Gaztransport & Technigaz
Annual Report 2017

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KGTT Communications, Inc. - GTTFiled: March 01, 2018 (period: December 31, 2017)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, 2017 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) 7900 Tysons One PlaceSuite 1450McLean, 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 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 þ 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 þIndicate 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 þ No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to 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 shorterperiod that the registrant was required to submit and post such files). Yes þ 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. þIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company"in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filerþ Accelerated Filer¨Non-Accelerated Filer¨(Do not check if a smaller reporting company)Smaller reporting company¨ Emerging growth company¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 (31,109,655 shares) based on the $31.65 closing price of theregistrant’s common stock as reported on the NYSE on June 30, 2017, was $984,620,581. For purposes of this computation, all officers, directors and 10%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 February 27, 2018, 44,825,118 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 2018 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 01, 2018Powered 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 Factors5Item 1B.Unresolved Staff Comments15Item 2.Properties15Item 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 Data17Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations19Item 7A.Quantitative and Qualitative Disclosures About Market Risk35Item 8.Financial Statements and Supplementary Data35Item 9.Changes In and Disagreements with Accountants on Accounting and Financial Disclosure35Item 9A.Controls and Procedures35Item 9B.Other Information39 PART III Item 10.Directors, Executive Officers and Corporate Governance39Item 11.Executive Compensation39Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters39Item 13.Certain Relationships and Related Transactions, and Director Independence39Item 14.Principal Accounting Fees and Services39 PART IV Item 15.Exhibits, Financial Statement Schedules40Item 16.Form 10-K Summary43 Signatures44iSource: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 Certain statements contained or incorporated by reference in this Form 10-K ("Annual Report") may constitute "forward-looking statements" within themeaning of Section 27A of the Securities Act and Section 21E of the Securities Act of 1934, as amended (the "Exchange Act"). Any statements included orincorporated by reference in this Annual Report about our expectations, beliefs, plans, objectives, assumptions or future events or performance are nothistorical facts and are forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions proveincorrect, actual results may differ from those anticipated, estimated or expected. You can identify these forward-looking statements by the use of words orphrases such as "may," "likely," "potentially," "will," "expect," "intend," "anticipate," "projects," "believe," "estimate," "plan," "could," "should,""opportunity," and "continue" or similar words, whether in the negative or the affirmative. Forward-looking statements include information concerning ourbusiness strategy, plans, and goals and objectives, as well as information concerning the expected timing, consummation and financial benefits of certaintransactions.Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account information currentlyavailable to us. These forward-looking statements are subject to known and unknown risks, uncertainties and factors or events that may cause our actualresults, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. These statementsinclude, among others, statements concerning:•our business and our strategy for continuing to pursue our business;•our integration of the operations from recent and anticipated acquisitions, and realization of anticipated benefits and synergies in connection withthe acquisitions;•anticipated growth of our industry;•expectations as to our future revenue, margins, expenses, cash flows, profitability and capital requirements; and•other statements of expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements are subject to risks and uncertainties, including financial, regulatory, environmental, and industry projections, that could cause actualevents or results to differ materially from those expressed or implied by the statements. Factors, contingencies, and risks that could cause our actual results todiffer materially from these forward-looking statements include, but are not limited to, the effects on our business and customers of general economic andfinancial market conditions, as well as the following:•our ability to achieve the expected benefits of certain transactions;•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 prevent process and system failures or security breaches that significantly disrupt the availability and quality of the services that weprovide;•our ability to maintain adequate liquidity and produce sufficient cash flow to fund acquisitions and capital expenditures;•our ability to meet all the terms and conditions of our debt obligations;•our ability to obtain capital to grow our business;•our ability to utilize our net operating losses;•expectations regarding the trading price of our common stock;•our ability to complete acquisitions or divestitures and effectively integrate any business or operation acquired;•fluctuations in our effective tax rate; andiiSource: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 impact of the Tax Cuts and Jobs Act (the "Tax Act").Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and uncertaintiesinherent in our business. Such risks and uncertainties include, among others, factors discussed under the section entitled "Risk Factors" in this Annual Report.Any such risks and uncertainties could materially and adversely affect our results of operations, our profitability and our cash flows, which could, in turn,have a material adverse impact on our ability to make payments on our debt. You should not place undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date of which statements weremade. We expressly disclaim any obligation to update our forward-looking statements, whether as a result of new information, future events or circumstances,or otherwise, except as required by law.You should understand that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statementsincluded or incorporated by reference in this Annual Report by these cautionary statements. Although we believe that our plans, intentions, expectations,strategies and prospects as reflected in our forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity,performance or achievement. You should carefully consider the risk factors contained herein, in addition to the other information included or incorporated byreference.iiiSource: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. BUSINESSOverviewGTT Communications, Inc. ("GTT," the "Company," "we," or "us") provides cloud networking services to multinational clients. We operate a Tier 1global IP backbone, ranked among the top five in the industry, and we own the lowest latency, transatlantic fiber network. Our comprehensive portfolio ofservices includes: private networking; internet; optical transport; SD-WAN; managed services; voice and unified communications; video transport; andaccess services.Our global network connects people across organizations and around the world. We provide cloud networking services to leading multinationalenterprise, carrier, and government clients in over 100 countries. We differentiate ourselves from our competition by delivering service to our customers withsimplicity, speed and agility.We are a Delaware corporation founded in 2005. As of December 31, 2017, we had 1,257 full-time equivalent employees.StrategyMultinational organizations are shifting greater amounts of traffic to cloud-based applications and outsourcing IT infrastructure services, which createssignificant opportunities for GTT. Our global networking services are designed to capitalize on these growing market demands, most notably our privatenetworking, internet, optical transport, SD-WAN, and managed services offerings. We believe our broad network reach and differentiated service capabilitiesuniquely position GTT to serve the changing networking requirements of multinational clients.Our strategy is focused on three key elements:Expanding cloud networking services to multinational clients. Our network assets and services are built to serve the requirements of large, global clients.These organizations have increasing demands for scalable and flexible network connectivity due to the rapid adoption of cloud-based applications andincreasing data usage across locations driven by increasing file sizes, voice, video and real-time collaboration tools. In addition, enterprise CIOs andtechnology executives are increasingly using third-party management of their network and IT infrastructure so their teams can focus on applicationdevelopment and performance. We are one of the few non-incumbent providers with the product breadth, global scope and operating experience to meet thesophisticated networking needs and managed service requirements of the world’s most demanding multinational clients, and we will continue to look forways to expand our portfolio of services to meet our clients’ needs.Extending secure network connectivity to any location in the world and any application in the cloud. We operate one of the five largest IP networks inthe world, and our global access footprint is one of the broadest in the industry. Network connectivity is a fundamental requirement for clients to realize thefull benefits of cloud computing, and they are increasingly demanding dedicated, secure and high-bandwidth connectivity between their various officelocations and leading cloud service providers for mission-critical applications and services. We can connect any client location in the world to our globalnetwork through our core network infrastructure and relationships with approximately 2,000 regional suppliers. We will continue to seek opportunities toexpand our global footprint to enable our clients to connect to the cloud more efficiently and cost-effectively.Delivering outstanding client experience by living our core values of Simplicity, Speed and Agility. We strive to be easy to work with, fast andresponsive, and to say "yes" to our clients. We are committed to delivering high-quality, reliable and secure services that will continue to attract new clientsand create additional opportunities with existing clients. We believe that by operating all areas of our business with simplicity, speed and agility, we offercustomers a better service experience than larger incumbent providers.We execute on this strategy both through rep-driven growth and through strategic acquisitions. Our 165 quota bearing reps are focused on designing anddelivering world-class global network solutions that connect any office location in the world, to any application in the cloud. We continue to expand oursales force through external hiring and through acquisitions. We have completed many acquisitions throughout our history, and we believe we haveconsistently demonstrated an ability to acquire and effectively integrate companies and realize cost synergies. Acquisitions have the ability to increase thescale of our operations, which in turn affords us the ability to expand our operating leverage, extend our network reach, augment our product set, and broadenour customer base. We believe our ability to realize significant cost synergies through acquisitions provides us with a competitive advantage in futureconsolidation opportunities within our industry. We will continue to evaluate these opportunities and are regularly involved1Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 acquisition discussions. We will evaluate these opportunities based on a number of criteria, including the strategic fit within our existing businesses, theability to integrate people, systems and networks quickly, and the opportunity to create value through the realization of cost synergies.Global NetworkOur global network assets are deployed in North America, South America, Europe, the Middle East, Asia, and Australia. Our Tier 1 IP network consists ofover 600 points of presence ("PoPs") in top data centers around the world, connected with resilient and redundant transport. Based on industry data, our IPbackbone is consistently ranked as a top five network in terms of internet routes. We own and operate three trans-Atlantic subsea cables connecting NorthAmerica and Europe, including our industry leading lowest latency Express transatlantic subsea cable system.Our private, long-haul optical network provides the foundation for a multiprotocol label switching ("MPLS") mesh between core backbone routers ineach market. We engineer our network to provide high levels of capacity and performance, even when utilizing enhanced services such as traffic analysis andfiltering. We route network traffic to ensure customer applications take the shortest path possible through the network, delivering low latency performance,reliability and security.We employ a "capex light" model, which leverages the sophisticated routing and switching infrastructure in our core global network, then integratesnetwork access leased from last mile carriers. This business model benefits us and our customers. We are able to quickly add capacity as needed, minimizeinfrastructure deployment, maintenance and replacement costs, and focus solely on designing the best network solutions for our clients' specific needs.Service OfferingsWe deliver the following eight primary service offerings to our customers:Private NetworkingWe provide Layer 2 (Ethernet) and Layer 3 (IP VPN) private networking solutions to meet the growing needs of multinational enterprises, carriers, serviceproviders, and content delivery networks regardless of location. We design and implement custom private, public, and hybrid cloud network solutions for ourcustomers, offering bandwidth speeds from 10 Mbps to 100 Gbps per port with burstable and aggregate bandwidth capabilities. All services are available on aprotected basis with the ability to specify pre-configured alternate routes to minimize the impact of any network disruption.Through GTT's private networking services, clients can securely connect to cloud service providers in data centers and exchanges around the world. OurCloud Connect feature provides private, secure, pre-established connectivity to leading cloud service providers. Using GTT's global network, clients canconnect any office location in the world to any application in the cloud. InternetWe offer clients scalable, high-bandwidth global internet connectivity and IP transit with guaranteed availability and packet delivery. Our Internetservices offer flexible connectivity with multiple port interfaces including Fast Ethernet, Gigabit Ethernet, 10 Gigabit Ethernet, and 100 Gigabit Ethernet. Wealso offer a wide range of broadband and wireless access services. We support a dual stack of IPv4 and IPv6 protocols, enabling the delivery of seamless IPv6services alongside existing IPv4 services.Optical TransportWe provide a full suite of optical transport services over a core fiber network, enabling cloud-based applications and the transport of high volume databetween data centers, large enterprise office locations, and media hubs. Our native wavelength product is designed to deliver scalable high performanceoptical connectivity over a state-of-the-art dense wave division multiplexing ("DWDM") platform. Our service is differentiated based on unique networkdiversity and low latency connections between major financial and commercial centers in North America and Europe. Our clients for these services includeinternet-based technology companies and over-the-top companies ("OTTs"), large banks, and other service providers requiring network infrastructure.Additionally, we provide ultra-low latency services between the major financial centers and exchanges, tailored to meet the requirements of proprietarytrading firms for the fastest connections. Our service provides the industry leading lowest latency performance of the Express transatlantic subsea cableconnecting North America and Europe, which is wholly owned and operated by GTT.2Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Software Defined Wide Area Networking ("SD-WAN")SD-WAN is a new enterprise networking technology in the early stages of market adoption with high growth potential. SD-WAN provides enterpriseswith improved agility to manage changing network traffic patterns resulting from cloud applications. The software-based network intelligence in SD-WANenables more efficient load-balancing of traffic across a mix of access types, accelerates the speed of deployments, and improves application visibility.•GTT’s SD-WAN delivers cost-effective, managed global connectivity, enhanced application performance and control, and secure access to cloud-based services and applications that enterprises require. Our service leverages GTT’s global, Tier 1 IP backbone, securely connecting client locationsto any destination on the internet or to any cloud service provider. We offer the widest range of access options with bundled network security,making it simple and cost-effective to integrate new locations and add network bandwidth as needed.Managed ServicesWe offer fully managed network services, including managed equipment, and security, enabling customers to focus on their core business. These end-to-end services cover the design, procurement, implementation, monitoring, and maintenance of a customer’s network.•Managed Equipment. Managed Equipment provides a turnkey solution for the end-to-end management of customer premise equipment, from devicethrough the core network. This includes the design, procurement, implementation, monitoring, and maintenance of equipment including routers,switches, servers, and Wi-Fi access points.•Security. Our cloud-based and premise-based security services provide a comprehensive, multi-layered security solution that protects the networkwhile meeting the most stringent security standards. Our Unified Threat Management ("UTM") services include advanced firewall, intrusiondetection, anti-virus, web filtering, and anti-spam. Voice and Unified CommunicationOur SIP Trunking service integrates voice, video, and chat onto a single IP connection, driving efficiency and productivity organization-wide. OurEnterprise PBX service allows clients to eliminate traditional voice infrastructure with communication services delivered through the cloud. This unifiedcommunication service offering includes fully hosted and hybrid models for maximum flexibility.Video TransportWe provide a suite of fully-managed video transport services. Our services are designed to support our clients' requirements for stringent broadcastquality, providing 100% quality of service for transmission of live events, sports entertainment, and news. Our service options include Dedicated, OccasionalUse, and IP Video. We manage individual services, multicast distribution, and entire client networks, supporting all forms of signal management required formedia workflow. GTT's video transport services are based on the core principle of "any signal, any format, anywhere." Our clients include many of the world'stop broadcasters and cable programming providers.Access ServicesWithin North America, GTT operates an access infrastructure composed of approximately 1,750 central offices ("COs"), which includes 835 COs that areEthernet over Copper ("EoC") enabled. GTT Access Services include EoC and Digital Subscriber Line ("DSL") services, which are designed to providereliable and affordable network access utilizing traditional copper wire infrastructure. EoC is available in both asymmetric and symmetric configurations. Oursymmetric service offers guaranteed bandwidth, with available speeds from 2Mbps to 45Mbps.3Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.OperationsSupplier ManagementWe have strong, long-standing relationships with a diverse group of approximately 2,000 suppliers from which we source our global networkconnectivity, last-mile bandwidth capacity and other services. We maintain multiple supplier agreements covering diverse routes throughout our network toensure service continuity, competitive pricing, bandwidth capacity and improved carrier responsiveness.For our core global network, supplier agreements are typically one-year commitments with an option to renew, which enables us to (i) maintainsignificant flexibility regarding the amount of bandwidth purchased and (ii) consistently benefit from the latest competitive pricing. For last-mileconnections, we typically structure the term to match the term of the underlying customer contract.Our supplier management team continually monitors supplier performance, network information and pricing to provide greater choice, flexibility andcost savings for our customers.Network OperationsOur network is supported by global Network Operations Centers ("NOCs") located in Austin, Texas; Belfast, Northern Ireland; Dublin, Ireland; Denver,Colorado; Lemont Furnace, Pennsylvania; Pune, India; and Seattle, Washington. The NOCs provide active monitoring, prioritization and resolution ofnetwork-related events 24 hours per day, 365 days per year. Our NOCs also respond to customer network inquiries, and coordinate and notify customers ofmaintenance activities.IT SystemsWe provide customers with advanced routing control and visibility into their network performance. Our proprietary online client portal providescustomers with online access to monitor their network performance and track real-time statistics.We have developed a comprehensive Client Management Database ("CMD") that manages our network, customer and supplier contracts, sales quoting,service provisioning, and customer invoicing. CMD also supports our financial reporting and other operational processes as well as our integration ofacquired companies. Our CMD system has been in operation since our inception, and its capabilities and processes are continually enhanced and automated.The CMD system provides our management team with visibility into all areas of our operations and allows us to operate with simplicity, speed and agility.Sales and MarketingWe market our products and services through a global direct sales force and indirect sales channels. We have sales representatives throughout NorthAmerica, Europe, South America, the Middle East, and Asia. Our sales activities are specifically focused on building relationships with new clients anddriving expansion within existing client accounts. Because we typically sell to large, global clients and our markets are highly competitive, we believe thatpersonal relationships and quality of service delivery remain important in winning new and repeat customer business. We supplement our direct salesapproach with a trusted community of agents and integrators who already have personal relationships with many leading multinational clients.GTT's marketing activities aim to generate broad awareness and promote our value proposition to multinational clients, applying both traditional anddigital marketing methods that target key client decision makers.CustomersOur customer base consists of enterprise, carrier, and government clients around the world. Our multinational enterprise client base includes leadingorganizations in financial services, healthcare, technology, manufacturing, retail, media and entertainment, and business services. Carrier customers includesome of the largest telecommunications firms in the world, who rely on our global network to extend their reach.Our customer contracts for network services range from one to three years or more for the initial term. Following the initial term, these agreementstypically provide for automatic renewal for specified periods ranging from one month to one year. Our prices are fixed for the duration of the contract, and wetypically bill monthly in advance for such services. If a customer terminates its agreement, the terms of our customer contracts typically require full recoveryof any amounts due for the remainder of the term or, at a minimum, our liability to any underlying suppliers.4Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.CompetitionWe operate in a highly competitive industry. Our competitors include incumbent local exchange carriers, competitive local exchange carriers, internetservice providers, cable companies, and other facilities-based operators. Many of these competitors are large, well-capitalized, and have strong marketpresence, brand recognition, and existing customer relationships. We also face competition from smaller providers who offer network services and managedenterprise solutions similar to ours. Specific competitors vary based on geography, product offering, and vertical market.Regulatory MattersWe are subject to federal, state, and foreign regulations. In the United States, the Federal Communications Commission ("FCC") has jurisdiction overinterstate telecommunications and international telecommunications that originate or terminate in the United States. State Public Utilities Commissions("PUCs") have similar powers with respect to intrastate telecommunications. Foreign country laws and regulations typically apply to telecommunications thatoriginate or terminate in, or in some instances traverse, that country. The regulation of the telecommunications industry is constantly evolving, and variesfrom state to state and from country to country.Where certification, licensing or authorization is required, carriers are required to comply with certain ongoing responsibilities. For example, we arerequired to submit periodic reports to various telecommunications regulatory authorities relating to the provision of services within relevant jurisdictions. Inaddition, we are responsible for the payment of certain regulatory fees and the collection and remittance of certain surcharges and fees associated with theprovision of telecommunications services depending upon the jurisdiction, the type of service and the type of customer.Intellectual PropertyWe do not own any material patent registrations, applications, or licenses.Available InformationWe make available, through our website, www.gtt.net, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, andexhibits and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, promptly after they areelectronically filed with the Securities and Exchange Commission (the "SEC"). We caution you that the information on our website is not part of this or anyother report we file with, or furnish to, the SEC.In addition to our website, you may read and copy any materials we file with the SEC at www.sec.gov.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 anduncertainties we believe are most important for you to consider. Additional risks and uncertainties not presently known to us, which we currently deemimmaterial or which are similar to those faced by other companies in our industry or telecommunications and/or technology companies in general, may alsoimpair our business operations. If any of these risks or uncertainties actually occurs, our business, financial condition and operating results could bematerially adversely affected.Risks Related to Our Business and OperationsOur business could suffer delays and problems due to the actions of network providers on whom we are partially dependent. Most of our customers are connected to our network by means of communications lines that are provided as services by local telephone companies andothers. We may experience problems with the installation, maintenance, and pricing of these lines and other communications links, which could adverselyaffect our results of operations and our plans to add additional customers to our network using such services. We attempt to mitigate this risk by using manydifferent providers so that we have alternatives for linking a customer to our network. Competition among the providers tends to improve installationintervals, maintenance, and pricing.Our network may be the target of potential cyber-attacks and other security breaches that could have significant negative consequences.5Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Our business depends on our ability to limit and mitigate interruptions or degradation to our network availability. Our network, including our routers,may be vulnerable to unauthorized access, computer viruses, cyber-attacks, distributed denial of service ("DDOS"), and other security breaches. Cyber-attackshave increased in frequency, scope, and potential harm in recent years. An attack on or security breach of our network could result in interruption or cessationof services, our inability to meet our service level commitments, and potentially compromise customer data transmitted over our network. If cyber-thievesgain improper access to our network, they may be able to access, steal, publish, delete, misappropriate, or modify confidential customer data, and additionalharm to customers could be perpetrated by third parties who are given access to such confidential customer data. We cannot guarantee that our securitymeasures will not be circumvented, thereby resulting in compromised customer data or network failures or interruptions that could impact our networkavailability and have a material adverse effect on our business, financial condition, and operational results. We may be required to expend significantresources to protect against such threats, and may experience a reduction in revenues, litigation, and a diminution in goodwill, caused by a breach. Althoughour customer contracts limit our liability, affected customers and third parties may seek to recover damages from us under various legal theories.We are required to maintain, repair, upgrade and replace our network and facilities and our network could suffer serious disruption if certain locationsexperience serious damage.Our business requires that we maintain, upgrade, repair, and periodically replace parts of our network facilities. This requires, and will continue torequire, management time and the expenditure of capital on a regular basis. In the event that we fail to maintain, upgrade, or replace essential portions of ournetwork facilities, it could lead to a material degradation in the level of service that we provide, which would adversely affect our business. There are certain locations through which a large amount of our Internet traffic passes. Examples are facilities in which we exchange traffic with othercarriers, the facilities through which our transatlantic traffic passes, and certain of our network hub sites. If any of these facilities were destroyed or seriouslydamaged, a significant amount of our network traffic could be disrupted. Because of the large volume of traffic passing through these facilities, our ability(and the ability of carriers with whom we exchange traffic) to quickly restore service would be challenged. Our transatlantic subsea cables may require repairsfor damage caused by natural disasters, fishing vessels, or intentional damage by activist groups. These repairs may take significant time and our ability to re-route traffic to other cable systems or procure services on competitors transatlantic subsea cables may affect our ability to service these customers.In the event of such damage to any of our owned infrastructure, we will be required to incur expenses to repair such damage. There could be parts of ournetwork or the networks of other carriers that could not be quickly restored or that would experience substantially reduced service for a significant time. Ifsuch a disruption occurs, our reputation could be negatively impacted, which may cause us to lose customers and adversely affect our ability to attract newcustomers, resulting in an adverse effect on our business, operating results, and cash flows.We may have difficulty and experience disruptions as we add features and upgrade our network. We are constantly upgrading our network and implementing new features and services. This process involves reconfiguring our network and makingchanges to our operating systems. In doing so we may experience disruptions that affect our customers, our revenue, and our ability to grow. We may requireadditional resources to accomplish this work in a timely manner. That could cause us to incur unexpected expenses or delay portions of this effort to thedetriment of our ability to provide service to our customers.We may make purchase commitments to vendors for longer terms or in excess of the volumes committed by our underlying customers, or we mayoccasionally have certain sales commitments to customers that extend beyond our commitments from our underlying suppliers.We attempt to match our purchase of network capacity from our suppliers and service commitments from our customers. However, from time to time, wemay contract for obligations to our suppliers that exceed the duration of the related customer contracts or that are for capacity in excess of the amount forwhich we have customer commitments. This could arise:•based upon the terms and conditions available from our suppliers;•from an expectation that we will be able to utilize the excess capacity;•as a result of a breach of a customer’s commitment to us; and•to support fixed elements of our network.Under any of these circumstances, we may incur the cost of the network capacity from our supplier without having corresponding revenue fromcustomers, which could result in a material and adverse impact on our operating results.6Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Conversely, from time to time, our customer may contract for services that extend beyond the duration of the underlying vendor commitment. This maycause us to seek a renewal of services or a shorter period than we typically seek, or a shortened service period at higher prices. Our financial results could beadversely affected if we are unable to purchase extended service from a supplier at a cost sufficiently low to maintain margins for the remaining term of ourcommitment to a customer. While we have not historically encountered material price increases from suppliers with respect to continuation or renewal ofservices after expiration of initial contract terms, we cannot be certain that we would be able to obtain similar terms and conditions from suppliers goingforward.Our connections to the Internet require us to establish and maintain peering relationships with other providers, which we may not be able to maintain. The Internet is composed of various network providers who operate their own networks that interconnect at public and private interconnection points.Our network is one such network. In order to obtain Internet connectivity for our network, we must establish and maintain relationships with other providers,including many providers that are customers, and incur the necessary capital costs to locate our equipment and connect our network at these variousinterconnection points. By entering into what are known as settlement-free peering arrangements, providers agree to exchange traffic between their respective networks withoutcharging each other. Our ability to avoid the higher costs of acquiring paid dedicated network capacity (transit or paid peering) and to maintain high networkperformance is dependent upon our ability to establish and maintain peering relationships and to increase the capacity of these peering connections. Theterms and conditions of our peering relationships may also be subject to adverse changes, which we may not be able to control. If we are not able to maintainor increase our peering relationships in all of our markets on favorable terms, we may not be able to provide our customers with high performance oraffordable or reliable services, which could cause us to lose existing and potential customers, damage our reputation and have a material adverse effect on ourbusiness.Our core network infrastructure equipment is provided by a single vendor. We purchase from Juniper Networks, Inc. ("Juniper") the majority of the routers and transmission equipment used in our core IP network. If Juniper fails toprovide equipment on a timely basis or fails to meet our performance expectations, including in the event that Juniper fails to enhance, maintain, upgrade orimprove its products, hardware or software we purchase from them when and how we need, we may be delayed or unable to provide services as and whenrequested by our customers. We also may be unable to upgrade our network and face greater difficulty maintaining and expanding our network. Transitioningfrom Juniper to another vendor would be disruptive because of the time and expense required to learn to install, maintain, and operate the new vendor'sequipment and to operate a multi-vendor network. Any such disruption could increase our costs, decrease our operating efficiencies, and have an adverseeffect on our business, results of operations, and financial condition. Juniper may also be subject to litigation with respect to the technology on which we depend, including litigation involving claims of patentinfringement. Such claims have been growing rapidly in the communications industry. Regardless of the merit of these claims, they can result in the diversionof technical and management personnel, or require us to obtain non-infringing technology or enter into license agreements for the technology on which wedepend. There can be no assurance that such non-infringing technology or licenses will be available on acceptable terms and conditions, if at all.If the information systems that we depend on to support our customers, network operations, sales, billing, and financial reporting do not perform asexpected, our operations and our financial results may be adversely affected.We rely on complex information systems to operate our network and support our other business functions. Our ability to track sales leads, close salesopportunities, provision services, bill our customers for our services, and prepare our financial statements depends upon the effective integration of ourvarious information systems. If our information systems, individually or collectively, fail or do not perform as expected, our ability to process and provisionorders, to make timely payments to vendors, to ensure that we collect amounts owed to us and prepare our financial statements would be adversely affected.Such failures or delays could result in increased capital expenditures, customer and vendor dissatisfaction, loss of business or the inability to add newcustomers or additional services, and the inability to prepare accurate and timely financial statements, all of which would adversely affect our business andresults of operations.Our business depends on agreements with carrier neutral data center operators, which we could fail to obtain or maintain.Our business depends upon access to customers in carrier neutral data centers, which are facilities in which many large users of the Internet house thecomputer servers that deliver content and applications to users by means of the Internet and provide access7Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.to multiple Internet access networks. Most carrier neutral data centers allow any carrier to operate within the facility (for a standard fee). We expect to enterinto additional agreements with carrier neutral data center operators as part of our growth plan. Current government regulations do not require carrier neutraldata center operators to allow all carriers access on terms that are reasonable or nondiscriminatory. We have been successful in obtaining agreements withthese operators in the past and have generally found that the operators want to have us located in their facilities because we offer low-cost, high-capacityInternet service to their customers. Any deterioration in our existing relationships with these operators could harm our sales and marketing efforts and couldsubstantially reduce our potential customer base.We may be liable for the material that content providers distribute over our network.Although we believe our liability for third-party information stored on or transmitted through our networks is limited, the liability of private networkoperators is impacted both by changing technology and evolving legal principles. As a private network provider, we could be exposed to legal claimsrelating to third-party content stored or transmitted on our networks. Such claims could involve, among others, allegations of defamation, invasion ofprivacy, copyright infringement, or aiding and abetting restricted activities such as online gambling or pornography. If we decide to implement additionalmeasures to reduce our exposure to these risks or if we are required to defend ourselves against these kinds of claims, our operating results and financialcondition could be negatively affected. Historically, we have generated net losses and used more cash than we have generated from operations, and we may continue to do so.We have historically generated net losses and such losses may continue in the future. These net losses primarily have been driven by acquisition-relatedexpenses, depreciation, amortization, interest expense, and share-based compensation. We cannot assure you that we will generate net income in the future.We have also consistently consumed our entire positive cash flow generated from operating activities with our investing activities. Our investingactivities have consisted principally of the acquisition of businesses and customer contracts as well as additions to property and equipment. We have fundedthe excess of cash used in investing activities over cash provided by operating activities with proceeds from equity and debt issuances.We intend to continue to invest in expanding our business and pursuing acquisitions that we believe provide an attractive return on our capital. Theseinvestments may continue to exceed the amount of cash flow available from operations after debt service requirements. To the extent that our investmentsexceed our cash flow from operations, we plan to rely on potential future debt or equity issuances, which could increase interest expense or dilute the interestof stockholders, as well as cash on hand and borrowings under our revolving credit facility. We cannot assure you, however, that we will be able to obtain orcontinue to have access to sufficient capital on reasonable terms, or at all, to successfully grow our business.Our revenue is relatively concentrated among a small number of customers, and the loss of any of these customers could significantly harm our business,financial condition, results of operations, and cash flows.Revenues from our top five customers accounted for approximately 10% of our revenue for the year ended December 31, 2017. We currently depend, andexpect to continue to depend, upon a relatively small number of customers for a significant percentage of our revenue. Many of these customers are alsocompetitors for some or all of our service offerings. Our customer contracts typically have terms of one to three years. Our customers may elect not to renewthese contracts. Furthermore, our customer contracts are terminable for cause if we breach a material provision of the contract. We may face increasedcompetition and pricing pressure as our customer contracts become subject to renewal. Our customers may negotiate renewal of their contracts at lower rates,for fewer services or for shorter terms. Many of our customers are in the telecommunications industry, which is undergoing consolidation. To the extent thattwo or more of our customers combine, they may be able to use their greater size to negotiate lower prices from us and may purchase fewer services from us,especially if their networks overlap. If we are unable to successfully renew our customer contracts on commercially acceptable terms, or if our customercontracts are terminated, our business could suffer.We are also subject to credit risk associated with the concentration of our accounts receivable from our key customers. If one or more of these customerswere to become bankrupt, insolvent or otherwise were unable to pay for the services provided by us, we may incur significant write-offs of accountsreceivable or incur impairment charges.Future acquisitions are a component of our strategic plan, and will include integration and other risks that could harm our business.8Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.We have grown rapidly and intend to continue to acquire complementary businesses and assets. This exposes us to the risk that when we evaluate apotential acquisition target we over-estimate the target’s value and, as a result, pay too much for it. We also cannot be certain that we will be able tosuccessfully integrate acquired assets or the operations of the acquired entity with our existing operations. Businesses and assets that we have acquired ormay acquire in the future may be subject to unknown or contingent liabilities for which we may have limited or no recourse against the sellers. While weusually require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification is often limited andsubject to various claim expiration periods, materiality thresholds, a significant deductible or an aggregate cap on losses. As a result, there is no guaranteethat we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount ofcosts and expenses that we may incur with respect to liabilities associated with acquired properties and entities may exceed our expectations, which mayadversely affect our operating results and financial condition.Difficulties with integration could cause material customer disruption and dissatisfaction, which could in turn increase churn and reduce new sales.Additionally, we may not be able to integrate acquired businesses in a manner that permits us to realize the cost synergies we anticipate. Our actual costsynergies, cost savings, growth opportunities, and efficiency and operational benefits resulting from any acquisition may be lower and may take longer torealize than we currently expect.We may incur additional debt or issue additional equity to assist in the funding of these potential transactions, which may increase our leverage and/ordilute the interest of stockholders. Further, additional transactions could cause disruption of our ongoing business and divert management’s attention fromthe management of daily operations to the closing and integration of the acquired business. Acquisitions also involve other operational and financial riskssuch as:•increased demand on our existing employees and management related to the increase in the size of the business and the possible distraction from ourexisting business due to the acquisition;•loss of key employees and salespeople of the acquired business;•liabilities of the acquired business, both unknown and known at the time of the consummation of the acquisition;•discovery that the financial statements we relied on to buy a business were incorrect;•expenses associated with the integration of the operations of the acquired business;•the possibility of future impairment, write-downs of goodwill and other intangibles associated with the acquired business;•finding that the services and operations of the acquired business do not meet the level of quality of those of our existing services and operations;and•determining that the internal controls of the acquired business were inadequate.We are growing rapidly and may not maintain or efficiently manage our growth.We have rapidly grown our company through acquisitions of companies and assets and the acquisition of new customers through our own sales efforts. Inorder to become consistently profitable and consistently cash flow positive, we need to both retain existing customers and continue to add a large number ofnew customers. While no single customer accounted for more than 10% of our 2017 revenue, the loss of or reduced purchases from several significantcustomers could impair our growth, cash flow, and profitability. Customers can be reluctant to switch providers of bandwidth services because it can involvesubstantial expense and technical difficulty. That can make it harder for us to acquire new customers through our own sales efforts. Our expansion may placestrains on our management and our operational and financial infrastructure. Our ability to manage our growth will be particularly dependent upon our abilityto:•expand, develop, and retain an effective sales force and other qualified personnel;•maintain the quality of our operations and our service offerings;•attract customers to switch from their current providers to us in spite of the costs associated with switching providers;•maintain and enhance our system of internal controls to ensure timely and accurate reporting; and•expand our operational information systems in order to support our growth, including integrating new customers without disruption. We expect that economies of scale will allow us to increase revenue while incurring incremental costs that are proportionately lower than thoseapplicable to our existing businesses. If the increased costs required to support our revenue growth turn out to be greater than anticipated, we may be unableto improve our profitability and/or cash flows even if our revenue growth goals are achieved.We are highly dependent on our management team and other key employees.We expect that our continued success will largely depend upon the efforts and abilities of members of our management team and other key employees.Our success also depends upon our ability to identify, attract, develop, and retain qualified employees.9Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 we lose members of our management team or other key employees, or if we are unable to recruit qualified employees in the future, it would likely have amaterial adverse effect on our business and our cash flows.The international operations of our business expose us to risks that could materially and adversely affect the business.We have operations and investments outside of the United States, as well as rights to subsea cable capacity extending to other countries, that expose usto risks inherent in international operations. These include:•general economic, social, and political conditions;•the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;•tax rates in some foreign countries may exceed those in the U.S.;•foreign currency exchange rates may fluctuate, which could adversely affect our results of operations and the value of our international assets andinvestments;•foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls, or other restrictions;•difficulties and costs of compliance with foreign laws and regulations that impose restrictions on our investments and operations, with penalties fornoncompliance, including loss of licenses and monetary fines;•difficulties in obtaining licenses or interconnection arrangements on acceptable terms, if at all; and•changes in U.S. laws and regulations relating to foreign trade and investment.We may as part of our expansion strategy increase our exposure to international investments and operations.Some of our customer agreements contain service level obligations that could subject us to liability or the loss of revenue.Some of our contracts with customers contain service level guarantees (including network availability) and service delivery date targets, which, if notmet, enable customers to claim credits and, under certain conditions, terminate their agreements. Our failure to meet our service level guarantees couldadversely affect our business, financial condition, and results of operations. Lost revenue from failure to meet service level guarantees was de minimis for theyears ended December 31, 2016 and 2017. While we typically have carve-outs for force majeure events, many events, such as fiber cuts, equipment failure,and third-party vendors being unable to meet their underlying commitments with us, could impact our ability to meet our service level agreements, whichcould adversely affect our financial conditions and operations.Our international operations expose us to currency risk.We conduct a portion of our business using foreign currencies, predominately the British Pound Sterling and the Euro. Fluctuation of the U.S. Dollarcould adversely affect our consolidated revenue. Since we tend to incur costs in the same currency in which those operations realize revenue, the effect onoperating income and operating cash flow is largely mitigated. However, if the U.S. Dollar continues to fluctuate significantly, future revenues, operatingincome, and operating cash flows could be adversely affected.Our future tax liabilities are not predictable or controllable. If we become subject to increased levels of taxation, our financial condition and operationscould be negatively impacted.We provide telecommunication and other services in multiple jurisdictions across the United States and Europe and are, therefore, subject to multiplesets of complex and varying tax laws and rules. We cannot predict the amount of future tax liabilities to which we may become subject. Any increase in theamount of taxation incurred as a result of our operations or due to legislative or regulatory changes would be adverse to us. In addition, we may becomesubject to income tax audits by many tax jurisdictions throughout the world. It is possible that certain tax positions taken by us could result in tax liabilitiesfor us. While we believe that our current provisions for taxes are reasonable and appropriate, we cannot assure you that these items would be settled for theamounts accrued or that we will not identify additional exposures in the future.We cannot assure you whether, when or in what amounts we will be able to use our net operating losses, or when they will be depleted.At December 31, 2017, we had $163.4 million of U.S. federal net operating loss carryforwards ("NOLs") net of limitations under Section 382. Undercertain circumstances, these NOLs can be used to offset our future federal and certain state taxable income. If we experience an "ownership change," asdefined in Section 382 of the Internal Revenue Code and related Treasury regulations, our ability to use the NOLs could be substantially limited. This limitcould impact the timing of the usage of the NOLs, thus accelerating cash tax payments or causing NOLs to expire prior to their use, which could affect theultimate realization of the NOLs.10Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Furthermore, transactions that we enter into, as well as transactions by existing or future 5% stockholders that we do not participate in, could cause us toincur an "ownership change," which could prevent us from fully utilizing our NOLs to reduce our federal income taxes. These limitations could cause us notto pursue otherwise favorable acquisitions and other transactions involving our capital stock, or could reduce the net benefits to be realized from any suchtransactions.We issue projected results and estimates for future periods from time to time, and such projections and estimates are subject to inherent uncertainties andmay prove to be inaccurate.Financial information, results of operations and other projections that we may issue from time to time are based upon our assumptions and estimates.While we believe these assumptions and estimates to be reasonable when they are developed, they are inherently subject to significant business, economic,and competitive uncertainties and contingencies, many of which are beyond our control. You should understand that certain unpredictable factors couldcause our actual results to differ from our expectations and those differences may be material. No independent expert participates in the preparation of theseestimates. These estimates should not be regarded as a representation by us as to our results of operations during such periods as there can be no assurancethat any of these estimates will be realized. In light of the foregoing, we caution you not to place undue reliance on these estimates. These estimatesconstitute forward-looking statements.If we do not comply with laws regarding corruption and bribery, we may become subject to monetary or criminal penalties.The United States Foreign Corrupt Practices Act generally prohibits companies and their intermediaries from bribing foreign officials for the purpose ofobtaining or keeping business. Other countries have similar laws to which we are subject. We currently take precautions to comply with these laws. However,these precautions may not protect us against liability, particularly as a result of actions that may be taken in the future by agents and other intermediariesthrough whom we have exposure under these laws even though we may have limited or no ability to control such persons. Our competitors include foreignentities that are not subject to the United States Foreign Corrupt Practices Act or laws of similar stringency, and hence we may be at a competitivedisadvantage.Risks Related to Our IndustryConsolidation among companies in the telecommunications industry could further strengthen our competitors and adversely impact our business.The telecommunications industry is very competitive and continues to undergo significant consolidation. There are many reasons for consolidation inour industry, including the desire for companies to acquire customers or assets in regions where they currently have no or insufficient presence. Theconsolidation within the industry may cause customers to disconnect services to move them to their own networks, or consolidate buying with otherproviders. Additionally, consolidation in the industry could further strengthen our competitors, give them greater financial resources and geographic reach,and allow them to put additional pressure on prices for our services. Furthermore, consolidation can reduce the number of suppliers available to contract with,resulting in decreased flexibility and cost savings opportunity.The sector in which we operate is highly competitive, and we may not be able to compete effectively. We face significant competition from incumbent carriers, Internet service providers, and facilities-based network operators. Relative to us, many of theseproviders have significantly greater financial, technological, and personnel resources, more well-established brand names, superior marketing capabilities,greater network reach, larger customer bases, and more diverse strategic plans and service offerings. Most of these competitors are also our customers andsuppliers. Intense competition from these traditional and new communications companies has led to declining prices and margins for many communicationsservices, and we expect this trend to continue as competition intensifies in the future. Our competitors may also introduce new technologies or services thatcould make our services less attractive to potential customers.Certain of our services are subject to regulation that could change or otherwise impact us in an adverse manner.Communications services are subject to domestic and international regulation at the federal, state, and local levels. These regulations affect our businessand our existing and potential competitors. Our communications services and communications networks in Europe and elsewhere are subject to regulatoryoversight by national communications regulators, such as the United Kingdom’s Office of Communications ("Ofcom"). In addition, in April 2016, theEuropean Commission adopted the General Data Protection Regulation ("GDPR"), which will be in effect as of May 2018. The GDPR extends the scope ofEuropean privacy laws to any entity which processes personal data about E.U. residents in connection with the offer of goods or services or the monitoring ofbehavior. Complying with the GDPR and other emerging and changing privacy requirements may cause us to incur substantial11Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.costs or require us to change our business practices. Noncompliance could result in penalties or significant legal liability, and could affect our ability toretain and attract customers. In the United States, both the Federal Communications Commission ("FCC") and the state public utility commissions or similarregulatory authorities (the "State PUCs") typically require us to file periodic reports, pay various regulatory fees and assessments, and to comply with theirregulations. Such compliance can be costly and burdensome and may affect the way we conduct our business. Delays in receiving required regulatoryapprovals (including approvals relating to acquisitions or financing activities or for interconnection agreements with other carriers), the enactment of newand adverse international or domestic legislation or regulations (including those pertaining to broadband initiatives and net-neutrality), or the denial,modification, or termination by a regulator of any approval or authorization, could have a material adverse effect on our business. Local governments alsoexercise legal authority that may have an adverse effect on our business because of our need to obtain rights-of-way for certain portions of our network. Whilelocal governments may not prohibit persons from providing telecommunications services nor treat telecommunications service providers in a discriminatorymanner, they can affect the timing and costs associated with our use of public rights-of-way. Further, the current regulatory landscape is subject to changethrough judicial review of current legislation and rulemaking by the FCC, Ofcom, and other domestic, foreign, and international rulemaking bodies. Theserulemaking bodies regularly consider changes to their regulatory framework and fee obligations. Changes in current regulation may make it more difficult toobtain the approvals necessary to operate our business, significantly increase the regulatory fees to which we are subject, or have other adverse effects on ourfuture operations in the United States and Europe.We are subject to various forms of regulation from the Federal Communications Commission and state regulatory commissions in the states in which weoperate, which limit our pricing flexibility and cost structure for regulated voice and high-speed Internet products.As of December 31, 2017 we had operating authority from each of the 48 states and the District of Columbia in which we conducted operations, and weare subject to various forms of regulation from the regulatory commissions in each of these areas as well as from the FCC. The FCC has primary jurisdictionover interstate services including the rates that we pay other telecommunications companies to use their network and other issues related to interstate service.Future revenues, costs, and capital investment in our acquired Global Capacity business could be adversely affected by material changes to or decisionsregarding applicability of government requirements. Federal and state communications laws and regulations may be amended in the future, and other lawsand regulations may affect our business. In addition, certain laws and regulations applicable to us and our competitors may be, and have been, challenged inthe courts and could be changed at any time. We cannot predict future developments or changes to the regulatory environment or the impact suchdevelopments or changes would have. In addition, these regulations could create significant compliance costs for us.Our growth and financial health are subject to a number of economic risks. A downturn in the world economy, especially the economies of North America and Europe, would negatively impact our growth. We would beparticularly impacted by a decline in the development of new applications and businesses that make use of the Internet, which depend on numerous factorsbeyond our control. Our revenue growth is predicated on growing use of the Internet that makes up for the declining prices of Internet service. An economicdownturn could impact the Internet business more significantly than other businesses that are less dependent on new applications and growth in the use ofthose applications because of the retrenchment by consumers and businesses that typically occur in an economic downturn.Unfavorable general global economic conditions could negatively impact our operating results and financial condition.Unfavorable general global economic conditions could negatively affect our business. Although it is difficult to predict the impact of general economicconditions on our business, these conditions could adversely affect the affordability of, and customer demand for, our services, and could cause customers todelay or forgo purchases of our services. One or more of these circumstances could cause our revenue to decline. Also, our customers may not be able toobtain adequate access to credit, which could affect their ability to purchase our services or make timely payments to us. The current economic conditions,including federal fiscal and monetary policy actions, may lead to inflationary conditions in our cost base, particularly in our lease and personnel relatedexpenses. This could harm our margins and profitability if we are unable to increase prices or reduce costs sufficiently to offset the effects of inflation in ourcost base. For these reasons, among others, if challenging economic conditions persist or worsen, our operating results and financial condition could beadversely affected.Terrorist activity throughout the world, military action to counter terrorism, or natural disasters could adversely impact our business.The continued threat of terrorist activity and other acts of war or hostility have had, and may continue to have, an adverse effect on business, financial,and general economic conditions internationally. Effects from these events and any future terrorist activity, including cyber terrorism, may, in turn, increaseour costs due to the need to provide enhanced security, which would adversely12Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.affect our business and results of operations. These circumstances may also damage or destroy our Internet infrastructure and may adversely affect our abilityto attract and retain customers, our ability to raise capital and the operation and maintenance of our network access points. We are also susceptible to othercatastrophic events such as major natural disasters, extreme weather, fire, or similar events that could affect our headquarters, other offices, our network,infrastructure or equipment, which could adversely affect our business.Risk Factors Related to Our IndebtednessOur substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our debtagreements.We have substantial indebtedness. Our substantial debt may have important consequences. For instance, it could:•make it more difficult for us to satisfy our financial obligations, including those relating to our debt;•require us to dedicate a substantial portion of any cash flow from operations to the payment of interest and principal due under our debt, which willreduce funds available for other business purposes, including the growth of our operations, capital expenditures, and acquisitions;•place us at a competitive disadvantage compared with some of our competitors that may have less debt and better access to capital resources; and•limit our ability to obtain additional financing required to fund working capital and capital expenditures, for strategic acquisitions, and for othergeneral corporate purposes.Our ability to satisfy our obligations, including our debt, depends on our future operating performance and on economic, financial, competitive, andother factors, many of which are beyond our control. Our business may not generate sufficient cash flow, and future financings may not be available toprovide sufficient net proceeds, to meet these obligations or to successfully execute our business strategy.Despite our leverage, we may still be able to incur more debt. This could further exacerbate the risks that we and our subsidiaries face.We and our subsidiaries may incur additional indebtedness, including additional secured indebtedness, in the future. The terms of our debt facilitiesrestrict, but do not completely prohibit, us from doing so. If new debt or other liabilities are added to our current debt levels, the related risks that we and oursubsidiaries now face could intensify.We may be subject to interest rate risk, and increasing interest rates may increase our interest expense.Borrowings under the credit agreement bear, and our future indebtedness may bear, interest at variable rates and expose us to interest rate risk. If interestrates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and ournet income and cash available for servicing our indebtedness would decrease.The agreements governing our debt obligations impose restrictions on our business and could adversely affect our ability to undertake certain corporateactions.The agreements governing our various debt obligations include covenants imposing significant restrictions on our business. These restrictions mayaffect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. These covenants placerestrictions on our ability to, among other things:•incur additional debt;•create liens;•make certain investments;•consummate acquisitions;•enter into certain transactions with affiliates;•declare or pay dividends, redeem stock or make other distributions to stockholders; and•consolidate, merge or transfer or sell all or substantially all of our assets.Our ability to comply with these agreements may be affected by events beyond our control, including prevailing economic, financial, and industryconditions. These covenants could have an adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition, orother corporate opportunities. 13Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 addition, the credit agreement requires us to comply with specified financial ratios, including ratios regarding secured leverage. Our ability to complywith these ratios may be affected by events beyond our control. These restrictions limit our ability to plan for or react to market conditions, meet capitalneeds, or otherwise constrain our activities or business plans. They also may adversely affect our ability to finance our operations, enter into acquisitions, orengage in other business activities that would be in our interest.A breach of any of the covenants contained in our credit agreement or any future agreements related to indebtedness or our inability to comply with thefinancial ratios could result in an event of default, which would allow the lenders to declare all borrowings outstanding to be due and payable or to terminatethe ability to borrow under the Revolver. If the amounts outstanding under the credit agreement or other future indebtedness were to be accelerated, wecannot assure that our assets would be sufficient to repay in full the money owed. In such a situation, we could be forced to file for bankruptcy or seek otherprotections from creditors.To service our indebtedness, we will require a significant amount of cash. However, our ability to generate cash depends on many factors, many of whichare beyond our control.Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cashin the future, which, in turn, is subject to general economic, financial, competitive, regulatory, and other factors, many of which are beyond our control.Our business may not generate sufficient cash flow from operations and we may not have available to us future borrowings in an amount sufficient toenable us to pay our indebtedness or to fund our other liquidity needs. In these circumstances, we may need to refinance all or a portion of our indebtednesson or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. Without this financing, we couldbe forced to sell assets or secure additional financing to make up for any shortfall in our payment obligations under unfavorable circumstances. However, wemay not be able to secure additional financing on terms favorable to us or at all and, in addition, the terms of the indentures governing our notes limit ourability to sell assets and also restrict the use of proceeds from such a sale. We may not be able to sell assets quickly enough or for sufficient amounts to enableus to meet our obligations, including our obligations under our notes.If we are unable to meet our debt service obligations, we would be in default under the terms of our credit agreement, permitting acceleration of theamounts due under the credit agreement and eliminating our ability to draw on the Revolver. If the amounts outstanding under the credit facilities or futureindebtedness were to be accelerated, we could be forced to file for bankruptcy.Risks Related to Our Common Stock and the Securities MarketsBecause we do not currently intend to pay dividends on our common stock, stockholders will benefit from an investment in our common stock only if itappreciates 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 byour Board of Directors and will depend upon results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law, andother factors our Board of Directors deems relevant. Accordingly, realization of a gain on stockholders’ investments will depend on the appreciation of theprice of our common stock. There is no guarantee that our common stock will appreciate in value or even maintain the price at which stockholders purchasedtheir shares.The concentration of our capital stock ownership may limit a stockholder’s ability to influence corporate matters, and could discourage a takeoverthat 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., Mr. Thompson’s privateequity investment and advisory firm, owned 6,807,575 shares of our common stock at February 27, 2018. Based on the number of shares of our commonstock outstanding on February 27, 2018, Mr. Thompson and Universal Telecommunications, Inc. beneficially own approximately 15% of our common stock.In addition, as of February 27, 2018, our executive officers, directors, and affiliated entities, excluding Mr. Thompson and Universal Telecommunications,Inc., together beneficially owned common stock representing approximately 8% of our common stock. As a result, these stockholders have the ability to exertsignificant control over matters that require approval by our stockholders, including the election of directors and approval of significant corporatetransactions. The interests of these stockholders might conflict with your interests as a holder of our securities, and it may cause us to pursue transactions that,in their judgment, could enhance their equity investments, even though such transactions may involve significant risks to you as a security holder. The largeconcentration of ownership in a small group of stockholders might also have the effect of delaying or preventing a change of control that other stockholdersmay view as beneficial.14Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.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. While we believe we havesufficient liquidity as of December 31, 2017 to fund our working capital and other operating requirements, we may raise additional funds for acquisitions orto expand our operations. If we obtain additional funding in the future, we may seek debt financing or obtain additional equity capital. Additional capitalmay 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 weraise additional funds through issuances of equity or convertible debt securities, our existing stockholders could suffer dilution, and any new equitysecurities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.Disruptions in the financial markets could affect our ability to obtain debt or equity financing or to refinance our existing indebtedness on reasonableterms or at all.Disruptions in the financial markets could impact our ability to obtain debt or equity financing, or lines of credit, in the future as well as impact ourability to refinance our existing indebtedness on reasonable terms or at all, which could affect our strategic operations and our financial performance andforce modifications to our operations.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESAs of December 31, 2017, we lease approximately 275,000 square feet of space for offices, data centers, colocation facilities, and PoPs throughout NorthAmerica, Europe, Asia, the Middle East, and South America. Additionally, as of December 31, 2017, we owned eight cable landing stations in North Americaand Europe comprising approximately 88,000 square feet.Our corporate headquarters facility consists of approximately 19,000 square feet, located in McLean, Virginia.We believe our properties, taken as a whole, are in good operating condition and are adequate for our business needs.ITEM 3. LEGAL PROCEEDINGS From time to time, we are party to legal proceedings arising in the normal course of business. We do not believe that we are party to any current orpending legal action that could reasonably be expected to have a material adverse effect on our financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURESNot applicable.15Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 OF EQUITYSECURITIESMarket for Equity Securities Our common stock trades on the NYSE under the symbol "GTT" and has traded on the NYSE since November 28, 2014. Prior to November 28, 2014, ourcommon stock traded on the NYSE MKT.As of February 27, 2018, there were 137 holders of record of our common stock, par value $.0001 per share. The following table sets forth, for thecalendar quarters indicated, the quarterly high and low sales information of our common stock as reported on the NYSE. Common Stock High Low2016 First Quarter$18.70 $12.31Second Quarter$18.88 $14.96Third Quarter$24.20 $17.55Fourth Quarter$29.75 $20.802017 First Quarter$29.70 $22.95Second Quarter$34.20 $23.10Third Quarter$32.60 $28.30Fourth Quarter$47.75 $31.51 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,restrictive covenants existing from the credit agreement that we have entered into preclude us from paying dividends until certain conditions are met.Performance GraphThe following performance graph compares the relative changes in the cumulative total return of our common stock for the period from December 31,2012 to December 31, 2017, against the cumulative total return for the same period of (1) The Standard & Poor's 500 (S&P 500) Index, (2) The Standard &Poor's (S&P) Telecom Select Industry Index, and (3) NASDAQ Telecommunication Index. The comparison below assumes $100 was invested on December31, 2012, in our common stock, the S&P 500 Index, the S&P Telecom Select Industry Index, and NASDAQ Telecommunication Index. 16Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. * $100 invested on December 31, 2012 in stock or index. Fiscal year ending December 31.Copyright © 2018, S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17GTT Communications, Inc.$100.00 $260.71 $472.50 $609.29 $1,026.79 $1,676.79S&P 500 ® Index100.00 129.60 144.36 143.31 156.98 187.47S&P Telecom Select Industry Index100.00 122.04 126.25 122.42 151.73 149.36NASDAQ Telecommunications Index100.00 124.02 135.07 124.94 143.52 138.31The stock price performance included in this graph is not necessarily indicative of future stock price performance.Equity Compensation Plan InformationThe information required by this Item 5 regarding Securities Authorized for Issuance Under Equity Compensation Plans is incorporated in this report byreference to the information set forth under the caption "Equity Plan Information" in our 2018 Proxy Statement.ITEM 6. SELECTED FINANCIAL DATAThe annual financial information set forth below has been summarized from our audited consolidated financial statements for GTT Communications, Inc.and its wholly-owned subsidiaries, for the periods and as of the dates indicated. The information should be read in connection with, and is qualified in itsentirety by reference to, Item 7. "Management's Discussion and Analysis of Financial17Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Condition and Results of Operations", the consolidated financial statements and notes included elsewhere in this report and in our SEC filings. Thesehistorical results are not necessarily indicative of the results to be expected in the future. Year Ended December 31, 2017 2016 2015 2014 2013 (Amounts in millions, except for share and per share data)Consolidated Statement of Operations Data: Telecommunications services$827.9 $527.3 $372.5 $209.0 $158.9Operating expenses: Cost of telecommunications services432.1 279.6 207.7 129.7 104.3Selling, general and administrative expenses215.4 143.2 101.7 45.7 31.7Severance, restructuring and other exit costs22.4 0.9 12.7 9.4 7.7Depreciation and amortization132.6 62.8 46.7 24.9 17.2Total operating expenses802.5 486.5 368.8 209.7 160.9Operating income (loss)25.4 40.8 3.7 (0.7) (2.0)Interest expense, net(71.2) (29.4) (13.9) (8.5) (8.4)Loss on debt extinguishment(8.6) (1.6) (3.4) (3.1) (0.7)Other income (expense), net0.2 (0.6) (1.2) (8.6) (11.7)(Loss) income before income taxes(54.2) 9.2 (14.8) (20.9) (22.8)Provision for (benefit from) income taxes17.3 3.9 (34.1) 2.1 (2.0)Net (loss) income$(71.5) $5.3 $19.3 $(23.0) $(20.8)Net (loss) earnings per common share - basic$(1.71) $0.14 $0.55 $(0.85) $(0.95)Net (loss) earnings per common share - diluted$(1.71) $0.14 $0.54 $(0.85) $(0.95)Weighted average common shares - basic41,912,952 37,055,663 34,973,284 27,011,381 21,985,241Weighted average common shares - diluted41,912,952 37,568,915 35,801,395 27,011,381 21,985,241 Consolidated Balance Sheet Data: Cash and cash equivalents$101.2 $29.7 $14.6 $49.3 $5.8Restricted cash and cash equivalents— 304.3 — — —Property and equipment, net499.3 43.4 38.8 25.2 20.5Total assets1,798.2 953.3 596.5 266.5 171.8Long-term debt, including current portion1,243.5 729.5 386.2 120.8 92.5Total stockholders’ equity231.4 127.8 110.5 77.6 9.518Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains certain forward-looking statementswithin the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Historical results may not indicate future performance. Ourforward-looking statements reflect our current views about future events, are based on assumptions, and are subject to known and unknown risks anduncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences betweenactual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in "Risk Factors" in Part I, Item 1A, ofthis Annual Report. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result fromany facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results,events, levels of activity, performance, or achievements.This MD&A is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financialcondition. As used in this MD&A, the words, "we", "our", and "us" refer to GTT Communications, Inc. and its consolidated subsidiaries. This MD&A shouldbe read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report.Company OverviewGTT Communications, Inc. provides cloud networking services to multinational clients. We operate a Tier 1 global IP backbone, ranked among the topfive in the industry, and own the lowest latency, transatlantic fiber network. Our comprehensive portfolio of services includes: private networking; internet;optical transport; SD-WAN; managed services; voice and unified communications; video transport; and access services.Our global network connects people across organizations and around the world. We provide cloud networking services to leading multinationalenterprise, carrier, and government clients in more than 100 countries. We differentiate ourselves from our competition by delivering service to our clientswith simplicity, speed, and agility.We deliver the following eight primary service offerings to our customers:Private NetworkingWe provide Layer 2 (Ethernet) and Layer 3 (IP VPN) private networking solutions to meet the growing needs of multinational enterprises, carriers, serviceproviders, and content delivery networks regardless of location. We design and implement custom private, public, and hybrid cloud network solutions for ourcustomers, offering bandwidth speeds from 10 Mbps to 100 Gbps per port with burstable and aggregate bandwidth capabilities. All services are available on aprotected basis with the ability to specify pre-configured alternate routes to minimize the impact of any network disruption.Through GTT's private networking services, clients can securely connect to cloud service providers in data centers and exchanges around the world. OurCloud Connect feature provides private, secure, pre-established connectivity to leading cloud service providers. Using GTT's global network, clients canconnect any office location in world to any application in the cloud. InternetWe offer clients scalable, high-bandwidth global internet connectivity and IP transit with guaranteed availability and packet delivery. Our Internetservices offer flexible connectivity with multiple port interfaces including Fast Ethernet, Gigabit Ethernet, 10 Gigabit Ethernet, and 100 Gigabit Ethernet. Wealso offer a wide range of broadband and wireless access services. We support a dual stack of IPv4 and IPv6 protocols, enabling the delivery of seamless IPv6services alongside existing IPv4 services.Optical TransportWe provide a full suite of optical transport services over a core fiber network, enabling cloud-based applications and the transport of high volume databetween data centers, large enterprise office locations, and media hubs. Our native wavelength product is designed to deliver scalable high performanceoptical connectivity over a state-of-the-art dense wave division multiplexing platform. Our service is differentiated based on unique network diversity andlow latency connections between major financial and commercial centers in North America and Europe. Our clients for these services include internet-basedtechnology companies and OTTs, large banks, and other service providers requiring network infrastructure.19Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Additionally, we provide ultra-low latency services between the major financial centers and exchanges, tailored to meet the requirements of proprietarytrading firms for the fastest connections. Our service provides the industry leading lowest latency performance of the Express transatlantic subsea cableconnecting North America and Europe, which is wholly owned and operated by GTT.Software Defined Wide Area NetworkingSD-WAN is a new enterprise networking technology in the early stages of market adoption with high growth potential. SD-WAN provides enterpriseswith improved agility to manage changing network traffic patterns resulting from cloud applications. The software-based network intelligence in SD-WANenables more efficient load-balancing of traffic across a mix of access types, accelerates the speed of deployments, and improves application visibility.•GTT’s SD-WAN delivers cost-effective, managed global connectivity, enhanced application performance and control, and secure access to cloud-based services and applications that enterprises require. Our service leverages GTT’s global, Tier 1 IP backbone, securely connecting client locationsto any destination on the internet or to any cloud service provider. We offer the widest range of access options with bundled network security,making it simple and cost-effective to integrate new locations and add network bandwidth as needed.Managed ServicesWe offer fully managed network services, including managed equipment, and security, enabling customers to focus on their core business. These end-to-end services cover the design, procurement, implementation, monitoring, and maintenance of a customer’s network.•Managed Equipment. Managed Equipment provides a turnkey solution for the end-to-end management of customer premise equipment, from devicethrough the core network. This includes the design, procurement, implementation, monitoring, and maintenance of equipment including routers,switches, servers, and Wi-Fi access points.•Security. Our cloud-based and premise-based security services provide a comprehensive, multi-layered security solution that protects the networkwhile meeting the most stringent security standards. Our Unified Threat Management services include advanced firewall, intrusion detection, anti-virus, web filtering, and anti-spam. Voice and Unified CommunicationOur SIP Trunking service integrates voice, video, and chat onto a single IP connection, driving efficiency and productivity organization-wide. OurEnterprise PBX service allows clients to eliminate traditional voice infrastructure with communication services delivered through the cloud. This unifiedcommunication service offering includes fully hosted and hybrid models for maximum flexibility.Video TransportWe provide a suite of fully-managed video transport services. Our services are designed to support our clients' requirements for stringent broadcastquality, providing 100% quality of service for transmission of live events, sports entertainment, and news. Our service options include Dedicated, OccasionalUse, and IP Video. We manage individual services, multicast distribution, and entire client networks, supporting all forms of signal management required formedia workflow. GTT's video transport services are based on the core principle of "any signal, any format, anywhere." Our clients include many of the world'stop broadcasters and cable programming providers.Access ServicesWithin North America, GTT operates an access infrastructure composed of approximately 1,750 central offices, which includes 835 COs that are Ethernetover Copper enabled. GTT Access Services include EoC and DSL services, which are designed to provide reliable and affordable network access utilizingtraditional copper wire infrastructure. EoC is available in both asymmetric and symmetric configurations. Our symmetric service offers guaranteed bandwidth,with available speeds from 2Mbps to 45Mbps.Customer and Network Contracts20Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Our customer contracts generally range from three to five years or more for the initial term. Following the initial term, these agreements typically providefor automatic renewal for specified periods ranging from one month to one year. Our prices are fixed for the duration of the contract, and we typically billmonthly in advance for such services. If a customer terminates its agreement, the terms of our customer contracts typically require full recovery of anyamounts due for the remainder of the term or, at a minimum, our liability to any underlying suppliers.Our revenue is composed of three primary categories: recurring revenue, non-recurring revenue, and usage revenue. Recurring revenue relates tocontracted ongoing service that is generally fixed in price and paid by the customer on a monthly basis for the contracted term. For the year endedDecember 31, 2017, recurring revenue was approximately 94% of our total revenue. Non-recurring revenue primarily includes installation and equipmentcharges to customers, and one-time termination charges for customers who cancel their services prior to the contract termination date. Usage revenuerepresents variable revenue based on whether a customer exceeds its committed usage threshold as specified in the contract.Our network supplier contracts do not have any market related net settlement provisions. We have not entered into, and do not plan 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 us in the normal course of business.Other than cost of telecommunication services provided, our most significant operating expenses are employment costs. As of December 31, 2017, wehad 1,257 full-time equivalent employees. For the year ended December 31, 2017, the total employee cash compensation and benefits representedapproximately 12% of total revenue.Recent Developments Affecting Our ResultsBusiness AcquisitionsSince our formation, we have consummated a number of transactions accounted for as business combinations as part of our strategy of expandingthrough acquisitions. These acquisitions, which are in addition to our periodic purchases of customer contracts, have allowed us to increase the scale at whichwe operate, which in turn affords us the ability to increase our operating leverage, extend our network, and broaden our customer base. The accompanyingconsolidated financial statements include the operations of the acquired entities from their respective acquisition dates.Custom ConnectIn December 2017, we acquired Custom Connect International B.V. ("Custom Connect"). We paid $28.9 million in cash consideration, of which $0.6million was net cash acquired, and 49,941 unregistered shares of our common stock valued at $2.2 million at closing. $3.2 million of the initial cashconsideration is held in escrow for one year, subject to reduction for any indemnification claims made by us prior to such date. The results of CustomConnect have been included from December 31, 2017. The acquisition was considered a stock purchase for tax purposes.TransbeamIn October 2017, we acquired Transbeam, Inc. ("Transbeam"). We paid $26.4 million, of which $0.8 million was net cash acquired, and $2.0 million wasdeferred as holdback consideration for a 12-month period, subject to reduction for any indemnification claims made by us prior to such date. The results ofTransbeam have been included from October 1, 2017. The acquisition was considered a stock purchase for tax purposes.Global CapacityIn September 2017, we acquired Global Capacity for $104.0 million in cash consideration, of which $4.0 million was net cash acquired, and 1,850,000unregistered shares of our common stock valued at $53.6 million at closing. $10.0 million of the initial cash consideration is held in escrow for one year,subject to reduction for any indemnification claims made by us prior to such date. The results of Global Capacity have been included from September 15,2017. The acquisition was considered an asset purchase for tax purposes.PerseusIn June 2017, we acquired Perseus Telecom ("Perseus"). We paid $37.5 million in cash consideration, of which $0.1 million was net cash acquired, andassumed $1.9 million in capital leases. $4.0 million of the initial cash consideration is held in escrow21Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.for one year, subject to reduction for any indemnification claims made by us prior to such date. The results of Perseus have been included from June 1, 2017.The acquisition was considered a stock purchase for tax purposes.HiberniaIn January 2017, we acquired Hibernia Networks ("Hibernia") for $529.6 million in cash consideration, of which $14.6 million was net cash acquired, and3,329,872 unregistered shares of our common stock, initially valued at $75.0 million on the date of announcement, and ultimately valued at $86.1 million atclosing. $15.0 million of the initial cash consideration is held in escrow for one year, subject to reduction for any indemnification claims made by us prior tosuch date. The results of Hibernia have been included from January 1, 2017. The acquisition was considered an asset purchase for tax purposes.TelnesIn February 2016, we completed the acquisition of Telnes Broadband ("Telnes"). We paid $15.5 million in cash and issued 178,202 unregistered sharesof our common stock valued at $2.0 million. $1.8 million of the cash consideration was deferred for one year subject to reduction for any indemnificationclaims made by us prior to such date. The acquisition was considered an asset purchase for tax purposes.One SourceIn October 2015, we completed the acquisition of One Source Networks Inc. ("One Source"). We paid $169.3 million in cash and issued 185,946unregistered shares of our common stock valued at $2.3 million. We also issued 289,055 unregistered shares of our common stock to certain One Sourceemployees as compensation for continuous employment valued at $3.6 million. The net working capital was finalized in 2016 for additional consideration of$0.4 million. The acquisition was considered a stock purchase for tax purposes.MegaPathIn April 2015, we acquired MegaPath Corporation ("MegaPath"). We paid $141.4 million in cash consideration, assumed approximately $3.4 million incapital leases, and issued 610,843 unregistered shares of our common stock valued at $7.5 million. In April 2016, we also settled a dispute related to closingdate working capital with MegaPath in 2016, resulting in an increase to total consideration and goodwill of $4.1 million. $10.0 million of the initial cashconsideration was deferred for one year, subject to reduction for any indemnification claims made by us prior to such date. The acquisition was considered anasset purchase for tax purposes.The acquisition of Custom Connect, Transbeam, Global Capacity, Perseus, and Hibernia are collectively referred to as "2017 Acquisitions," theacquisition of Telnes is referred to as the "2016 Acquisition," and the acquisition of One Source and MegaPath are collectively referred to as "2015Acquisitions" for purposes of explaining our results of operations. Asset PurchasesPeriodically we acquire customer contracts that we account for as an asset purchase and record a corresponding intangible asset that is amortized over itsassumed useful life.During 2017, we acquired customer contracts for an aggregate purchase price of $37.4 million, of which $14.9 million was paid in 2017 on the respectiveclosing dates. Of the remaining $22.5 million, $4.5 million was subsequently paid during the year ended December 31, 2017. The remaining $18.0 million isexpected to be paid in 2018, subject to any indemnification claims made through the final payment date.During 2016, we acquired customer contracts for an aggregate purchase price of $41.3 million, of which $20.0 million was paid in 2016 on the respectiveclosing dates. The remaining $21.3 million was paid during the year ended December 31, 2017.We did not have any asset purchases in 2015.IndebtednessThe following summarizes our long-term debt at December 31, 2017 and 2016 (amounts in millions):22Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. December 31, 2017 December 31, 2016 Term loan$693.0 $425.87.875% Senior unsecured notes575.0 300.0Revolving line of credit— 20.0Total debt obligations1,268.0 745.8Unamortized debt issuance costs(33.8) (9.3)Unamortized original issuance premium (discount), net9.3 (7.0)Carrying value of debt1,243.5 729.5Less current portion(7.0) (4.3)Long-term debt less current portion$1,236.5 $725.22017 Credit AgreementIn January 2017, we entered into a credit agreement (the "2017 Credit Agreement") that provides a $700.0 million term loan facility and a $75.0 millionrevolving line of credit facility (which includes a $25.0 million letter of credit facility). In addition, we may request incremental term loan and/or incrementalrevolving loan commitments in an aggregate amount not to exceed the sum of $150.0 million and an unlimited amount that is subject to pro formacompliance with certain net secured leverage ratio tests provided, however, that incremental revolving loan commitments may not exceed $25.0 million.The maturity date of the term loan facility is January 2024 and the maturity date of the revolving loan facility is January 2022. The principal amount ofthe term loan facility is payable in equal quarterly installments of $1.8 million, commencing on March 31, 2017 and continuing thereafter until the maturitydate, when the remaining balance of outstanding principal amount is payable in full. In addition to scheduled mandatory repayments, we are also required torepay an amount of up to 50% of Excess Cash Flow (as defined in the 2017 Credit Agreement). No such excess cash payments were made during the yearended December 31, 2017.We may prepay loans under the 2017 Credit Agreement at any time, subject to certain notice requirements and LIBOR breakage costs.At our election, the loans under the 2017 Credit Agreement may be made as either Base Rate Loans or Eurodollar Loans. The Eurodollar Loans aresubject to a floor of 1.00%.In July 2017, we entered into Amendment No. 1 (the "Repricing Amendment") to the 2017 Credit Agreement. The Repricing Amendment, among otherthings, reduced the applicable margin on Tranche B Term Loans from 3.00% to 2.25% for Base Rate Loans and from 4.00% to 3.25% for Eurodollar Loans,and reduced the applicable margin on Revolving Loans from 2.50% to 2.00% for Base Rate Loans and from 3.50% to 3.00% for Eurodollar Loans. Theamendment also established a soft call protection of 1.0% through January 10, 2018 for certain prepayments, refinancings, and amendments.In October 2017, we entered into an Incremental Revolving Credit Assumption Agreement to increase our revolving line of credit facility from $75.0million to $100.0 million.The 2017 Credit Agreement does not contain a financial covenant for the term loan facility, but includes a maximum consolidated net secured leverageratio applicable to the revolving credit facility in the event that utilization exceeds 30% of the revolving loan facility commitment.Previous Credit AgreementIn October 2015, we entered into a credit agreement (the "October 2015 Credit Agreement"), which provided for a $400.0 million term loan facility and a$50.0 million revolving line of credit facility (which included a $15.0 million letter of credit facility and a $10.0 million swingline facility). In May 2016, weentered into an incremental term loan agreement that increased outstanding term loans by $30.0 million. As of December 31, 2016, we had drawn $20.0million under the revolving line of credit and had $29.5 million of available borrowing capacity. Amounts outstanding under the October 2015 CreditAgreement were repaid in full in connection with the 2017 Credit Agreement. The previous term loan was issued at an OID of $8.0 million.7.875% Senior Unsecured Notes23Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 December 2016, we completed a private offering of $300.0 million aggregate principal amount of 7.875% senior unsecured notes due in 2024 (the"Original Notes"). The proceeds of the Original Notes were deposited into escrow, where the funds remained until the closing of the acquisition of Hibernia inJanuary 2017. We recognized the proceeds from the private offering as restricted cash and cash equivalents in our consolidated financial statements as ofDecember 31, 2016, which were subsequently released with the closing of Hibernia. In connection with the offering, we incurred debt issuance costs of $9.7million, of which $0.5 million was incurred in 2016 and the remainder was incurred in 2017.In June 2017, we completed a private offering of $150.0 million aggregate principal amount of 7.875% senior unsecured notes due in 2024 (the "June2017 Notes"). The June 2017 Notes will be treated as a single series of debt securities with the Company's Original Notes (together with the Original Notes,the "Existing Notes"). The June 2017 Notes have identical terms as the Original Notes, other than the issue date and offering price. The June 2017 Notes wereissued at a premium of $9.0 million. In connection with the offering, we incurred debt issuance costs of $2.9 million.In October 2017, we completed a private offering of $125.0 million aggregate principal amount of 7.875% senior unsecured notes due in 2024 (the"October 2017 Notes"). The October 2017 Notes will be treated as a single series of debt securities with the Existing Notes. The October 2017 Notes haveidentical terms as the Existing Notes, other than the issue date and offering price. The October 2017 Notes were issued at a premium of $7.5 million. Inconnection with the offering, we incurred debt issuance costs of $3.2 million.Subsequent EventsOn February 23, 2018, we entered into an Agreement for the Sale and Purchase of Interoute Communications Holdings S.A., a Luxembourg publiclimited liability company. The purchase price of approximately €1.9 billion will be paid in cash at closing. We received committed equity financing for thetransaction of $250 million from two institutional investors and committed debt financing from a group of financial institutions for the remainder. We expectthe transaction to close in three to six months, subject to customary regulatory approvals.Results of Operations of the Company Year Ended December 31, 2017 Compared to Years Ended December 31, 2016 and 2015 Overview. The information presented in the tables below is comprised of the consolidated financial information for the years ended December 31, 2017,2016, and 2015 (amounts in millions):24Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Year Ended December 31, Year-over-Year 2017 2016 2015 2017 to 2016 2016 to 2015Revenue: Telecommunications services$827.9 $527.3 $372.5 57.0 % 41.6 % Operating expenses: Cost of telecommunications services432.1 279.6 207.7 54.5 % 34.7 %Selling, general and administrative expenses215.4 143.2 101.7 50.4 % 40.8 %Severance, restructuring and other exit costs22.4 0.9 12.7 2,474.7 % (93.1)%Depreciation and amortization132.6 62.8 46.7 111.2 % 34.4 % Total operating expenses802.5 486.5 368.8 65.0 % 31.9 % Operating income25.4 40.8 3.7 (37.8)% 1,018.5 % Other expense: Interest expense, net(71.2) (29.4) (13.9) 141.9 % 111.1 %Loss on debt extinguishment(8.6) (1.6) (3.4) 427.0 % (52.3)%Other income (expense), net0.2 (0.6) (1.2) (134.7)% (50.6)% Total other expense(79.6) (31.6) (18.5) 151.6 % 70.7 % (Loss) income before income taxes(54.2) 9.2 (14.8) (689.9)% (162.0)% Provision for (benefit from) income taxes17.3 3.9 (34.1) * * Net (loss) income$(71.5) $5.3 $19.3 (1,459.3)% (72.8)% * Not meaningfulYear Ended December 31, 2017 Compared to Year Ended December 31, 2016RevenueOur revenue increased by $300.6 million, or 57.0%, from $527.3 million for the year ended December 31, 2016 to $827.9 million for the year endedDecember 31, 2017. The increase was primarily due to 2017 Acquisitions and the purchase of certain customer contracts.On a constant currency basis using the average exchange rates in effect during the year ended December 31, 2016, revenue would have been higher by$3.5 million for the year ended December 31, 2017. Cost of Telecommunications Services ProvidedCost of telecommunications services provided increased by $152.5 million, or 54.5%, from $279.6 million for the year ended December 31, 2016 to$432.1 million for the year ended December 31, 2017. Consistent with our increase in revenue, the increase in cost of telecommunications services providedwas principally driven by 2017 Acquisitions and the purchase of certain customer contracts.On a constant currency basis using the average exchange rates in effect during the year ended December 31, 2016, cost of telecommunications servicesprovided would have been higher by $1.0 million for the year ended December 31, 2017.Operating ExpensesSelling, General and Administrative Expenses. Selling, general and administrative expenses increased by $72.2 million, or 50.4%, from $143.2 millionfor the year ended December 31, 2016 to $215.4 million for the year ended December 31, 2017. The25Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.following table summarizes the major categories of selling, general and administrative expenses for the years ended December 31, 2017 and 2016 (amountsin millions): Year Ended December 31, 2017 2016 $ Variance % ChangeEmployee related compensation (excluding share-basedcompensation)$97.3 $83.1 $14.2 17.1%Share-based compensation22.2 15.8 6.4 40.7%Transaction and integration expense19.1 4.8 14.3 299.6%Other SG&A(1)76.8 39.5 37.3 94.2%Total$215.4 $143.2 $72.2 50.4%(1) Includes bad debt expense, professional fees, marketing costs, facilities, and other general support costs.Employee related compensation increased primarily due to the Hibernia acquisition. Share-based compensation expense increases were driven by therecognition of share-based compensation for performance awards and an increase in the aggregate value of employee equity awards. Transaction andintegration costs increases were driven by 2017 Acquisitions. Other SG&A expense increases were principally driven by the acquisition of Hibernia.On a constant currency basis using the average exchange rates in effect during the year ended December 31, 2016, selling, general and administrativeexpenses would have been higher by $0.3 million for the year ended December 31, 2017.Severance, Restructuring and Other Exit Costs. For the year ended December 31, 2017, we incurred restructuring charges of $22.4 million relating to2017 Acquisitions. We incurred restructuring charges of $0.9 million for the year ended December 31, 2016 related to the acquisition of Telnes.Depreciation and Amortization. Amortization of intangible assets increased $28.3 million or 69.7%, from $40.7 million for the year ended December 31,2016 to $69.0 million for the year ended December 31, 2017, primarily due to the additional definite-lived intangible assets recorded in the Hiberniaacquisition. Depreciation expense increased $41.5 million, or 187.3% from $22.1 million to $63.6 million for the year ended December 31, 2017, primarilydue to the assets acquired from the Hibernia acquisition.Other Expense. Other expense increased by $48.0 million, or 151.6% from $31.6 million for the year ended December 31, 2016 to $79.6 million for theyear ended December 31, 2017. This is primarily attributed to higher interest expense related to increased debt levels to fund the 2017 Acquisitions as well asa loss on debt extinguishment of $8.6 million incurred in connection with the 2017 Credit Agreement and Repricing Amendment.Provision for income taxes. Our provision for income taxes for the year ended December 31, 2017 was $17.3 million. This included $11.8 million ofprovisional tax expense related to the reduction of the U.S. corporate income tax rate from 35% to 21% under the Tax Act, $5.5 million of tax expense for theone-time transition on deemed repatriation under the Tax Act, and $29.0 million of tax expense related to the recording of a valuation allowance against netU.S. deferred tax assets, partially offset by $19.0 million of tax benefit for the current year tax loss at the statutory rate and $9.3 million of tax benefit relatedto foreign tax rate differential. Year Ended December 31, 2016 Compared to Year Ended December 31, 2015RevenueOur revenue increased by $154.8 million, or 41.6%, from $372.5 million for the year ended December 31, 2015 to $527.3 million for the year endedDecember 31, 2016. The increase was primarily due to the 2016 Acquisition and having the full year impact of 2015 Acquisitions, as well as rep-drivengrowth and the purchase of certain customer contracts.On a constant currency basis using the average exchange rates in effect during the year ended December 31, 2015, revenue would have been higher by$2.8 million for the year ended December 31, 2016. Cost of Telecommunications Services ProvidedCost of telecommunications services provided increased by $71.9 million, or 34.7%, from $207.7 million for the year ended December 31, 2015 to$279.6 million for the year ended December 31, 2016. Consistent with our increase in revenue, the increase26Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 cost of telecommunications services provided was principally driven by the 2016 Acquisition and having the full year impact of 2015 Acquisitions, aswell as rep-driven growth and the purchase of certain customer contracts.On a constant currency basis using the average exchange rates in effect during the year ended December 31, 2015, cost of telecommunications servicesprovided would have been higher by $1.0 million for the year ended December 31, 2016. Operating ExpensesSelling, General and Administrative Expenses. Selling, general and administrative expenses increased by $41.5 million, or 40.8%, from $101.7 millionfor the year ended December 31, 2015 to $143.2 million for the year ended December 31, 2016. The following table summarizes the major category ofselling, general and administrative expenses for the year ended December 31, 2016 and 2015 (amounts in millions): Year Ended December 31, 2016 2015 $ Variance % ChangeEmployee related compensation (excluding share-basedcompensation)$83.1 $59.7 $23.4 39.2 %Share-based compensation15.8 7.9 7.9 100.3 %Transaction and integration expense4.8 6.1 (1.3) (21.4)%Other SG&A(1)39.5 28.0 11.5 41.0 %Total$143.2 $101.7 $41.5 40.8 %(1) Includes bad debt expense, professional fees, marketing costs, facilities, and other general support costs.Employee related compensation increased primarily due to the 2016 Acquisition and having the full year impact of 2015 Acquisitions. Share-basedcompensation expense increases were driven by (i) the recognition of share-based compensation for performance awards where the performance criteria weremet, (ii) certain shares issued to former employees of One Source, which were accounted for as compensation, and (iii) an overall increase in the quantity ofemployee equity awards. Transaction and integration expense decreases were driven by higher transaction costs associated with the 2015 Acquisitions in2015. Other SG&A expense increased primarily as a result of the acquisitions.Severance, Restructuring and Other Exit Costs. Restructuring costs decreased by $11.8 million, or 93.1% from $12.7 million for the year endedDecember 31, 2015 to $0.9 million for year ended December 31, 2016. The decrease was due to the fact that we closed two large acquisitions in 2015 (OneSource and MegaPath), compared to one small acquisition in 2016 (Telnes).Depreciation and Amortization. Amortization of intangible assets increased $14.7 million, or 56.5%, from $26.0 million for the year ended December 31,2015 to $40.7 million for the year ended December 31, 2016, due to the addition of definite-lived intangible assets from the Telnes and having the full yearimpact of the amortization of definite-lived intangible assets from the One Source and MegaPath acquisitions in 2015. Similarly, depreciation expenseincreased $1.4 million, or 6.8%, from $20.7 million for the year ended December 31, 2015 to $22.1 million for the year ended December 31, 2016, primarilydue to having the full year impact of depreciation from the addition of property and equipment from the MegaPath acquisition in 2015.Other Expense. Other expense increased by $13.1 million, or 70.7%, from $18.5 million for the year ended December 31, 2015 to $31.6 million for theyear ended December 31, 2016. This is primarily attributable to higher interest expense related to increased debt levels to support acquisition activities. On a constant currency basis using the average exchange rates in effect during the year ended December 31, 2015, selling, general and administrativeexpenses would have been higher by $0.6 million for the year ended December 31, 2016.Liquidity and Capital ResourcesOur primary sources of liquidity have been cash provided by operations, equity offerings, and debt financing. Our principal uses of cash have been foracquisitions, working capital, capital expenditures, and debt service requirements. We anticipate that our principal uses of cash in the future will be foracquisitions, capital expenditures, working capital, and debt service.Management monitors cash flow and liquidity requirements on a regular basis, including an analysis of the anticipated working capital requirements forthe next 12 months. This analysis assumes our ability to manage expenses, capital expenditures, indebtedness, and the anticipated growth of revenue. If ouroperating performance differs significantly from our forecasts, we may27Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.be required to reduce our operating expenses and curtail capital spending, and we may not remain in compliance with our debt covenants. In addition, if weare unable to fully fund our cash requirements through operations and current cash on hand, we may need to obtain additional financing through acombination of equity and debt financings and/or renegotiation of terms of our existing debt. If any such activities become necessary, there can be noassurance that we would be successful in obtaining additional financing or modifying our existing debt terms.Our capital expenditures increased by $17.8 million, or 73.6%, from $24.2 million (4.6% of revenue) for the year ended December 31, 2016 to $42.0million (5.1% of revenue) for the year ended December 31, 2017. The increase in capital expenditures was due to our growth and the acquisition of Hibernia.We anticipate that we will incur capital expenditures in the range of 5% to 6% of revenue for 2018. We continue to expect that our capital expenditures willbe primarily success-based, i.e., in support of specific revenue opportunities.We believe that our cash flows from operating activities, in addition to cash on-hand, will be sufficient to fund our operating activities and capitalexpenditures for the foreseeable future, and in any event for at least the next 12 to 18 months. However, no assurance can be given that this will be the case.CashflowsThe following table summarizes the components of our cash flows for the years ended December 31, 2017, 2016, and 2015.Consolidated Statements of Cash Flows DataYear Ended December 31,(amounts in millions)2017 2016 2015Net cash provided by operating activities$63.4 $60.4 $24.6Net cash used in investing activities(460.4) (362.6) (314.8)Net cash provided by financing activities469.7 318.6 253.6Cash Provided by Operating Activities Our largest source of cash provided by operating activities is monthly recurring revenue from our customers. Our primary uses of cash are payments tonetwork suppliers, compensation related costs, and payments to third-party vendors such as agents, contractors, and professional service providers.Net cash flows provided by operating activities increased by $3.0 million, from $60.4 million for the year ended December 31, 2016 to $63.4 million forthe year ended December 31, 2017. This increase was primarily due to 2017 Acquisitions and the purchase of certain customer contracts partially offset bynon-recurring cash payments for severance and exit costs and for transaction and integration costs.Net cash flows provided by operating activities increased by $35.8 million, from $24.6 million for the year ended December 31, 2015 to $60.4 millionfor the year ended December 31, 2016. This increase was primarily due to 2016 and 2015 Acquisitions as well as rep-driven growth and the purchase ofcertain customer contracts.Cash provided by operating activities during the year ended December 31, 2017 included $15.9 million cash paid for severance and exit costs, $19.1million cash paid for transaction and integration costs, and a working capital use of $14.2 million.Cash provided by operating activities during the year ended December 31, 2016 included $4.5 million cash paid for severance and exit costs, $4.8million cash paid for transaction and integration costs, and a working capital use of $25.6 million.Cash provided by operating activities during the year ended December 31, 2015 included $8.0 million cash paid for severance and exit costs, $6.1million cash paid for transaction and integration costs, and a working capital use of $21.2 million.Cash Used in Investing ActivitiesOur primary uses of cash include acquisitions, purchase of customer contracts, and capital expenditures.Net cash flows used in investing activities increased by $97.8 million, from $362.6 million for the year ended December 31, 2016 to $460.4 million forthe year ended December 31, 2017. Net cash flows from investing activities increased by $47.8 million, from $314.8 million for the year ended December 31,2015 to $362.6 million for the year ended December 31, 2016.28Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Cash used in investing activities for the year ended December 31, 2017 primarily consisted of $706.3 million for the 2017 Acquisitions, as well as thepurchase of certain customer contracts for which we paid $14.9 million, and capital expenditures of approximately $42.0 million..Cash used in investing activities for the year ended December 31, 2016 primarily consisted of $304.3 million for restricted cash that was deposited intoescrow in anticipation of the Hibernia Networks acquisition that closed on January 9, 2017, $14.1 million for the 2016 Acquisition, as well as the purchase ofcertain customer contracts for which we paid $20.0 million, and capital expenditures of approximately $24.2 million.Cash used in investing activities for the year ended December 31, 2015 primarily consisted of $300.7 million of cash used for the 2015 Acquisitions, inaddition to capital expenditures of approximately $14.1 million.Cash Provided by Financing ActivitiesOur primary source of cash for financing activities is debt financing proceeds. Our primary use of cash for financing activities is the refinancing of ourdebt and repayment of principal pursuant to the debt agreements.Net cash flows provided by financing activities increased by $151.1 million, from $318.6 million for the year ended December 31, 2016 to $469.7million for the year ended December 31, 2017. Net cash flows from financing activities increased by $65.0 million, from $253.6 million for the year endedDecember 31, 2015 to $318.6 million for the year ended December 31, 2016.Net cash flows provided by financing activities for the year ended December 31, 2017 was $469.7 million, consisting primarily of net proceeds from theterm loan and issuance of senior notes to fund the 2017 Acquisitions.Net cash provided by financing activities for the year ended December 31, 2016 was $318.6 million consisting primarily of $300.0 million in proceedsfrom the issuance of senior notes to fund the Hibernia Networks acquisition.Net cash provided by financing activities for the year ended December 31, 2015 was $253.6 million, which primarily consisted of net proceeds from theOctober 2015 Credit Agreement used to fund the acquisition of One Source.Supplemental cash flowsDuring the years ended December 31, 2017, 2016 and 2015, we made cash payments for interest totaling $47.2 million, $26.3 million, and $13.1 million,respectively. The increase in interest payments is a result of the incremental debt associated with acquisitions, as discussed further in Note 8 - Debt of thenotes to the consolidated financial statements (Part II, Item 8 of this Form 10-K). The cash payments for interest expense are directly correlated to ouroutstanding indebtedness.Off-Balance Sheet Arrangements, Contractual Obligations and Commitments The following table summarizes our significant contractual obligations as of December 31, 2017 (amounts in millions): Total Less than 1 year 1-3 years 3-5 years More than 5 yearsTerm loan$693.0 $7.0 $14.0 $14.0 $658.07.875% Senior Note575.0 — — — 575.0Operating leases42.0 6.3 12.1 9.4 14.2Capital leases1.8 1.5 0.3 — —Network supplier agreements (1)308.6 144.1 111.8 13.7 39.0Other (2)15.1 8.4 5.4 1.3 — $1,635.5 $167.3 $143.6 $38.4 $1,286.2(1)Excludes contracts where the initial term has expired and we are currently in month-to-month status.(2) "Other" consists of vendor contracts associated with network monitoring and maintenance services.As of December 31, 2017, we did not have any off-balance sheet arrangements.29Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Non-GAAP Financial MeasuresIn addition to financial measures prepared in accordance with GAAP, from time to time we may use or publicly disclose certain "non-GAAP financialmeasures" in the course of our financial presentations, earnings releases, earnings conference calls, and otherwise. For these purposes, the SEC defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial positions, or cash flows that (i) exclude amounts, or issubject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance withGAAP in financial statements, and (ii) include amounts, or is subject to adjustments that effectively include amounts, that are excluded from the most directlycomparable measure so calculated and presented.Non-GAAP financial measures are provided as additional information to investors to provide an alternative method for assessing our financial conditionand operating results. We believe that these non-GAAP measures, when taken together with our GAAP financial measures, allow us and our investors to betterevaluate our performance and profitability. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistentwith non-GAAP financial measures used by other companies. These measures should be used in addition to and in conjunction with results presented inaccordance with GAAP, and should not be relied upon to the exclusion of GAAP financial measures.Pursuant to the requirements of Regulation G, whenever we refer to a non-GAAP financial measure, we will also present the most directly comparablefinancial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measurewe reference with such comparable GAAP financial measure.Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")Adjusted EBITDA is defined as net income/(loss) before interest, income taxes, depreciation and amortization ("EBITDA") adjusted to excludeseverance, restructuring and other exit costs, acquisition-related transaction and integration costs, losses on extinguishment of debt, share-basedcompensation, and from time to time, other non-cash or non-recurring items.We use Adjusted EBITDA to evaluate operating performance, and this financial measure is among the primary measures we use for planning andforecasting future periods. We further believe that the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors toview results in a manner similar to the method used by management and makes it easier to compare our results with the results of other companies that havedifferent financing and capital structures. In addition, we have debt covenants that are based on a leverage ratio that utilizes a modified EBITDA calculation,as defined in our credit agreement. The modified EBITDA calculation is similar to our definition of Adjusted EBITDA; however it includes the pro formaAdjusted EBITDA of and expected cost synergies from the companies acquired by us during the applicable reporting period. Finally, Adjusted EBITDAresults, along with other quantitative and qualitative information, are utilized by management and our compensation committee for purposes of determiningbonus payouts to our employees.Adjusted EBITDA Less Capital ExpendituresAdjusted EBITDA less purchases of property and equipment, which we also refer to as capital expenditures or capex, is a performance measure that weuse to evaluate the appropriate level of capital expenditures needed to support our expected revenue, and to provide a comparable view of our performancerelative to other telecommunications companies who may utilize different strategies for providing access to fiber-based services and related infrastructure. Weuse a "capex light" strategy, which means we purchase last-mile services and select core IP network services from other providers on an as-needed basis,pursuant to our customers' requirements. Many other telecommunications companies spend significant amounts of capital expenditures to construct their ownfiber networks and data centers, and attempt to purchase as little as possible from other providers. As a result of our strategy, we typically have lower AdjustedEBITDA margins compared to other providers, but also spend much less on capital expenditures relative to our revenue. We believe it is important to takeboth of these factors into account when evaluating our performance.The following is a reconciliation of Adjusted EBITDA and Adjusted EBITDA less capital expenditures from Net Income (Loss):30Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Year Ended December 31,(Amounts in millions)2017 2016 2015 (Unaudited) Adjusted EBITDA Net (loss) income$(71.5) $5.3 $19.3(Benefit from) provision for income taxes17.3 3.9 (34.1)Interest and other expense, net71.0 30.0 15.1Loss on debt extinguishment8.6 1.6 3.4Depreciation and amortization132.6 62.8 46.7Severance, restructuring and other exit costs22.4 0.9 12.7Transaction and integration costs19.1 4.8 6.1Share-based compensation22.2 15.8 7.9Adjusted EBITDA221.7 125.1 77.1 Purchases of property and equipment(42.0) (24.2) (14.1)Adjusted EBITDA less capital expenditures$179.7 $100.9 $63.0Critical Accounting Policies and Estimates The discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States ("GAAP"). In the preparation of our consolidated financial statements, we arerequired to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosures ofcontingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under thecircumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readilyapparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences maybe material to our consolidated financial statements. Our critical accounting policies have been discussed with the Audit Committee of our Board ofDirectors. We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of ourconsolidated financial statements, and believe that an understanding of these policies is important to a proper evaluation of the reported consolidatedfinancial results. Our significant accounting policies are described in Note 2 – Significant Accounting Policies of the notes to the consolidated financialstatements (Part II, Item 8 of this Form 10-K).Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on reportedresults of operations.Segment ReportingWe report operating results and financial data in one operating and reporting segment. Our Chief Executive Officer is the chief operating decision makerand manages our business as a single profit center in order to promote collaboration, provide comprehensive service offerings across our entire customer base,and provide incentives to employees based on the success of the organization as a whole. Although certain information regarding selected products orservices is discussed for purposes of promoting an understanding of our complex business, the chief operating decision maker manages our business andallocates resources at the consolidated level.Revenue Recognition We deliver eight primary services to our customers — private networking; internet; optical transport; SD-WAN; managed services; voice and unifiedcommunications; video transport; and access services. Certain of our current commercial activities have features that may be considered multiple elements,specifically, when we sell connectivity services in addition to Customer Premise Equipment ("CPE"). We believe that there is sufficient evidence todetermine each element’s fair value and, as a result, in those arrangements where there are multiple elements, the service revenue is recorded ratably over theterm of the agreement and the equipment is accounted for as a sale, at the time of sale, as long as collectability is reasonably assured. 31Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Our services are provided under contracts that typically provide for an installation charge along with payments of recurring charges on a monthly basisfor use of the services over a committed term. Our contracts with customers specify the terms and conditions for providing such services, includinginstallation date, recurring and non-recurring fees, payment terms, and length of term. These contracts call for us to provide the service in question (e.g., datatransmission between point A and point Z), to manage the activation process, and to provide ongoing support (in the form of service maintenance andtrouble-shooting) during the service term. The contracts do not typically provide the customer any rights to use specifically identifiable assets. Furthermore,the contracts generally provide us with discretion to engineer (or re-engineer) a particular network solution to satisfy each customer’s data transmissionrequirement, and typically prohibit physical access by the customer to the network infrastructure used by us and our suppliers to deliver the services.We recognize revenue as follows: Recurring Revenue. Recurring revenue represents the substantial majority of our revenue, and consists of fees we charge for ongoing services that aregenerally fixed in price and billed on a recurring monthly basis (one month in advance) for a specified term. At the end of the term, most contracts provide fora continuation of services on the same terms, either for a specified renewal period (e.g., one year) or on a month-to-month basis. We record recurring revenuebased on the fees agreed to in each contract, as long as the contract is in effect, for the period the service is provided.Usage Revenue. Usage revenue represents variable charges for certain services, based on specific usage of those services, or usage above a fixedthreshold, billed monthly in arrears. We record usage revenue based on actual usage charges billed using the rates and/or thresholds specified in eachcontract.Non-recurring Revenue. Non-recurring revenue consists of charges for installation in connection with the delivery of recurring communications services,late payments, cancellation fees, early termination fees, and equipment sales. Fees billed for installation services are initially recorded as deferred revenuethen recognized ratably over the contractual term of the recurring service. Fees charged for late payments, cancellation (pre-installation) or early termination(post-installation) are typically fixed or determinable per the terms of the respective contract, and are recognized as revenue when billed. In addition, fromtime to time we sell communications and/or networking equipment to our customers in connection with our data networking services. We recognize revenuefrom the sale of equipment at the contracted selling price when title to the equipment passes to the customer (generally F.O.B. origin).Prepaid Capacity Sales and Indefeasible Right to Use. From time to time we sell capacity on a long-term basis, where a certain portion of the contractedrevenue is prepaid upon acceptance of the service by the customer. This prepaid amount is initially recorded as deferred revenue and amortized ratably overthe term of the contract. Certain of these prepaid capacity sales are in the form of Indefeasible Rights to Use ("IRUs"), where the customer has the right to usethe capacity for the life of the fiber optic cable. We record revenues from these prepaid leases of fiber optic cable IRUs over the term that the customer isgiven exclusive access to the assets, generally 20 years, consistent with our assumed useful life of the associated fiber optic cable.Universal Service Fund (USF), Gross Receipts Taxes and Other Surcharges. We are liable in certain cases for collecting regulatory fees and/or certainsales taxes from our customers and remitting the fees and taxes to the applicable governing authorities. We record certain excise taxes and surcharges on agross basis and include them in our telecommunications services revenue and costs of telecommunications services.We record revenue only when collectability is reasonably assured, irrespective of the type of revenue.Share-Based CompensationWe issue three types of grants under our share-based compensation plan: time-based restricted stock, time-based stock options, and performance-basedrestricted stock. The time-based restricted stock and stock options generally vest over a four-year period, contingent upon meeting the requisite serviceperiod requirement. Performance awards typically vest over a shorter period, e.g., one to two years, starting when the performance criteria established in thegrant have been met and maintained.The share price of our common stock as reported on the NYSE on the date of grant is used as the fair value for all restricted stock. We use the Black-Scholes option-pricing model to determine the estimated fair value for stock options. Critical inputs into the Black-Scholes option-pricing model include thefollowing: option exercise price, fair value of the stock price, expected life of the option, annualized volatility of the stock, annual rate of quarterly dividendson the stock, and risk-free interest rate.32Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Implied volatility is calculated as of each grant date based on our historical stock price volatility along with an assessment of a peer group. Other thanthe expected life of the option, volatility is the most sensitive input to our option grants. The risk-free interest rate used in the Black-Scholes option-pricingmodel is determined by referencing the U.S. Treasury yield curve rates with the remaining term equal to the expected life assumed at the date of grant.Forfeitures are estimated based on our historical analysis of attrition levels. Forfeiture estimates are updated quarterly for actual forfeitures.The expense is recognized on a straight-line basis over the vesting period. We recognize share-based compensation expense for performance awardswhen we consider the achievement of the performance criteria to be probable.Income TaxesIncome taxes are accounted for under the asset and liability method pursuant to GAAP. Under this method, deferred tax assets and liabilities arerecognized for the expected future consequences attributable to the differences between the financial statement carrying amounts and the tax basis of assetsand liabilities. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period of the change. Further, deferred tax assets arerecognized for the expected realization of available net operating loss and tax credit carryforwards. A valuation allowance is recorded on gross deferred taxassets when it is "more likely than not" that such asset will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positiveand negative, is evaluated. Items considered in this analysis include the ability to carry back losses, the reversal of temporary differences, tax planningstrategies, and expectations of future earnings. We review our deferred tax assets on a quarterly basis to determine if a valuation allowance is required basedupon these factors. Changes in our assessment of the need for a valuation allowance could give rise to a change in such allowance, potentially resulting inadditional expense or benefit in the period of change.Our income tax provision includes U.S. federal, state, local, and foreign income taxes and is based on pre-tax income or loss. In determining the annualeffective income tax rate, we analyzed various factors, including our annual earnings and taxing jurisdictions in which the earnings were generated, theimpact of state and local income taxes and our ability to use tax credits and net operating loss carryforwards.Under GAAP, the amount of tax benefit to be recognized is the amount of benefit that is "more likely than not" to be sustained upon examination. Weanalyze our tax filing positions in all of the U.S. federal, state, local, and foreign tax jurisdictions where we are required to file income tax returns, as well asfor all open tax years in these jurisdictions. If, based on this analysis, we determine that uncertainties in tax positions exist, a liability is established in theconsolidated financial statements. We recognize accrued interest and penalties related to unrecognized tax positions in the provision for income taxes.Estimating Allowances and Accrued LiabilitiesAllowance for Doubtful Accounts We establish an allowance for bad debts for accounts receivable amounts that may not be collectible. We state our accounts receivable balances atamounts due from the customer net of an allowance for doubtful accounts. We determine this allowance by considering a number of factors, including thelength of time receivables are past due, the customer's payment history and current ability to pay its obligation to the Company, and the condition of thegeneral economy. The allowance for doubtful accounts was $5.1 million and $2.7 million as of December 31, 2017 and 2016, respectively. Allowance for Vendor DisputesIn the normal course of business, we identify errors by suppliers with respect to the billing of services. We perform bill verification procedures to ensurethat errors in our suppliers’ billed invoices are identified and resolved. If we conclude that a vendor has billed us inaccurately, we will record a liability onlyfor the amount that we believe is owed. As of December 31, 2017 and 2016, we had $5.3 million and $5.8 million, respectively, in disputed billings fromsuppliers that were not accrued because we do not believe we owe them.Deferred CostsInstallation costs related to provisioning of recurring communications services that we incur from third-party suppliers, directly attributable andnecessary to fulfill a particular service contract, and which costs would not have been incurred but for the occurrence of that service contract, are recorded asdeferred costs and expensed ratably over the contractual term of service in the same manner as the deferred revenue arising from that contract. Based onhistorical experience, we believe the initial contractual term is the best33Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.estimate for the period of earnings. If any installation costs exceed the amount of corresponding deferred revenue, the excess cost is recognized in the currentperiod. Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill isreviewed for impairment at least annually, in October, or more frequently if a triggering event occurs between impairment testing dates. We operate as asingle operating segment and as a single reporting unit for the purpose of evaluating goodwill impairment. Our impairment assessment begins with aqualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. The qualitativeassessment includes comparing our overall financial performance against the planned results used in the last quantitative goodwill impairment test.Additionally, we assess the fair value in light of certain events and circumstances, including macroeconomic conditions, industry and market considerations,cost factors, and other relevant entity and Company specific events. The selection and assessment of qualitative factors used to determine whether it is morelikely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgments and estimates. If it is determined under thequalitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a two-step quantitativeimpairment test is performed. Under the first step, the estimated fair value of the Company would be compared with our carrying value (including goodwill).If the fair value of the Company exceeds the carrying value, step two does not need to be performed. If the estimated fair value of the Company is less thanthe carrying value, an indication of goodwill impairments exists and we would need to perform step two of the impairment test. Under step two, animpairment loss would be recognized for any excess of the carrying amount of our goodwill over the implied fair value of that goodwill. The fair value underthe two-step assessment is determined using a combination of both income and market-based approaches. There were no goodwill impairments identified forthe years ended December 31, 2017, 2016, and 2015.Intangible assets arising from business combinations, such as acquired customer contracts and relationships, (collectively "customer relationships"), tradenames, intellectual property or know-how, are initially recorded at fair value. We amortize these intangible assets over the determined useful life, whichgenerally ranges from three to eight years. We review the intangible assets for impairment whenever events or circumstances indicate that the carryingamount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, animpairment loss is recognized for the difference between fair value and the carrying value of the asset. There were no intangible asset impairments recognizedfor the years ended December 31, 2017, 2016, and 2015.Further information is available in Note 4 – Goodwill and Intangible Assets of the notes to the consolidated financial statements (Part II, Item 8 of thisForm 10-K).Business Combinations and Asset PurchasesWe allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on theirestimated acquisition date fair values. The excess of the fair value of the purchase consideration over the fair values of the identifiable assets acquired andliabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, we make significant estimates andassumptions, especially with respect to intangible assets.We recognize the purchase of assets and the assumption of liabilities as an asset purchase if the transaction does not constitute a business combination.The excess of the fair value of the purchase consideration is allocated on a relative fair value basis to the identifiable assets acquired and liabilities assumed.No goodwill is recorded in an asset purchase.Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships anddeveloped technology, discount rates, and terminal values. Our estimate of fair value is based upon assumptions believed to be reasonable, but actual resultsmay differ from estimates.Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquiredand liabilities assumed, as more fully discussed in Note 3 – Business Acquisitions of the notes to the consolidated financial statements (Part II, Item 8 of thisForm 10-K).Recent Accounting PronouncementsRefer to Note 2 – Significant Accounting Policies of the notes to the consolidated financial statements (Part II, Item 8 of this Form 10-K) for furtherdiscussion.34Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe are exposed to certain market risks. These risks, which include interest rate risk and foreign currency exchange risk, arise in the normal course ofbusiness rather than from trading activities.Interest Rate Sensitivity Our exposure to market risk for changes in interest rates is primarily related to our outstanding term loans and revolving loans. The interest expenseassociated with our term loans and any loans under our revolving credit facility will vary with market rates.For purposes of the following hypothetical calculations, we have used the 2017 Credit Agreement, which carries an interest rate equal to either Base RateLoans with applicable margin at 2.25% or Eurodollar Loans at 3.25%, subject to a floor of 1.0%. Based on rates, a hypothetical 100 basis point increase inthe Eurodollar rate would increase annual interest expense by approximately $6.9 million as of December 31, 2017, which would decrease our income andcash flows by the same amount. A hypothetical increase of the Eurodollar rate to 4%, the average historical three-month rate, would increase annual interestexpense by approximately $18.2 million, which would decrease our income and cash flows by the same amount.We do not currently use derivative financial instruments and have not entered into any interest rate hedging transactions, but we may do so in the future.Exchange Rate Sensitivity Our exposure to market risk for changes in foreign currency rate relates to our global operations. Our consolidated financial statements are denominatedin U.S. Dollars, but a portion of our revenue, cost of telecommunication services provided, and selling, general and administrative expenses are generated inthe local currency of our foreign subsidiaries. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. Dollar will affectthe translation of each foreign subsidiary’s financial results into U.S. Dollars for purposes of reporting consolidated financial results.Approximately 12% of our revenues for the three months ended December 31, 2017 was generated by non-US entities, of which approximately 9% wasrecorded in GBP, approximately 2% was recorded in Euros, and the remainder was recorded predominantly in Canadian dollars. Approximately 14% of ourcost of telecommunications services provided and approximately 12% of our selling, general and administrative expenses for the three months endedDecember 31, 2017 were generated by the same non-US entities. Therefore, it is highly unlikely that changes in exchange rates would have a material impacton our financial condition or results of operations.We do not currently use derivative financial instruments and have not entered into any foreign currency hedging transactions, but we may do so in thefuture.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,which consolidated financial statements, notes, and report are incorporated herein by reference.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our chief executive officer (CEO) and chief financial officer (CFO), has evaluated the effectiveness of ourdisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), asof the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our CEO and CFO have concluded that as of December 31,2017, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that informationwe are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods35Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, asappropriate, to allow timely decisions regarding required disclosure.In accordance with guidance issued by the SEC, companies are allowed to exclude acquisitions from their first assessment of internal control overfinancial reporting during the first year subsequent to the date of acquisition while integrating the acquired operations. Our assessment of the effectiveness ofinternal control over financial reporting excluded Global Capacity, which was acquired in September 2017. Approximately 4% of total assets and 7% of totalrevenue are associated with the Global Capacity acquisition and are included in the consolidated financial statements of the Company as of and for the yearended December 31, 2017. Management’s Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting FirmOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) underthe Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth inInternal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on theassessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2017, to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. The effectiveness of ourinternal control over financial reporting as of December 31, 2017, has been audited by CohnReznick LLP, an independent registered public accounting firm,as stated in their report, which appears herein.Changes in Internal Control Over Financial ReportingExcept for the implementation of certain internal controls related to the adoption of the new revenue recognition standard (Topic 606), there were nochanges in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year endedDecember 31, 2017, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Companyimplemented new controls as part of its effort to adopt Topic 606. The adoption of Topic 606 required the implementation of new accounting processes,which changed the Company's internal controls over revenue recognition and financial reporting. We implemented these internal controls to ensure weadequately evaluated our contracts and properly assessed the impact of Topic 606 on our financial statements to facilitate its adoption in 2018.36Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 FIRMThe Shareholders and Board of Directors of GTT Communications, Inc.Opinion on Internal Control over Financial ReportingWe have audited internal control over financial reporting of GTT Communications, Inc. and subsidiaries (the “Company”) as of December 31, 2017, based oncriteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(“COSO”). As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internalcontrol over financial reporting at Global Capacity, which was acquired on September 15, 2017 and whose financial statements constitute 4% of total assetsand 7% of total revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2017. Accordingly, our audit did notinclude the internal control over financial reporting at Global Capacity. In our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the consolidatedbalance sheets of GTT Communications, Inc. and subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations,comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notesand the schedule listed in the index at 15(a), and our report dated March 1, 2018 expressed an unqualified opinion on those financial statements andschedules.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States ofAmerica. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the UnitedStates of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors ofthe company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.37Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ CohnReznick LLPTysons, VirginiaMarch 1, 201838Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 9B. OTHER INFORMATIONNot applicable.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe 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 2018 Annual Meeting of Stockholders.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 2018 Annual Meeting of Stockholders.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe 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 2018 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 2018 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 2018 Annual Meeting of Stockholders.39Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Financial Statement Schedules. The Financial Statement Schedule described below is filed as part of this report.DescriptionSchedule II - Valuation and Qualifying Accounts.All other financial statement schedules are not required under the relevant instructions or are inapplicable and therefore have been omitted.(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:2.1Share Purchase Agreement, dated as of November 8, 2016, by and among the Registrant, Murosa Development S.A.R.L., a companyorganized under the laws of Luxembourg ("Murosa"), Columbia Ventures Corporation, a Washington corporation, Hibernia NGSLimited, a private company limited by shares formed under the laws of the Republic of Ireland, and Murosa as the Seller Representative(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 15, 2016).2.2Agreement and Plan of Merger, dated as of September 15, 2015, by and among the Registrant, Global Telecom & TechnologyAmericas, Inc., a Virginia corporation, Duo Merger Sub, Inc., a Delaware corporation, One Source Networks Inc., a Texas corporation,Ernest Cunningham, as representative of the equityholders in One Source Networks Inc. and, for limited portions of the Agreement andPlan of Merger, certain key employees of One Source named therein (incorporated by reference to Exhibit 2.1 to the Registrant’sCurrent Report on Form 8-K filed September 18, 2015).2.3Agreement and Plan of Merger Amendment No.1 to the Agreement and Plan of Merger, dated as of September 15, 2015, by and amongthe Registrant, Global Telecom & Technology Americas, Inc., a Virginia corporation, Duo Merger Sub, Inc., a Delaware corporation,One Source Networks Inc., a Texas corporation, Ernest Cunningham, as representative of the equityholders in One Source Networks Inc.and, for limited portions of the Agreement and Plan of Merger, certain key employees of One Source named therein (incorporated byreference to Exhibit 2.7 to the Registrant’s Annual Report on Form 10-K filed March 9, 2016).2.4Agreement and Plan of Merger Amendment No. 2 to the Agreement and Plan of Merger, dated as of September 15, 2015, by and amongthe Registrant, Global Telecom & Technology Americas, Inc., a Virginia corporation, Duo Merger Sub, Inc., a Delaware corporation,One Source Networks Inc., a Texas corporation, Ernest Cunningham, as representative of the equityholders in One Source Networks Inc.and, for limited portions of the Agreement and Plan of Merger, certain key employees of One Source named therein (incorporated byreference to Exhibit 2.8 to the Registrant’s Annual Report on Form 10-K filed March 9, 2016).2.5Stock Purchase Agreement, dated February 19, 2015, by and among Global Telecom & Technology Americas, Inc., a Delawarecorporation, the Registrant, MegaPath Group, Inc., a Delaware corporation, and MegaPath Corporation, a Virginia corporation(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed February 25, 2015).2.6Agreement and Plan of Merger, dated as of October 1, 2014, by and among the Registrant, Global Telecom & Technology Americas,Inc., GTT UNSI, Inc., American Broadband, Inc. (d/b/a United Network Services, Inc.) and Francis D. John, as stockholder representative(incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed October 7, 2014).3.1Second Amended and Restated Certificate of Incorporation, dated October 16, 2006 (incorporated by reference to Exhibit 3.1 to theRegistrant’s Current Report on Form 8-K filed October 19, 2006).40Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.3.2Certificate of Amendment to Second Amended and Restated Certificate of Incorporation, dated December 31, 2013 (incorporated byreference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed January 6, 2014).3.3Amended and Restated Bylaws, dated October 15, 2006 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report onForm 8-K filed October 19, 2006).3.4Amendment to Amended and Restated Bylaws, dated May 7, 2007 (incorporated by reference to Exhibit 3.1 to the Registrant’s CurrentReport on Form 8-K filed May 10, 2007).4.1Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Qfiled November 14, 2006).4.2Form 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. (incorporated by reference toExhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-122303) filed January 26, 2005).4.3Registration Rights Agreement, dated April 30, 2012, among the Registrant, Jordon Lowe and Daniel Brosk Trust dated December 22,2006 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed May 4, 2012).4.4Form of Registration Rights Agreement, dated March 28, 2013 (incorporated by reference to Exhibit 10.1 to the Registrant’s CurrentReport on Form 8-K filed April 3, 2013).4.5Indenture, dated as of December 22, 2016, by and between GTT Escrow Corporation and Wilmington Trust, National Association, astrustee December 22, 2016 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed December 22,2016).4.6First Supplemental Indenture, dated as of January 9, 2017, by and among the Registrant, the Guaranteeing Subsidiaries party theretoand Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report onForm 8-K filed January 13, 2017).10.1 +2006 Employee, Director and Consultant Stock Plan, as amended (incorporated by reference to Annex E to the Registrant’s DefinitiveProxy Statement on Schedule 14A filed October 2, 2006).10.2 +2011 Employee, Director and Consultant Stock Plan (incorporated by reference to Annex A to the Registrant’s Definitive ProxyStatement on Schedule 14A filed April 29, 2011).10.3 +2015 Stock Option and Incentive Plan (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement onSchedule 14A filed April 30, 2015).10.4 +Employment Agreement for H. Brian Thompson, dated October 15, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant’sCurrent Report on Form 8-K filed October 19, 2006).10.5 +Employment Agreement for Richard D. Calder, Jr., dated May 7, 2007 (incorporated by reference to Exhibit 10.1 to the Registrant’sCurrent Report on Form 8-K filed May 10, 2007).10.6 +Amendment No. 1 to the Employment Agreement for Richard D. Calder, Jr., dated July 18, 2008 (incorporated by reference to Exhibit10.1 to the Registrant’s Current Report on Form 8-K filed August 4, 2008).10.7 +Amendment No. 2 to the Employment Agreement for Richard D. Calder, Jr., dated September 7, 2011 (incorporated by reference toExhibit 10.2 to the Registrant’s Current Report on Form 8-K filed September 16, 2011).10.8 +Amendment No. 3 to the Employment Agreement for Richard D. Calder, Jr., dated May 4, 2017 (incorporated by reference to Exhibit10.2 to the Registrant’s Current Report on Form 10-Q filed May 9, 2017).10.9 +Employment Agreement for Christopher McKee, dated September 12, 2011 (incorporated by reference to Exhibit 10.3 to theRegistrant’s Current Report on Form 8-K filed September 16, 2011).10.10 +Amendment No. 1 to the Employment Agreement for Christopher McKee, dated May 4, 2017 (incorporated by reference to Exhibit 10.3to the Registrant’s Current Report on Form 10-Q filed May 9, 2017).10.11 +Employment Agreement for Michael Sicoli, dated as of April 13, 2015 (incorporated by reference to Exhibit 10.2 to the Registrant’sQuarterly Report on Form 10-Q filed May 7, 2015).10.12 +Amendment No. 1 to the Employment Agreement for Michael Sicoli, dated May 4, 2017 (incorporated by reference to Exhibit 10.4 tothe Registrant’s Current Report on Form 10-Q filed May 9, 2017).41Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.10.13Credit Agreement, dated as of January 9, 2017, by and among (1) the Registrant, as borrower, (2) KeyBank National Association, as theadministrative agent and as an LC Issuer, (3) KeyBanc Capital Markets Inc., Credit Suisse Securities (USA) LLC and SunTrustRobinson Humphrey, Inc., as joint lead arrangers and joint bookrunners, (4) Credit Suisse AG, Cayman Islands Branch, and SunTrustBank, as the syndication agents, (5) Citizens Bank, Wells Fargo Bank, National Association, and ING Capital LLC, as thedocumentation agents and (6) the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report onForm 8-K filed January 13, 2017).10.14Amendment No. 1, dated as of July 10, 2017, among GTT Communications, Inc., a Delaware corporation, as the borrower, the lendersparty thereto, and KeyBank National Association, as the administrative agent and as the Additional Tranche B Term Loan Lender(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed July 14, 2017).10.15Credit Agreement, dated as of October 22, 2015, among: (i) the Registrant, as the borrower; (ii) the lenders from time to time partyhereto; (ii) KeyBank National Association, as the administrative agent, as the Swing Line Lender, and as LC Issuer, (iv) SunTrust Bank,as a Lender and as the syndication agent; (v) KeyBank Capital Markets Inc. and SunTrust Robinson Humphrey, Inc., as joint leadarrangers and joint bookrunners; and (vi) MUFG Union Bank, N.A., Pacific Western Bank, CIT Bank, N.A., ING Capital LLC, SociétéGénérale and CoBank, ACB as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Reporton Form 8-K filed October 27, 2015).10.16Incremental Term Loan Assumption Agreement, dated as of May 3, 2016, among (1) the Registrant, as the borrower, (2) KeyBankNational Association, as the administrative agent, and (3) KeyBank National Association, as the Initial Term Lender (incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 5, 2016).10.17Amendment No. 1, dated as of June 28, 2016, among the Registrant, as the borrower, the lenders party thereto, and KeyBank NationalAssociation, as the administrative agent and as the Additional Tranche B Term Loan Lender (incorporated by reference to Exhibit 10.1to the Registrant’s Current Report on Form 8-K filed June 29, 2016).10.18Second Amended and Restated Credit Agreement, dated August 6, 2014, among the Registrant, Global Telecom & TechnologyAmericas, 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, GTT 360, Inc. and Wall Street Network Solutions, LLC, as co-borrows, andWebster Bank, N.A., as administrative agent, lead arranger and lender, the other lenders (as defined therein) party thereto, PacificWestern Bank, as syndication agent and East West Bank and Fifth Third Bank, as co-document agents (incorporated by reference toExhibit 10.1 to the Registrant’s Current Report on Form 8-K filed August 12, 2014).10.19Amendment Agreement, dated April 1, 2015, to the Second Amended and Restated Credit Agreement, dated August 6, 2014, among theRegistrant, Global Telecom & Technology Americas, Inc., GTT Global Telecom Government Services, LLC, CommunicationDecisions-SNVC, LLC, Core180, LLC, Electra, LTD, NT Network Services, LLC, GTT 360, Inc., Wall Street Network Solutions, LLC,American Broadband, Inc., Airband Communications, Inc., Sparkplug, Inc., and MegaPath Corporation, as borrows, and KeybankNational Association, as administrative agent, joint lead arranger, L/C issuer and lender, the other lenders (as defined therein) partythereto, Webster Bank, N.A. as joint lead arranger, syndication agent, L/C issuer and lender, Pacific Western Bank, Cobank, ACB andMUFG Union Bank, N.A., as co-document agents (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form8-K filed April 7, 2015).10.20Amendment Agreement, dated June 4, 2015, to the Second Amended and Restated Credit Agreement, dated August 6, 2014, among theRegistrant, Global Telecom & Technology Americas, Inc., GTT Global Telecom Government Services, LLC, CommunicationDecisions-SNVC, LLC, Core180, LLC, Electra, LTD, IDC Global, Inc., NT Network Services, LLC, GTT 360, Inc., Wall Street NetworkSolutions, LLC, American Broadband, Inc., Airband Communications, Inc., Sparkplug, Inc., and GTT Communications (MP), Inc., asborrows, and Keybank National Association, as administrative agent, joint lead arranger, L/C issuer and lender, the other lenders (asdefined therein) party thereto, Webster Bank, N.A., as joint lead arranger, syndication agent, L/C issuer and lender, Pacific WesternBank, Cobank, ACB and MUFG Union Bank, N.A., as co-document agents (incorporated by reference to Exhibit 99.4 to theRegistrant’s Current Report on Form 8-K/A filed June 15, 2015).42Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.10.21Amended 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, IDCGlobal, Inc., NT Network Services, LLC, Webster Bank, N.A., and the other Lenders (as defined therein) party thereto (incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed January 6, 2014).10.22Warrant Purchase and Exercise Agreement, dated as of August 6, 2014, by and among the Registrant, BIA Digital Partners SBIC II LP,BNY Mellon-Alcentra Mezzanine III, L.P., Plexus Fund II, L.P. and GTT Communications, Inc. (incorporated by reference to Exhibit10.2 to the Registrant’s Current Report on Form 8-K filed August 12, 2014).10.23Incremental Revolving Credit Assumption Agreement, dated as of October 12, 2017, among GTT Communications, Inc., a Delawarecorporation, as the borrower, KeyBank National Association, as the administrative agent, and the Incremental Revolving CreditLenders party hereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 10-Q filed November 3,2017).21.1*Subsidiaries of the Registrant.23.1*Consent of CohnReznick LLP.24.1*Power of Attorney (included on the signature page to this Annual 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 2002.99.1 +2016 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8(File No. 333-210488) filed March 30, 2016).101.INS**XBRL Instance Document101.SCH**XBRL Taxonomy Extension Schema Document101.CAL**XBRL Taxonomy Extension Calculation Linkbase Document101.DEF**XBRL Taxonomy Extension Definition Linkbase Document101.LAB**XBRL Taxonomy Extension Label Linkbase Document101.PRE**XBRL Taxonomy Extension Presentation Linkbase Document101.INS**XBRL Instance Document101.SCH**XBRL Taxonomy Extension Schema Document101.CAL**XBRL Taxonomy Extension Calculation Linkbase Document101.DEF**XBRL Taxonomy Extension Definition Linkbase Document101.LAB**XBRL Taxonomy Extension Label Linkbase Document101.PRE**XBRL Taxonomy Extension Presentation Linkbase Document101.INS**XBRL Instance Document *Filed herewith**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement orprospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 andotherwise are not subject to liability. +Denotes a management or compensatory plan or arrangement. ITEM 16. FORM 10-K SUMMARY43Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Not applicable.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 1, 2018POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard D. Calder, Jr. andMichael T. Sicoli, 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 1, 2018 by the following persons onbehalf of the registrant and in the capacities indicated.44Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Signature Title/s/ Richard D. Calder, Jr. President, Chief Executive Officer andRichard D. Calder, Jr. Director (Principal Executive Officer) /s/ Michael T. Sicoli Chief Financial OfficerMichael T. Sicoli (Principal Financial Officer) /s/ Daniel M. Fraser Vice President and ControllerDaniel M. Fraser (Principal Accounting Officer) /s/ H. Brian Thompson Chairman of the Board and ExecutiveH. Brian Thompson Chairman /s/ Nicola A. Adamo DirectorNicola A. Adamo /s/ S. Joseph Bruno DirectorS. Joseph Bruno /s/ Julius Erving DirectorJulius Erving /s/ Rhodric C. Hackman DirectorRhodric C. Hackman /s/ Howard Janzen DirectorHoward Janzen /s/ Elizabeth Satin DirectorElizabeth Satin /s/ Theodore B. Smith, III DirectorTheodore B. Smith, III 45Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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, 2017 and 2016F - 3Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016, and 2015F - 4Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2017, 2016, and 2015F - 5Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2017, 2016, and 2015F - 6Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, and 2015F - 7Notes to Consolidated Financial StatementsF - 8F - 1Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 FIRMTo the Shareholders and Board of Directors of GTT Communications, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of GTT Communications, Inc. and subsidiaries (the “Company”) as of December 31, 2017and 2016, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three yearsin the period ended December 31, 2017, and the related notes and the schedule listed in the index at 15(a) (collectively referred to as the “financialstatements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity withaccounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the Company’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2018, expressed an unqualified opinion on theCompany’s internal control over financial reporting.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion./s/ CohnReznick LLPWe have served as the Company's auditor since 2005.Tysons, VirginiaMarch 1, 2018F - 2Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 millions, except for share and per share data) December 31, 2017 December 31, 2016ASSETS Current assets: Cash and cash equivalents$101.2 $29.7Accounts receivable, net of allowances of $5.1 and $2.7, respectively102.8 76.3Deferred costs2.1 3.4Prepaid expenses10.4 5.8Other assets11.6 3.6Total current assets228.1 118.8Restricted cash and cash equivalents— 304.3Property and equipment, net499.3 43.4Intangible assets, net417.1 193.9Goodwill644.5 280.6Other long-term assets9.2 12.3Total assets$1,798.2 $953.3LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$22.5 $11.3Accrued expenses and other current liabilities89.0 36.9Acquisition earn-outs and holdbacks14.0 24.4Current portion of capital lease obligations1.5 1.0Current portion of long-term debt7.0 4.3Deferred revenue53.7 17.9Total current liabilities187.7 95.8Capital lease obligations, long-term portion0.3 0.1Long-term debt1,236.5 725.2Deferred revenue, long-term portion108.0 3.4Deferred tax liability26.3 —Other long-term liabilities8.0 1.0Total liabilities1,566.8 825.5Commitments and contingencies Stockholders’ equity: Common stock, par value $.0001 per share, 80,000,000 shares authorized, 44,531,905 and37,228,144 shares issued and outstanding as of December 31, 2017 and 2016, respectively— —Additional paid-in capital360.2 197.3Accumulated deficit(124.9) (64.6)Accumulated other comprehensive loss(3.9) (4.9)Total stockholders’ equity231.4 127.8Total liabilities and stockholders’ equity$1,798.2 $953.3 The accompanying notes are an integral part of these consolidated financial statements.F - 3Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 millions, except for share and per share data) Year Ended December 31, 2017 2016 2015Revenue: Telecommunications services$827.9 $527.3 $372.5 Operating expenses: Cost of telecommunications services432.1 279.6 207.7Selling, general and administrative expenses215.4 143.2 101.7Severance, restructuring and other exit costs22.4 0.9 12.7Depreciation and amortization132.6 62.8 46.7 Total operating expenses802.5 486.5 368.8 Operating income25.4 40.8 3.7 Other expense: Interest expense, net(71.2) (29.4) (13.9)Loss on debt extinguishment(8.6) (1.6) (3.4)Other income (expense), net0.2 (0.6) (1.2) Total other expense(79.6) (31.6) (18.5) (Loss) income before income taxes(54.2) 9.2 (14.8) Provision for (benefit from) income taxes17.3 3.9 (34.1) Net (loss) income$(71.5) $5.3 $19.3 (Loss) earnings per share: Basic$(1.71) $0.14 $0.55Diluted$(1.71) $0.14 $0.54 Weighted average shares: Basic41,912,952 37,055,663 34,973,284Diluted41,912,952 37,568,915 35,801,395 The accompanying notes are an integral part of these consolidated financial statements.F - 4Source: GTT Communications, Inc., 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc.Consolidated Statements of Comprehensive (Loss) Income(Amounts in millions) Year Ended December 31, 2017 2016 2015 Net (loss) income$(71.5) $5.3 $19.3 Other comprehensive income (loss): Foreign currency translation adjustment1.0 (2.5) (1.5)Comprehensive (loss) income$(70.5) $2.8 $17.8 The accompanying notes are an integral part of these consolidated financial statements. F - 5Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 millions, except for share data) Common Stock Additional Paid-In Capital AccumulatedDeficit Accumulated OtherComprehensive Loss Total Shares Amount Balance, December 31, 201433,848,543 $— $167.7 $(89.2) $(0.9) $77.6Share-based compensation for options issued— — 1.6 — — 1.6Share-based compensation for restricted stockissued1,536,043 — 6.3 — — 6.3Tax withholding related to the vesting ofrestricted stock units(195,917) — (3.5) — — (3.5)Shares issued in connection with acquisitions1,085,844 — 9.8 — — 9.8Stock options exercised259,121 — 0.9 — — 0.9Net income— — — 19.3 — 19.3Foreign currency translation— — — — (1.5) (1.5)Balance, December 31, 201536,533,634 $— $182.8 $(69.9) $(2.4) $110.5Share-based compensation for options issued— — 1.8 — — 1.8Share-based compensation for restricted stockissued408,108 — 14.0 — — 14.0Tax withholding related to the vesting ofrestricted stock units(276,365) — (5.7) — — (5.7)Shares issued in connection with employeestock purchase plan77,279 — 1.2 — — 1.2Shares issued in connection with acquisition178,202 — 2.0 — — 2.0Stock options exercised307,286 — 1.2 — — 1.2Net income— — — 5.3 — 5.3Foreign currency translation— — — — (2.5) (2.5)Balance, December 31, 201637,228,144 $— $197.3 $(64.6) $(4.9) $127.8Share-based compensation for options issued— — 1.4 — — 1.4Share-based compensation for restricted stockissued1,864,265 — 20.6 — — 20.6Tax withholding related to the vesting ofrestricted stock units(257,613) — (4.0) — — (4.0)Stock issued in connection with employeestock purchase plan28,958 — 0.9 — — 0.9Stock issued in connection with acquisition5,229,813 — 141.9 — — 141.9Stock options exercised438,338 — 2.1 — — 2.1Cumulative effect of adjustment forunrecognized windfall benefits— — — 11.2 — 11.2Net loss— — — (71.5) — (71.5)Foreign currency translation— — — — 1.0 1.0Balance, December 31, 201744,531,905 $— $360.2 $(124.9) $(3.9) $231.4The accompanying notes are an integral part of these consolidated financial statements.F - 6Source: GTT Communications, Inc., 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc.Consolidated Statements of Cash Flows(Amounts in millions) Year Ended December 31, 2017 2016 2015Cash flows from operating activities: Net (loss) income$(71.5) $5.3 $19.3Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization132.6 62.8 46.7Share-based compensation22.2 15.8 7.9Debt discount amortization0.4 0.9 0.2Loss on debt extinguishment8.6 1.6 3.4Amortization of debt issuance costs3.8 1.5 1.0Excess tax benefit from share-based compensation(6.2) — —Deferred income taxes16.5 2.2 (30.5)Non-cash deferred revenue(33.4) (6.9) (5.6)Non-cash deferred costs4.6 2.8 2.5Change in fair value of acquisition earn-out— — 0.9Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net14.2 (14.9) (7.9)Prepaid expenses4.7 4.7 (8.1)Deferred costs and other assets(2.1) (6.2) (11.5)Accounts payable(22.7) (12.3) (8.7)Accrued expenses and other current liabilities7.7 (7.1) 1.8Deferred revenue and other liabilities(16.0) 10.2 13.2Net cash provided by operating activities63.4 60.4 24.6 Cash flows from investing activities: Acquisition of businesses, net of cash acquired(706.3) (14.1) (300.7)Purchase of customer contracts(14.9) (20.0) —Change in restricted cash and cash equivalents304.3 (304.3) —Purchases of property and equipment(42.0) (24.2) (14.1)Purchases of intangible assets(1.5) — —Net cash used in investing activities(460.4) (362.6) (314.8) Cash flows from financing activities: Proceeds from revolving line of credit50.0 47.0 5.0Repayment of revolving line of credit(70.0) (32.0) —Proceeds from term loan696.5 29.9 622.0Repayment of term loan(432.8) (4.2) (353.6)Proceeds from senior note291.5 300.0 —Payment of earn-out and holdbacks(28.7) (15.6) (3.7)Debt issuance costs(34.0) (1.4) (12.6)Repayment of capital leases(1.6) (1.8) (0.9)Proceeds from issuance of common stock under employee stock purchase plan0.7 1.2 —Tax withholding related to the vesting of restricted stock units(4.0) (5.7) (3.5)Exercise of stock options2.1 1.2 0.9Net cash provided by financing activities469.7 318.6 253.6 Effect of exchange rate changes on cash(1.2) (1.4) 2.0 Net increase (decrease) in cash and cash equivalents71.5 15.0 (34.6) Cash and cash equivalents at beginning of year29.7 14.7 49.3 Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Cash and cash equivalents at end of year$101.2 $29.7 $14.7 Supplemental disclosure of cash flow information: Cash paid for interest$47.2 $26.3 $13.1Cash paid for income taxes, net of refunds$1.7 $1.0 $0.4 Supplemental disclosure of non-cash investing and financing activities: Fair value of current assets acquired$76.8 $0.9 $26.1Fair value of non-current assets acquired*$772.0 $53.4 $171.8Fair value of current liabilities assumed$87.7 $0.6 $26.1Fair value of non-current liabilities assumed$215.5 $— $1.9Shares issued in connection with acquisition$141.9 $2.0 $9.8* Excludes goodwill The accompanying notes are an integral part of these consolidated financial statements. F - 7Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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") provides cloud networking services to multinational clients. The Company offers acomprehensive portfolio of services including: private networking; internet; optical transport; SD-WAN; managed services; voice and unifiedcommunications; video transport; and access services.GTT's global network connects people across organizations and around the world. The Company provides cloud networking services to leadingmultinational enterprise, carrier, and government clients in over 100 countries. GTT differentiates itself from its competition by delivering service to itsclients 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 its wholly owned subsidiaries. All significant intercompany transactionsand balances have been eliminated in consolidation.The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America("GAAP") requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significantestimates are used when establishing allowances for doubtful accounts, accruals for billing disputes and exit activities, determining useful lives fordepreciation and amortization, assessing the need for impairment charges (including those related to intangible assets and goodwill), determining the fairvalues of assets acquired and liabilities assumed in business combinations, accounting for income taxes and related valuation allowances against deferred taxassets, and estimating the grant date fair values used to compute the share-based compensation expense. Management evaluates these estimates andjudgments on an ongoing basis and makes estimates based on historical experience, current conditions, and various other assumptions that are believed to bereasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities aswell as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from these estimatesunder different assumptions or conditions.Changes in Basis of Presentation and AccountingRevenue recognition standards include guidance relating to taxes or surcharges assessed by a governmental authority that are directly imposed on arevenue-producing transaction between a seller and a customer and may include, but are not limited to, certain excise taxes and surcharges. Such charges maybe presented gross (included in revenue and expense) or net (excluded from revenue and expense) based upon the Company’s accounting policy election. In2017, the Company changed its presentation of excise taxes and surcharges from the net method to the gross method. The presentation was changed to thegross method for internal and external consistency. Historical periods have been reclassified for consistency with the current year presentation.As a result of policy alignments related to acquired businesses, certain prior period amounts in the consolidated statements of cash flows, have beenreclassified to conform with the current period presentation to better reflect the nature of these activities. The Company has reclassified $6.9 million and $5.6million from the "Deferred revenue and other liabilities" line to the "Non-cash deferred revenue" line and $2.8 million and $2.5 million from the "Deferredcosts and other assets" line to the "Non-cash deferred costs" line for the years ended December 31, 2016 and 2015, respectively. These reclassifications had noimpact on the net change in cash and cash equivalents or cash flows from operating, investing and financing activities for any periods presented.Segment ReportingThe Company reports operating results and financial data in one operating and reportable segment. The Company's Chief Executive Officer is the chiefoperating decision maker and manages the Company as a single profit center in order to promote collaboration, provide comprehensive service offeringsacross its entire customer base, and provide incentives to employees based on the success of the organization as a whole. Although certain informationregarding selected products or services is discussed forF - 8Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.purposes of promoting an understanding of the Company's complex business, the chief operating decision maker manages the Company and allocatesresources at the consolidated level.Revenue RecognitionThe Company delivers eight primary services to its customers — private networking; internet; optical transport; SD-WAN; managed services; voice andunified communications; video transport services; and access services. Certain of its current commercial activities have features that may be consideredmultiple elements, specifically when the Company sells its connectivity services in addition to customer premise equipment ("CPE"). The Company believesthat there is sufficient evidence to determine each element’s fair value and, as a result, in those arrangements where there are multiple elements, the servicerevenue is recorded ratably over the term of the agreement and the equipment is accounted for as a sale, at the time of sale as long as collectability isreasonably assured. The Company's services are provided under contracts that typically include an installation charge along with payments of recurring charges on amonthly basis for use of the services over a committed term. Its contracts with customers specify the terms and conditions for providing such services,including installation date, recurring and non-recurring fees, payment terms, and length of term. These contracts call for the Company to provide the servicein question (e.g., data transmission between point A and point Z), to manage the activation process, and to provide ongoing support (in the form of servicemaintenance and trouble-shooting) during the service term. The contracts do not typically provide the customer any rights to use specifically identifiableassets. Furthermore, the contracts generally provide the Company with discretion to engineer (or re-engineer) a particular network solution to satisfy eachcustomer’s data transmission requirement, and typically prohibit physical access by the customer to the network infrastructure used by the Company and itssuppliers to deliver the services.The Company recognizes revenue as follows: Recurring Revenue. Recurring revenue represents the substantial majority of the Company's revenue, and consists of fees charged for ongoing servicesthat are generally fixed in price and billed on a recurring monthly basis (one month in advance) for a specified term. At the end of the term, most contractsprovide for a continuation of services on the same terms, either for a specified renewal period (e.g., one year) or on a month-to-month basis. The Companyrecords recurring revenue based on the fees agreed to in each contract, as long as the contract is in effect, for the period the service is provided.Usage Revenue. Usage revenue represents variable charges for certain services, based on specific usage of those services, or usage above a fixedthreshold, billed monthly in arrears. The Company records usage revenue based on actual usage charges billed using the rates and/or thresholds specified ineach contract.Non-recurring Revenue. Non-recurring revenue consists of charges for installation in connection with the delivery of recurring communications services,late payments, cancellation fees, early termination fees, and equipment sales. Fees billed for installation services are initially recorded as deferred revenueand then recognized ratably over the contractual term of the recurring service. Fees charged for late payments, cancellation (pre-installation) or earlytermination (post-installation) are typically fixed or determinable per the terms of the respective contract, and are recognized as revenue when billed. Inaddition, from time to time the Company sells communications and/or networking equipment to its customers in connection with its data networkingservices. 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).Prepaid Capacity Sales and Indefeasible Right to Use. From time to time the Company sells capacity on a long-term basis, where a certain portion of thecontracted revenue is prepaid upon acceptance of the service by the customer. This prepaid amount is initially recorded as deferred revenue and amortizedratably over the term of the contract. Certain of these prepaid capacity sales are in the form of Indefeasible Rights to Use ("IRUs"), where the customer has theright to use the capacity for the life of the fiber optic cable. The Company records revenues from these prepaid leases of fiber optic cable IRUs over the termthat the customer is given exclusive access to the assets, generally 20 years, consistent with our assumed useful life of the associated fiber optic cable.Universal Service Fund (USF), Gross Receipts Taxes and Other Surcharges. The Company is liable in certain cases for collecting regulatory fees and/orcertain sales taxes from its customers and remitting the fees and taxes to the applicable governing authorities. The Company records certain excise taxes andsurcharges on a gross basis and includes them in its telecommunications services revenue and costs of telecommunications services. Excise taxes andsurcharges billed to customers and recorded on a gross basis (as service telecommunications services revenue and cost of telecommunications services) were$17.5 million, $5.6 million, and $3.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.The Company records revenue only when collectability is reasonably assured, irrespective of the type of revenue.F - 9Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Cost of Telecommunications ServicesCost of telecommunications services includes direct costs incurred in accessing other telecommunications providers’ networks in order to maintain theCompany's global Tier 1 IP network and provide telecommunications services to the Company's customers including access, co-location, usage-basedcharges, and certain excise taxes and surcharges recorded on a gross basis.Marketing and Advertising CostsCosts related to marketing and advertising are expensed as incurred and included in selling, general and administrative expenses in our consolidatedstatements of operations. Our marketing and advertising expense was $3.3 million, $2.2 million, and $1.3 million for the years ended December 31, 2017,2016, and 2015, respectively.Share-Based Compensation The Company issues three types of equity grants under its share-based compensation plan: time-based restricted stock, time-based stock options, andperformance-based restricted stock. The time-based restricted stock and stock options generally vest over a four-year period, contingent upon meeting therequisite service period requirement. Performance awards typically vest over a shorter period, e.g. one to two years, starting when the performance criteriaestablished in the grant have been met and maintained.The share price of our common stock as reported on the NYSE on the date of grant is used as the fair value for all restricted stock. The Company uses theBlack-Scholes option-pricing model to determine the estimated fair value for stock options. Critical inputs into the Black-Scholes option-pricing modelinclude the following: option exercise price, fair value of the stock price, expected life of the option, annualized volatility of the stock, annual rate ofquarterly dividends on the stock, and risk-free interest rate.Implied volatility is calculated as of each grant date based on our historical stock price volatility along with an assessment of a peer group. Other thanthe expected life of the option, volatility is the most sensitive input to our option grants. The risk-free interest rate used in the Black-Scholes option-pricingmodel is determined by referencing the U.S. Treasury yield curve rates with the remaining term equal to the expected life assumed at the date of grant.Forfeitures are estimated based on our historical analysis of attrition levels. Forfeiture estimates are updated quarterly for actual forfeitures.The expense is recognized on a straight-line basis over the vesting period. The Company recognizes share-based compensation expense for performanceawards when the achievement of the performance criteria is considered probable.Income Taxes Income taxes are accounted for under the asset and liability method pursuant to GAAP. Under this method, deferred tax assets and liabilities arerecognized for the expected future consequences attributable to the differences between the financial statement carrying amounts and the tax basis of assetsand liabilities. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period of the change. Further, deferred tax assets arerecognized for the expected realization of available net operating loss and tax credit carryforwards. A valuation allowance is recorded on gross deferred taxassets when it is "more likely than not" that such asset will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positiveand negative, is evaluated. Items considered in this analysis include the ability to carry back losses, the reversal of temporary differences, tax planningstrategies and expectations of future earnings. The Company reviews its deferred tax assets on a quarterly basis to determine if a valuation allowance isrequired based upon these factors. Changes in the Company's assessment of the need for a valuation allowance could give rise to a change in such allowance,potentially resulting in additional expense or benefit in the period of change.The Company's income tax provision includes U.S. federal, state, local, and foreign income taxes and is based on pre-tax income or loss. In determiningthe annual effective income tax rate, the Company analyzed various factors, including its annual earnings and taxing jurisdictions in which the earnings weregenerated, the impact of state and local income taxes and its ability to use tax credits and net operating loss carryforwards.Under GAAP, the amount of tax benefit to be recognized is the amount of benefit that is "more likely than not" to be sustained upon examination. TheCompany analyzes its tax filing positions in all of the U.S. federal, state, local, and foreign tax jurisdictions where it is required to file income tax returns, aswell as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability isestablished in the consolidated financial statements. The Company recognizes accrued interest and penalties related to unrecognized tax positions in theprovision for income taxes.F - 10Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Comprehensive (Loss) Income In addition to net (loss) income, comprehensive (loss) income includes charges or credits to equity occurring other than as a result of transactions withstockholders. For the Company, this consists of foreign currency translation adjustments.(Loss) Earnings Per ShareBasic (loss) earnings per share is computed by dividing net (loss) income available to common stockholders by the weighted average number of commonshares outstanding. Diluted (loss) earnings per share reflect, in periods with earnings and in which they have a dilutive effect, the effect of common sharesissuable upon exercise of stock options and warrants.The table below details the calculations of earnings (loss) per share (in millions, except for share and per share amounts): Year Ended December 31, 2017 2016 2015Numerator for basic and diluted EPS – (loss) income available to commonstockholders$(71.5) $5.3 $19.3Denominator for basic EPS – weighted average shares41,912,952 37,055,663 34,973,284Effect of dilutive securities— 513,252 828,111Denominator for diluted EPS – weighted average shares41,912,952 37,568,915 35,801,395 Earnings (loss) per share: basic$(1.71) $0.14 $0.55Earnings (loss) per share: diluted$(1.71) $0.14 $0.54 All of the stock options were anti-dilutive as of December 31, 2017 due to the net loss incurred during the period. There were approximately 0 and256,000 anti-dilutive common shares that were excluded from the computation of earnings per share as of December 31, 2016 and 2015, respectively.Cash and Cash Equivalents Cash and cash equivalents may include 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.The Company invests its cash and cash equivalents and short-term investments in accordance with the terms and conditions of its Credit Agreement,which seeks to ensure both liquidity and safety of principal. The Company’s policy limits investments to instruments issued by the U.S. government andcommercial institutions with strong investment grade credit ratings, and places restrictions on the length of maturity. As of December 31, 2017, the Companyheld no direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or non-government guaranteed mortgage-backed securities.Restricted Cash and Cash EquivalentsCash and cash equivalents that are contractually restricted from operating use are classified as restricted cash and cash equivalents. In December 2016,the Company completed a private offering of $300.0 million aggregate principal amount of 7.875% senior unsecured notes due in 2024. The proceeds of theprivate offering plus 60 days of prepaid interest were deposited into escrow, where the funds remained until all the escrow release conditions were satisfied,specifically the closing of the acquisition of Hibernia Networks ("Hibernia") that occurred in January 2017. The proceeds were released from escrow atclosing to fund the Hibernia acquisition. 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 ofF - 11Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 invoice. The Company treats invoices as past due when they remain unpaid, in whole or in part, beyond the payment date set forth in the applicableservice 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 payment history and current ability to pay its obligation to the Company, and the condition of the general economy. Specific reserves arealso established on a case-by-case basis by management. Credit losses have historically been within management’s expectations. Actual bad debts, whendetermined, reduce the allowance, the adequacy of which management then reassesses. The Company writes off accounts after a determination bymanagement that the amounts at issue are no longer likely to be collected, following the exercise of reasonable collection efforts, and upon management’sdetermination that the costs of pursuing collection outweigh the likelihood of recovery. The allowance for doubtful accounts was $5.1 million and $2.7million as of December 31, 2017 and 2016, respectively. Deferred CostsInstallation costs related to provisioning of communications services that the Company incurs from third-party suppliers, directly attributable andnecessary to fulfill particular service contract, and which costs would not have been incurred but for the occurrence of that service contract, are recorded asdeferred contract costs and expensed ratably over the contractual term of service in the same manner as the deferred revenue arising from that contract. Basedon historical experience, the Company believes the initial contractual term is the best estimate for the period of earnings. If any installation costs exceed theamount of corresponding deferred revenue, the excess cost is recognized in the current period.Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation on these assets is computed on a straight-line basis over theestimated useful lives of the assets. Assets are recorded at acquired cost plus any internal labor to prepare the asset for installation to become functional.Assets and liabilities under capital leases are recorded at the lesser of the present value of the aggregate future minimum lease payments or the fair value ofthe assets under lease. Leasehold improvements and assets under capital leases are amortized over the shorter of the term of the lease, excluding optionalextensions, or the useful life. Expenditures for maintenance and repairs are expensed as incurred. Depreciable lives used by the Company for its classes ofassets are as follows: Buildings30 yearsFurniture and Fixtures7 yearsFiber Optic Cable20 yearsFiber Optic Network Equipment3 - 15 yearsLeasehold Improvementsup to 10 yearsComputer Hardware and Software3-5 yearsThe Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets maynot be recoverable. If the carrying amount of an asset were to exceed its estimated future undiscounted cash flows, the asset would be considered to beimpaired. Impairment losses would then be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to bedisposed of, if any, are reported at the lower of the carrying amount or fair value less costs to sell.Software Capitalization Software development costs include costs to develop software to be used solely to meet the Company's internal needs. The Company capitalizesdevelopment costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed.Subsequent additions, modifications, or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a functionit previously did not perform. Software maintenance, data conversion, and training costs are expensed in the period in which they are incurred. The Companycapitalized software costs of $2.1 million, $1.5 million, and $1.1 million for the years ended December 31, 2017, 2016, and 2015, respectively.Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill isreviewed for impairment at least annually, in October, or more frequently if a triggering event occursF - 12Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.between impairment testing dates. The Company operates as a single operating segment and as a single reporting unit for the purpose of evaluating goodwillimpairment. The Company's impairment assessment begins with a qualitative assessment to determine whether it is more like than not that fair value of thereporting unit is less than its carrying value. The qualitative assessment includes comparing the overall financial performance of the Company against theplanned results used in the last quantitative goodwill impairment test. Additionally, the Company's fair value is assessed in light of certain events andcircumstances, including macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specificevents. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceedsthe carrying value involves significant judgment and estimates. If it is determined under the qualitative assessment that it is more likely than not that the fairvalue of a reporting unit is less than its carrying value, then a two-step quantitative impairment test is performed. Under the first step, the estimated fair valueof the Company would be compared with its carrying value (including goodwill). If the fair value of the Company exceeds its carrying value, step two doesnot need to be performed. If the estimated fair value of the Company is less than its carrying value, an indication of goodwill impairment exists for theCompany and it would need to perform step two of the impairment test. Under step two, an impairment loss would be recognized for any excess of thecarrying amount of the Company's goodwill over the implied fair value of that goodwill. Fair value of the Company under the two-step assessment isdetermined using a combination of both income and market-based approaches. There were no goodwill impairments identified for the years ended December31, 2017, 2016, and 2015.Intangible assets arising from business combinations, such as acquired customer contracts and relationships, (collectively "customer relationships"), tradenames, intellectual property or know-how are initially recorded at fair value. The Company amortizes these intangible assets over the determined useful life,which ranges from three to eight years. The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carryingamount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, animpairment loss is recognized for the difference between fair value and the carrying value of the asset. There were no intangible asset impairments recognizedfor the years ended December 31, 2017, 2016, and 2015.Business Combinations The Company includes the results of operations of the businesses that it acquires as of the respective dates of acquisition. The Company allocates the fairvalue of the purchase price of its acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value ofthe purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.Asset Purchases Periodically we acquire customer contracts that we account for as an asset purchase and record a corresponding intangible asset that is amortized over itsassumed useful life. Any excess of the fair value of the purchase price over the fair value of the identifiable assets and liabilities is allocated on a relative fairvalue basis. No goodwill is recorded in an asset acquisition.During 2017, the Company acquired customer contracts for an aggregate purchase price of $37.4 million, of which $14.9 million was paid in 2017 on therespective closing dates. Of the remaining $22.5 million, $4.5 million was subsequently paid during the year ended December 31, 2017. The remaining $18.0million is expected to be paid in 2018, subject to any indemnification claims made through the final payment date.During 2016, the Company acquired customer contracts for an aggregate purchase price of $41.3 million, of which $20.0 million was paid in 2016 on therespective closing dates. The remaining $21.3 million was paid during the year ended December 31, 2017.We did not have any asset purchases in 2015.Accrued Supplier Expenses The Company accrues estimated charges owed to its suppliers for services. The Company bases this accrual on the supplier contract, the individualservice order executed with the supplier for that service, and the length of time the service has been active.Disputed Supplier Expenses In the normal course of business, the Company identifies errors by suppliers with respect to the billing of services. The Company performs billverification procedures to ensure that errors in the Company's suppliers' billed invoices are identified and resolved. If the Company concludes that a vendorhas billed inaccurately, the Company will record a liability only for the amount that itF - 13Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.believes is owed. As of December 31, 2017 and 2016, the Company had open disputes not accrued for of $5.3 million and $5.8 million, respectively.Acquisition Earn-outs and HoldbacksAcquisition earn-outs and holdbacks represent either contingent consideration subject to fair value measurements, or fixed deferred consideration to bepaid out at some point in the future, typically on the one-year anniversary of an acquisition. Contingent consideration is remeasured to fair value at eachreporting period. The portion of the deferred consideration due within one year is recorded as a current liability until paid, and any consideration due beyondone year is recorded in other long-term liabilities.As of December 31, 2017 and 2016, there was no contingent consideration subject to re-measurement outstanding.Debt Issuance CostsDebt issuance costs represent costs that qualify for deferral associated with the issuance of new debt or the modification of existing debt facilities. Theunamortized balance of debt issuance costs is presented as a reduction to the carrying value of long-term debt. Debt issuance costs are amortized andrecognized on the consolidated statements of operations as interest expense. The unamortized debt issuance costs were $33.8 million and $9.3 million as ofDecember 31, 2017 and 2016, respectively.Original Issuance Discounts and PremiumsOriginal issuance discounts and premiums ("OID") is the difference between the face value of debt and the amount of principal received when the loanwas originated. When the debt reaches maturity, the face value of the debt is payable. The Company recognizes OID by accretion of the discount or premiumas interest expense, net over the term of the debt. The unamortized portion of the OID was a $9.3 million net premium and a $7.0 million discount as ofDecember 31, 2017 and 2016, respectively.Translation of Foreign CurrenciesFor non-U.S. subsidiaries, the local currency is the functional currency for financial reporting purposes. These consolidated financial statements havebeen reported in U.S. Dollars by translating asset and liability amounts of foreign subsidiaries at the closing currency exchange rate, equity amounts athistorical rates, and the results of operations and cash flow at the average currency exchange rate prevailing during the periods reported. The net effect ofsuch translation gains and losses are reflected in accumulated other comprehensive loss in the stockholders' equity section of the consolidated balance sheets. Transactions denominated in foreign currencies other than a subsidiary's functional currency are recorded at the rates of exchange prevailing at the timeof the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the balance sheet date.Exchange differences arising upon settlement of a transaction are reported in the consolidated statements of operations in other expense, net.Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at themeasurement date. The Company classifies certain assets and liabilities based on the following hierarchy of fair value:Level 1:Quoted prices for identical assets or liabilities in active markets that can be assessed at the measurement date.Level 2:Inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices foridentical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observablemarket data.Level 3:Inputs reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Theinputs are unobservable in the market and significant to the instrument's valuation.When determining the fair value measurements for assets and liabilities required to be recorded at fair value, management considers the principal or mostadvantageous market in which it would transact and considers risks, restrictions, or other assumptions that market participants would use when pricing theasset or liability.F - 14Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Concentrations of Credit RiskFinancial instruments potentially subject to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash and cashequivalents, and trade accounts receivable. At times during the periods presented, the Company had funds in excess of $250,000 insured by the U.S. FederalDeposit Insurance Corporation, or in excess of similar Deposit Insurance programs outside of the United States, on deposit at various financial institutions.Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which thosedeposits are held.The Company's trade accounts receivable are unsecured and geographically dispersed. No single customer's trade accounts receivable balance as ofDecember 31, 2017 and 2016, exceeded 10% of the Company's consolidated accounts receivable, net. No single customer accounted for more than 10% ofrevenue for the years ended December 31, 2017, 2016, and 2015.Newly Adopted Accounting PrinciplesIn March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Improvements toEmployee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions. The ASU changes fiveaspects of the accounting for share-based payment award transactions: (1) accounting for income taxes; (2) classification of excess tax benefits on thestatement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement ofcash flows when an employer withholds shares for taxes. The Company adopted ASU 2016-09 effective January 1, 2017. Excess tax benefits for share-basedpayments are now recognized against income tax expense rather than additional paid-in capital and are included in operating cash flows rather thanfinancing cash flows. The recognition of excess tax benefits has been applied on a modified retrospective basis through a cumulative-effect adjustment to theopening balance of retained earnings. As of January 1, 2017, the cumulative effect of adopting ASU 2016-09 was an increase in deferred tax assets of $11.2million and a decrease in accumulated deficit of $11.2 million as a result of recognizing $27.8 million previously unrecognized excess tax benefits fromshare-based compensation. The Company will continue to account for forfeitures as they occur. Cash paid by the Company when directly withholding sharesfor tax withholding purposes will continue to be classified as a financing activity rather than an operating activity. Additionally, the Company has appliedthe provisions of ASU 2016-09 on a prospective basis in the consolidated statements of cash flows and prior periods have not been adjusted.In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies thedefinition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. Thestandard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and asubstantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning after December 15, 2017,including interim periods within that reporting period. Early adoption of the standard is allowed for transactions that have not been reported in financialstatements issued prior to the new standards issuance date. The Company adopted the guidance as of January 1, 2017. Certain immaterial asset purchasesduring 2017 were accounted for as acquisitions of assets as a result of applying the new guidance.Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standardsfor revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the EffectiveDate, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the originaleffective date. During 2016, the FASB also issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU No.2016-10, Identifying Performance Obligations and Licensing; ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients; and ASU No.2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers which amend ASU No. 2014-09. Theseamendments include clarification of principal versus agent guidance in situations in which a revenue transaction involves a third party in providing goods orservices to a customer. The amendments also clarify, in terms of identifying performance obligations, how entities would determine whether promised goodsor services are separately identifiable from other promises in a contract and, therefore, would be accounted for separately. The guidance allows entities todisregard goods or services that are immaterial in the context of a contract. The new revenue recognition standard will be effective for the Company in thefirst quarter of 2018. The new standard also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospectivemethod), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modifiedretrospective method). The Company will adopt this new standard as of January 1, 2018 using the modified retrospective method applied to those contractsthat were not completed as of that date. The Company has completed a detailed review of contracts and policies in order to evaluate any required changes toits existing accounting policies and to quantify the impact of Topic 606. For most revenue arrangements there are no impacts as they generally consist of asingle performanceF - 15Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.obligation to transfer promised goods or services and they were not previously accounted for under any industry-specific guidance that will be superseded byTopic 606. In these arrangements, any promised installation services are generally considered to be immaterial in the context of the contract and willtherefore be included in the single performance obligation. In addition, most revenue arrangements contain substantive termination provisions such that thecontract term will be unaffected by Topic 606. As part of the detailed analysis, the Company further analyzed its initial assessment related to the usage basedcontracts, price concessions, and sales commissions, and based upon the nature and extent of these activities, has concluded there are no material impacts.Certain of the Company’s contracts with customers are in the form of IRUs, which will generally fall outside the scope of Topic 606 and will be recognized inaccordance with ASC 840, Leases or ASC 842, Leases, upon its adoption. While the Company will provide expanded disclosures, the adoption of Topic 606will not have a material impact on its consolidated statements of operations.In February 2016, the FASB issued ASU 2016-02, Leases, which requires most leases (with the exception of leases with terms of less than one year) to berecognized on the balance sheet as an asset and a lease liability. Leases will be classified as an operating lease or a financing lease. Operating leases areexpensed using the straight-line method, whereas financing leases will be treated similarly to a capital lease under the current standard. The new standard willbe effective for annual and interim periods, within those fiscal years, beginning after December 15, 2018, but early adoption is permitted. The new standardmust be presented using the modified retrospective method beginning with the earliest comparative period presented. The Company is currently evaluatingthe effect of the new standard on its consolidated financial statements and related disclosures.In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity inpractice of how certain transactions are classified and presented in the statement of cash flows in accordance with ASC 230. The ASU amends or clarifiesguidance on eight specific cash flow issues, some of which include classification on debt prepayment or debt extinguishment costs, contingent considerationpayments made after a business combination, and separately identifiable cash flows and application of the predominance principle. The standard is effectivefor financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those periods. Early adoption is permitted,provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. TheCompany is currently evaluating the effect of the new standard on its consolidated financial statements and related disclosures, but the Company does notexpect the new guidance to have a material impact.In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies the presentationrequirements of restricted cash within the statement of cash flows. The changes in restricted cash and restricted cash equivalents during the period should beincluded in the beginning and ending cash and cash equivalents balance reconciliation on the statement of cash flows. When cash, cash equivalents,restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, an entity shall calculate atotal cash amount in a narrative or tabular format that agrees to the amount shown on the statement of cash flows. Details on the nature and amounts ofrestricted cash should also be disclosed. This guidance will be effective in the first quarter of 2018, and early adoption is permitted. The guidance requiresapplication using a retrospective approach. The Company is assessing whether the new standard will have a material effect on its consolidated financialstatements and related disclosures.In March 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, whichsimplifies the accounting for goodwill impairment by eliminating the requirement to calculate the implied fair value of goodwill (Step 2) to measure agoodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (asdetermined in Step 1). The guidance is effective prospectively for public business entities for fiscal years beginning after December 15, 2019. Early adoptionis permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the newguidance to have a material impact on its consolidated financial statements.In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifieswhen changes to the terms or conditions of share-based equity awards must be accounted for as modifications. Entities will apply the modificationaccounting guidance if the value, vesting conditions or classification of the award are not the same immediately before and after the modification. Theguidance is effective prospectively for public business entities for fiscal years beginning after December 15, 2017, including interim periods within thatreporting period. The Company does not expect this new guidance to have a material impact on its consolidated financial statements.Other recent accounting pronouncements issued by the FASB during 2017 and through the filing date did not and are not believed by management tohave a material impact on the Company's present or historical consolidated financial statements.NOTE 3 — BUSINESS ACQUISITIONS F - 16Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Since its formation, the Company has consummated a number of transactions accounted for as business combinations as part of its growth strategy. Theacquisitions of these businesses, which are in addition to periodic purchases of customer contracts, have allowed the Company to increase the scale at whichit operates, which in turn affords the Company the ability to increase its operating leverage, extend its network, and broaden its customer base.The accompanying consolidated financial statements include the operations of the acquired entities from their respective acquisition dates. All of theacquisitions noted below have been accounted for as a business combination. Accordingly, consideration paid by the Company to complete the acquisitionsis initially allocated to the respective assets and liabilities based upon their estimated acquisition date fair values. The recorded amounts for assets acquiredand liabilities assumed are provisional and subject to change during the measurement period, which is up to 12 months from the date of acquisition.The following is a list of material business combinations the Company completed during 2017, 2016, and 2015, respectively.2017 AcquisitionsCustom Connect International B.V.In December 2017, the Company acquired Custom Connect International B.V. ("Custom Connect"). The Company paid $28.9 million in cashconsideration, of which $0.6 million was net cash acquired, and 49,941 unregistered shares of the Company's common stock valued at $2.2 million atclosing. $3.2 million of the initial cash consideration is held in escrow for one year, subject to reduction for any indemnification claims made by theCompany prior to such date. The results of Custom Connect have been included from December 31, 2017. The acquisition was considered a stock purchasefor tax purposes.Transbeam, Inc.In October 2017, the Company acquired Transbeam, Inc. ("Transbeam"). The Company paid $26.4 million in cash consideration at closing, of which $0.8million was net cash acquired, and $2.0 million was deferred as holdback consideration for a 12-month period, subject to reduction for any indemnificationclaims made by the Company prior to such date. The results of Transbeam have been included from October 1, 2017. The acquisition was considered a stockpurchase for tax purposes.Global CapacityIn September 2017, the Company acquired Global Capacity. The Company paid $104.0 million in cash consideration, of which $4.0 million was netcash acquired, and 1,850,000 unregistered shares of the Company's common stock valued at $53.6 million at closing. $10.0 million of the initial cashconsideration is held in escrow for one year, subject to reduction for any indemnification claims made by the Company prior to such date. The results ofGlobal Capacity have been included from September 15, 2017. The acquisition was considered an asset purchase for tax purposes.Perseus TelecomIn June 2017, the Company acquired Perseus Telecom ("Perseus"). The Company paid $37.5 million in cash consideration, of which $0.1 million was netcash acquired, and assumed $1.9 million in capital leases. $4.0 million of the initial cash consideration is held in escrow for one year, subject to reduction forany indemnification claims made by the Company prior to such date. The results of Perseus have been included from June 1, 2017. The acquisition wasconsidered a stock purchase for tax purposes.HiberniaIn January 2017, the Company acquired Hibernia. The Company paid $529.6 million in cash consideration, of which $14.6 million was net cashacquired, and 3,329,872 unregistered shares of the Company's common stock, initially valued at $75.0 million on the date of announcement, and ultimatelyvalued at $86.1 million at closing. $15.0 million of the initial cash consideration is held in escrow for one year, subject to reduction for any indemnificationclaims made by the Company prior to such date. The results of Hibernia have been included from January 1, 2017. The acquisition was considered an assetpurchase for tax purposes.2016 AcquisitionsTelnes BroadbandIn February 2016, the Company completed the acquisition of Telnes Broadband ("Telnes"). The Company paid $17.5 million, composed of $15.5million in cash and 178,202 unregistered shares of the Company's common stock valued at $2.0 million. $1.8F - 17Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.million of the cash consideration was deferred for one year subject to reduction for any indemnification claims made by the Company prior to such date. Theacquisition was considered an asset purchase for tax purposes.2015 AcquisitionsOne Source Networks Inc.In October 2015, the Company acquired One Source Networks Inc. ("One Source"). The Company paid $169.3 million of cash and issued 185,946unregistered shares of the Company's common stock valued at $2.3 million. The Company also issued 289,055 unregistered shares of its common stock tocertain One Source employees as compensation for continuous employment. Share-based compensation of $3.6 million has been amortized ratably over an18 month service period. The net working capital was finalized in 2016 for additional consideration of $0.4 million. The acquisition was considered a stockpurchase for tax purposes.MegaPath CorporationIn April 2015, the Company acquired MegaPath Corporation ("MegaPath"). The Company paid $141.4 million in cash (exclusive of the assumption of$3.4 million in capital leases) and issued 610,843 unregistered shares of the Company’s common stock valued at $7.5 million. In April 2016, the Companyalso settled a dispute related to closing date working capital with MegaPath in 2016, resulting in an increase to total consideration and goodwill of $4.1million. $10.0 million of the initial cash consideration was deferred for one year, subject to reduction for any indemnification claims made by the Companyprior to such date. The acquisition was considered an asset purchase for tax purposes.Purchase Price AllocationThe table below reflects the Company's estimates of the acquisition date fair values of the purchase consideration, assets acquired, and liabilitiesassumed for its 2017 acquisitions (amounts in millions): F - 18Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Hibernia Global Capacity Other 2017 AcquisitionsPurchase Price Cash paid at closing, including working capital estimate$529.6 $104.0 $92.8Deferred cash consideration— — 2.0Common stock (1)86.1 53.6 2.2Purchase consideration$615.7 $157.6 $97.0 Purchase Price Allocation Assets acquired: Current assets$42.6 $25.7 $8.5Property and equipment432.5 34.4 9.8Other assets0.1 2.5 0.5Intangible assets - customer lists166.7 41.2 39.8Intangible assets - tradename0.7 — 0.1Intangible assets - other— 4.6 0.2Deferred tax asset— — —Goodwill201.1 88.8 73.7Total assets acquired843.7 197.2 132.6 Liabilities assumed: Current liabilities(40.6) (24.1) (23.0)Capital leases, long-term portion— — (2.3)Deferred revenue(163.3) (15.5) (1.4)Deferred tax liability(24.1) — (8.7)Other long-term liabilities— — (0.2)Total liabilities assumed(228.0) (39.6) (35.6)Net assets acquired$615.7 $157.6 $97.0(1) Common stock fair value for Hibernia equals the closing share price of $27.80 less a discount for lack of marketability. Common stock fair value for Global Capacity equalsthe closing share price of $30.85 less a discount for lack of marketability.The table below reflects the weighted average amortization period for intangible assets acquired in 2017 (amounts in years): Hibernia Global Capacity Other 2017AcquisitionsIntangible assets - customer lists10.0 9.0 8.0Intangible assets - tradename2.0 — 0.5Intangible assets - other— 2.2 5.0Weighted average10.0 8.3 8.0Amortization expense related to intangible assets created as a result of the 2017 acquisitions of $21.1 million has been recorded for the year endedDecember 31, 2017. Estimated amortization expense related to the 2017 acquisitions for each of the years subsequent to December 31, 2017 is as follows(amounts in millions):F - 19Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.2018$30.5201926.9202026.9202126.9202226.92023 and beyond94.1Total$232.2Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefitsarising from other assets acquired that could not be individually identified and separately recognized. The goodwill is not expected to be deductible for taxpurposes. Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairmentare present.Acquisition Method Accounting EstimatesThe Company initially recognizes the assets and liabilities acquired from the aforementioned acquisitions based on its preliminary estimates of theiracquisition date fair values. As additional information becomes known regarding the acquired assets and assumed liabilities, management may makeadjustments to the opening balance sheet of the acquired company up to the end of the measurement period, which is a one-year period following theacquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives ofdepreciable tangible and identifiable intangible assets) requires significant judgment.Transaction CostsTransaction costs describe the broad category of costs the Company incurs in connection with signed and/or closed acquisitions. There are two types ofcosts that the Company accounts for:•Severance, restructuring and other exit costs•Transaction and integration costsSeverance, restructuring and other exit costs include severance and other one-time benefits for terminated employees, termination charges for leases andsupplier contracts, and other costs incurred associated with an exit activity. These costs are reported separately in the consolidated statements of operations.Refer to Note 11 - Severance, Restructuring, and Other Exit Costs of these consolidated financial statements for further information on severance,restructuring and other exit costs.Transaction and integration costs include expenses associated with legal, accounting, regulatory, and other transition services rendered in connectionwith acquisitions, travel expense, and other non-recurring direct expenses associated with acquisitions. Transaction and integration costs are expensed asincurred in support of the integration. The Company incurred transaction and integration costs of $19.1 million, $4.8 million, and $6.1 million for the yearsended December 31, 2017, 2016, and 2015, respectively. Transaction and integration costs have been included in selling, general and administrativeexpenses in the consolidated statements of operations and in cash flows from operating activities in the consolidated statements of cash flows during theyears then ended.Pro forma Financial Information (Unaudited)The pro forma results presented below include the effects of the Company’s acquisitions during 2017 and 2016 as if the acquisitions occurred on January1, 2016. The pro forma net income (loss) for the years ended December 31, 2017 and 2016 includes adjustments to revenue and cost of telecommunicationsservices to eliminate inter-company activity and adjustments to deferred revenue and deferred cost from the acquired companies. The pro forma adjustmentsare based on historically reported transactions by the acquired companies. The pro forma results do not include any anticipated synergies or other expectedbenefits of the acquisitions. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or resultsthat might have been achieved had the acquisitions been consummated as of January 1, 2016.F - 20Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Year Ended December 31, 2017 2016(Amounts in millions, except per share and share data) Revenue$977.4 $912.9Net (loss) income$(81.2) $(19.4) (Loss) earnings per share: Basic$(1.94) $(0.46)Diluted$(1.94) $(0.46) Denominator for basic EPS – weighted average shares41,912,952 42,235,535Denominator for diluted EPS – weighted average shares41,912,952 42,235,535NOTE 4 — GOODWILL AND INTANGIBLE ASSETS The goodwill balance was $644.5 million and $280.6 million as of December 31, 2017 and 2016, respectively. Additionally, the Company's intangibleasset balance was $417.1 million and $193.9 million as of December 31, 2017 and 2016, respectively. The additions to both goodwill and intangible assetsduring the year ended December 31, 2017 relate to the 2017 Acquisitions (see to Note 3 - Business Acquisitions). The additions to intangible assets duringthe year ended December 31, 2017 also include the purchase of customer contracts.The changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 were as follows (amounts in millions):Goodwill - January 1, 2016$271.0Initial goodwill associated with 2016 businesscombinations5.1Adjustments to prior year business combinations4.5Goodwill - December 31, 2016280.6Initial goodwill associated with 2017 businesscombinations334.7Adjustments to current year business combinations28.9Adjustments to prior year business combinations0.3Goodwill - December 31, 2017$644.5 The following tables summarize the Company’s intangible assets (amounts in millions): December 31, 2017 December 31, 2016 AmortizationPeriod Gross AssetCost AccumulatedAmortization Net BookValue Gross AssetCost AccumulatedAmortization Net Book ValueCustomer lists3-10 years $552.8 $155.1 $397.7 $267.7 $91.1 $176.6Non-compete agreements3-5 years 4.6 4.5 0.1 4.6 4.4 0.2Point-to-point FCC licensefees3 years 1.7 1.7 — 1.7 1.3 0.4Intellectual property10 years 23.7 5.2 18.5 17.4 2.1 15.3Tradename3 years 3.9 3.1 0.8 3.1 1.7 1.4 $586.7 $169.6 $417.1 $294.5 $100.6 $193.9Amortization expense was $69.0 million, $40.7 million and $26.0 million for the years ended December 31, 2017, 2016, and 2015, respectively.F - 21Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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, 2017 in each of the years subsequent toDecember 31, 2017 is as follows (amounts in millions):2018$73.8201965.4202062.3202160.8202247.72023 and beyond107.1Total$417.1NOTE 5 — PROPERTY AND EQUIPMENT The following table summarizes the Company’s property and equipment (amounts in millions): December 31, 2017 2016Land and Buildings$14.2 $—Furniture and Fixtures1.9 1.0Fiber Optic Cable411.0 —Fiber Optic Network Equipment199.8 116.2Leasehold Improvements5.0 4.4Computer Hardware and Software25.9 15.6Property and equipment, gross657.8 137.2Less accumulated depreciation(158.5) (93.8)Property and equipment, net$499.3 $43.4Depreciation expense associated with property and equipment was $63.6 million, $22.1 million and $20.7 million for the years ended December 31,2017, 2016, and 2015, respectively.NOTE 6 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following table summarizes the Company’s accrued expenses and other current liabilities (amounts in millions): December 31, 2017 2016Compensation and benefits$13.3 $10.0Selling, general and administrative2.1 4.5Carrier costs13.8 13.5Restructuring9.7 3.2Interest22.9 0.7Fiber pair repurchase10.0 —Accrued taxes9.6 1.8Other7.6 3.2 $89.0 $36.9NOTE 7 — DEFERRED REVENUEThe total deferred revenue as of December 31, 2017 was $161.7 million, consisting of unamortized prepaid capacity sales, IRUs, deferred non-recurringrevenue, and unearned revenue for amounts billed in advance to customers. The total deferred revenue as of December 31, 2016 was $21.3 million, consistingof deferred non-recurring revenue and unearned revenue for amounts billed in advance to customers. Deferred revenue is recognized as current andnoncurrent deferred revenue on the consolidated balance sheets.F - 22Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Prepaid capacity sales and IRUs represent $122.1 million of the total deferred revenue balance as of December 31, 2017, and remaining amortization atDecember 31, 2017 and in each of the years subsequent to December 31, 2017 is as follows (amounts in millions): Capacity Salesand IRUs2018$15.8201911.3202011.0202110.1202210.12023 and beyond63.8 $122.1NOTE 8 — DEBT Long-term debt is summarized as follows (amounts in millions): December 31, 2017 December 31, 2016 Term loan$693.0 $425.87.875% Senior unsecured notes575.0 300.0Revolving line of credit— 20.0Total debt obligations1,268.0 745.8Unamortized debt issuance costs(33.8) (9.3)Unamortized original issuance premium (discount), net9.3 (7.0)Carrying value of debt1,243.5 729.5Less current portion(7.0) (4.3) $1,236.5 $725.22017 Credit AgreementOn January 9, 2017, the Company entered into a credit agreement (the "2017 Credit Agreement") that provides a $700.0 million term loan facility and a$75.0 million revolving line of credit facility (which includes a $25.0 million letter of credit facility). In addition, the Company may request incrementalterm loan and/or incremental revolving loan commitments in an aggregate amount not to exceed the sum of $150.0 million and an unlimited amount that issubject to pro forma compliance with certain net secured leverage ratio tests provided, however, that incremental revolving loan commitments may notexceed $25.0 million. The term loan facility was issued at an original issuance discount of $3.5 million.The maturity date of the term loan facility is January 9, 2024, and the maturity date of the revolving line of credit facility is January 9, 2022. Theprincipal amount of the term loan facility is payable in equal quarterly installments of $1.8 million commencing on March 31, 2017 and continuingthereafter until the maturity date when the remaining balance of outstanding principal amount is payable in full. In addition to scheduled mandatoryrepayments, the Company is also required to repay an amount of up to 50% of Excess Cash Flow (as defined in the Credit Agreement). No such excess cashpayments were made during the year ended December 31, 2017.The Company may prepay loans under the 2017 Credit Agreement at any time, subject to certain notice requirements and LIBOR breakage costs.F - 23Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.At the Company's election, the loans under the 2017 Credit Agreement may be made as either Base Rate Loans or Eurodollar Loans. The EurodollarLoans are subject to a floor of 1.00%.On July 10, 2017, the Company entered into Amendment No. 1 (the "Repricing Amendment") to the 2017 Credit Agreement. The Repricing Amendment,among other things, reduced the applicable margin on Tranche B Term Loans from 3.00% to 2.25% for Base Rate Loans and from 4.00% to 3.25% forEurodollar Loans, and reduced the applicable margin on revolving loans from 2.50% to 2.00% for Base Rate Loans and from 3.50% to 3.00% for EurodollarLoans. The amendment also established a soft call protection of 1.0% through January 10, 2018 for certain prepayments, refinancings, and amendments.On October 12, 2017, the Company entered into an Incremental Revolving Credit Assumption Agreement to increase its revolving line of credit facilityfrom $75.0 million to $100.0 million.The effective interest rate on the term loan at December 31, 2017 and 2016 was 4.5% and 5.8%, respectively.The obligations under the 2017 Credit Agreement are secured by the substantial majority of the tangible and intangible assets of the Company and theguarantors.The 2017 Credit Agreement does not contain a financial covenant for the term loan facility, but includes a maximum consolidated net secured leverageratio applicable to the revolving credit facility in the event that utilization exceeds 30% of the revolving loan facility commitment.The unused and available amount of the revolving line of credit facility at December 31, 2017 was as follows (amounts in millions):Committed capacity$100.0Borrowings outstanding—Letters of credit issued(4.6)Unused and available$95.47.875% Senior Unsecured NotesIn December 2016, the Company completed a private offering of $300.0 million aggregate principal amount of its 7.875% senior unsecured notes due in2024 (the "Original Notes"). The proceeds from the Original Notes were deposited into escrow, where the funds remained until the closing of the acquisitionof Hibernia in January 2017. The Company recognized the proceeds from the private offering as restricted cash and cash equivalents in its consolidatedfinancial statements as of December 31, 2016. The funds were subsequently released with the closing of Hibernia. In connection with the offering, theCompany incurred debt issuance costs of $11.2 million, of which $0.5 million was incurred in 2016 and the remainder was incurred in 2017.In June 2017, the Company completed a private offering of $150.0 million aggregate principal amount of its 7.875% senior unsecured notes due in 2024(the "June 2017 Notes"). The June 2017 Notes will be treated as a single series of debt securities with the Company's Original Notes (together with the June2017 Notes, the "Existing Notes"). The June 2017 Notes have identical terms as the Original Notes, other than the issue date and offering price. The June2017 Notes were issued at a premium of $9.0 million. In connection with the offering, the Company incurred debt issuance costs of $2.9 million.In October 2017, the Company completed a private offering of $125.0 million aggregate principal amount of its 7.875% senior unsecured notes due in2024 (the "October 2017 Notes"). The October 2017 Notes will be treated as a single series of debt securities with the Existing Notes. The October 2017Notes have identical terms as the Existing Notes, other than the issue date and offering price. The October 2017 Notes were issued at a premium of $7.5million. In connection with the offering, the Company incurred debt issuance costs of $3.2 million.Term Loan and 7.875% Senior Unsecured Notes Contractual MaturitiesThe aggregate contractual maturities of long-term debt (excluding unamortized debt issuance costs and unamortized OID) were as follows as ofDecember 31, 2017 (amounts in millions):F - 24Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Total debt2018$7.020197.020207.020217.020227.02023 and beyond1,233.0 $1,268.0Debt Issuance Costs and Original Issuance Discounts and PremiumsThe following table summarizes the debt issuance costs activity for the years ended December 31, 2017 and 2016 (amounts in millions): Term Loan 7.875% SeniorUnsecured Notes Revolving Lineof Credit TotalBalance, December 31, 2015$(9.8) $— $(1.2) $(11.0)Debt issuance costs incurred(0.9) (0.5) — (1.4)Amortization1.3 — 0.2 1.5Loss on debt extinguishment1.6 — — 1.6Balance, December 31, 2016(7.8) (0.5) (1.0) (9.3)Debt issuance costs incurred(14.5) (16.8) (2.7) (34.0)Amortization2.2 1.2 0.4 3.8Loss on debt extinguishment5.4 — 0.3 5.7Balance, December 31, 2017$(14.7) $(16.1) $(3.0) $(33.8)Debt issuance costs are presented in the consolidated balance sheets as a reduction to "Long-term debt." Interest expense associated with theamortization of debt issuance costs was $3.8 million, $1.5 million and $1.0 million for the years ended December 31, 2017, 2016, and 2015, respectively.The following table summarizes the original issuance discount and premium activity for the year ended December 31, 2017 (amounts in millions): Term Loan 7.875% SeniorUnsecured Notes TotalBalance, December 31, 2015$(7.9) $— $(7.9)New Original Issuance (Discount)/Premium— — —Amortization0.9 — 0.9Loss on debt extinguishment— — —Balance, December 31, 2016(7.0) — (7.0)New Original Issuance (Discount)/Premium(3.5) 16.5 13.0Amortization1.1 (0.7) 0.4Loss on debt extinguishment2.9 — 2.9Balance, December 31, 2017$(6.5) $15.8 $9.3OID is presented in the consolidated balance sheets as a reduction to "Long-term debt." Interest expense, net associated with the amortization of OID was$0.4 million, $0.9 million and $0.2 million for the years ended December 31, 2017, 2016, and 2015, respectively.F - 25Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 expensed an aggregate of $8.6 million, $1.6 million, and $3.4 million of debt issuance costs and OID that did not qualify for deferral as a"Loss on debt extinguishment" in the consolidated statements of operations for the years ended December 31, 2017, 2016, and 2015, respectively.Previous Debt Agreement - October 2015 Credit AgreementOn October 22, 2015, the Company entered into a credit agreement (the "October 2015 Credit Agreement") that provided for a $400.0 million term loanfacility and a $50.0 million revolving line of credit (which included a $15.0 million letter of credit facility and a $10.0 million swingline facility). As ofDecember 31, 2016, the Company had drawn $20.0 million under the revolving line of credit and had $29.5 million of borrowing capacity available.Amounts outstanding under the October 2015 Credit agreement were paid in full at the closing of the 2017 Credit Agreement. The previous term loan wasissued at an OID of $8.0 million.NOTE 9 — FAIR VALUE MEASUREMENTS As of December 31, 2017 and 2016, the carrying amounts reflected in the accompanying consolidated balance sheets for cash and cash equivalents,accounts receivable, accounts payable, accrued expenses and other current liabilities, and acquisition earn-outs and holdbacks approximated fair value dueto the short-term nature of these instruments.The table below presents the fair values for the Company's long-term debt as well as the input level used to determine these fair values. The carryingamounts exclude any debt issuance costs or original issuance discount: Fair Value Measurement Using Total Carrying Value in ConsolidatedBalance Sheet Unadjusted Quoted Prices in ActiveMarkets for Identical Assets or Liabilities(1)(Level 1)(amounts in millions) December 31,2017 December 31, 2016 December 31, 2017 December 31, 2016Liabilities not recorded at fair value in the FinancialStatements: Long-term debt, including the current portion: Term loan $693.0 $425.8 $697.3 $425.87.875% Senior unsecured notes 575.0 300.0 608.1 300.0Total long-term debt, including current portion $1,268.0 $725.8 $1,305.4 $725.8(1) Fair value based on the bid quoted price.Assets and liabilities measured at fair value on a non-recurring basis include goodwill, tangible assets, and intangible assets. Such assets are reviewedquarterly for impairment indicators. If a triggering event has occurred, the assets are remeasured when the estimated fair value of the corresponding assetgroup is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3). There were nogoodwill or intangible asset impairments recorded during the years ended December 31, 2017, 2016, and 2015. NOTE 10 — INCOME TAXES The components of (loss) income before income taxes are as follows (amounts in millions): Year Ended December 31, 2017 2016 2015Domestic$(87.1) $11.5 $(12.3)Foreign32.9 (2.3) (2.5)Total$(54.2) $9.2 $(14.8)The components of the provision for (benefit from) income taxes are as follows (amounts in millions):F - 26Source: GTT Communications, Inc., 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Year Ended December 31, 2017 2016 2015Current: Federal$(0.5) $0.4 $0.1State— — —Foreign7.3 1.3 (3.7)Total current6.8 1.7 (3.6) Federal8.0 2.4 (25.3)State0.4 0.7 (3.8)Foreign2.1 (0.9) (1.4)Total deferred10.5 2.2 (30.5)Income tax expense (benefit)$17.3 $3.9 $(34.1) The following is a reconciliation of the U.S. federal statutory income taxes to the amounts reported in the financial statements (amounts in millions): Year Ended December 31, 2017 2016 2015U.S. federal statutory income tax$(19.0) $3.2 $(5.2)Permanent items1.2 (0.2) 0.7State taxes, net of federal benefit(3.0) 0.4 (0.5)Foreign tax rate differential(9.3) — —Compensation related items(5.1) — —Change in valuation allowance29.0 — (23.4)Unrecognized tax positions2.8 — (2.2)Tax Cuts and Jobs Act17.3 — —Other3.4 0.5 (3.5)Total income tax expense (benefit)$17.3 $3.9 $(34.1) The components of the Company's deferred tax assets and liabilities are as follows (amounts in millions): December 31, 2017 2016Deferred tax assets: Tax loss and credit carryforwards$56.5 $21.3Reserves and allowances1.2 0.7Share-based compensation4.2 3.7Other(0.2) 2.2Total deferred tax assets before valuation allowance61.7 27.9Less: Valuation allowance(39.2) (0.3)Total deferred tax assets22.5 27.6Deferred tax liabilities: Intangible assets and goodwill(30.0) (17.7)Property and equipment(12.1) (4.2)Other(6.7) (0.6)Total deferred tax liabilities(48.8) (22.5)Net deferred tax (liabilities) assets(1)$(26.3) $5.1(1) The 2016 Net deferred tax assets are included as a component of Other long-term assets on the consolidated balance sheet.F - 27Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.As of December 31, 2017, the Company had $163.4 million of U.S. federal net operating loss ("NOL") carryforwards net of limitations under Section 382.The Company's U.S. federal NOL carryforwards, if not utilized to reduce taxable income in future years, will expire between 2020 and 2037.As of December 31, 2017, the Company had tax-effected state NOL carryforwards of approximately $6.7 million, which are subject to limitations andhave various expirations through 2037.As of December 31, 2017, the Company had NOL carryforwards in the U.K. of $89.5 million, the majority of which have no expiration date.As of December 31, 2017, the Company recorded a valuation allowance of $29.0 million against its net U.S. deferred tax assets under the criteria of ASC740. The amount of U.S. deferred tax asset considered realizable, could be adjusted if objective negative evidence in the form of cumulative losses is nolonger present or additional weight given to subjective evidence of future forecasts, which are subject to variation due the effects of acquisitions.Additionally, based on its assessment as of December 31, 2017, the Company maintained a valuation allowance on $10.0 million of foreign NOLs that theCompany determined would not be realized in the future, and will continue to evaluate the need for a valuation allowance in the other foreign jurisdictions.The Tax Act was enacted in December 2017. The Tax Act significantly changes U.S. tax law by, among other things, lowering U.S. corporate income taxrates, implementing a territorial tax system, and imposing a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. The Tax Actreduces the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporarydifferences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, we revalued ourending net deferred tax assets at December 31, 2017 and recognized provisional tax expense of $11.8 million.The Tax Act provided for a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits("E&P"). We have recognized a provisional $5.5 million of income tax expense related to the transition tax.While the Tax Act provides for a modified territorial tax system, beginning in 2018, global intangible low-taxed income ("GILTI") provisions will beapplied providing an incremental tax on low taxed foreign income. The GILTI provisions require us to include in our U.S. income tax return foreignsubsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. Under U.S. GAAP, we are required to make an accountingpolicy election to either (1) treat taxes due related to GILTI as a current-period expense when incurred (the "period cost method") or (2) factor such amountsinto our measurement of our deferred taxes (the "deferred method"). We are continuing to evaluate the GILTI tax rules and have not yet adopted our policy toaccount for the related impacts.The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does nothave the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain incometax effects of the Tax Act and allows the registrant to record provisional amounts during a measurement period not to extend beyond one year from theenactment date. The ultimate impact may materially differ from the provisional amounts recorded as of December 31, 2017 due to, among other things,additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take asa result of the Tax Act. We expect to complete our analysis within the measurement period in accordance with SAB 118.Due to the one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits, all previouslyunremitted earnings for which no U.S. deferred tax liability had been accrued have now been subjected to U.S. federal income tax. To the extent we repatriateearnings to the U.S., we estimate we will not incur significant additional tax expense related to such amounts; however, our estimates are provisional andsubject to further analysis.Accounting for Uncertainty in Income TaxesThe Company had unrecognized tax benefits of $1.5 million as of December 31, 2017. The unrecognized tax benefit was not material as of December 31,2016 and 2015. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Changes in unrecognized taxbenefits are set forth below (amounts in millions):F - 28Source: GTT Communications, Inc., 10-K, March 01, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2017 2016 2015Balance, January 1$— $— $2.1Changes for tax positions of prior years2.8 — (1.8)Increases for tax positions related to the current year— — —Settlements and lapsing of statutes of limitations(1.3) — (0.3)Balance, December 31$1.5 $— $—The Company files income tax returns in U.S. federal, state, and foreign jurisdictions. The Company is no longer subject to U.S. federal and state incometax examinations for years prior to 2014 with the exception of the federal and state tax returns of certain acquired entities for which net operating losses areavailable for utilization. NOTE 11 — SEVERANCE, RESTRUCTURING, AND OTHER EXIT COSTSThe Company incurred severance, restructuring and other exit costs associated with the various acquisitions. These costs include employee severancecosts, termination costs associated with facility leases and network agreements, and other exit costs related to the transactions. Transaction and integrationcosts are not included in exit costs, but are recorded as a component of selling, general and administrative expense.The exit costs recorded and paid relating to the 2017 Acquisitions are summarized as follows for the year ended December 31, 2017 (amounts inmillions): Balance, December 31,2016 Charges andAdjustments Payments Balance, December 31,2017Employee Termination Benefits$— $16.6 $(11.1) $5.5Contract Terminations: Lease terminations0.9 3.5 (2.0) 2.4 Other contract terminations2.3 2.3 (2.8) 1.8 $3.2 $22.4 $(15.9) $9.7The exit costs recorded and paid related to the 2016 Acquisition are summarized as follows for the year ended December 31, 2016 (amounts in millions): Balance, December 31,2015 Charges andAdjustments Payments Balance, December 31,2016Employee Termination Benefits$1.9 $1.0 $(2.9) $—Contract Terminations: Lease terminations1.5 — (0.6) 0.9 Other contract terminations3.4 (0.1) (1.0) 2.3 $6.8 $0.9 $(4.5) $3.2 The exit costs recorded and paid related to the 2015 Acquisitions are summarized as follows for the year ended December 31, 2015 (amounts inmillions): Balance, December 31,2014 Charges andAdjustments Payments Balance, December 31,2015Employee Termination Benefits$0.8 $7.2 $(6.1) $1.9Contract Terminations: Lease terminations0.2 1.8 (0.5) 1.5 Other contract terminations1.1 3.7 (1.4) 3.4 $2.1 $12.7 $(8.0) $6.8F - 29Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 12 — SHARE-BASED COMPENSATIONShare-Based Compensation Plan The Company grants share-based equity awards, including stock options and restricted stock, under the GTT Stock Plan. The GTT Stock Plan is limitedto an aggregate 9,500,000 shares of which 9,126,787 have been issued and are outstanding as of December 31, 2017.The GTT Stock Plan permits the granting of time-based stock options, time-based restricted stock, and performance-based restricted stock to employeesand consultants of the Company, and non-employee directors of the Company.Time-based options granted under the GTT Stock Plan have an exercise price of at least 100% of the fair market value of the underlying stock on thegrant date and expire no later than 10 years from the grant date. The Company uses the Black-Scholes option-pricing model to determine the fair value of itsstock option awards at the time of grant. The stock options generally vest over four years with 25% of the options becoming exercisable one year from thedate of grant and the remaining vesting 75% annually or quarterly over the following three years.Time-based restricted stock granted under the GTT Stock Plan is valued at the share price of our common stock as reported on the NYSE on the date ofgrant. Time-based restricted stock generally vests over four years with 25% of the shares becoming unrestricted one year from the date of grant and theremaining vesting 75% annually or quarterly over the following three years.Performance-based restricted stock is granted under the GTT Stock Plan subject to the achievement of certain performance measures. Once achievementof these performance measures becomes probable, the Company starts to expense the fair value of the grant over the vesting period. The performance-basedrestricted stock is valued at the share price of our common stock as reported on the NYSE on the date of grant. The performance grant vests quarterly over thevesting period once achievement of the performance measure has been met and approved by the Compensation Committee.The Compensation Committee of the Board of Directors, as administrator of the GTT Stock Plan, has the discretion to authorize a different vestingschedule for any awards.Share-Based Compensation ExpenseThe following table summarizes the share-based compensation expense recognized as a selling, general and administrative expense in the consolidatedstatements of operations (amounts in millions): Year Ended December 31, 2017 2016 2015Time-based stock options$1.4 $1.8 $1.6Restricted stock (1)20.6 13.7 6.3ESPP0.2 0.3 —Total$22.2 $15.8 $7.9(1) Includes $0.7 million, $2.2 million, and $0.7 million for the years ended December 31, 2017, 2016, and 2015, respectively, related to the shares issued to the formeremployees of One Source for continued employment.The following table summarizes the unrecognized compensation cost and the weighted average period over which the cost is expected to be amortized(amounts in millions):F - 30Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. December 31, 2017 Unrecognized Compensation Cost Weighted Average Remaining Period tobe Recognized (Years)Time-based stock options$1.8 1.53Time-based restricted stock33.0 2.38Performance-based restricted stock (1)9.3 1.15Total$44.1 2.09(1) Excludes $32.2 million of unrecognized compensation cost related to the 2017 Performance Awards as achievement of the performance criteria was not probable as ofDecember 31, 2017.Time-Based Stock OptionsThe Company uses the Black-Scholes option-pricing model method to calculate the fair value of the time-based stock options as of the grant date. Theuse of option valuation models requires the input by management of certain assumptions, including the expected stock price volatility, the expected life ofthe option term, and the forfeiture rate. These assumptions are utilized by the Company in determining the estimated fair value of the time-based stockoptions. There were no time-based stock options granted during the year ended December 31, 2017. Assumptions used in the calculation of the fair value ofthe time-based stock options granted for the years ended December 31, 2016 and 2015 were as follows: 2016 2015Expected volatility42.5% - 48.8% 44.3% - 64.6%Risk free interest rate1.0% - 1.9% 1.3% - 1.9%Expected term (in years)6.11 6.25Dividend yield0.0% 0.0%Forfeiture rate4.0% 4.0% The following table summarizes our time-based stock option activity: Options Weighted AverageExercise Price WeightedAverageFair Value Weighted AverageRemainingContractualLife (Years) AggregateIntrinsicValueBalance, December 31, 2014 1,363,460 $5.41 $3.17 Granted 344,117 17.91 8.64 Exercised (259,121) 2.35 1.40 Forfeited or canceled (72,079) 6.50 2.75 Balance, December 31, 2015 1,376,377 9.05 4.89 Granted 158,958 13.76 6.10 Exercised (307,286) 3.83 2.29 Forfeited or canceled (64,141) 13.31 6.47 Balance, December 31, 2016 1,163,908 10.84 5.66 Granted — — — Exercised (438,338) 7.89 3.45 Forfeited or canceled (37,607) 16.44 7.82 Balance, December 31, 2017 687,963 $12.40 $6.85 6.60 $23,762,296Exercisable 472,759 $10.96 $5.94 6.17 $17,014,104 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company's closing stock price onthe last day of the year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders hadall option holders exercised their options on December 31, 2017. The amount of aggregate intrinsic value will change based on the fair market value of theCompany's stock.F - 31Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.As of December 31, 2017, the total vested portion of share-based compensation expense for time-based stock options was $7.5 million.Time-Based Restricted Stock The following table summarizes our time-based restricted stock activity: Shares WeightedAverageFairValueUnvested balance, December 31, 2014679,075 $11.65Granted550,027 18.46Forfeited(18,220) 10.96Vested(331,250) 19.20Unvested balance, December 31, 2015879,632 13.08Granted638,362 14.66Forfeited(83,293) 16.85Vested(385,731) 18.93Unvested balance, December 31, 20161,048,970 11.59Granted1,035,496 30.19Forfeited(112,887) 22.27Vested(728,228) 31.61Unvested balance, December 31, 20171,243,351 $14.39 The fair value of time-based restricted stock awarded totaled $31.3 million, $9.4 million and $10.9 million for the years ended December 31, 2017, 2016,and 2015, respectively.Performance-Based Restricted StockThe following table summarizes our performance-based restricted stock activity: Shares WeightedAverageFairValueUnvested balance, December 31, 2014766,500 $11.11Granted935,000 19.18Forfeited— —Vested(303,373) 20.03Unvested balance, December 31, 20151,398,127 14.57Granted— —Forfeited(19,687) 17.69Vested(450,004) 18.36Unvested balance, December 31, 2016928,436 12.66Granted930,000 35.15Forfeited— —Vested(48,436) 28.74Unvested balance, December 31, 20171,810,000 $23.79The Company granted $8.5 million of restricted stock during 2014 and early 2015 contingent upon the achievement of certain performance criteria (the"2014 Performance Awards"). The fair value of the 2014 Performance Awards was calculated using the value of GTT common stock on the grant date. TheCompany started recognizing share-based compensation expense for these grants when the achievement of the performance criteria became probable, whichwas in the third quarter of 2015. The 2014F - 32Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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.Performance Awards started vesting in the fourth quarter of 2015 when the performance criteria were met and they will continue to vest ratably through thethird quarter of 2017. As of December 31, 2017, the 2014 Performance Awards were fully vested.The Company granted $17.4 million of restricted stock during 2015 and 2017 contingent upon the achievement of certain performance criteria (the"2015 Performance Awards"). The fair value of the 2015 Performance Awards was calculated using the value of GTT common stock on the respective grantdates. Upon announcement of the Hibernia acquisition in November 2016, the achievement of two of the four performance criteria became probable and theCompany started recognizing share-based compensation expense for these grants. Expense recognition will continue through the first quarter of 2019.Additionally, upon announcement of the Global Capacity acquisition in June 2017, the achievement of the final two performance criteria became probableand the Company started recognizing share-based compensation expense for these grants. Expense recognition will continue through the fourth quarter of2019. The Company recognized share-based compensation expense related to the 2015 Performance Awards of $6.3 million and $1.1 million for the yearsended December 31, 2017 and 2016, respectively. As of December 31, 2017, unamortized compensation cost related to the unvested 2015 PerformanceAwards was $9.3 million.The Company granted $32.2 million of restricted stock during 2017 contingent upon the achievement of certain performance criteria (the "2017Performance Awards"). The fair value of the 2017 Performance Awards was calculated using the value of GTT common stock on the grant date. As ofDecember 31, 2017, achievement of the performance criteria was not probable. Accordingly, the Company recognized no share-based compensation expenserelated to the 2017 Performance Awards for the year ended December 31, 2017. As of December 31, 2017, unamortized compensation cost related to theunvested 2017 Performance Awards was $32.2 million.Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan ("ESPP") that permits eligible employees to purchase common stock through payroll deductions atthe lesser of the opening stock price or 85% of the closing stock price of the Company's common stock during each of the three-month offering periods. Theoffering periods generally commence on the first day and the last day of each quarter. At December 31, 2017, 439,370 shares were available for issuanceunder the ESPP.Shares Issued in AcquisitionIn conjunction with the acquisition of One Source, the Company issued $3.6 million, or 289,055 unregistered shares, of common stock to the sellingshareholders of One Source subject to a continuing employment period of 18 months. The fair value of this issuance was calculated using the value of GTTcommon stock on the acquisition date less a discount for lack of marketability. The $3.6 million was expensed ratably over the service period of 18 months.As of December 31, 2017, the related compensation expense was fully recognized.NOTE 13 — DEFINED CONTRIBUTION PLAN The Company has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code ("IRC") that covers substantially all U.S.based employees. The plan allows eligible employees to contribute from 1% to 100% of their pre-tax eligible earnings, subject to defined limits. TheCompany matches 50% of an employee's voluntary contributions per pay period up to the annual maximum as defined by the IRS. Employer's matchingcontributions under the Company's plan vest at a rate of 25% for each year of employment and are fully vested after four years of employment for all currentand future contributions. During the years ended December 31, 2017, 2016, and 2015, the Company incurred 401(k) matching expense of $1.7 million, $0.9million, and $0.6 million, respectively.NOTE 14 — COMMITMENTS AND CONTINGENCIES Estimated annual commitments under contractual obligations are as follows at December 31, 2017 (amounts in millions):F - 33Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Network Supply Office Space Capital Leases Other(1)2018$144.1 $6.3 $1.5 $8.4201981.0 6.5 0.3 2.8202030.8 5.6 — 2.620218.0 5.1 — 1.320225.7 4.3 — —2023 and beyond39.0 14.2 — — $308.6 $42.0 $1.8 $15.1(1) Primarily consists of vendor contracts associated with network monitoring and maintenance services.Network Supply Agreements As of December 31, 2017, the Company had purchase obligations of $308.6 million associated with the telecommunications services that the Companyhas contracted to purchase from its suppliers. The Company’s supplier agreements fall into two key categories, the Company's core IP backbone and customerspecific locations (also referred to as 'last mile' locations). Supplier agreements associated with the Company's core IP backbone are typically contracted on aone-year term and do not relate to any specific underlying customer commitments. The short-term duration allows the Company to take advantage offavorable pricing trends.Supplier agreements associated with the Company's customer specific locations, which represent the substantial majority of the Company's networkspending, are typically contracted so the terms and conditions in both the vendor and customer contracts are substantially the same in terms of duration andcapacity. The back-to-back nature of the Company’s contracts means that its network supplier obligations are generally mirrored by its customers'commitments to purchase the services associated with those obligations.Office Space and Leases The Company is currently headquartered in McLean, Virginia and has twenty other offices throughout North America, nine offices in Europe, two officesin Asia, one office in the Middle East, and one office in Brazil. The Company records rent expense using the straight-line method over the term of the leaseagreement. Office facility rent expense was $7.2 million, $5.5 million and $4.5 million for the years ended December 31, 2017, 2016, and 2015, respectively.Legal Proceedings From time to time, the Company is a party to legal proceedings arising in the normal course of its business. The Company does not believe that it is aparty to any current or pending legal action that could reasonably be expected to have a material adverse effect on its financial condition or results ofoperations and cash flow. NOTE 15 — FOREIGN OPERATIONSThe Company’s operations are located primarily in the United States and Europe. The Company’s financial data recognized by legal entities as follows(amounts in millions):F - 34Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. UK IRELAND CANADA ITALY OTHER FOREIGNCOUNTRYTOTAL US TOTAL2017 Revenues by geographicarea$83.7 $18.0 $12.8 $0.9 $6.4 $121.8 $706.1 $827.9Long-lived assets atDecember 3176.1 61.4 38.3 18.8 4.1 198.7 1,362.2 1,560.92016 Revenues by geographicarea$31.0 $— $— $37.7 $1.6 $70.3 $457.0 $527.3Long-lived assets atDecember 318.1 — — 24.1 0.6 32.8 485.1 517.92015 Revenues by geographicarea$25.6 $— $— $46.6 $3.5 $75.7 $296.8 $372.5Long-lived assets atDecember 319.3 — — 30.0 1.2 40.5 451.4 491.9NOTE 16 — SUBSEQUENT EVENTSOn February 23, 2018, the Company entered into an Agreement for the Sale and Purchase of Interoute Communications Holdings S.A., a Luxembourgpublic limited liability company. The purchase price of approximately €1.9 billion will be paid in cash at closing. The Company received committed equityfinancing for the transaction of $250 million from two institutional investors and committed debt financing from a group of financial institutions for theremainder. The Company expects the transaction to close in three to six months, subject to customary regulatory approvals.NOTE 17 — QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)The following tables are unaudited consolidated quarterly results of operations for the years ended December 31, 2017 and 2016. The financialinformation presented should be read in conjunction with other information included in the Company's consolidated financial statements. Quarters Ended March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017Revenue:(In millions)Telecommunications services$186.0 $190.1 $202.6 $249.2 Operating expenses: Cost of telecommunications services95.0 97.3 103.8 136.0 Operating (loss) income(3.0) 14.6 2.9 10.9 Net (loss) income(13.1) 0.6 (9.5) (49.5) (Loss) earnings per share: Basic$(0.32) $0.02 $(0.23) $(1.12)Diluted$(0.32) $0.02 $(0.23) $(1.12) Weighted average shares: Basic40,410,554 41,244,595 41,762,693 44,135,789Diluted40,410,554 41,819,377 41,762,693 44,135,789F - 35Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Quarters Ended March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016Revenue: (In millions) Telecommunications services$125.8 $130.3 $133.3 $137.9 Operating expenses: Cost of telecommunications services67.5 69.7 69.7 72.7 Operating income9.0 9.0 12.2 10.6 Net income (loss)0.9 0.1 5.1 (0.8) Earnings (loss) per share: Basic$0.03 $— $0.14 $(0.02)Diluted$0.03 $— $0.14 $(0.02) Weighted average shares: Basic36,854,219 37,065,651 37,152,063 37,221,037Diluted37,455,379 37,678,120 37,785,921 37,221,037ReclassificationsAs discussed in Note 2 - Significant Accounting Policies, in 2017 the Company changed its presentation of certain excise taxes and surcharges from thenet method to the gross method. The previously reported telecommunications revenue and cost of telecommunications services included within theConsolidated Statements of Operations for the quarterly periods in the years ended December 31, 2017 and 2016 as presented in the Company's quarterlyreports on Form 10-Q have been reclassified for consistency with current year presentation. See Note 2 - Significant Accounting Policies for further discussionof the nature of such reclassifications.SCHEDULE IIGTT COMMUNICATIONS INC.VALUATION AND QUALIFYING ACCOUNTS(IN MILLIONS) Allowance for Doubtful Accounts ReceivableYear Balance at Beginning ofYear Charged to Cost andExpenses Deductions Other Balance at End of Year2015 $0.9 $3.2 $(3.2) $0.1 $1.02016 $1.0 $6.0 $(4.3) $— $2.72017 $2.7 $15.1 $(12.8) $0.1 $5.1 F - 36Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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. Deferred Tax Asset Valuation AllowanceYear Balance at Beginning ofYear Charged to Cost andExpenses Deductions Other Balance at End of Year2015 $23.8 $— $(23.5) $— $0.32016 $0.3 $— $— $— $0.32017 $0.3 $29.0 $— $9.9 $39.2F - 37Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 ofIncorporation or OrganizationGTT Americas, LLC DelawareGTT Escrow Corporation DelawareGTT Global Telecom Government Services LLC VirginiaGTT-EMEA, Ltd. United KingdomGTT Communications SRL ItalyHibernia Atlantic Cable System Limited IrelandHibernia NGS Limited IrelandHibernia Express (Ireland) Limited IrelandHibernia Atlantic U.S. LLC United StatesGC Pivotal LLC United StatesSource: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-194972) and Form S-8 (Nos. 333-210488, 333-210095,333-194530, and 333-139356) of our reports dated March 1, 2018, with respect to the consolidated financial statements and schedules of GTTCommunications, Inc. as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017 and the effectiveness ofinternal control over financial reporting of GTT Communications, Inc. as of December 31, 2017 included in this Annual Report on Form 10-K of GTTCommunications, Inc. for the year ended December 31, 2017./s/ CohnReznick LLPMarch 1, 2018Tysons, VirginiaSource: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 inExchange Act 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 theregistrant and 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 purposesin accordance 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 theeffectiveness of 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 reasonablylikely to 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 1, 2018/s/ Richard D. Calder, Jr. Richard D. Calder, Jr. President and Chief Executive Officer Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 T. Sicoli, 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 inExchange Act 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 theregistrant and 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 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; 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 1, 2018/s/ Michael T. Sicoli Michael T. Sicoli Chief Financial Officer Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Richard D. Calder, Jr., Chief Executive Officer of the Company certify, pursuant to18 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 1, 2018/s/ Richard D. Calder, Jr. Richard D. Calder, Jr. President and Chief Executive Officer Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Michael T. Sicoli, Chief Financial Officer of the Company certify, pursuant to 18U.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 1, 2018/s/ Michael T. Sicoli Michael T. Sicoli Chief Financial Officer Source: GTT Communications, Inc., 10-K, March 01, 2018Powered 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 01, 2018Powered 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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