FORM 10-K |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
INTERNAP CORPORATION |
(Exact Name of Registrant as Specified in Its Charter) |
Delaware | 91-2145721 |
(State or Other Jurisdiction of | (I.R.S. Employer |
Incorporation or Organization) | Identification No.) |
One Ravinia Drive, Suite 1300 | |
Atlanta, Georgia | 30346 |
(Address of Principal Executive Offices) | (Zip Code) |
(404) 302-9700 |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: |
Title of each class | Name of exchange on which registered | |
Common Stock, $0.001 par value | The NASDAQ Stock Market LLC | |
(NASDAQ Global Market) |
Large accelerated filer ☐ | Accelerated filer ☒ |
Non-accelerated filer ☐ | Smaller reporting company ☐ |
(Do not check if a smaller reporting company) |
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● | hybrid infrastructure services: customers can mix and match cloud, hosting and colocation for the optimal combination of services to meet specific application and business requirements; |
● | availability across a global network of data centers; |
● | patented network services that leverage our proprietary technologies to maximize uptime and minimize latency for customer applications; and |
● | a “single-pane-of-glass” customer portal, backed by service level agreements (“SLAs”) and our team of dedicated support professionals. |
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Domestic sites operated | International sites operated | |||||
Internap operated | under third party agreements | under third party agreements | ||||
Atlanta | Atlanta | Orange County | Amsterdam | Paris | ||
Boston | Boston | San Diego | Frankfurt | Singapore | ||
Dallas | Chicago | Philadelphia | Hong Kong | Sydney | ||
Houston | Dallas | Phoenix | London | Tokyo(1) | ||
Los Angeles | Denver | San Francisco | Osaka(1) | Toronto | ||
Montreal | Los Angeles | San Jose | ||||
New York Metro | Miami | Santa Clara | ||||
Santa Clara | New York Metro | Seattle | ||||
Seattle | Oakland | Washington DC |
(1) | Through our joint venture in Internap Japan Co., Ltd. (“Internap Japan”) with NTT-ME Corporation and Nippon Telegraph and Telephone Corporation (“NTT Holdings”). |
● | colocation, hosting and cloud providers, including Equinix, Inc.; Rackspace, Inc.; Amazon Web Services; Telx Group, Inc.; CyrusOne; CenturyLink, Inc.; Softlayer (IBM); and QTS Realty Trust, Inc.; and |
● | ISPs that provide connectivity services and storage solutions, including AT&T Inc.; Sprint Nextel Corporation; Verizon Communications Inc.; Level 3 Communications, Inc.; Akamai Technologies, Inc. and Zayo Group, LLC. |
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● | sourcing, identifying, obtaining and maintaining qualified research and development staff with the appropriate skill and expertise; |
● | managing the length of the development cycle for new products and product enhancements, which historically has been longer than expected; |
● | identifying and adapting to emerging and evolving industry standards and to technological developments by our competitors’ and customers’ services and products; |
● | developing or expanding efficient sales channels; |
● | entering into new or unproven markets where we have limited experience; |
● | managing new service and product service strategies and integrating them with our existing services and products; |
● | incorporating acquired products and technologies; |
● | trade compliance issues affecting our ability to ship new products to international markets; and |
● | obtaining required technology licenses and technical access from operating system software vendors on reasonable terms to enable the development and deployment of interoperable products. |
● | identify and obtain the use of locations meeting our selection criteria on competitive terms; |
● | estimate costs and control delays; |
● | obtain necessary permits on a timely basis, if at all; |
● | generate sufficient cash flow from operations or through current or additional debt or equity financings to support these expansion plans; |
● | establish key relationships with IT infrastructure providers; |
● | hire, train, retain and manage sufficient operational and technical employees and supporting personnel; |
● | obtain the necessary power density and supply from local utility companies; |
● | avoid labor issues impacting our suppliers, such as a strike; and |
● | identify and obtain contractors that will not default on the agreed upon contract performance. |
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● | develop and expand their IT infrastructure and service offerings more rapidly; |
● | adapt to new or emerging technologies and changes in customer requirements more quickly; |
● | take advantage of acquisitions and other opportunities more readily; or |
● | devote greater resources to the marketing and sale of their services and adopt more aggressive pricing policies than we can. |
● | their level of satisfaction with our services; |
● | our ability to provide features and functionality demanded by our customers; |
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● | the prices of our services compared to our competitors; |
● | technological advances that allow customers to meet their needs with fewer infrastructure resources; |
● | mergers and acquisitions affecting our customer base; and |
● | reduction in our customers’ spending levels. |
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● | human error; |
● | physical or electronic security breaches; |
● | fire, earthquake, hurricane, flood, tornado and other natural disasters; |
● | improper maintenance of the buildings in which our data centers are located; |
● | water damage, extreme temperatures, fiber cuts; |
● | power loss or equipment failure; |
● | sabotage and vandalism; and |
● | failures experienced by underlying service providers upon which our business relies. |
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● | sourcing, evaluating and targeting potential customers and managing existing customers; |
● | implementing customer orders for services; |
● | delivering these services; |
● | timely billing for these services; |
● | budgeting, forecasting, tracking and reporting our results of operations; and |
● | providing technical and operational support to customers and tracking the resolution of customer issues. |
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● | challenges in establishing and maintaining relationships with global customers, ISPs and local vendors, including data center and local network operators; |
● | challenges in staffing and managing NOCs and P-NAPs across disparate geographic areas; |
● | potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than the laws in the U.S.; |
● | challenges in reducing operating expense or other costs required by local laws and longer accounts receivable payment cycles and difficulties in collecting accounts receivable; |
● | exposure to fluctuations in international currency exchange rates; |
● | costs of customizing P-NAPs for foreign countries and customers; and |
● | compliance with requirements of foreign laws, regulations and other governmental controls, including trade and labor restrictions and related laws that may reduce the flexibility of our business operations or favor local competition. |
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● | failure to sustain sales of our services; |
● | pricing pressures; |
● | significant increases in cost of goods sold or other operating expenses; |
● | failure of our services to operate as expected; |
● | loss of customers or inability to attract new customers or loss of existing customers at a rate greater than our increase in new customers; |
● | customers’ failure to pay on a timely basis or at all or failure to continue to purchase our IT infrastructure services in accordance with their contractual commitments; or |
● | network failures and any breach or unauthorized access to our network. |
● | competition and the introduction of new services by our competitors; |
● | continued pricing pressures; |
● | fluctuations in the demand and sales cycle for our services; |
● | fluctuations in the market for qualified sales and other personnel; |
● | the cost and availability of adequate public utilities, including power; |
● | our ability to obtain local loop connections to our P-NAPs at favorable prices; |
● | general economic conditions; and |
● | any impairments or restructurings charges that we may incur in the future. |
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● | actual or anticipated variations in our quarterly and annual results of operations; |
● | changes in market valuations of companies in the industries in which we may compete; |
● | changes in expectations of future financial performance or changes in estimates of securities analysts; |
● | fluctuations in stock market prices and volumes; |
● | future issuances of common stock or other securities; |
● | the addition or departure of key personnel; and |
● | announcements by us or our competitors of acquisitions, investments or strategic alliances. |
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Year Ended December 31, 2014: | High | Low | ||||||
Fourth Quarter | $ | 8.35 | $ | 6.52 | ||||
Third Quarter | 7.39 | 6.27 | ||||||
Second Quarter | 7.68 | 6.35 | ||||||
First Quarter | 8.50 | 6.89 | ||||||
Year Ended December 31, 2013: | High | Low | ||||||
Fourth Quarter | $ | 7.75 | $ | 6.51 | ||||
Third Quarter | 9.10 | 6.66 | ||||||
Second Quarter | 9.47 | 7.82 | ||||||
First Quarter | 9.60 | 6.80 |
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Equity Compensation Plan Information | ||||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity compensation plans approved by security holders(1) | 5,928 | $ | 7.07 | 4,232 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 5,928 | $ | 7.07 | 4,232 |
(1) | Employees Consists of: 4,435,420 shares under the 2014 Stock Incentive Plan; 5,566,945 shares under the 2005 Incentive Stock Plan as amended; 35,389 shares under the 2000 Non-Officer Equity Incentive Plan and 122,080 shares under the 1999 Non-Employee Directors’ Stock Option Plan. We may only issue equity under the 2014 Stock Incentive Plan. Each plan listed above contains customary anti-dilution provisions that are applicable in the event of a stock split or certain other changes in our capitalization. |
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
October 1 to 31, 2014 | 2,010 | $ | 6.91 | — | — | |||||||||||
November 1 to 30, 2014 | 967 | 8.04 | — | — | ||||||||||||
December 1 to 31, 2014 | 57,139 | 7.75 | — | — | ||||||||||||
Total | 60,116 | $ | 7.73 | — | — |
(1) | Employees surrendered these shares to us as payment of statutory minimum payroll taxes due in connection with the vesting of restricted stock. |
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Year Ended December 31, | ||||||||||||||||||||
2014 | 2013(1) | 2012 | 2011(2) | 2010 | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Consolidated Statements of Operations and Comprehensive Loss Data: | ||||||||||||||||||||
Revenues | $ | 334,959 | $ | 283,342 | $ | 273,592 | $ | 244,628 | $ | 244,164 | ||||||||||
Operating costs and expenses: | ||||||||||||||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization, shown below | 144,946 | 132,012 | 130,954 | 120,310 | 127,423 | |||||||||||||||
Direct costs of customer support | 36,804 | 29,687 | 26,664 | 21,278 | 19,861 | |||||||||||||||
Direct costs of amortization of acquired and developed technologies | 5,918 | 4,967 | 4,718 | 3,500 | 3,811 | |||||||||||||||
Sales and marketing | 37,845 | 31,800 | 31,343 | 29,715 | 29,232 | |||||||||||||||
General and administrative | 43,902 | 42,759 | 38,635 | 33,952 | 33,048 | |||||||||||||||
Depreciation and amortization | 75,251 | 48,181 | 36,147 | 36,926 | 30,158 | |||||||||||||||
Loss (gain) on disposals of property and equipment, net | 112 | 9 | (55 | ) | 37 | 116 | ||||||||||||||
Exit activities, restructuring and impairments | 4,520 | 1,414 | 1,422 | 2,833 | 1,411 | |||||||||||||||
Total operating costs and expenses | 349,298 | 290,829 | 269,828 | 248,551 | 245,060 | |||||||||||||||
(Loss) income from operations | (14,339 | ) | (7,487 | ) | 3,764 | (3,923 | ) | (896 | ) | |||||||||||
Non-operating expenses | 26,775 | 12,841 | 7,849 | 3,866 | 2,170 | |||||||||||||||
Loss before income taxes and equity in (earnings) of equity-method investment | (41,114 | ) | (20,328 | ) | (4,085 | ) | (7,789 | ) | (3,066 | ) | ||||||||||
(Benefit) provision for income taxes | (1,361 | ) | (285 | ) | 453 | (5,612 | ) | 952 | ||||||||||||
Equity in (earnings) of equity-method investment, net of taxes | (259 | ) | (213 | ) | (220 | ) | (475 | ) | (396 | ) | ||||||||||
Net loss | $ | (39,494 | ) | $ | (19,830 | ) | $ | (4,318 | ) | $ | (1,702 | ) | $ | (3,622 | ) | |||||
Net loss per share: | ||||||||||||||||||||
Basic and diluted | $ | (0.77 | ) | $ | (0.39 | ) | $ | (0.09 | ) | $ | (0.03 | ) | $ | (0.07 | ) |
December 31, | ||||||||||||||||||||
2014 | 2013(1) | 2012 | 2011(2) | 2010 | ||||||||||||||||
Consolidated Balance Sheets Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 20,084 | $ | 35,018 | $ | 28,553 | $ | 29,772 | $ | 59,582 | ||||||||||
Total assets | 591,784 | 614,241 | 400,712 | 356,710 | 293,142 | |||||||||||||||
Credit facilities, due after one year, and capital lease obligations, less current portion | 356,686 | 346,800 | 136,555 | 94,673 | 37,889 | |||||||||||||||
Total stockholders’ equity | 150,336 | 182,210 | 195,605 | 192,170 | 188,611 |
Year Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | ||||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Capital expenditures, net of equipment sale-leaseback transactions | $ | 77,408 | $ | 62,798 | $ | 74,947 | $ | 68,542 | $ | 62,184 | ||||||||||
Net cash flows provided by operating activities | 53,248 | 33,683 | 43,742 | 28,630 | 39,602 | |||||||||||||||
Net cash flows used in investing activities | (75,727 | ) | (208,086 | ) | (79,697 | ) | (96,265 | ) | (55,184 | ) | ||||||||||
Net cash flows provided by financing activities | 7,924 | 180,810 | 34,571 | 37,901 | 1,224 |
(1) | On November 26, 2013, we completed our acquisition of iWeb. We allocated the purchase price to iWeb’s net tangible and intangible assets based on their estimated fair values as of November 26, 2013. We recorded the excess purchase price over the value of the net tangible and identifiable intangible assets as goodwill. |
(2) | On December 30, 2011, we completed our acquisition of Voxel Holdings, Inc. (“Voxel”). We allocated the purchase price to Voxel’s net tangible and intangible assets based on their estimated fair values as of December 30, 2011. We recorded the excess purchase price over the value of the net tangible and identifiable intangible assets as goodwill. In addition, as a result of our purchase price accounting, our net loss was reduced by a $6.1 million deferred tax benefit that offset our existing income tax expense of $0.5 million. |
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Business Performance
We continued to focus on profitable growth in 2014 through three primary initiatives: enhancing margin through new product offerings and product mix shift; expanding capacity to support growth; and extending our routes to market via online, e-commerce channels.
Enhancing Margin
We continued our efforts to shift our product mix to the more profitable parts of our business, specifically core data center services, which includes company-controlled colocation, hosting and cloud services, including revenues attributable to iWeb, as well as increasing the average revenue per customer through new product offerings, including hybridized solutions. Shifting our product mix to higher margin core data center services allows us to more efficiently utilize our company-controlled data center space and increase the revenue per square foot of occupied space. Additionally, we believe our ability to increase average revenue per customer is indicative of not only the trend toward companies outsourcing their IT services, but also reflective of our ability to capture a larger proportion of the enterprise customers spend for high performance IT infrastructure services.
Total revenue increased 18% to $335.0 million for the year ended December 31, 2014, compared to $283.3 million for the same period in 2013. Core data center services revenue increased 46% to $195.4 million for the year ended December 31, 2014, compared to $134.0 million for the same period in 2013. Core data center services revenue represents 81% of data center services segment revenue and 58% of total revenue for the year ended December 31, 2014, compared to 72% and 47%, respectively, for the same period in 2013.
Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) margin, a non-GAAP performance measure, increased 300 basis points to 23.5% for the year ended December 31, 2014, compared to 20.5% for the same period in 2013. We calculate adjusted EBITDA margin as adjusted EBITDA, defined below in “—Non-GAAP Financial Measure,” as a percentage of revenues. We will continue to focus on enhancing margin in 2015 through product mix shift, hybridized product offerings and other efficiency initiatives.
Expanding Capacity
Our services are dependent on premium data center space with sufficient power. We will continue our focus on efficiently utilizing our existing space and power and investing in additional company-controlled space and power to support our growth. During 2014, we spent $77.4 million on capital expenditures to upgrade existing space and power, procure new space and power, procure hardware and software and make other investments to grow our business.
At December 31, 2014, we had approximately 284,000 net sellable square feet of data center space with a utilization rate of 60%, compared to approximately 292,000 net sellable square feet of data center space with a utilization rate of 60% at December 31, 2013. At December 31, 2014 and 2013, 80% and 79%, respectively, of our total net sellable square feet were in company-controlled data centers versus 20% and 21%, respectively, in partner sites.
Our services also depend on procurement of bandwidth from our underlying network service providers to meet our current and future needs. During 2014, overall bandwidth traffic increased approximately 55% compared to 2013, calculated based on an average over the number of months in the respective periods.
Extending our Routes to Market
Our strategy is to leverage the benefits of multiple routes to market, including online e-commerce, direct sales and channel sales programs. Historically, we have relied largely on a direct enterprise sales route to market. More recently, we have augmented our direct enterprise sales route to market with investment in our channel sales program selling into the same target enterprise customer base. Additionally, as we see our target customers become increasingly comfortable procuring IT infrastructure services online, we are leveraging our product portfolio through an expansion of our online e-commerce route to market. During 2014, we expanded our online e-commerce route to market and increased sales delivered through this route to roughly 25% of sales from roughly 5% in 2013, primarily through our acquisition of iWeb in December 2013. This route-to-market capability includes extensive inbound/outbound digital marketing, multi-lingual sales, campaign management and customer support skill sets. We believe there is a significant opportunity to leverage our online e-commerce route to market capabilities to sell IT infrastructure services across our global footprint to an increasingly international customer base. We seek to leverage diverse routes to market across a common platform of IT infrastructure services and maximize the opportunity for profitable growth while simultaneously minimizing the risk of incremental capital investment.
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
(Loss) income from operations | $ | (14,339 | ) | $ | (7,487 | ) | $ | 3,764 | ||||
Depreciation and amortization, including amortization of acquired and developed technologies | 81,169 | 53,148 | 40,865 | |||||||||
Loss (gain) on disposals of property and equipment, net | 112 | 9 | (55 | ) | ||||||||
Exit activities, restructuring and impairments | 4,520 | 1,414 | 1,422 | |||||||||
Stock-based compensation | 7,182 | 6,743 | 5,858 | |||||||||
Acquisition costs | 85 | 4,210 | — | |||||||||
Adjusted EBITDA | $ | 78,729 | $ | 58,037 | $ | 51,854 |
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● | costs for connecting to and accessing ISPs and competitive local exchange providers; |
● | facility and occupancy costs, including power and utilities, for hosting and operating our equipment and hosting our customers’ equipment; |
● | costs incurred for providing additional third party services to our customers; and |
● | royalties and costs of license fees for operating systems software. |
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Year Ended December 31, | Increase (decrease) from 2013 to 2014 | Increase (decrease) from 2012 to 2013 | ||||||||||||||||||||||||||
2014 | 2013 | 2012 | Amount | Percent | Amount | Percent | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Data center services: | ||||||||||||||||||||||||||||
Core | $ | 195,373 | $ | 133,970 | $ | 113,399 | $ | 61,403 | 46 | % | $ | 20,571 | 18 | % | ||||||||||||||
Partner | 47,250 | 51,177 | 53,887 | (3,927 | ) | (8 | ) | (2,710 | ) | (5 | ) | |||||||||||||||||
Total data center services | 242,623 | 185,147 | 167,286 | 57,476 | 31 | 17,861 | 11 | |||||||||||||||||||||
IP services | 92,336 | 98,195 | 106,306 | (5,859 | ) | (6 | ) | (8,111 | ) | (8 | ) | |||||||||||||||||
Total revenues | 334,959 | 283,342 | 273,592 | 51,617 | 18 | 9,750 | 4 | |||||||||||||||||||||
Operating costs and expenses: | ||||||||||||||||||||||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization, shown below: | ||||||||||||||||||||||||||||
Data center services: | ||||||||||||||||||||||||||||
Core | 70,998 | 55,270 | 51,081 | 15,728 | 28 | 4,189 | 8 | |||||||||||||||||||||
Partner | 35,161 | 37,294 | 39,523 | (2,133 | ) | (6 | ) | (2,229 | ) | (6 | ) | |||||||||||||||||
Total data center services | 106,159 | 92,564 | 90,604 | 13,595 | 15 | 1,960 | 2 | |||||||||||||||||||||
IP services | 38,787 | 39,448 | 40,350 | (661 | ) | (2 | ) | (902 | ) | (2 | ) | |||||||||||||||||
Direct costs of customer support | 36,804 | 29,687 | 26,664 | 7,117 | 24 | 3,023 | 11 | |||||||||||||||||||||
Direct costs of amortization of acquired and developed technologies | 5,918 | 4,967 | 4,718 | 951 | 19 | 249 | 5 | |||||||||||||||||||||
Sales and marketing | 37,845 | 31,800 | 31,343 | 6,045 | 19 | 457 | 1 | |||||||||||||||||||||
General and administrative | 43,902 | 42,759 | 38,635 | 1,143 | 3 | 4,124 | 11 | |||||||||||||||||||||
Depreciation and amortization | 75,251 | 48,181 | 36,147 | 27,070 | 56 | 12,034 | 33 | |||||||||||||||||||||
Loss (gain) on disposal of property and equipment, net | 112 | 9 | (55 | ) | 103 | — | 64 | 116 | ||||||||||||||||||||
Exit activities, restructuring and impairments | 4,520 | 1,414 | 1,422 | 3,106 | 220 | (8 | ) | (1 | ) | |||||||||||||||||||
Total operating costs and expenses | 349,298 | 290,829 | 269,828 | 58,469 | 20 | 21,001 | 8 | |||||||||||||||||||||
(Loss) income from operations | $ | (14,339 | ) | $ | (7,487 | ) | $ | 3,764 | $ | (6,852 | ) | (92 | ) | $ | (11,251 | ) | (299 | ) | ||||||||||
Interest expense | $ | 26,742 | $ | 11,346 | $ | 7,566 | $ | 15,396 | 136 | $ | 3,780 | 50 | ||||||||||||||||
(Benefit) provision for income taxes | $ | (1,361 | ) | $ | (285 | ) | $ | 453 | $ | (1,076 | ) | (378 | )% | $ | (738 | ) | (163 | )% |
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Segment Information
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Data center services | $ | 242,623 | $ | 185,147 | $ | 167,286 | ||||||
IP services | 92,336 | 98,195 | 106,306 | |||||||||
Total revenues | 334,959 | 283,342 | 273,592 | |||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization: | ||||||||||||
Data center services | 106,159 | 92,564 | 90,604 | |||||||||
IP services | 38,787 | 39,448 | 40,350 | |||||||||
Total direct costs of network, sales and services, exclusive of depreciation and amortization | 144,946 | 132,012 | 130,954 | |||||||||
Segment profit: | ||||||||||||
Data center services | 136,464 | 92,583 | 76,682 | |||||||||
IP services | 53,549 | 58,747 | 65,956 | |||||||||
Total segment profit | 190,013 | 151,330 | 142,638 | |||||||||
Exit activities, restructuring and impairments | 4,520 | 1,414 | 1,422 | |||||||||
Other operating expenses, including direct costs of customer support, depreciation and amortization | 199,832 | 157,403 | 137,452 | |||||||||
(Loss) income from operations | (14,339 | ) | (7,487 | ) | 3,764 | |||||||
Non-operating expense | 26,775 | 12,841 | 7,849 | |||||||||
Loss before income taxes and equity in (earnings) of equity-method investment | $ | (41,114 | ) | $ | (20,328 | ) | $ | (4,085 | ) |
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2014 | 2013 | |||||||
Direct costs of customer support | $ | 1,448 | $ | 1,108 | ||||
Sales and marketing | 1,147 | 1,110 | ||||||
General and administrative | 4,587 | 4,525 | ||||||
$ | 7,182 | $ | 6,743 |
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2013 | 2012 | |||||||
Direct costs of customer support | $ | 1,108 | $ | 936 | ||||
Sales and marketing | 1,110 | 929 | ||||||
General and administrative | 4,525 | 3,993 | ||||||
$ | 6,743 | $ | 5,858 |
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Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 year | 1-3 Years | 3-5 Years | More than 5 years | ||||||||||||||||
Term loan, including interest | $ | 383,519 | $ | 20,999 | $ | 41,450 | $ | 321,070 | $ | — | ||||||||||
Revolving credit facility, including interest | 11,825 | 466 | 932 | 10,427 | — | |||||||||||||||
Interest rate swap | 813 | 765 | 48 | — | — | |||||||||||||||
Capital lease obligations, including interest | 91,610 | 12,488 | 22,156 | 19,414 | 37,552 | |||||||||||||||
Exit activities and restructuring | 6,529 | 2,581 | 3,095 | 853 | — | |||||||||||||||
Asset retirement obligation | 4,863 | — | 1,479 | — | 3,384 | |||||||||||||||
Operating lease commitments | 103,354 | 24,831 | 44,445 | 21,726 | 12,352 | |||||||||||||||
Service and purchase commitments | 27,102 | 18,420 | 8,216 | 433 | 33 | |||||||||||||||
$ | 629,615 | $ | 80,550 | $ | 121,821 | $ | 373,923 | $ | 53,321 |
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Page | ||
Report of Independent Registered Public Accounting Firm | F-1 | |
Consolidated Statements of Operations and Comprehensive Loss | F-2 | |
Consolidated Balance Sheets | F-3 | |
Consolidated Statements of Stockholders’ Equity | F-4 | |
Consolidated Statements of Cash Flows | F-5 | |
Notes to Consolidated Financial Statements | F-6 | |
Item 15(a)(2). Financial Statement Schedules. The following financial statement schedule is filed herewith: | ||
Page | ||
Schedule II - Valuation and Qualifying Accounts and Reserves | S-1 |
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Exhibit Number | Description | ||
2.1 | Share Purchase Agreement made as of October 30, 2013 between iWeb Group Inc., its stockholders and stockholders’ representative and 8672377 Canada Inc. and Internap Network Services Corporation (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed October 31, 2013).† | ||
3.1 | Certificate of Elimination of the Series B Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K, filed March 2, 2010). | ||
3.2 | Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K, filed March 2, 2010). | ||
3.3 | Certificate of Amendment of Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed June 21, 2010). | ||
3.4 | Certificate of Amendment to the Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed November 25, 2014). | ||
3.5 | Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed November 25, 2014). | ||
10.1 | Internap Network Services Corporation 1999 Non-Employee Directors’ Stock Option Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K, filed March 13, 2009).+ | ||
10.2 | First Amendment to the Internap Network Services Corporation 1999 Non-Employee Directors’ Stock Option Plan (incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K, filed March 13, 2009).+ | ||
10.3 | Internap Network Services Corporation 2000 Non-Officer Equity Incentive Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8, File No. 333-37400 dated May 19, 2000).+ | ||
10.4 | 2005 Incentive Stock Plan, as amended (incorporated herein by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K, filed February 20, 2014).+ | ||
10.5 | Form of Stock Grant Certificate under the Amended and Restated Internap Network Services Corporation 2005 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K, filed March 2, 2010).+ | ||
10.6 | Form of Stock Option Certificate under the Amended and Restated Internap Network Services Corporation 2005 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K, filed March 2, 2010).+ | ||
10.7 | 2014 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8, filed June 16, 2014).+ | ||
10.8* | Form of Stock Grant Certificate under the 2014 Stock Incentive Plan.+ | ||
10.9* | Form of Stock Option Certificate under the 2014 Stock Incentive Plan.+ | ||
10.10* | Form of Stock Grant Certificate (Canada) under the 2014 Stock Incentive Plan.+ | ||
10.11* | Form of Stock Option Certificate (Canada) under the 2014 Stock Incentive Plan.+ | ||
10.12 | Employment Security Plan dated November 14, 2007 (incorporated herein by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K, filed February 21, 2013).+ | ||
10.13 | Form of Indemnity Agreement for directors and officers of the Company (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed May 29, 2009).+ | ||
10.14 | Commitment Letter dated October 30, 2013 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed October 31, 2013). | ||
10.15 | Credit Agreement dated as of November 26, 2013 among Internap Network Services Corporation, as Borrower; the Guarantors party thereto, as Guarantors; the Lenders party thereto; Jefferies Finance, LLC, as Administrative Agent and Collateral Agent; Jefferies Finance LLC and PNC Capital Markets LLC, as Joint Lead Arrangers and Joint Book Managers; PNC Bank National Association, as Syndication Agent; and Jefferies Finance LLC, as Issuing Bank and Swingline Lender (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 26, 2013).† |
- 33 - |
10.16 | Security Agreement dated as of November 26, 2013 among Internap Network Services Corporation; the Guarantors party thereto; and Jefferies Finance LLC, as Collateral Agent ((incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 26, 2013).† | ||
10.17 | Lease Agreement by and between Cousins Properties Incorporated and CO Space Services, LLC, originally dated January 10, 2000 and as amended through February 26, 2007 (incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K, filed February 24, 2011).†§ | ||
10.18 | Joinder Agreement to the Employment Security Plan executed by Steven A. Orchard (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed May 6, 2010).+ | ||
10.19 | Offer Letter between the Company and Eric Cooney, dated January 16, 2009 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 2, 2009).+ | ||
10.20 | Joinder Agreement to the Employment Security Plan executed by Eric Cooney (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed February 2, 2009).+ | ||
10.21 | Employment Security Agreement executed by Kevin M. Dotts (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 26, 2012).+ | ||
10.22 | 2014 Short Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 21, 2014).+ | ||
21.1* | List of Subsidiaries. | ||
23.1* | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. | ||
31.1* | Rule 13a-14(a)/15d-14(a) Certification, executed by J. Eric Cooney, President and Chief Executive Officer of the Company. | ||
31.2* | Rule 13a-14(a)/15d-14(a) Certification, executed by Kevin M. Dotts, Chief Financial Officer of the Company. | ||
32.1* | Section 1350 Certification, executed by J. Eric Cooney, President and Chief Executive Officer of the Company. | ||
32.2* | Section 1350 Certification, executed by Kevin M. Dotts, Chief Financial Officer of the Company. | ||
101* | Interactive Data File. |
* | Documents filed herewith. | |
+ | Management contract and compensatory plan and arrangement. | |
† | Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission. | |
§ | Confidential treatment has been requested for this exhibit. The copy filed as an exhibit omits the information subject to the request for confidential treatment. |
- 34 - |
INTERNAP CORPORATION | |||
Date: February 19, 2015 | |||
By: | /s/ Kevin M. Dotts | ||
Kevin M. Dotts | |||
Chief Financial Officer | |||
(Principal Accounting Officer) |
Signature | Title | Date | ||
/s/ J. Eric Cooney | ||||
J. Eric Cooney | President, Chief Executive Officer and Director | February 19, 2015 | ||
(Principal Executive Officer) | ||||
/s/ Kevin M. Dotts | ||||
Kevin M. Dotts | Chief Financial Officer | February 19, 2015 | ||
(Principal Accounting Officer) | ||||
/s/ Daniel C. Stanzione | ||||
Daniel C. Stanzione | Non-Executive Chairman and Director | February 19, 2015 | ||
/s/ Charles B. Coe | ||||
Charles B. Coe | Director | February 19, 2015 | ||
/s/ Patricia L. Higgins | ||||
Patricia L. Higgins | Director | February 19, 2015 | ||
/s/ Gary M. Pfeiffer | ||||
Gary M. Pfeiffer | Director | February 19, 2015 | ||
/s/ Michael A. Ruffolo | ||||
Michael A. Ruffolo | Director | February 19, 2015 | ||
/s/ Debora J. Wilson | ||||
Debora J. Wilson | Director | February 19, 2015 |
- 35 - |
Page | |
F-1 | |
F-2 | |
F-3 | |
F-4 | |
F-5 | |
F-6 | |
S-1 |
i |
In our opinion, the consolidatedfinancial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Internap Corporationand its subsidiariesatDecember 31, 2014 and December 31, 2013, and the results of their operations and their cash flows for each of the three years in the period endedDecember 31, 2014in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidatedfinancial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established inInternal Control - Integrated Framework2013issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Control Over Financial Reporting appearing under item 9A.Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
F-1 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Data center services | $ | 242,623 | $ | 185,147 | $ | 167,286 | ||||||
Internet protocol (IP) services | 92,336 | 98,195 | 106,306 | |||||||||
Total revenues | 334,959 | 283,342 | 273,592 | |||||||||
Operating costs and expenses: | ||||||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization, shown below: | ||||||||||||
Data center services | 106,159 | 92,564 | 90,604 | |||||||||
IP services | 38,787 | 39,448 | 40,350 | |||||||||
Direct costs of customer support | 36,804 | 29,687 | 26,664 | |||||||||
Direct costs of amortization of acquired and developed technologies | 5,918 | 4,967 | 4,718 | |||||||||
Sales and marketing | 37,845 | 31,800 | 31,343 | |||||||||
General and administrative | 43,902 | 42,759 | 38,635 | |||||||||
Depreciation and amortization | 75,251 | 48,181 | 36,147 | |||||||||
Loss (gain) on disposal of property and equipment, net | 112 | 9 | (55 | ) | ||||||||
Exit activities, restructuring and impairments | 4,520 | 1,414 | 1,422 | |||||||||
Total operating costs and expenses | 349,298 | 290,829 | 269,828 | |||||||||
(Loss) income from operations | (14,339 | ) | (7,487 | ) | 3,764 | |||||||
Non-operating expenses: | ||||||||||||
Interest expense | 26,742 | 11,346 | 7,566 | |||||||||
Loss on extinguishment of debt | — | 881 | — | |||||||||
Other, net | 33 | 614 | 283 | |||||||||
Total non-operating expenses | 26,775 | 12,841 | 7,849 | |||||||||
Loss before income taxes and equity in (earnings) of equity-method investment | (41,114 | ) | (20,328 | ) | (4,085 | ) | ||||||
(Benefit) provision for income taxes | (1,361 | ) | (285 | ) | 453 | |||||||
Equity in (earnings) of equity-method investment, net of taxes | (259 | ) | (213 | ) | (220 | ) | ||||||
Net loss | (39,494 | ) | (19,830 | ) | (4,318 | ) | ||||||
Other comprehensive (loss) income: | ||||||||||||
Foreign currency translation adjustment, net of taxes | (431 | ) | (464 | ) | 84 | |||||||
Unrealized loss on interest rate swap | (36 | ) | (777 | ) | — | |||||||
Total other comprehensive (loss) income | (467 | ) | (1,241 | ) | 84 | |||||||
Comprehensive loss | $ | (39,961 | ) | $ | (21,071 | ) | $ | (4,234 | ) | |||
Basic and diluted net loss per share | $ | (0.77 | ) | $ | (0.39 | ) | $ | (0.09 | ) | |||
Weighted average shares outstanding used in computing basic and diluted net loss per share | 51,237 | 51,135 | 50,761 |
F-2 |
December 31, | ||||||||
2014 | 2013 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,084 | $ | 35,018 | ||||
Accounts receivable, net of allowance for doubtful accounts of $2,121 and $1,995, respectively | 19,606 | 23,927 | ||||||
Deferred tax asset | 633 | 371 | ||||||
Prepaid expenses and other assets | 12,276 | 22,533 | ||||||
Total current assets | 52,599 | 81,849 | ||||||
Property and equipment, net | 342,145 | 331,963 | ||||||
Investment in joint venture | 2,622 | 2,602 | ||||||
Intangible assets, net | 52,545 | 57,699 | ||||||
Goodwill | 130,313 | 130,387 | ||||||
Deposits and other assets | 9,923 | 7,999 | ||||||
Deferred tax asset | 1,637 | 1,742 | ||||||
Total assets | $ | 591,784 | $ | 614,241 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 30,589 | $ | 29,774 | ||||
Accrued liabilities | 13,120 | 13,549 | ||||||
Deferred revenues | 7,345 | 6,729 | ||||||
Capital lease obligations | 7,366 | 5,489 | ||||||
Term loan, less discount of $1,463 and $1,387, respectively | 1,537 | 1,613 | ||||||
Exit activities and restructuring liability | 1,809 | 2,286 | ||||||
Other current liabilities | 1,590 | 2,493 | ||||||
Total current liabilities | 63,356 | 61,933 | ||||||
Deferred revenues | 3,544 | 3,804 | ||||||
Capital lease obligations | 52,686 | 49,800 | ||||||
Revolving credit facility | 10,000 | — | ||||||
Term loan, less discount of $6,543 and $8,006, respectively | 287,457 | 288,994 | ||||||
Exit activities and restructuring liability | 2,701 | 1,877 | ||||||
Deferred rent | 10,583 | 14,617 | ||||||
Deferred tax liability | 7,293 | 8,591 | ||||||
Other long-term liabilities | 3,828 | 2,415 | ||||||
Total liabilities | 441,448 | 432,031 | ||||||
Commitments and contingencies (note 11) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value; 20,000 shares authorized; no shares issued or outstanding | — | — | ||||||
Common stock, $0.001 par value; 120,000 shares authorized; 54,410 and 54,023 shares outstanding, respectively | 54 | 54 | ||||||
Additional paid-in capital | 1,262,402 | 1,253,106 | ||||||
Treasury stock, at cost, 621 and 461 shares, respectively | (4,683 | ) | (3,474 | ) | ||||
Accumulated deficit | (1,105,514 | ) | (1,066,020 | ) | ||||
Accumulated items of other comprehensive loss | (1,923 | ) | (1,456 | ) | ||||
Total stockholders’ equity | 150,336 | 182,210 | ||||||
Total liabilities and stockholders’ equity | $ | 591,784 | $ | 614,241 |
F-3 |
Common | ||||||||||||||||||||||||||||
Stock | ||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||
Additional | Items of | Total | ||||||||||||||||||||||||||
Par | Paid-In | Treasury | Accumulated | Comprehensive | Stockholders’ | |||||||||||||||||||||||
Shares | Value | Capital | Stock | Deficit | Loss | Equity | ||||||||||||||||||||||
Balance, December 31, 2011 | 52,528 | $ | 53 | $ | 1,235,554 | $ | (1,266 | ) | $ | (1,041,872 | ) | $ | (299 | ) | $ | 192,170 | ||||||||||||
Net loss | — | — | — | — | (4,318 | ) | — | (4,318 | ) | |||||||||||||||||||
Foreign currency translation | — | — | — | — | — | 84 | 84 | |||||||||||||||||||||
Stock-based compensation | — | — | 6,285 | — | — | — | 6,285 | |||||||||||||||||||||
Other activity of stock compensation plans | 931 | 1 | 1,962 | (579 | ) | — | — | 1,384 | ||||||||||||||||||||
Balance, December 31, 2012 | 53,459 | 54 | 1,243,801 | (1,845 | ) | (1,046,190 | ) | (215 | ) | 195,605 | ||||||||||||||||||
Net loss | — | — | — | — | (19,830 | ) | — | (19,830 | ) | |||||||||||||||||||
Foreign currency translation | — | — | — | — | — | (464 | ) | (464 | ) | |||||||||||||||||||
Interest rate swap | — | — | — | — | — | (777 | ) | (777 | ) | |||||||||||||||||||
Stock-based compensation | — | — | 7,167 | — | — | — | 7,167 | |||||||||||||||||||||
Other activity of stock compensation plans | 564 | — | 2,138 | (1,629 | ) | — | — | 509 | ||||||||||||||||||||
Balance, December 31, 2013 | 54,023 | 54 | 1,253,106 | (3,474 | ) | (1,066,020 | ) | (1,456 | ) | 182,210 | ||||||||||||||||||
Net loss | — | — | — | — | (39,494 | ) | — | (39,494 | ) | |||||||||||||||||||
Foreign currency translation | — | — | — | — | — | (431 | ) | (431 | ) | |||||||||||||||||||
Interest rate swap | — | — | — | — | — | (36 | ) | (36 | ) | |||||||||||||||||||
Stock-based compensation | — | — | 7,522 | — | — | — | 7,522 | |||||||||||||||||||||
Other activity of stock compensation plans | 387 | — | 1,774 | (1,209 | ) | — | — | 565 | ||||||||||||||||||||
Balance, December 31, 2014 | 54,410 | $ | 54 | $ | 1,262,402 | $ | (4,683 | ) | $ | (1,105,514 | ) | $ | (1,923 | ) | $ | 150,336 |
F-4 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net loss | $ | (39,494 | ) | $ | (19,830 | ) | $ | (4,318 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 81,169 | 53,148 | 40,865 | |||||||||
Impairment of property and equipment | 537 | 520 | 438 | |||||||||
Amortization of debt discount and issuance costs | 1,934 | 631 | 445 | |||||||||
Stock-based compensation expense, net of capitalized amount | 7,182 | 6,743 | 5,858 | |||||||||
Equity in (earnings) of equity-method investment | (259 | ) | (213 | ) | (220 | ) | ||||||
Provision for doubtful accounts | 1,306 | 1,861 | 932 | |||||||||
Non-cash portion of loss on extinguishment of debt | — | 841 | — | |||||||||
Non-cash change in capital lease obligations | (412 | ) | 99 | 705 | ||||||||
Non-cash change in exit activities and restructuring liability | 4,591 | 1,185 | 1,171 | |||||||||
Non-cash change in deferred rent | (2,577 | ) | (1,907 | ) | (1,073 | ) | ||||||
Deferred taxes | (1,555 | ) | (67 | ) | 204 | |||||||
Other, net | 193 | 84 | (575 | ) | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 2,923 | (5,777 | ) | (1,428 | ) | |||||||
Prepaid expenses, deposits and other assets | 1,839 | (218 | ) | (671 | ) | |||||||
Accounts payable | 529 | 3,992 | 413 | |||||||||
Accrued and other liabilities | 413 | (5,062 | ) | 2,304 | ||||||||
Deferred revenues | 498 | 1,149 | 862 | |||||||||
Exit activities and restructuring liability | (4,245 | ) | (2,895 | ) | (2,890 | ) | ||||||
Asset retirement obligation | (1,319 | ) | — | — | ||||||||
Other liabilities | (5 | ) | (601 | ) | 720 | |||||||
Net cash flows provided by operating activities | 53,248 | 33,683 | 43,742 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchases of property and equipment | (77,363 | ) | (62,798 | ) | (74,947 | ) | ||||||
Additions to acquired and developed technology | (3,100 | ) | (801 | ) | — | |||||||
Proceeds from sale-leaseback transactions | 4,662 | — | — | |||||||||
Payment of accrued contingent consideration | — | — | (4,750 | ) | ||||||||
Acquisition, net of cash received | 74 | (144,487 | ) | — | ||||||||
Net cash flows used in investing activities | (75,727 | ) | (208,086 | ) | (79,697 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||||
Proceeds from credit agreements | 10,000 | 320,000 | 40,401 | |||||||||
Principal payments on credit agreements | (3,000 | ) | (116,000 | ) | (3,250 | ) | ||||||
Payment of debt issuance costs | — | (12,415 | ) | (543 | ) | |||||||
Return (payment) of deposit collateral on credit agreement | 6,461 | (6,461 | ) | — | ||||||||
Payments on capital lease obligations | (5,921 | ) | (4,655 | ) | (3,303 | ) | ||||||
Proceeds from exercise of stock options | 1,774 | 2,138 | 2,469 | |||||||||
Tax withholdings related to net share settlements of restricted stock awards | (1,209 | ) | (1,630 | ) | (1,085 | ) | ||||||
Other, net | (181 | ) | (167 | ) | (118 | ) | ||||||
Net cash flows provided by financing activities | 7,924 | 180,810 | 34,571 | |||||||||
Effect of exchange rates on cash and cash equivalents | (379 | ) | 58 | 165 | ||||||||
Net (decrease) increase in cash and cash equivalents | (14,934 | ) | 6,465 | (1,219 | ) | |||||||
Cash and cash equivalents at beginning of period | 35,018 | 28,553 | 29,772 | |||||||||
Cash and cash equivalents at end of period | $ | 20,084 | $ | 35,018 | $ | 28,553 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for interest | $ | 24,957 | $ | 11,678 | $ | 7,646 | ||||||
Cash paid for income taxes | 157 | 344 | 189 | |||||||||
Non-cash acquisition of property and equipment under capital leases | 9,626 | 9,815 | 10,079 | |||||||||
Additions to property and equipment included in accounts payable | 8,249 | 7,884 | 2,869 | |||||||||
Capitalized stock-based compensation | 340 | 424 | 427 |
F-5 |
F-6 |
F-7 |
F-8 |
F-9 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Net loss and net loss available to common stockholders | $ | (39,494 | ) | $ | (19,830 | ) | $ | (4,318 | ) | |||
Weighted average shares outstanding, basic and diluted | 51,237 | 51,135 | 50,761 | |||||||||
Net loss per share, basic and diluted | $ | (0.77 | ) | $ | (0.39 | ) | $ | (0.09 | ) | |||
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans | 6,696 | 6,795 | 5,909 |
F-10 |
F-11 |
Current assets, including cash acquired of $1.3 million | $ | 4,284 | ||
Property and equipment | 52,497 | |||
Goodwill | 70,708 | |||
Intangible assets | 40,925 | |||
Other long-term assets | 689 | |||
Current liabilities | (7,119 | ) | ||
Deferred revenue | (3,740 | ) | ||
Capital lease obligations | (1,301 | ) | ||
Other long-term liabilities | (2,981 | ) | ||
Net deferred income tax liability, long-term | (8,249 | ) | ||
$ | 145,713 |
Fair Value | Weighted Average Useful Life | |||||
Customer relationships | $ | 22,200 | 15 years | |||
Trade name | 15,100 | 30 years | ||||
Beneficial leasehold interest | 858 | 14 years | ||||
Internally developed software | 2,767 | 5 years | ||||
Total intangible assets | $ | 40,925 |
Year Ended December 31, | ||||||||
2013 | 2012 | |||||||
(in thousands) | ||||||||
Unaudited pro forma revenue | $ | 323,000 | $ | 315,000 | ||||
Unaudited pro forma net loss | (32,000 | ) | (19,000 | ) |
● | Level 1: Quoted prices in active markets for identical assets or liabilities; |
● | Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and |
● | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
F-12 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
December 31, 2014: | ||||||||||||||||
Interest rate swap (note 10) | $ | — | $ | 813 | $ | — | $ | 813 | ||||||||
Asset retirement obligations(1) (note 11) | — | — | 2,471 | 2,471 | ||||||||||||
December 31, 2013: | ||||||||||||||||
Money market funds(2) | 5,006 | — | — | 5,006 | ||||||||||||
Interest rate swap (note 10) | — | 777 | — | 777 | ||||||||||||
Asset retirement obligations(1) (note 11) | — | — | 2,357 | 2,357 |
(1) | We calculate the fair value of asset retirement obligations by discounting the estimated amount using the current Treasury bill rate adjusted for our credit non-performance. |
(2) | Included in “Cash and cash equivalents” in the consolidated balance sheets as of December 31, 2013. Unrealized gains and losses on money market funds were nominal due to the short-term nature of the investments. |
December 31, | ||||||||
2014 | 2013 | |||||||
Balance, January 1 | $ | 2,357 | $ | — | ||||
Accrued estimated obligation, less fair value adjustment | 1,338 | 3,820 | ||||||
Subsequent revision of estimated obligation | (68 | ) | (1,519 | ) | ||||
Accretion(1) | 244 | 56 | ||||||
Payments | (1,319 | ) | — | |||||
Gain on settlement(2) | (81 | ) | — | |||||
Balance, December 31 | $ | 2,471 | $ | 2,357 |
(1) | Included in data center services “Direct costs of network, sales and services” in the accompanying consolidated statements of operations and comprehensive loss. |
(2) | Included in “Other, net” in the accompanying consolidated statements of operations and comprehensive loss. |
December 31, | ||||||||||||
2014 | 2013 | |||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||
Term loan | $ | 297,000 | 313,000 | $ | 300,000 | 293,000 | ||||||
Revolving credit facility | 10,000 | 9,900 | — | — |
December 31, | ||||||||
2014 | 2013 | |||||||
Network equipment | $ | 194,441 | $ | 189,763 | ||||
Network equipment under capital lease | 8,023 | 6,346 | ||||||
Furniture and equipment | 19,811 | 19,194 | ||||||
Software | 41,595 | 51,763 | ||||||
Leasehold improvements | 380,376 | 319,119 | ||||||
Land | 254 | 630 | ||||||
Buildings | 696 | 1,395 | ||||||
Buildings under capital lease | 64,323 | 56,440 | ||||||
Property and equipment, gross | 709,519 | 644,650 | ||||||
Less: accumulated depreciation and amortization ($25,209 and $17,786 related to capital leases at December 31, 2014 and 2013, respectively) | (367,374 | ) | (312,687 | ) | ||||
$ | 342,145 | $ | 331,963 |
F-13 |
Year ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Direct costs of network, sales and services | $ | 70,579 | $ | 44,799 | $ | 33,019 | ||||||
Other depreciation and amortization | 4,672 | 3,382 | 3,128 | |||||||||
Subtotal | 75,251 | 48,181 | 36,147 | |||||||||
Amortization of acquired and developed technologies | 5,918 | 4,967 | 4,718 | |||||||||
Total depreciation and amortization | $ | 81,169 | $ | 53,148 | $ | 40,865 |
Year Ended December 31, | ||||||||
2014 | 2013 | |||||||
Investment balance, January 1 | $ | 2,602 | $ | 3,000 | ||||
Proportional share of net income | 259 | 213 | ||||||
Unrealized foreign currency translation loss, net | (239 | ) | (611 | ) | ||||
Investment balance, December 31 | $ | 2,622 | $ | 2,602 |
Data Center Services | IP Services | Total | ||||||||||
Balance, December 31, 2013: | ||||||||||||
Goodwill | $ | 90,923 | $ | 152,087 | $ | 243,010 | ||||||
Accumulated impairment losses | — | (112,623 | ) | (112,623 | ) | |||||||
Net | 90,923 | 39,464 | 130,387 | |||||||||
iWeb acquisition – working capital adjustment | (74 | ) | — | (74 | ) | |||||||
Balance, December 31, 2014: | ||||||||||||
Goodwill | 90,849 | 152,087 | 242,936 | |||||||||
Accumulated impairment losses | — | (112,623 | ) | (112,623 | ) | |||||||
Net | $ | 90,849 | 39,464 | 130,313 |
F-14 |
December 31, 2014 | December 31, 2013 | |||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||
Acquired and developed technology | $ | 52,512 | $ | (40,718 | ) | $ | 47,723 | $ | (34,474 | ) | ||||||
Customer relationships and trade names | 69,548 | (28,797 | ) | 69,548 | (25,950 | ) | ||||||||||
Beneficial lease interest | — | — | 858 | (6 | ) | |||||||||||
$ | 122,060 | $ | (69,515 | ) | $ | 118,129 | $ | (60,430 | ) |
2015 | $ | 5,968 | ||
2016 | 5,606 | |||
2017 | 4,855 | |||
2018 | 4,677 | |||
2019 | 4,003 | |||
Thereafter | 27,436 | |||
$ | 52,545 |
December 31, | ||||||||
2014 | 2013 | |||||||
Compensation and benefits payable | $ | 7,239 | $ | 8,100 | ||||
Property, sales, and other taxes | 1,512 | 1,619 | ||||||
Customer credit balances | 1,815 | 1,147 | ||||||
Other | 2,554 | 2,683 | ||||||
$ | 13,120 | $ | 13,549 |
Balance December 31, 2013 | Initial Charges | Plan Adjustments | Cash Payments | Balance December 31, 2014 | ||||||||||||||||
Real estate obligations: | ||||||||||||||||||||
2014 exit activities | $ | — | $ | 3,499 | $ | 17 | $ | (1,506 | ) | $ | 2,010 | |||||||||
2011 - 2013 exit activities | 67 | — | 21 | (81 | ) | 7 | ||||||||||||||
2007 restructuring | 3,296 | — | 1,055 | (2,026 | ) | 2,325 | ||||||||||||||
2001 restructuring | 800 | — | — | (632 | ) | 168 | ||||||||||||||
$ | 4,163 | $ | 3,499 | $ | 1,093 | $ | (4,245 | ) | $ | 4,510 |
F-15 |
Balance December 31, 2012 | Initial Charges | Plan Adjustments | Cash Payments | Balance December 31, 2013 | ||||||||||||||||
Real estate obligations: | ||||||||||||||||||||
2011 - 2013 exit activities | $ | 146 | $ | 81 | $ | 2 | $ | (162 | ) | $ | 67 | |||||||||
2007 restructuring | 4,245 | — | 1,043 | (1,992 | ) | 3,296 | ||||||||||||||
2001 restructuring | 1,482 | — | 59 | (741 | ) | 800 | ||||||||||||||
$ | 5,873 | $ | 81 | $ | 1,104 | $ | (2,895 | ) | $ | 4,163 |
Year Ended December 31, | |||||||
2014 | 2013 | ||||||
Losses recorded as the effective portion of the change in fair value | 36 | 777 | |||||
Interest payments reclassified as an increase to interest expense | 806 | 497 |
F-16 |
December 31, | ||||||||
2014 | 2013 | |||||||
Credit limit: | ||||||||
Revolving credit facility | $ | 50,000 | $ | 50,000 | ||||
Term loan | 300,000 | 300,000 | ||||||
Outstanding balance on revolving credit facility | 10,000 | — | ||||||
Outstanding principal balance on the term loan, less unamortized discount of $8.0 million and $9.4 million, respectively | 288,994 | 290,608 | ||||||
Letters of credit issued with proceeds from revolving credit facility | 6,329 | — | ||||||
Letters of credit issued with cash | — | 6,400 | ||||||
Borrowing capacity | 33,671 | 50,000 | ||||||
Interest rate – term loan | 6.0 | % | 6.0 | % | ||||
Interest rate – revolving credit facility | 4.7 | % | 4.7 | % |
Maturities of the term loan are as follows: | ||||
2015 | $ | 3,000 | ||
2016 | 3,000 | |||
2017 | 3,000 | |||
2018 | 3,000 | |||
2019 | 285,000 | |||
$ | 297,000 |
F-17 |
2015 | $ | 12,488 | ||
2016 | 11,435 | |||
2017 | 10,721 | |||
2018 | 10,251 | |||
2019 | 9,163 | |||
Thereafter | 37,552 | |||
Remaining capital lease payments | 91,610 | |||
Less: amounts representing imputed interest | (31,558 | ) | ||
Present value of minimum lease payments | 60,052 | |||
Less: current portion | (7,366 | ) | ||
$ | 52,686 |
2015 | $ | 24,831 | ||
2016 | 24,920 | |||
2017 | 19,525 | |||
2018 | 12,988 | |||
2019 | 8,738 | |||
Thereafter | 12,352 | |||
$ | 103,354 |
2015 | $ | 18,420 | ||
2016 | 6,322 | |||
2017 | 1,894 | |||
2018 | 224 | |||
2019 | 209 | |||
Thereafter | 33 | |||
$ | 27,102 |
F-18 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Data center services | $ | 242,623 | $ | 185,147 | $ | 167,286 | ||||||
IP services | 92,336 | 98,195 | 106,306 | |||||||||
Total revenues | 334,959 | 283,342 | 273,592 | |||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization: | ||||||||||||
Data center services | 106,159 | 92,564 | 90,604 | |||||||||
IP services | 38,787 | 39,448 | 40,350 | |||||||||
Total direct costs of network, sales and services, exclusive of depreciation and amortization | 144,946 | 132,012 | 130,954 | |||||||||
Segment profit: | ||||||||||||
Data center services | 136,464 | 92,583 | 76,682 | |||||||||
IP services | 53,549 | 58,747 | 65,956 | |||||||||
Total segment profit | 190,013 | 151,330 | 142,638 | |||||||||
Exit activities, restructuring and impairments | 4,520 | 1,414 | 1,422 | |||||||||
Other operating expenses, including direct costs of customer support, depreciation and amortization | 199,832 | 157,403 | 137,452 | |||||||||
(Loss) income from operations | (14,339 | ) | (7,487 | ) | 3,764 | |||||||
Non-operating expenses | 26,775 | 12,841 | 7,849 | |||||||||
Loss before income taxes and equity in (earnings) of equity-method investment | $ | (41,114 | ) | $ | (20,328 | ) | $ | (4,085 | ) |
December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Data center services | $ | 474,460 | $ | 470,736 | $ | 233,727 | ||||||
IP services | 117,324 | 143,505 | 166,985 | |||||||||
$ | 591,784 | $ | 614,241 | $ | 400,712 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
United States | $ | 258,770 | $ | 257,591 | $ | 252,058 | ||||||
Canada | 47,479 | 4,303 | 690 | |||||||||
Other countries | 28,710 | 21,448 | 20,844 | |||||||||
$ | 334,959 | $ | 283,342 | $ | 273,592 |
F-19 |
December 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 278,065 | $ | 276,400 | ||||
Canada | 60,320 | 52,209 | ||||||
Other countries | 3,760 | 3,354 | ||||||
$ | 342,145 | $ | 331,963 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Direct costs of customer support | $ | 1,448 | $ | 1,108 | $ | 936 | ||||||
Sales and marketing | 1,147 | 1,110 | 929 | |||||||||
General and administrative | 4,587 | 4,525 | 3,993 | |||||||||
$ | 7,182 | $ | 6,743 | $ | 5,858 |
F-20 |
Shares | Weighted Average Exercise Price | |||||||
Balance, December 31, 2013 | 5,802 | $ | 7.05 | |||||
Granted | 1,521 | 7.78 | ||||||
Exercised | (306 | ) | 5.80 | |||||
Forfeitures and post-vesting cancellations | (1,089 | ) | 8.31 | |||||
Balance, December 31, 2014 | 5,928 | 7.07 | ||||||
Exercisable, December 31, 2014 | 3,673 | 6.51 |
Fully Vested and Exercisable | Expected to Vest | |||||
Total shares | 3,673 | 5,504 | ||||
Weighted-average exercise price | $ | 6.51 | 7.00 | |||
Aggregate intrinsic value | $ | 7,150 | 7,479 | |||
Weighted-average remaining contractual term (in years) | 5.6 | 6.6 |
Shares | Weighted- Average Grant Date Fair Value | |||||||
Unvested balance, December 31, 2013 | 992 | $ | 6.08 | |||||
Granted | 471 | 7.54 | ||||||
Vested | (464 | ) | 5.70 | |||||
Forfeited | (230 | ) | 7.13 | |||||
Unvested balance, December 31, 2014 | 769 | 6.89 |
Stock Options | Restricted Stock | Total | ||||||||||
Unrecognized compensation | $ | 6,050 | $ | 2,767 | $ | 8,817 | ||||||
Weighted-average remaining recognition period (in years) | 2.6 | 1.7 | 2.3 |
F-21 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
United States | $ | (32,684 | ) | $ | (17,066 | ) | $ | (3,838 | ) | |||
Foreign | (8,430 | ) | (3,262 | ) | (247 | ) | ||||||
Loss from continuing operations before income taxes and equity in (earnings) of equity-method investment | $ | (41,114 | ) | $ | (20,328 | ) | $ | (4,085 | ) |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | (420 | ) | $ | — | |||||
State | 127 | 122 | 165 | |||||||||
Foreign | 121 | 12 | — | |||||||||
248 | (286 | ) | 165 | |||||||||
Deferred: | ||||||||||||
Federal | — | — | — | |||||||||
State | — | 25 | — | |||||||||
Foreign | (1,609 | ) | (24 | ) | 288 | |||||||
(1,609 | ) | 1 | 288 | |||||||||
Net income tax (benefit) provision | $ | (1,361 | ) | $ | (285 | ) | $ | 453 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Federal income tax at statutory rates | (34 | )% | (34 | )% | (34 | )% | ||||||
Foreign income tax | — | — | — | |||||||||
State income tax | (4 | ) | (4 | ) | (2 | ) | ||||||
Other permanent differences | 2 | 3 | 3 | |||||||||
Statutory tax rate change | — | 1 | 4 | |||||||||
Compensation | 4 | 5 | 9 | |||||||||
Capital loss expiration | — | 11 | — | |||||||||
Acquisition costs | — | 6 | — | |||||||||
Change in valuation allowance | 29 | 11 | 31 | |||||||||
Effective tax rate | (3 | )% | (1 | )% | 11 | % |
F-22 |
December 31, | ||||||||
2014 | 2013 | |||||||
Current deferred income tax assets (liabilities): | ||||||||
Provision for doubtful accounts | $ | 2,998 | $ | 2,937 | ||||
Accrued compensation | 1,673 | 1,812 | ||||||
Other accrued expenses | 4 | 6 | ||||||
Deferred revenue | 844 | 967 | ||||||
Restructuring liability | 687 | 869 | ||||||
Other | 208 | 195 | ||||||
Current deferred income tax assets | 6,414 | 6,786 | ||||||
Less: valuation allowance | (5,781 | ) | (6,415 | ) | ||||
Net current deferred income tax assets (liabilities) | 633 | 371 | ||||||
Long-term deferred income tax assets (liabilities): | ||||||||
Property and equipment | 45,719 | 40,255 | ||||||
Goodwill | 3,388 | 3,856 | ||||||
Intangible assets | (20,090 | ) | (17,329 | ) | ||||
Deferred revenue, less current portion | 1,225 | 927 | ||||||
Restructuring liability, less current portion | 1,026 | 713 | ||||||
Deferred rent | 4,119 | 5,533 | ||||||
Stock-based compensation | 4,667 | 3,398 | ||||||
U.S. net operating loss carryforwards | 69,457 | 63,730 | ||||||
Foreign net operating loss carryforwards, less current portion | 10,052 | 8,220 | ||||||
Tax credit carryforwards | 3,246 | 2,782 | ||||||
Other | 1,771 | 1,219 | ||||||
Long-term deferred income tax assets | 124,580 | 113,304 | ||||||
Less: valuation allowance | (130,236 | ) | (120,153 | ) | ||||
Net long-term deferred income tax (liabilities) assets | (5,656 | ) | (6,849 | ) | ||||
Net deferred tax (liabilities) assets | $ | (5,023 | ) | $ | (6,478 | ) |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Balance, January 1, | $ | 126,568 | $ | 124,433 | $ | 123,414 | ||||||
Increase in deferred tax assets | 9,449 | 2,135 | 1,019 | |||||||||
Balance, December 31, | $ | 136,017 | $ | 126,568 | $ | 124,433 |
F-23 |
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Unrecognized tax benefits balance, January 1, | $ | 408 | $ | 341 | $ | 283 | ||||||
Addition for tax positions taken in current year | — | — | 58 | |||||||||
Addition for tax positions taken in a prior year | — | 408 | — | |||||||||
Deduction for tax positions taken in a prior year | — | (341 | ) | — | ||||||||
Unrecognized tax benefits balance, December 31, | $ | 408 | $ | 408 | $ | 341 |
2014 Quarter Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
Revenues | $ | 81,961 | $ | 84,068 | $ | 84,667 | $ | 84,263 | ||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization | 35,760 | 36,562 | 37,148 | 35,475 | ||||||||||||
Direct costs of customer support | 8,927 | 9,553 | 9,114 | 9,211 | ||||||||||||
Direct costs of amortization of acquired technologies | 1,461 | 1,551 | 1,524 | 1,383 | ||||||||||||
Exit activities, restructuring and impairments | 1,384 | 1,561 | 56 | 1,518 | ||||||||||||
Net loss | (10,675 | ) | (11,185 | ) | (9,377 | ) | (8,257 | ) | ||||||||
Basic and diluted net loss per share | (0.21 | ) | (0.22 | ) | (0.18 | ) | (0.16 | ) | ||||||||
2013 Quarter Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
Revenues | $ | 69,699 | $ | 69,983 | $ | 69,572 | $ | 74,087 | ||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization | 32,870 | 32,653 | 32,795 | 33,693 | ||||||||||||
Direct costs of customer support | 7,151 | 7,372 | 7,528 | 7,635 | ||||||||||||
Direct costs of amortization of acquired technologies | 1,179 | 1,190 | 1,273 | 1,324 | ||||||||||||
Exit activities, restructuring and impairments | 248 | 683 | 274 | 209 | ||||||||||||
Net loss | (1,643 | ) | (3,702 | ) | (4,035 | ) | (10,450 | ) | ||||||||
Basic and diluted net loss per share | (0.03 | ) | (0.07 | ) | (0.08 | ) | (0.21 | ) |
F-24 |
Balance at Beginning of Fiscal Period | Charges to Costs and Expense | Deductions | Balance at End of Fiscal Period | |||||||||||||
Year ended December 31, 2012: | ||||||||||||||||
Allowance for doubtful accounts | $ | 1,668 | $ | 932 | $ | (791 | )(1) | $ | 1,809 | |||||||
Year ended December 31, 2013: | ||||||||||||||||
Allowance for doubtful accounts | 1,809 | 1,861 | (1,675 | )(1) | 1,995 | |||||||||||
Year ended December 31, 2014: | ||||||||||||||||
Allowance for doubtful accounts | 1,995 | 1,469 | (1,343 | )(1) | 2,121 |
(1) | Deductions in the allowance for doubtful accounts represent write-offs of uncollectible accounts net of recoveries. |
S-1 |