Internap (INAPQ) 10-Q 5 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Sep. 30, 2015shares
Document and Entity Information Abstract
Entity Registrant Name	Internap Corp
Entity Central Index Key	1,056,386
Trading Symbol	inap
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock Shares Outstanding	56,036,236
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

UNAUDITED CONDENSED CONSOLIDATE

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Direct costs of sales and services, exclusive of depreciation and amortization, shown below:
Direct costs of customer support	$ 9,173	$ 9,114	$ 27,381	$ 27,594
Direct costs of amortization of acquired and developed technologies	816	1,524	2,557	4,535
Sales and marketing	8,305	8,858	28,347	28,938
General and administrative	10,793	11,611	34,295	34,471
Depreciation and amortization	23,815	19,391	64,847	54,773
Exit activities, restructuring and impairments	920	56	1,245	3,001
Total operating costs and expenses	87,503	87,702	258,678	262,782
Loss from operations	(9,185)	(3,035)	(19,142)	(12,086)
Non-operating (income) expenses:
Interest expense	6,923	6,699	20,613	19,996
Other, net	(288)	(149)	(763)	335
Total non-operating (income) expenses	6,635	6,550	19,850	20,331
Loss before income taxes and equity in (earnings) of equity-method investment	(15,820)	(9,585)	(38,992)	(32,417)
Benefit for income taxes	(1,612)	(128)	(1,723)	(982)
Equity in (earnings) of equity-method investment, net of taxes	(11)	(80)	(96)	(198)
Net loss	(14,197)	(9,377)	(37,173)	(31,237)
Other comprehensive (loss) income:
Foreign currency translation adjustment	49	(264)	(109)	(94)
Unrealized loss on foreign currency contracts	(192)		(379)
Unrealized gain (loss) on interest rate swap	47	341	(102)	61
Total other comprehensive (loss) income	(96)	77	(590)	(33)
Comprehensive loss	$ (14,293)	$ (9,300)	$ (37,763)	$ (31,270)
Basic and diluted net loss per share (in dollars per share)	$ (0.27)	$ (0.18)	$ (0.72)	$ (0.61)
Weighted average shares outstanding used in computing basic and diluted net loss per share: (in dollars per share)	51,699	51,063	51,763	51,180
Operating segments
Revenues:
Total revenues	$ 78,318	$ 84,667	$ 239,536	$ 250,696
Direct costs of sales and services, exclusive of depreciation and amortization, shown below:
Direct costs of sales and services, exclusive of depreciation and amortization	33,681	37,148	100,006	109,470
Operating segments | Data center services
Revenues:
Total revenues	58,622	61,640	177,142	181,318
Direct costs of sales and services, exclusive of depreciation and amortization, shown below:
Direct costs of sales and services, exclusive of depreciation and amortization	25,111	27,716	73,711	80,170
Operating segments | IP services
Revenues:
Total revenues	19,696	23,027	62,394	69,378
Direct costs of sales and services, exclusive of depreciation and amortization, shown below:
Direct costs of sales and services, exclusive of depreciation and amortization	$ 8,570	$ 9,432	$ 26,295	$ 29,300

UNAUDITED CONDENSED CONSOLIDAT3

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 18,312	$ 20,084
Accounts receivable, net of allowance for doubtful accounts of $1,830 and $2,121, respectively	22,007	19,606
Deferred tax asset	676	633
Prepaid expenses and other assets	10,994	12,276
Total current assets	51,989	52,599
Property and equipment, net	330,603	342,145
Investment in joint venture	2,733	2,622
Intangible assets, net	38,463	52,545
Goodwill	130,313	130,313
Deposits and other assets	10,790	9,923
Deferred tax asset	164	1,637
Total assets	565,055	591,784
Current liabilities:
Accounts payable	18,047	30,589
Accrued liabilities	11,981	13,120
Deferred revenues	6,696	7,345
Capital lease obligations	8,218	7,366
Term loan, less discount of $1,523 and $1,463, respectively	1,477	1,537
Exit activities and restructuring liability	2,140	1,809
Other current liabilities	2,232	1,590
Total current liabilities	50,791	63,356
Deferred revenues	4,613	3,544
Capital lease obligations	49,291	52,686
Revolving credit facility	31,000	10,000
Term loan, less discount of $5,396 and $6,543, respectively	286,354	287,457
Exit activities and restructuring liability	1,756	2,701
Deferred rent	9,296	10,583
Deferred tax liability	3,610	7,293
Other long-term liabilities	4,668	3,828
Total liabilities	$ 441,379	$ 441,448
Commitments and contingencies (note 6)
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; 56,036 and 54,410 shares outstanding, respectively	$ 56	$ 54
Additional paid-in capital	1,274,834	1,262,402
Treasury stock, at cost; 768 and 621 shares, respectively	(6,014)	(4,683)
Accumulated deficit	(1,142,687)	(1,105,514)
Accumulated items of other comprehensive loss	(2,513)	(1,923)
Total stockholders' equity	123,676	150,336
Total liabilities and stockholders' equity	$ 565,055	$ 591,784

UNAUDITED CONDENSED CONSOLIDAT4

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Allowance for doubtful accounts receivable (in dollars)	$ 1,830	$ 2,121
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000	20,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	120,000	120,000
Common stock, shares outstanding	56,036	54,410
Treasury stock, shares	768	621
Term loan current
Term loan, discount (in dollars)	$ 1,523	$ 1,463
Term loan noncurrent
Term loan, discount (in dollars)	$ 5,396	$ 6,543

UNAUDITED CONDENSED CONSOLIDAT5

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows from Operating Activities:
Net loss	$ (37,173)	$ (31,237)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	67,404	59,308
Impairment of property and equipment	232	537
Amortization of debt discount and issuance costs	1,498	1,441
Stock-based compensation expense, net of capitalized amount	6,200	5,675
Equity in (earnings) of equity-method investment	(96)	(198)
Provision for doubtful accounts	922	811
Non-cash change in capital lease obligations	(1,167)	(87)
Non-cash change in exit activities and restructuring liability	1,400	2,996
Non-cash change in deferred rent	(1,287)	(2,028)
Deferred taxes	(2,181)	(1,226)
Other, net	230	197
Changes in operating assets and liabilities:
Accounts receivable	(3,459)	3,198
Prepaid expenses, deposits and other assets	836	(3,080)
Accounts payable	(7,748)	(2,585)
Accrued and other liabilities	(1,862)	4,795
Deferred revenues	624	99
Exit activities and restructuring liability	(2,014)	(2,296)
Other liabilities	34	(90)
Net cash flows provided by operating activities	22,393	36,230
Cash Flows from Investing Activities:
Purchases of property and equipment	(41,299)	(51,312)
Additions to acquired and developed technologies	(1,120)	(2,004)
Proceeds from sale-leaseback transactions		2,603
Acquisition, net of cash received		74
Net cash flows used in investing activities	(42,419)	(50,639)
Cash Flows from Financing Activities:
Proceeds from credit agreements	21,000	5,000
Principal payments on credit agreements	(2,250)	(2,250)
Return of deposit collateral on credit agreement		6,461
Payments on capital lease obligations	(5,718)	(4,212)
Proceeds from exercise of stock options	6,005	973
Acquisition of common stock for income tax withholdings	(1,332)	(744)
Other, net	869	(135)
Net cash flows provided by financing activities	18,574	5,093
Effect of exchange rates on cash and cash equivalents	(320)	(209)
Net decrease in cash and cash equivalents	(1,772)	(9,525)
Cash and cash equivalents at beginning of period	20,084	35,018
Cash and cash equivalents at end of period	18,312	25,493
Supplemental disclosure of cash flow information:
Cash paid for interest	19,712	18,109
Non-cash acquisition of property and equipment under capital leases	4,342	7,757
Additions to property and equipment included in accounts payable	$ 3,540	$ 11,117

NATURE OF OPERATIONS AND BASIS

NATURE OF OPERATIONS AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation Of Financial Statements [Abstract]
NATURE OF OPERATIONS AND BASIS OF PRESENTATION	1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION Internap Corporation (“we,” “us” or “our”) provides high-performance information technology (“IT”) infrastructure services at 52 data centers across North America, Europe and the Asia-Pacific region and through 86 Internet Protocol (“IP”) service points. We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated all intercompany transactions and balances in the accompanying financial statements. We have condensed or omitted certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP. In the opinion of management, the accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, necessary for a fair statement of our financial position as of September 30, 2015 and our operating results and cash flows for the interim periods presented. The balance sheet at December 31, 2014 was derived from our audited financial statements, but does not include all disclosures required by GAAP. You should read the accompanying financial statements and the related notes in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission. The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for any future periods.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	2. FAIR VALUE MEASUREMENTS We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: • 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. Assets and liabilities measured at fair value on a recurring basis are summarized as follows (in thousands): Level 1 Level 2 Level 3 Total September 30, 2015: Foreign currency contracts (1) $ — $ 518 $ — $ 518 Interest rate swap (note 5) — 914 — 914 Asset retirement obligations (2) — — 2,668 2,668 December 31, 2014: Interest rate swap (note 5) — 813 — 813 Asset retirement obligations (2) — — 2,471 2,471 (1) We include foreign currency contracts in “Other current liabilities” in the accompanying consolidated balance sheets as of September 30, 2015. (2) 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. We include asset retirement obligations in “Other long-term liabilities” in the accompanying consolidated balance sheets as of September 30, 2015 and December 31, 2014. The following table provides a summary of changes in our Level 3 asset retirement obligations for the nine months ended September 30, 2015 (in thousands): Balance, January 1, 2015 $ 2,471 Accretion 197 Balance, September 30, 2015 $ 2,668 The fair values of our other Level 3 debt liabilities, estimated using a discount cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements, are as follows (in thousands): September 30, 2015 December 31, 2014 Carrying Fair Carrying Fair Revolving credit facility $ 31,000 $ 30,400 $ 10,000 $ 9,900 Term loan 294,750 304,000 297,000 313,000

TRADE NAME

TRADE NAME	9 Months Ended
	Sep. 30, 2015
Trade Name [Abstract]
TRADE NAME	3. TRADE NAME As part of the acquisition of iWeb Technologies Inc. (“iWeb”) in November 2013, we ascribed a value of $15.1 million to the iWeb trade name. Since the acquisition, we have operated under two brands, Internap and iWeb. We have determined to phase-out the use of the iWeb trade name to support our long-term strategy. As a result, we changed the estimate of the trade name’s useful life to approximately nine months beginning in late March 2015. During the three and nine months ended September 30, 2015, the additional amortization expense was $4.5 million and $9.5 million, respectively. As of September 30, 2015, the unamortized balance was $4.7 million.

GOODWILL

GOODWILL	9 Months Ended
	Sep. 30, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
GOODWILL	4. GOODWILL For purposes of valuing our goodwill, we have the following reporting units: IP services, IP products, data center services and data center products. We performed our annual impairment review as of August 1, 2015 and concluded that goodwill attributed to each of our reporting units was not impaired as the fair value of each reporting unit exceeded the carrying value, including goodwill. To determine the fair value of our reporting units, we utilize the discounted cash flow and market methods. We have consistently utilized both methods in our goodwill impairment tests and weight both results equally because we believe both, in conjunction with each other, provide a reasonable estimate of the fair value of the reporting unit. The discounted cash flow method is specific to our anticipated future results of the reporting unit, while the market method is based on our market sector including our competitors. We determined the assumptions supporting the discounted cash flow method, including the discount rate, using our estimates as of the date of the impairment review. To determine the reasonableness of these assumptions, we performed various sensitivity analyses on certain of the assumptions used in the discounted cash flow method, such as forecasted revenues and discount rate. We used reasonable judgment in developing our estimates and assumptions and there was no impairment indicated in our testing. The assumptions, inputs and judgments used in performing the valuation analysis are inherently subjective and reflect estimates based on known facts and circumstances at the time we perform the valuation. These estimates and assumptions primarily include, but are not limited to, discount rates; terminal growth rates; projected revenues and costs; earnings before interest, taxes, depreciation and amortization for expected cash flows; market comparables and capital expenditure forecasts. The use of different assumptions, inputs and judgments, or changes in circumstances, could materially affect the results of the valuation. Due to inherent uncertainty involved in making these estimates, actual results could differ from our estimates and could result in additional non-cash impairment charges in the future. While we did not identify any impairment indicators, the fair value of the IP services reporting unit exceeded its carrying value by 13%. At September 30, 2015, goodwill attributable to the IP services reporting unit was $33.7 million. If revenue for such reporting unit continues to decline, we may be at risk for impairment within this reporting unit. In addition, although the fair value of the IP products reporting unit substantially exceeded the carrying value, we calculated the fair value using revenue projections for the rollout of our new product, Managed Internet Route Optimizer Controller, which replaced our previous generation of route optimization hardware. Since this is a new product without an established historical revenue pattern, the IP products reporting unit may be at risk of impairment if we do not meet our projections. At September 30, 2015, goodwill attributable to the IP products reporting unit was $5.8 million. As with all of our reporting units, we monitor potential triggering events on a quarterly basis, which could result in an interim impairment analysis. Through September 30, 2015, we concluded no impairment indicators existed that caused us to reassess our goodwill.

INTEREST RATE SWAP

INTEREST RATE SWAP	9 Months Ended
	Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
INTEREST RATE SWAP	5. INTEREST RATE SWAP As of September 30, 2015, the fair value of our interest rate swap was $0.9 million, of which $0.8 million is included in “Other current liabilities” and $0.1 million is included in “Other long-term liabilities” in the accompanying consolidated balance sheets. As of December 31, 2014, the fair value of our interest rate swap was $0.8 million which we included in “Other long-term liabilities.” During the three and nine months ended September 30, 2015 and 2014, we recorded the effective portion of the change in fair value of our interest rate swap in “Accumulated items of other comprehensive loss” in the accompanying consolidated balance sheets. We did not recognize any hedge ineffectiveness during either the three and nine months ended September 30, 2015 and 2014. We will reclassify amounts reported in “Accumulated items of other comprehensive loss” related to our interest rate swaps to “Interest expense” in our accompanying consolidated statements of operations and comprehensive loss as we accrue interest payments on our variable-rate debt. Through September 30, 2016, we estimated that we will reclassify an additional $0.8 million as an increase to interest expense since the hedge interest rate currently exceeds the variable interest rate on our debt. The activity of our interest rate swap is summarized as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Gain (loss) recorded as the effective portion of the change in fair value $ 47 $ 341 $ (102 ) $ 61 Interest payments reclassified as an increase to interest expense 201 203 598 604

COMMITMENTS, CONTINGENCIES AND

COMMITMENTS, CONTINGENCIES AND LITIGATION	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS, CONTINGENCIES AND LITIGATION	6. COMMITMENTS, CONTINGENCIES AND LITIGATION On September 18, 2015, a purported stockholder filed a putative class action complaint in the Superior Court of Fulton County of the State of Georgia against us, the current members of our board of directors and Jefferies Finance LLC (“Jefferies”). The complaint is captioned Grisolia v. Internap Corp., et al., Case No. 2015cv265926 (Ga. Sup. Ct.). The complaint alleges, among other things, that the members of our board of directors breached their fiduciary duties, and that Jefferies aided and abetted such breaches, in connection with the credit agreement described in this filing. The complaint alleges that the credit agreement contains a so-called “dead hand proxy put” provision that (a) defines the election of a majority of directors whose initial nomination arose from an actual or threatened proxy contest to be an event of default that triggers the lenders’ right to accelerate payment of the debt outstanding under the credit agreement; and (b) thereby allegedly coerces stockholders and entrenches the members of the Board of Directors. The Plaintiff further claims that Jefferies aided and abetted the alleged breach of fiduciary duties by including the provisions in the credit agreement and encouraging our board of directors to accept them. The complaint seeks, among other things, declaratory and injunctive relief, as well as an award of costs and disbursements, including attorneys’ and experts’ fees. During the three months ended September 30, 2015, we recorded $0.5 million as litigation expense in “General and administrative” in the accompanying statements of operations and comprehensive loss for the three and nine months ended September 30, 2015. On October 30, 2015, the Company and our lenders amended the credit agreement to remove the provision which is the subject of the litigation. We believe we have meritorious defenses to the claims asserted in the lawsuit including that the lawsuit is now moot. We do not believe that the ultimate costs of this complaint will be material. We are subject to other legal proceedings, claims and litigation arising in the ordinary course of business. Although the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse impact on our financial condition, results of operations or cash flows.

EXIT ACTIVITIES AND RESTRUCTURI

EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES	9 Months Ended
	Sep. 30, 2015
Restructuring and Related Activities [Abstract]
EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES	7. EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES In prior years, we incurred costs related to certain exited facilities. In addition, during the nine months ended September 30, 2015, we recorded initial exit activity charges primarily due to ceasing use of an office facility and subsequent plan adjustments in sublease income assumptions for certain properties included in our previously-disclosed plans. We include subsequent plan adjustments in “Exit activities, restructuring and impairments” in the accompanying statements of operations and comprehensive loss for each of the three and nine months ended September 30, 2015 and 2014. The following table displays the transactions and balances for exit activities and restructuring charges, substantially related to our data center services segment, during each of the nine months ended September 30, 2015 and 2014 (in thousands): December 31, Initial Plan Cash September 30, Real estate obligations: 2015 exit activities $ — $ 683 $ — $ (75 ) $ 608 2014 exit activities 2,010 — 232 (407 ) 1,835 2007 restructuring 2,325 — 490 (1,362 ) 1,453 Other 175 — (6 ) (169 ) — Total $ 4,510 $ 683 $ 716 $ (2,013 ) $ 3,896 December 31, Initial Plan Cash September 30, Real estate obligations: 2014 exit activities $ — $ 1,454 $ — $ (205 ) $ 1,249 2007 restructuring 3,296 — 1,521 (1,538 ) 3,279 Other 867 — 21 (553 ) 335 Total $ 4,163 $ 1,454 $ 1,542 $ (2,296 ) $ 4,863

OPERATING SEGMENTS

OPERATING SEGMENTS	9 Months Ended
	Sep. 30, 2015
Segment Reporting [Abstract]
OPERATING SEGMENTS	8. OPERATING SEGMENTS We operate in two business segments: data center services and IP services. The data center services segment includes colocation, hosting and cloud services. Colocation involves providing physical space within data centers and associated services such as power, interconnection, environmental controls and security while allowing our customers to deploy and manage their servers, storage and other equipment. Hosting and cloud services involve the provision and maintenance of hardware, operating system software, management and monitoring software, data center infrastructure and interconnection, while allowing our customers to own and manage their software applications and content. Our IP services segment includes our patented Performance IP™ service, content delivery network services and IP routing and hardware and software platform. Segment profit is calculated as segment revenues less direct costs of sales and services, exclusive of depreciation and amortization for the segment and does not include direct costs of customer support, direct costs of amortization of acquired technologies or any other depreciation or amortization associated with direct costs. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues: Data center services $ 58,622 $ 61,640 $ 177,142 $ 181,318 IP services 19,696 23,027 62,394 69,378 Total revenues 78,318 84,667 239,536 250,696 Direct costs of sales and services, exclusive of depreciation and amortization: Data center services 25,111 27,716 73,711 80,170 IP services 8,570 9,432 26,295 29,300 Total direct costs of network, sales and services, exclusive of depreciation and amortization 33,681 37,148 100,006 109,470 Segment profit: Data center services 33,511 33,924 103,431 101,148 IP services 11,126 13,595 36,099 40,078 Total segment profit 44,637 47,519 139,530 141,226 Exit activities, restructuring and impairments 920 56 1,245 3,001 Other operating expenses, including direct costs of customer support, depreciation and amortization 52,902 50,498 157,427 150,311 Loss from operations (9,185 ) (3,035 ) (19,142 ) (12,086 ) Non-operating expense 6,635 6,550 19,850 20,331 Loss before income taxes and equity in (earnings) of equity-method investment $ (15,820 ) $ (9,585 ) $ (38,992 ) $ (32,417 )

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2015
Income Tax Disclosure [Abstract]
INCOME TAXES	9. INCOME TAXES We periodically evaluate the recoverability of our deferred tax assets and the appropriateness of a valuation allowance. During the three months ended June 30, 2015, we recorded a $1.7 million reserve against our U.K. net deferred tax asset. We record the resulting income tax expense for the reserve, netted with the tax benefit for the operational results of iWeb, in “Benefit for income taxes” in the accompanying consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2015.

NET LOSS PER SHARE

NET LOSS PER SHARE	9 Months Ended
	Sep. 30, 2015
Earnings Per Share [Abstract]
NET LOSS PER SHARE	10. NET LOSS PER SHARE We compute basic net loss per share by dividing net loss attributable to our common stockholders by the weighted average number of shares of common stock outstanding during the period. We exclude all outstanding options and unvested restricted stock as such securities are anti-dilutive for all periods presented. Basic and diluted net loss per share is calculated as follows (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net loss attributable to common stock $ (14,197 ) $ (9,377 ) $ (37,173 ) $ (31,237 ) Weighted average shares outstanding, basic and diluted 51,699 51,063 51,763 51,180 Net loss per share, basic and diluted $ (0.27 ) $ (0.18 ) $ (0.72 ) $ (0.61 ) Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans 6,868 7,141 6,868 7,141

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Sep. 30, 2015
New Accounting Pronouncements and Changes In Accounting Principles [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	11. RECENT ACCOUNTING PRONOUNCEMENTS In April 2015, the Financial Accounting Standards Board (“FASB”) issued guidance that requires In February 2015, FASB issued guidance to improve targeted areas of the existing consolidation guidance and reduce the number of consolidation models. This update is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. In August 2014, FASB issued new guidance which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. The guidance is effective for the annual and interim periods ending after December 15, 2016. Early adoption is permitted. We expect adoption will not have a material impact on our financial condition or result of operations. In May 2014, FASB issued new guidance which provides a single model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The guidance is effective for periods beginning January 1, 2018. The guidance permits the application of its requirements retrospectively to all prior periods presented or in the year of adoption through a cumulative adjustment. We are currently evaluating the impact that the adoption will have on our consolidated financial statements and related disclosures. As we have not completed our evaluation, we cannot make a determination of the impact and have not yet selected a transition method or determined the impact of the standard on our ongoing financial reporting.

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
Schedule of assets and liabilities measured at fair value on a recurring basis	Level 1 Level 2 Level 3 Total September 30, 2015: Foreign currency contracts (1) $ — $ 518 $ — $ 518 Interest rate swap (note 5) — 914 — 914 Asset retirement obligations (2) — — 2,668 2,668 December 31, 2014: Interest rate swap (note 5) — 813 — 813 Asset retirement obligations (2) — — 2,471 2,471 (1) We include foreign currency contracts in “Other current liabilities” in the accompanying consolidated balance sheets as of September 30, 2015. (2) 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. We include asset retirement obligations in “Other long-term liabilities” in the accompanying consolidated balance sheets as of September 30, 2015 and December 31, 2014.
Schedule of changes in asset retirement obligations	Balance, January 1, 2015 $ 2,471 Accretion 197 Balance, September 30, 2015 $ 2,668
Schedule of fair value of term loan and revolving credit facility	September 30, 2015 December 31, 2014 Carrying Amount Fair Value Carrying Amount Fair Value Revolving credit facility $ 31,000 $ 30,400 $ 10,000 $ 9,900 Term loan 294,750 304,000 297,000 313,000

INTEREST RATE SWAP (Tables)

INTEREST RATE SWAP (Tables)	9 Months Ended
	Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of activity of interest rate swaps	Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Gain (loss) recorded as the effective portion of the change in fair value $ 47 $ 341 $ (102 ) $ 61 Interest payments reclassified as an increase to interest expense 201 203 598 604

EXIT ACTIVITIES AND RESTRUCTU19

EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES (Tables)	9 Months Ended
	Sep. 30, 2015
Restructuring and Related Activities [Abstract]
Schedule of transactions and balances for exit activities and restructuring charges	December 31, 2014 Initial Charges Plan Adjustments Cash Payments September 30, 2015 Real estate obligations: 2015 exit activities $ — $ 683 $ — $ (75 ) $ 608 2014 exit activities 2,010 — 232 (407 ) 1,835 2007 restructuring 2,325 — 490 (1,362 ) 1,453 Other 175 — (6 ) (169 ) — Total $ 4,510 $ 683 $ 716 $ (2,013 ) $ 3,896 December 31, 2013 Initial Charges Plan Adjustments Cash Payments September 30, 2014 Real estate obligations: 2014 exit activities $ — $ 1,454 $ — $ (205 ) $ 1,249 2007 restructuring 3,296 — 1,521 (1,538 ) 3,279 Other 867 — 21 (553 ) 335 Total $ 4,163 $ 1,454 $ 1,542 $ (2,296 ) $ 4,863

OPERATING SEGMENTS (Tables)

OPERATING SEGMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Segment Reporting [Abstract]
Schedule of operating results for business segments, along with reconciliations from segment profit to loss before income taxes and equity in (earnings) of equity-method investment	Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues: Data center services $ 58,622 $ 61,640 $ 177,142 $ 181,318 IP services 19,696 23,027 62,394 69,378 Total revenues 78,318 84,667 239,536 250,696 Direct costs of sales and services, exclusive of depreciation and amortization: Data center services 25,111 27,716 73,711 80,170 IP services 8,570 9,432 26,295 29,300 Total direct costs of network, sales and services, exclusive of depreciation and amortization 33,681 37,148 100,006 109,470 Segment profit: Data center services 33,511 33,924 103,431 101,148 IP services 11,126 13,595 36,099 40,078 Total segment profit 44,637 47,519 139,530 141,226 Exit activities, restructuring and impairments 920 56 1,245 3,001 Other operating expenses, including direct costs of customer support, depreciation and amortization 52,902 50,498 157,427 150,311 Loss from operations (9,185 ) (3,035 ) (19,142 ) (12,086 ) Non-operating expense 6,635 6,550 19,850 20,331 Loss before income taxes and equity in (earnings) of equity-method investment $ (15,820 ) $ (9,585 ) $ (38,992 ) $ (32,417 )

NET LOSS PER SHARE (Tables)

NET LOSS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2015
Earnings Per Share [Abstract]
Schedule of basic and diluted net loss per share	Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net loss attributable to common stock $ (14,197 ) $ (9,377 ) $ (37,173 ) $ (31,237 ) Weighted average shares outstanding, basic and diluted 51,699 51,063 51,763 51,180 Net loss per share, basic and diluted $ (0.27 ) $ (0.18 ) $ (0.72 ) $ (0.61 ) Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans 6,868 7,141 6,868 7,141

NATURE OF OPERATIONS AND BASI22

NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Detail Textuals)	9 Months Ended
	Sep. 30, 2015Data_CenterPoint
Organization, Consolidation and Presentation Of Financial Statements [Abstract]
Number of data centers	52
Number of internet protocol service points | Point	86

FAIR VALUE MEASUREMENTS - Summa

FAIR VALUE MEASUREMENTS - Summary of Assets and liabilities measured at fair value on recurring basis (Details) - Recurring basis - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Level 1 | Foreign currency contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[1]
Level 1 | Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Level 1 | Asset retirement obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[2]
Level 2 | Foreign currency contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[1]	$ 518
Level 2 | Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value		$ 914	$ 813
Level 2 | Asset retirement obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[2]
Level 3 | Foreign currency contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[1]
Level 3 | Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value
Level 3 | Asset retirement obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[2]	$ 2,668	$ 2,471
Total | Foreign currency contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[1]	518
Total | Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value		914	813
Total | Asset retirement obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	[2]	$ 2,668	$ 2,471
[1]	We include foreign currency contracts in "Other current liabilities" in the accompanying consolidated balance sheets as of September 30, 2015.
[2]	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. We include asset retirement obligations in "Other long-term liabilities" in the accompanying consolidated balance sheets as of September 30, 2015 and December 31, 2014.

FAIR VALUE MEASUREMENTS - Sum24

FAIR VALUE MEASUREMENTS - Summary of changes in Level 3 financial asset - Asset retirement obligation (Details 1) - Asset retirement obligations $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, January 1, 2015	$ 2,471
Accretion	197
Balance, September 30, 2015	$ 2,668

FAIR VALUE MEASUREMENTS - Sum25

FAIR VALUE MEASUREMENTS - Summary of fair value Level 3 debt - Term loan (Details 2) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Revolving credit facility	$ 31,000	$ 10,000
Term loan	294,750	297,000
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Revolving credit facility	30,400	9,900
Term loan	$ 304,000	$ 313,000

TRADE NAME (Detail Textuals)

TRADE NAME (Detail Textuals) - iWeb Technologies Inc - Trade name - USD ($) $ in Millions	1 Months Ended	3 Months Ended	9 Months Ended
	Nov. 30, 2013	Sep. 30, 2015	Sep. 30, 2015
Trade Name [Line Items]
Acquisition value	$ 15.1
Additional amortization expense		$ 4.5	$ 9.5
Unamortized balance		$ 4.7	$ 4.7

GOODWILL (Detail Textuals)

GOODWILL (Detail Textuals) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Goodwill [Line Items]
Goodwill attributable to the IP services	$ 130,313	$ 130,313
IP services
Goodwill [Line Items]
Percentage of fair value exceeded carrying value	13.00%
Goodwill attributable to the IP services	$ 33,700
IP products
Goodwill [Line Items]
Goodwill attributable to the IP services	$ 5,800

INTEREST RATE SWAP (Details)

INTEREST RATE SWAP (Details) - Interest rate swap - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Derivative [Line Items]
Gain (loss) recorded as the effective portion of the change in fair value	$ 47	$ 341	$ (102)	$ 61
Interest payments reclassified as an increase to interest expense	$ 201	$ 203	$ 598	$ 604

INTEREST RATE SWAP (Detail Text

INTEREST RATE SWAP (Detail Textuals) - Designated as Hedging Instrument - Cash Flow Hedging - Interest rate swap - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Derivative [Line Items]
Fair value of the interest rate swaps	$ 0.9
Other comprehensive loss
Derivative [Line Items]
Estimated reclassification of additional increase in interest expense through June 30, 2016	0.8
Other current liabilities
Derivative [Line Items]
Fair value of the interest rate swaps	0.8
Other long-term liabilities
Derivative [Line Items]
Fair value of the interest rate swaps	$ 0.1	$ 0.8

COMMITMENTS, CONTINGENCIES AN30

COMMITMENTS, CONTINGENCIES AND LITIGATION (Detail Textuals) $ in Millions	3 Months Ended
	Sep. 30, 2015USD ($)
General and administrative
Loss Contingencies [Line Items]
Litigation expense	$ 0.5

EXIT ACTIVITIES AND RESTRUCTU31

EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES - Summary of activity and balances for restructuring and asset impairment activity (Details) - Data center services - Exit activities and Restructuring charges - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Restructuring Reserve [Roll Forward]
December 31, 2014 and 2013	$ 4,510	$ 4,163
Initial Charges	683	1,454
Plan Adjustments	716	1,542
Cash Payments	(2,013)	(2,296)
September 30, 2015 and 2014	$ 3,896	$ 4,863
2015 exit activities
Restructuring Reserve [Roll Forward]
December 31, 2014 and 2013
Initial Charges	$ 683
Plan Adjustments
Cash Payments	$ (75)
September 30, 2015 and 2014	608
2014 exit activities
Restructuring Reserve [Roll Forward]
December 31, 2014 and 2013	$ 2,010
Initial Charges		$ 1,454
Plan Adjustments	$ 232
Cash Payments	(407)	$ (205)
September 30, 2015 and 2014	1,835	1,249
2007 restructuring
Restructuring Reserve [Roll Forward]
December 31, 2014 and 2013	$ 2,325	$ 3,296
Initial Charges
Plan Adjustments	$ 490	$ 1,521
Cash Payments	(1,362)	(1,538)
September 30, 2015 and 2014	1,453	3,279
Other
Restructuring Reserve [Roll Forward]
December 31, 2014 and 2013	$ 175	$ 867
Initial Charges
Plan Adjustments	$ (6)	$ 21
Cash Payments	$ (169)	(553)
September 30, 2015 and 2014		$ 335

OPERATING SEGMENTS - Summary of

OPERATING SEGMENTS - Summary of operating results for business segments - (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment profit:
Exit activities, restructuring and impairments	$ 920	$ 56	$ 1,245	$ 3,001
Loss from operations	(9,185)	(3,035)	(19,142)	(12,086)
Non-operating expense	(6,635)	(6,550)	(19,850)	(20,331)
Loss before income taxes and equity in (earnings) of equity-method investment	(15,820)	(9,585)	(38,992)	(32,417)
Operating segments
Revenues:
Total revenues	78,318	84,667	239,536	250,696
Direct costs of sales and services, exclusive of depreciation and amortization:
Total direct costs of sales and services, exclusive of depreciation and amortization	33,681	37,148	100,006	109,470
Segment profit:
Total segment profit	44,637	47,519	139,530	141,226
Operating segments | Data center services
Revenues:
Total revenues	58,622	61,640	177,142	181,318
Direct costs of sales and services, exclusive of depreciation and amortization:
Total direct costs of sales and services, exclusive of depreciation and amortization	25,111	27,716	73,711	80,170
Segment profit:
Total segment profit	33,511	33,924	103,431	101,148
Operating segments | IP services
Revenues:
Total revenues	19,696	23,027	62,394	69,378
Direct costs of sales and services, exclusive of depreciation and amortization:
Total direct costs of sales and services, exclusive of depreciation and amortization	8,570	9,432	26,295	29,300
Segment profit:
Total segment profit	11,126	13,595	36,099	40,078
Segment reconciling items
Segment profit:
Exit activities, restructuring and impairments	920	56	1,245	3,001
Other operating expenses, including direct costs of customer support, depreciation and amortization	52,902	50,498	157,427	150,311
Loss from operations	(9,185)	(3,035)	(19,142)	(12,086)
Non-operating expense	6,635	6,550	19,850	20,331
Loss before income taxes and equity in (earnings) of equity-method investment	$ (15,820)	$ (9,585)	$ (38,992)	$ (32,417)

OPERATING SEGMENTS (Detail Text

OPERATING SEGMENTS (Detail Textuals)	9 Months Ended
	Sep. 30, 2015Segment
Segment Reporting [Abstract]
Number of operating segments	2

INCOME TAXES (Detail Textuals)

INCOME TAXES (Detail Textuals) $ in Millions	3 Months Ended
	Jun. 30, 2015USD ($)
U.K. net deferred tax asset
Valuation Allowance [Line Items]
Valuation allowance reserve	$ 1.7

NET LOSS PER SHARE (Details)

NET LOSS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Net loss attributable to common stock	$ (14,197)	$ (9,377)	$ (37,173)	$ (31,237)
Weighted average shares outstanding, basic and diluted (in shares)	51,699	51,063	51,763	51,180
Net loss per share, basic and diluted (in dollars per share)	$ (0.27)	$ (0.18)	$ (0.72)	$ (0.61)
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans (in shares)	6,868	7,141	6,868	7,141