Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2015 | |
Document and Entity Information Abstract | |
Entity Registrant Name | Internap Corp |
Entity Central Index Key | 1,056,386 |
Document Type | 8-K |
Document Period End Date | Dec. 31, 2015 |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Direct costs of sales and services, exclusive of depreciation and amortization: | |||
Direct costs of customer support | $ 36,475 | $ 36,804 | $ 29,687 |
Sales, general and administrative | 81,340 | 81,859 | 74,568 |
Depreciation and amortization | 92,655 | 81,169 | 53,148 |
Exit activities, restructuring and impairments | 2,278 | 4,520 | 1,414 |
Total operating costs and expenses | 344,188 | 349,298 | 290,829 |
Loss from operations | (25,895) | (14,339) | (7,487) |
Non-operating expenses (income): | |||
Interest expense | 27,596 | 26,742 | 11,346 |
Loss on extinguishment of debt | 881 | ||
(Gain) loss on foreign currency, net | (771) | 4 | 261 |
Other (income) loss, net | (417) | 29 | 353 |
Total non-operating expenses (income) | 26,408 | 26,775 | 12,841 |
Loss before income taxes and equity in earnings of equity-method investment | (52,303) | (41,114) | (20,328) |
Benefit for income taxes | (3,660) | (1,361) | (285) |
Equity in earnings of equity-method investment, net of taxes | (200) | (259) | (213) |
Net loss | (48,443) | (39,494) | (19,830) |
Other comprehensive loss: | |||
Foreign currency translation adjustment | (197) | (431) | (464) |
Unrealized loss on foreign currency contracts | (745) | ||
Unrealized gain (loss) on interest rate swap | 84 | (36) | (777) |
Total other comprehensive loss | (858) | (467) | (1,241) |
Comprehensive loss | $ (49,301) | $ (39,961) | $ (21,071) |
Basic and diluted net loss per share | $ (0.93) | $ (0.77) | $ (0.39) |
Weighted average shares outstanding used in computing basic and diluted net loss per share | 51,898 | 51,237 | 51,135 |
Operating Segments | |||
Revenues: | |||
Total revenues | $ 318,293 | $ 334,959 | $ 283,342 |
Direct costs of sales and services, exclusive of depreciation and amortization: | |||
Total direct costs of sales and services, exclusive of depreciation and amortization | 131,440 | 144,946 | 132,012 |
Operating Segments | Data center and network services | |||
Revenues: | |||
Total revenues | 213,040 | 226,528 | 230,945 |
Direct costs of sales and services, exclusive of depreciation and amortization: | |||
Total direct costs of sales and services, exclusive of depreciation and amortization | 104,105 | 115,820 | 114,847 |
Operating Segments | Cloud and hosting services | |||
Revenues: | |||
Total revenues | 105,253 | 108,431 | 52,397 |
Direct costs of sales and services, exclusive of depreciation and amortization: | |||
Total direct costs of sales and services, exclusive of depreciation and amortization | $ 27,335 | $ 29,126 | $ 17,165 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 17,772 | $ 20,084 |
Accounts receivable, net of allowance for doubtful accounts of $1,751 and $2,121, respectively | 20,292 | 19,606 |
Deferred tax asset | 633 | |
Prepaid expenses and other assets | 12,405 | 12,063 |
Total current assets | 50,469 | 52,386 |
Property and equipment, net | 328,700 | 342,145 |
Investment in joint venture | 2,768 | 2,622 |
Intangible assets, net | 32,887 | 52,545 |
Goodwill | 130,313 | 130,313 |
Deposits and other assets | 9,474 | 9,087 |
Deferred tax asset | 1,637 | |
Total assets | 554,611 | 590,735 |
Current liabilities: | ||
Accounts payable | 22,607 | 30,589 |
Accrued liabilities | 10,737 | 13,120 |
Deferred revenues | 6,603 | 7,345 |
Capital lease obligations | 8,421 | 7,366 |
Term loan, less discount of $1,784 and $1,676, respectively | 1,215 | 1,324 |
Exit activities and restructuring liability | 2,034 | 1,809 |
Other current liabilities | 2,566 | 1,590 |
Total current liabilities | 54,183 | 63,143 |
Deferred revenues | 4,759 | 3,544 |
Capital lease obligations | 48,692 | 52,686 |
Revolving credit facility | 31,000 | 10,000 |
Term loan, less discount of $5,703 and $7,379, respectively | 285,298 | 286,621 |
Exit activities and restructuring liability | 1,844 | 2,701 |
Deferred rent | 8,879 | 10,583 |
Deferred tax liability | 880 | 7,293 |
Other long-term liabilities | 4,640 | 3,828 |
Total liabilities | 440,175 | 440,399 |
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; 55,971 and 54,410 shares outstanding, respectively | 56 | 54 |
Additional paid-in capital | 1,277,511 | 1,262,402 |
Treasury stock, at cost, 826 and 621 shares, respectively | (6,393) | (4,683) |
Accumulated deficit | (1,153,957) | (1,105,514) |
Accumulated items of other comprehensive loss | (2,781) | (1,923) |
Total stockholders' equity | 114,436 | 150,336 |
Total liabilities and stockholders' equity | $ 554,611 | $ 590,735 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 1,751 | $ 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 | 55,971 | 54,410 |
Treasury stock, shares | 826 | 621 |
Term Loan Current | ||
Term loan, discount (in dollars) | $ 1,784 | $ 1,676 |
Term Loan Noncurrent | ||
Term loan, discount (in dollars) | $ 5,703 | $ 7,379 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Items of Comprehensive Loss | Total |
Balance at Dec. 31, 2012 | $ 54 | $ 1,243,801 | $ (1,845) | $ (1,046,190) | $ (215) | $ 195,605 |
Balance (in shares) at Dec. 31, 2012 | 53,459 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (19,830) | (19,830) | ||||
Foreign currency translation adjustment | (464) | (464) | ||||
Interest rate swap | (777) | (777) | ||||
Stock-based compensation | 7,167 | 7,167 | ||||
Proceeds from exercise of stock options, net | 2,138 | (1,629) | 509 | |||
Proceeds from exercise of stock options (in shares) | 564 | |||||
Balance at Dec. 31, 2013 | $ 54 | 1,253,106 | (3,474) | (1,066,020) | (1,456) | 182,210 |
Balance (in shares) at Dec. 31, 2013 | 54,023 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (39,494) | (39,494) | ||||
Foreign currency translation adjustment | (431) | (431) | ||||
Interest rate swap | (36) | (36) | ||||
Stock-based compensation | 7,522 | 7,522 | ||||
Proceeds from exercise of stock options, net | 1,774 | (1,209) | 565 | |||
Proceeds from exercise of stock options (in shares) | 387 | |||||
Balance at Dec. 31, 2014 | $ 54 | 1,262,402 | (4,683) | (1,105,514) | (1,923) | $ 150,336 |
Balance (in shares) at Dec. 31, 2014 | 54,410 | 54,410 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (48,443) | $ (48,443) | ||||
Foreign currency translation adjustment | (197) | (197) | ||||
Foreign currency contracts | (745) | (745) | ||||
Interest rate swap | 84 | 84 | ||||
Stock-based compensation | 9,063 | 9,063 | ||||
Proceeds from exercise of stock options, net | $ 2 | 6,046 | (1,710) | 4,338 | ||
Proceeds from exercise of stock options (in shares) | 1,561 | |||||
Balance at Dec. 31, 2015 | $ 56 | $ 1,277,511 | $ (6,393) | $ (1,153,957) | $ (2,781) | $ 114,436 |
Balance (in shares) at Dec. 31, 2015 | 55,971 | 55,971 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows from Operating Activities: | |||
Net loss | $ (48,443) | $ (39,494) | $ (19,830) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 92,655 | 81,169 | 53,148 |
Loss on disposal of property and equipment, net | 674 | 112 | 9 |
Impairment of property and equipment | 232 | 537 | 520 |
Amortization of debt discount and issuance costs | 2,017 | 1,934 | 631 |
Stock-based compensation expense, net of capitalized amount | 8,781 | 7,182 | 6,743 |
Equity in (earnings) of equity-method investment | (200) | (259) | (213) |
Provision for doubtful accounts | 1,354 | 1,306 | 1,861 |
Non-cash portion of loss on extinguishment of debt | 841 | ||
Non-cash change in capital lease obligations | (1,437) | (412) | 99 |
Non-cash change in exit activities and restructuring liability | 2,241 | 4,591 | 1,185 |
Non-cash change in deferred rent | (1,704) | (2,577) | (1,907) |
Deferred taxes | (3,966) | (1,555) | (67) |
Other, net | 261 | 81 | 75 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (2,211) | 2,923 | (5,777) |
Prepaid expenses, deposits and other assets | 1,099 | 1,839 | (218) |
Accounts payable | (4,814) | 529 | 3,992 |
Accrued and other liabilities | (4,206) | 413 | (5,062) |
Deferred revenues | 758 | 498 | 1,149 |
Exit activities and restructuring liability | (2,873) | (4,245) | (2,895) |
Asset retirement obligation | (1,319) | ||
Other liabilities | (10) | (5) | (601) |
Net cash flows provided by operating activities | 40,208 | 53,248 | 33,683 |
Cash Flows from Investing Activities: | |||
Purchases of property and equipment | (55,695) | (77,363) | (62,798) |
Additions to acquired and developed technology | (1,462) | (3,100) | (801) |
Proceeds from sale-leaseback transactions | 4,662 | ||
Acquisition, net of cash received | 74 | (144,487) | |
Net cash flows used in investing activities | (57,157) | (75,727) | (208,086) |
Cash Flows from Financing Activities: | |||
Proceeds from credit agreements | 21,000 | 10,000 | 320,000 |
Principal payments on credit agreements | (3,000) | (3,000) | (116,000) |
Payment of debt issuance costs | (12,415) | ||
Return (payment) of deposit collateral on credit agreement | 6,461 | (6,461) | |
Payments on capital lease obligations | (7,879) | (5,921) | (4,655) |
Proceeds from exercise of stock options | 6,046 | 1,774 | 2,138 |
Acquisition of common stock for income tax withholdings | (1,710) | (1,209) | (1,630) |
Other, net | 833 | (181) | (167) |
Net cash flows provided by financing activities | 15,290 | 7,924 | 180,810 |
Effect of exchange rates on cash and cash equivalents | (653) | (379) | 58 |
Net (decrease) increase in cash and cash equivalents | (2,312) | (14,934) | 6,465 |
Cash and cash equivalents at beginning of period | 20,084 | 35,018 | 28,553 |
Cash and cash equivalents at end of period | 17,772 | 20,084 | 35,018 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 26,427 | 24,957 | 11,678 |
Non-cash acquisition of property and equipment under capital leases | 6,377 | 9,626 | 9,815 |
Additions to property and equipment included in accounts payable | $ 5,170 | $ 8,249 | $ 7,884 |
DESCRIPTION OF THE COMPANY AND
DESCRIPTION OF THE COMPANY AND NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | |
DESCRIPTION OF THE COMPANY AND NATURE OF OPERATIONS | 1. DESCRIPTION OF THE COMPANY AND NATURE OF OPERATIONS Internap Corporation (“we,” “us” or “our”) provides high-performance information technology (“IT”) infrastructure services. We provide services at 51 data centers across North America, Europe and the Asia-Pacific region and through 86 Internet Protocol (“IP”) service points. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Principles We prepare our consolidated financial statements and accompanying notes in accordance with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. We have eliminated inter-company transactions and balances in consolidation. Estimates and Assumptions The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expense and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, doubtful accounts, goodwill and intangible assets, accruals, stock-based compensation, income taxes, restructuring charges, leases, long-term service contracts, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates. Cash and Cash Equivalents We consider all highly-liquid investments purchased with an original maturity of three months or less at the date of purchase and money market mutual funds to be cash equivalents. We maintain our cash and cash equivalents at major financial institutions and may at times exceed federally insured limits. We believe that the risk of loss is minimal. To date, we have not experienced any losses related to cash and cash equivalents. Investment in Joint Venture We account for investments that provide us with the ability to exercise significant influence, but not control, over an investee using the equity method of accounting. Significant influence, but not control, is generally deemed to exist if we have an ownership interest in the voting stock of the investee of between 20% and 50%, although we consider other factors, such as minority interest protections, in determining whether the equity method of accounting is appropriate. As of December 31, 2015, Internap Japan Co., Ltd. (“Internap Japan”), a joint venture with NTT-ME Corporation and Nippon Telegraph and Telephone Corporation (“NTT Holdings”), qualified for equity method accounting. We record our proportional share of the income and losses of Internap Japan one month in arrears on the accompanying consolidated balance sheets as a long-term investment and our share of Internap Japan’s income and losses, net of taxes, as a separate caption in our accompanying consolidated statements of operations and comprehensive loss. Fair Value of Financial Instruments The carrying amounts of our financial instruments, including cash and cash equivalents, accounts receivable and other current liabilities, approximate fair value due to the short-term nature of these assets and liabilities. Due to the nature of our credit agreement and variable interest rates, the fair value of our debt approximates the carrying value. We measure and report certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents. The major categories of nonfinancial assets and liabilities that we measure at fair value include reporting units measured at fair value in step one of our goodwill impairment test. Financial Instrument Credit Risk Financial instruments that potentially subject us to a concentration of credit risk principally consist of cash, cash equivalents, marketable securities and trade receivables. Given the needs of our business, we may invest our cash and cash equivalents in money market funds. Property and Equipment We carry property and equipment at original acquisition cost less accumulated depreciation and amortization. We calculate depreciation and amortization on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives used for network equipment are generally five years; furniture, equipment and software are three to seven years; and leasehold improvements are 10 to 25 years or over the lease term, depending on the nature of the improvement. We capitalize additions and improvements that increase the value or extend the life of an asset. We expense maintenance and repairs as incurred. We charge gains or losses from disposals of property and equipment to operations. Leases We record leases in which we have substantially all of the benefits and risks of ownership as capital leases and all other leases as operating leases. For leases determined to be capital leases, we record the assets held under capital lease and related obligations at the lesser of the present value of aggregate future minimum lease payments or the fair value of the assets held under capital lease. We amortize the asset over its estimated useful life or over the lease term, depending on the nature of the asset. The duration of lease obligations and commitments ranges from three years for equipment to 25 years for facilities. For leases determined to be operating leases, we record lease expense on a straight-line basis over the lease term. Certain leases include renewal options that, at the inception of the lease, are considered reasonably assured of being renewed. The lease term begins when we control the leased property, which is typically before lease payments begin under the terms of the lease. We record the difference between the expense in our consolidated statements of operations and comprehensive loss and the amount we pay as deferred rent, which we include in our consolidated balance sheets. Costs of Computer Software Development We capitalize software development costs incurred during the application development stage. Amortization begins once the software is ready for its intended use and is computed based on the straight-line method over the economic life. Judgment is required in determining which software projects are capitalized and the resulting economic life. We capitalized $4.6 million, $6.2 million and $7.5 million in internal-use software costs during the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015 and 2014, the balance of unamortized internal-use software costs was $18.0 million and $17.7 million, respectively. During the years ended December 31, 2015, 2014 and 2013, amortization expense was $6.6 million, $6.7 million and $4.2 million, respectively. Valuation of Long-Lived Assets We periodically evaluate the carrying value of our long-lived assets, including, but not limited to, property and equipment. We consider the carrying value of a long-lived asset impaired when the undiscounted cash flows from such asset are separately identifiable and we estimate them to be less than its carrying value. In that event, we would recognize a loss based on the amount by which the carrying value exceeds the fair value of the long-lived asset. We determine fair value based on either market quotes, if available, or discounted cash flows using a discount rate commensurate with the risk inherent in our current business model for the specific asset being valued. We would determine losses on long-lived assets to be disposed of in a similar manner, except that we would reduce fair values by the cost of disposal. We charge losses due to impairment of long-lived assets to operations during the period in which we identify the impairment. Goodwill and Other Intangible Assets 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 as 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 have not identified any impairment indicators in our IP services reporting unit subsequent to the annual impairment review, the fair value of this reporting unit exceeded its carrying value by 13% as of August 1, 2015. If revenue for such reporting unit continues to decline, we may be at risk for future impairment. At December 31, 2015, goodwill attributable to the IP services reporting unit was $33.7 million. We did identify an impairment indicator for our IP products reporting unit in that actual 2015 revenue did not meet projections. At December 31, 2015, we recalculated the fair value using revised revenue projections for the rollout of our new product, Managed Internet Route Optimizer Controller, which replaced our previous generation of route optimization hardware, and the fair value of this reporting unit substantially exceed the carrying value. However, since this is a new product without an established historical revenue pattern, the IP products reporting unit may be at future risk of impairment if we do not meet our revised projections. At December 31, 2015, goodwill attributable to the IP products reporting unit was $5.8 million. Other intangible assets have finite lives and we record these assets at cost less accumulated amortization. We record amortization of acquired and developed technologies to be sold using the greater of (a) the ratio of current revenues to total and anticipated future revenues for the applicable technology or (b) the straight-line method over the remaining estimated economic life, which is five to eight years. We amortize the cost of customer relationship and trade names over their useful lives of 10 to 15 years. We assess other intangible assets on a quarterly basis whenever any events have occurred or circumstances have changed that would indicate that impairment could exist. Our assessment is based on estimated future cash flows directly associated with the asset or asset group. If we determine that the carrying value is not recoverable, we may record an impairment charge, reduce the estimated remaining useful life or both. We concluded that no impairment indicators existed, with the exception of the phase-out of the iWeb trade name further described in note 7, to cause us to reassess our other intangible assets during the year ended December 31, 2015. Derivatives We use derivatives only to reduce exposure to specific identified risks including managing the overall cost of capital and translational and transactional exposure arising from foreign transactions and ensuring the certainty of outcome as it relates to commodity pricing exposure. We do not use derivatives for any other purpose. Exit Activities and Restructuring When circumstances warrant, we may elect to exit certain business activities or change the manner in which we conduct ongoing operations. If we make such a change, we will estimate the costs to exit a business or restructure ongoing operations. The components of the estimates may include estimates and assumptions regarding the timing and costs of future events and activities that represent our best expectations based on known facts and circumstances at the time of estimation. If circumstances warrant, we will adjust our previous estimates to reflect what we then believe to be a more accurate representation of expected future costs. Because our estimates and assumptions regarding exit activities and restructuring charges include probabilities of future events, such as our ability to find a sublease tenant within a reasonable period of time or the rate at which a sublease tenant will pay for the available space, such estimates are inherently vulnerable to changes due to unforeseen circumstances that could materially and adversely affect our results of operations. We monitor market conditions at each period end reporting date and will continue to assess our key assumptions and estimates used in the calculation of our exit activities and restructuring accrual. Taxes We account for income taxes under the liability method. We determine deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, and we measure the tax assets and liabilities using the enacted tax rates and laws that will be in effect when we expect the differences to reverse. We maintain a valuation allowance to reduce our deferred tax assets to their estimated realizable value. We may recognize deferred tax assets in future periods if and when we estimate them to be realizable and supported by historical trends of profitability and future expectations within each tax jurisdiction. We evaluate liabilities for uncertain tax positions, and we recognized $0 and $0.4 million for associated liabilities during the years ended December 31, 2015 and 2014, respectively. We recorded nominal interest and penalties arising from the underpayment of income taxes in “Benefit for income taxes” in our accompanying consolidated statements of operations and comprehensive loss. As of December 31, 2015 and 2014, we accrued $0 for interest and penalties related to uncertain tax positions. We account for telecommunication, sales and other similar taxes on a net basis in “General and administrative” expense in our accompanying consolidated statements of operations and comprehensive loss. Stock-Based Compensation We measure stock-based compensation cost at the grant date based on the calculated fair value of the award. We recognize the expense over the employee’s requisite service period, generally the vesting period of the award. The fair value of restricted stock is the market value on the date of grant. The fair value of stock options is estimated at the grant date using the Black-Scholes option pricing model with weighted average assumptions for the activity under our stock plans. Option pricing model input assumptions, such as expected term, expected volatility and risk-free interest rate, impact the fair value estimate. Further, the forfeiture rate impacts the amount of aggregate compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. The expected term represents the weighted average period of time that we expect granted options to be outstanding, considering the vesting schedules and our historical exercise patterns. Because our options are not publicly traded, we assume volatility based on the historical volatility of our stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected option term. We have also used historical data to estimate option exercises, employee termination and stock option forfeiture rates. Changes in any of these assumptions could materially impact our results of operations in the period the change is made. We do not recognize a deferred tax asset for unrealized tax benefits associated with the tax deductions in excess of the compensation recorded (excess tax benefit). We apply the “with and without” approach for utilization of tax attributes upon realization of net operating losses in the future. This method allocates stock-based compensation benefits last among other tax benefits recognized. In addition, we apply the “direct only” method of calculating the amount of windfalls or shortfalls. Treasury Stock As permitted by our stock-based compensation plans, we acquire shares of treasury stock as payment of statutory minimum payroll taxes due from employees for stock-based compensation. However, we do not use shares of treasury stock acquired from employees in this manner to issue new equity awards under our stock-based compensation plans. Revenue Recognition We generate revenues primarily from the sale of data center services, including colocation, hosting and cloud, and IP services. Our revenues typically consist of monthly recurring revenues from contracts with terms of one year or more. We recognize the monthly minimum as revenue each month provided that we have entered into an enforceable contract, we have delivered the service to the customer, the fee for the service is fixed or determinable and collection is reasonably assured. We record installation fees as deferred revenue and recognize the revenue ratably over the estimated customer life. For our data center services revenue, we determine colocation revenues by occupied square feet and both allocated and variable-based usage, which includes both physical space for hosting customers’ network and other equipment plus associated services such as power and network connectivity, environmental controls and security. We determine hosting revenues by the number of servers utilized (physical or virtual) and cloud revenues by the amount of processing and storage consumed. We recognize IP services revenues on fixed-commitment or usage-based pricing. IP service contracts usually have fixed minimum commitments based on a certain level of bandwidth usage with additional charges for any usage over a specified limit. If a customer’s usage of our services exceeds the monthly minimum, we recognize revenue for such excess in the period of the usage. We use contracts and sales or purchase orders as evidence of an arrangement. We test for availability or connectivity to verify delivery of our services. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We also enter into multiple-element arrangements, or bundled services. When we enter into such arrangements, we account for each element separately over its respective service period provided that we have objective evidence of fair value for the separate elements. Objective evidence of fair value includes the price charged for the element when sold separately. If we cannot objectively determine the fair value of each element, we recognize the total value of the arrangement ratably over the entire service period to the extent that we have begun to provide the services, and we have satisfied other revenue recognition criteria. For multiple-deliverable revenue arrangements we allocate arrangement consideration at the inception of an arrangement to all deliverables using the relative selling price method. The hierarchy for determining the selling price of a deliverable includes (a) vendor-specific objective evidence, if available, (b) third-party evidence, if vendor-specific objective evidence is not available and (c) best estimated selling price, if neither vendor-specific nor third-party evidence is available. Vendor-specific objective evidence is generally limited to the price charged when we sell the same or similar service separately. If we seldom sell a service separately, it is unlikely that we will determine vendor-specific objective evidence for the service. We define vendor-specific objective evidence as an average price of recent standalone transactions that we price within a narrow range that we define. We determine third-party evidence based on the prices charged by our competitors for a similar deliverable when sold separately. It is difficult for us to obtain sufficient information on competitor pricing to substantiate third-party evidence and therefore we may not always be able to use this measure. If we are unable to establish selling price using vendor-specific objective evidence or third-party evidence, we use best estimated selling price in our allocation of arrangement consideration. The objective of best estimated selling price is to determine the price at which we would transact if we sold the service on a standalone basis. Our determination of best estimated selling price involves a weighting of several factors including, but not limited to, pricing practices and market conditions. We analyze the selling prices used in our allocation of arrangement consideration on an annual basis at a minimum. We will analyze selling prices on a more frequent basis if a significant change in our business necessitates a more timely analysis or if we experience significant variances in our selling prices. We account for each deliverable within a multiple-deliverable revenue arrangement as a separate unit of accounting if both of the following criteria are met: (a) the delivered item or items have value to the customer on a standalone basis and (b) for an arrangement that includes a general right of return for the delivered item(s), we consider delivery or performance of the undelivered item(s) probable and substantially in our control. We consider a deliverable to have standalone value if we sell this item separately or if the item is sold by another vendor or could be resold by the customer. Further, our revenue arrangements generally do not include a right of return relative to delivered services. We combine deliverables not meeting the criteria for being a separate unit of accounting with a deliverable that does meet that criterion. We then determine the appropriate allocation of arrangement consideration and recognition of revenue for the combined unit of accounting. Deferred revenue consists of revenue for services to be delivered in the future and consists primarily of advance billings, which we amortize over the respective service period. We defer and amortize revenues associated with billings for installation of customer network equipment over the estimated life of the customer relationship, which was, on average, approximately six years for 2015, 2014 and 2013. We defer and amortize revenues for installation services because the installation service is integral to our primary service offering and does not have value to customers on a stand-alone basis. We also defer and amortize the associated incremental direct costs. We routinely review the collectability of our accounts receivable and payment status of our customers. If we determine that collection of revenue is uncertain, we do not recognize revenue until collection is reasonably assured. Additionally, we maintain an allowance for doubtful accounts resulting from the inability of our customers to make required payments on accounts receivable. We base the allowance for doubtful accounts on general customer information, which primarily includes our historical cash collection experience and the aging of our accounts receivable, as well as historical write-offs as a percentage of revenue. We assess the payment status of customers by reference to the terms under which we provide services or goods, with any payments not made on or before their due date considered past-due. Once we have exhausted all collection efforts, we write the uncollectible balance off against the allowance for doubtful accounts. We routinely perform credit checks for new and existing customers and require deposits or prepayments for customers that we perceive as being a credit risk. In addition, we record a reserve amount for potential credits to be issued under our service level agreements and other sales adjustments. Research and Development Costs We include research and development costs in general and administrative costs and we expense them as incurred. These costs primarily relate to our development and enhancement of IP routing technology, hosting and cloud technologies and network engineering costs associated with changes to the functionality of our services. Research and development costs were $2.2 million, $2.8 million and $2.1 million during the years ended December 31, 2015, 2014 and 2013, respectively. These costs do not include $6.5 million, $8.5 million and $7.5 million of internal-use and available for sale software costs capitalized during the years ended December 31, 2015, 2014 and 2013, respectively. Advertising Costs We expense all advertising costs as incurred. Advertising costs during the years ended December 31, 2015, 2014 and 2013 were $4.9 million, $6.5 million and $3.1 million, respectively. 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): Year Ended December 31, 2015 2014 2013 Net loss and net loss available to common stockholders $ (48,443 ) $ (39,494 ) $ (19,830 ) Weighted average shares outstanding, basic and diluted 51,898 51,237 51,135 Net loss per share, basic and diluted $ (0.93 ) $ (0.77 ) $ (0.39 ) Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans 6,655 6,696 6,795 Segment Information and Operating Costs and Expenses We align our reportable segments with the internal reporting that management uses for making operating decisions and assessing performance. Effective January 1, 2016, as further described in note 12, we operate in two business segments: data center and network services and cloud and hosting services. We include the operations of iWeb Technologies Inc. (“iWeb”), acquired in November 2013, in our cloud and hosting services segment. In addition, in conjunction with the change in our organizational structure, we reclassified certain costs included in the expense categories on our consolidated statement of operations, which resulted in the following: a reclassification of "Sales and marketing" and "General and administrative" to "Sales, general and administrative" and "Direct costs of amortization of acquired and developed technologies" to "Depreciation and amortization" included on our consolidated statements of operations. Recent Accounting Pronouncements Effective January 1, 2016, we adopted new guidance that required debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, which is consistent with the presentation of debt discounts. The guidance, applied retrospectively, was effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Adoption did not have a material impact on our financial condition and had no impact on our result of operations. Our restatement of prior year amounts from assets to liabilities was $0.9 million and $1.0 million at December 31, 2015 and 2014, respectively. In November 2015, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify the presentation of deferred income taxes, which require deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. We have elected early adoption as of December 31, 2015 and prospectively applied the guidance. We did not retrospectively adjust prior periods. Had we retrospectively applied the guidance at December 31, 2014, the impact on the accompanying consolidated balance sheet would have been a decrease in “Current deferred tax asset” of $0.6 million with a decrease in “Long-term deferred tax liability” of $0.6 million. 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. We expect adoption will not have a material impact on our financial condition or result of operations. 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. |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
ACQUISITION | 3. ACQUISITION iWeb Acquisition On November 26, 2013, we completed the acquisition of iWeb. Headquartered in Montreal, Quebec, Canada, iWeb, at the time of acquisition, had four company-controlled data centers supporting global hosting, cloud and colocation services. Effective January 1, 2016, we include the results of iWeb in our cloud and hosting services segment in the consolidated statements of operations. For the period of November 26, 2013 through December 31, 2013, these results consisted of revenue of $3.6 million and loss before income tax of $0.4 million. We acquired all of the outstanding capital stock of iWeb for a total purchase price, net of working capital adjustments provided for under the purchase agreement, of $145.7 million. The net cash paid was $144.4 million, which included cash acquired of $1.3 million. We incurred $4.2 million in acquisition costs, which we expensed and included in “General and administrative” in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2013. We funded the purchase price and acquisition costs through a $350.0 million credit agreement, which we entered into contemporaneously with the acquisition, further described in note 11. Purchase Price Allocation We allocated the aggregate purchase price for iWeb to the net tangible and intangible assets based on their fair value as of November 26, 2013. We based the allocation of the purchase price on a valuation for property and equipment, intangible assets and deferred revenue and the carrying value for the remaining assets and liabilities, as the carrying value approximates fair value. The fair value of iWeb’s property and equipment was estimated using the market approach, using comparable market prices; the income approach, using present value of future income or cash flow; or the cost approach, using the replacement cost of assets, depending on the nature of the assets being valued. The fair value of identifiable intangible assets were measured at fair value primarily using various “income approaches,” which required a forecast of expected future cash flows, either for the use of a relief-from royalty method or a multi-period excess earnings method. We recorded the excess of the purchase price over the net tangible and intangible assets as goodwill. Factors that contributed to the recognition of goodwill included expected synergies and the trained workforce. We expect that none of the goodwill will be deductible for tax purposes. Our purchase price allocation was as follows (in thousands): 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 The intangible assets acquired were as follows (in thousands): Fair Value Weighted Customer relationships $ 22,200 15 years Trade name (1) 15,100 30 years Beneficial leasehold interest 858 14 years Internally developed software 2,767 5 years Total intangible assets $ 40,925 (1) During 2015, as further described in note 7, we accelerated the useful life of the iWeb trade name to support our long-term strategy. At December 31, 2015, the unamortized balance was zero. Unaudited Supplemental Financial Information Our unaudited pro forma results presented below, including iWeb, for the year ended December 31, 2013 are presented as if the acquisition had been completed on January 1, 2012. We calculated these amounts by adjusting the historical results of iWeb to reflect the additional interest, depreciation and amortization expenses that would have been recorded assuming the fair value adjustments to intangible assets had been applied from January 1, 2012, with the consequential tax effects. For the year ended December 31, 2013, the pro forma financial information below is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2012. (in thousands) Unaudited pro forma revenue $ 323,000 Unaudited pro forma net loss (32,000 ) |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 4. 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: l Level 1: Quoted prices in active markets for identical assets or liabilities; l 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 l 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 December 31, 2015: Foreign currency contracts (note 10) $ — $ 1,019 $ — $ 1,019 Interest rate swap (note 10) — 728 — 728 Asset retirement obligations (1) — — 2,803 2,803 December 31, 2014: Interest rate swap (note 10) — 813 — 813 Asset retirement obligations (1) — — 2,471 2,471 (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. The following table provides a summary of changes in our Level 3 asset retirement obligations (in thousands): December 31, 2015 2014 Balance, January 1 $ 2,471 $ 2,357 Accrued estimated obligation, less fair value adjustment — 1,338 Subsequent revision of estimated obligation 70 (68 ) Accretion (1) 262 244 Payments — (1,319 ) Gain on settlement (2) — (81 ) Balance, December 31 $ 2,803 $ 2,471 (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. The fair values of our other Level 3 debt liabilities, estimated using discount cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements, are as follows (in thousands): December 31, 2015 2014 Carrying Fair Carrying Fair Term loan $ 294,000 303,000 $ 297,000 313,000 Revolving credit facility 31,000 30,400 10,000 9,900 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands): December 31, 2015 2014 Network equipment $ 215,333 $ 194,441 Network equipment under capital lease 10,126 8,023 Furniture and equipment 18,957 19,811 Software 49,769 41,595 Leasehold improvements 378,747 380,376 Land — 254 Building — 696 Buildings under capital lease 63,117 64,323 Property and equipment, gross 736,049 709,519 Less: accumulated depreciation and amortization ($31,784 and $25,209 related to capital leases at December 31, 2015 and 2014, respectively) (407,349 ) (367,374 ) $ 328,700 $ 342,145 We disposed or retired $33.3 million of assets with accumulated depreciation of $32.6 million during the year ended December 31, 2015, $17.9 million of assets with accumulated depreciation of $17.4 million during the year ended December 31, 2014 and $8.1 million of assets with accumulated depreciation of $8.1 million during the year ended December 31, 2013. We capitalized an immaterial amount of interest for each of the three years ended December 31, 2015. Depreciation and amortization of property and equipment consisted of the following (in thousands): Year ended December 31, 2015 2014 2013 Direct costs of network, sales and services $ 70,080 $ 70,579 $ 44,799 Other depreciation and amortization 19,125 4,672 3,382 Subtotal 89,205 75,251 48,181 Amortization of acquired and developed technologies 3,450 5,918 4,967 Total depreciation and amortization $ 92,655 $ 81,169 $ 53,148 |
INVESTMENT IN JOINT VENTURE
INVESTMENT IN JOINT VENTURE | 12 Months Ended |
Dec. 31, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN JOINT VENTURE | 6. INVESTMENT IN JOINT VENTURE We have previously invested $4.1 million for a 51% ownership interest in Internap Japan, a joint venture with NTT-ME Corporation and NTT Holdings. Given the minority interest protections in favor of our joint venture partners, we do not assert control over the joint venture’s operational and financial policies and practices required to account for the joint venture as a subsidiary whose assets, liabilities, revenue and expense would be consolidated. We are, however, able to assert significant influence over the joint venture and, therefore, account for our joint venture investment using the equity-method of accounting. Our investment activity in the joint venture is summarized below (in thousands): Year Ended December 31, 2015 2014 Investment balance, January 1 $ 2,622 $ 2,602 Proportional share of net income 200 259 Unrealized foreign currency translation loss, net (54 ) (239 ) Investment balance, December 31 $ 2,768 $ 2,622 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 7. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill During the years ended December 31, 2015 and 2014, we did not identify an impairment as a result of our annual impairment test. However, at December 31, 2015, as further discussed in Note 2 “Goodwill and other intangible assets”, we considered the likelihood of triggering events that might cause us to reassess goodwill on an interim basis and concluded that we had an impairment indictor in our IP products reporting unit, included in our IP services reporting segment below. We recalculated the fair value and it substantially exceeded the carrying value. At December 31, 2015, goodwill attributable to the IP Products reporting unit was $5.8 million. Effective January 1, 2016, under our new segments as described in note 12, the carrying amount of our goodwill is as follows (in thousands): December 31, 2015 and 2014 Data Center and Network Services $ 80,104 Cloud and hosting services 50,209 130,313 Other Intangible Assets During the years ended December 31, 2015 and 2014, we concluded that no impairment indicators existed to cause us to reassess our other intangible assets. The components of our amortizing intangible assets, including capitalized software, are as follows (in thousands): December 31, 2015 December 31, 2014 Gross Accumulated Gross Accumulated Acquired and developed technology $ 52,783 (43,807 ) $ 52,512 $ (40,718 ) Customer relationships and trade names (1) 69,548 (45,637 ) 69,548 (28,797 ) $ 122,331 (89,444 ) $ 122,060 $ (69,515 ) (1) During 2015, we 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 year ended December 31, 2015, the additional amortization expense was $14.0 million. At December 31, 2015, the unamortized balance was zero. Amortization expense for intangible assets during the years ended December 31, 2015, 2014 and 2013 was $20.3 million, $9.1 million and $5.9 million, respectively. As of December 31, 2015, remaining amortization expense is as follows (in thousands): 2016 $ 5,242 2017 4,488 2018 4,321 2019 3,714 2020 2,614 Thereafter 12,508 $ 32,887 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | 8. ACCRUED LIABILITIES Accrued liabilities consist of the following (in thousands): December 31, 2015 2014 Compensation and benefits payable $ 5,906 $ 7,239 Property, sales, and other taxes 996 1,512 Customer credit balances 1,179 1,815 Other 2,656 2,554 $ 10,737 $ 13,120 |
EXIT ACTIVITIES AND RESTRUCTURI
EXIT ACTIVITIES AND RESTRUCTURING | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
EXIT ACTIVITIES AND RESTRUCTURING | 9. EXIT ACTIVITIES AND RESTRUCTURING During the year ended December 31, 2015, we recorded initial exit activity charges primarily due to the termination of contracts, with payments expected primarily through 2020 and subsequent plan adjustments in sublease income assumptions for properties included in our previously-disclosed plans, with payments expected from 2016 through 2019. During the year ended December 31, 2014, we recorded initial exit activity charges primarily due to ceasing use of certain data center space, with payments expected through 2019. We include initial charges and plan adjustments in “Exit activities, restructuring and impairments” in the accompanying statements of operations and comprehensive loss for the year ended December 31, 2015 and 2014. The following table displays the transactions and balances for exit activities and restructuring charges, substantially related to our data center and network services segment, during each of the years ended December 31, 2015 and 2014 (in thousands): Balance Initial Plan Cash Balance Real estate obligations: 2015 exit activities $ — $ 1,538 $ — $ (531 ) $ 1,007 2014 exit activities 2,010 — 244 (553 ) 1,701 2007 restructuring 2,325 — 660 (1,815 ) 1,170 Other 175 — (6 ) (169 ) — $ 4,510 $ 1,538 $ 898 $ (3,068 ) $ 3,878 Balance Initial Plan Cash Balance Real estate obligations: 2014 exit activities $ — $ 3,499 $ 17 $ (1,506 ) $ 2,010 2007 restructuring 3,296 — 1,055 (2,026 ) 2,325 Other 867 — 21 (713 ) 175 $ 4,163 $ 3,499 $ 1,093 $ (4,245 ) $ 4,510 |
DERIVATIVES
DERIVATIVES | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES | 10. DERIVATIVES Foreign Currency Contracts During 2015, we entered into foreign currency contracts to mitigate the risk of a portion of our Canadian employee benefit expense. These contracts will hedge foreign exchange variations between the United States and Canadian dollar and commit us to purchase a total of $6.0 million Canadian dollars at an exchange rate of 1.268 through June 2016 and $12.0 million Canadian dollars at 1.2855 through June 2017. As of December 31, 2015, the fair value of our foreign currency contracts was $0.7 million included in “Other current liabilities” and $0.3 million included in “Other long-term liabilities” in the accompanying consolidated balance sheets. The fair value was calculated as the present value of the estimated future cash flows using an appropriate interest rate curve with adjustment for counterparty credit risk. During the year ended December 31, 2015, the activity of the foreign currency contracts was as follows (in thousands): Unrealized loss, net of $0.3 million income tax, included in “Accumulated items of other comprehensive loss” in the accompanying consolidated balance sheets $ 745 Realized loss on effective portion, included as compensation expense primarily in “Direct costs of customer support” and “General and administrative” in the accompanying consolidated statements of operations and comprehensive loss 691 Interest Rate Swap During December 2013, we entered into and currently hold an interest rate swap to add stability to interest expense and to manage exposure to interest rate movements of our credit agreement. Our interest rate swap, which was designated and qualified as a cash flow hedge, involves the receipt of variable rate amounts from a counterparty in exchange for us making fixed-rate, over 1.5%, payments over the life of the agreement without exchange of the underlying notional amount. The cash flow hedge had a notional amount starting at $150.0 million through December 31, 2016. As of December 31, 2015 and 2014, the fair value of our interest rate swap, which was determined by the bank that holds the swap, was $0.7 million and is included in “Other current liabilities” in the accompanying consolidated balance sheets and $0.8 million and is included in “Other long-term liabilities” in the accompanying consolidated balance sheets, respectively. During the years ended December 31, 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 of the years ended December 31, 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 December 31, 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): Year Ended December 31, 2015 2014 Gain (loss) recorded as the effective portion of the change in fair value 84 (36 ) Interest payments reclassified as an increase to interest expense 798 806 |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND LITIGATION | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND LITIGATION | 11. COMMITMENTS, CONTINGENCIES AND LITIGATION Credit Agreement During 2013, we entered into a $350.0 million credit agreement (the “credit agreement”), which provides for a senior secured first lien term loan facility of an initial $300.0 million (“term loan”) and a second secured first lien revolving credit facility of $50.0 million (“revolving credit facility”). Concurrently with the effective date and funding of the term loan, we acquired iWeb and paid off our previous credit facility, which resulted in a loss on extinguishment of debt of $0.9 million. In addition, we recorded a debt discount of $9.5 million related to costs incurred for the credit agreement. The revolving credit facility is due November 26, 2018. The term loan is due in installments of $750,000 on the last day of each fiscal quarter, with the remaining unpaid balance due November 26, 2019. Borrowings under the credit agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, a base rate or an adjusted LIBOR rate. The applicable margin for loans under the revolving credit facility is 3.50% for loans bearing interest calculated using the base rate (“Base Rate Loans”) and 4.50% for loans bearing interest calculated using the adjusted LIBOR rate (“Adjusted LIBOR Loans”). The applicable margin for loans under the term loan is 4.00% for Base Rate Loans and 5.00% for Adjusted LIBOR Rate loans. The base rate is equal to the highest of (a) the adjusted U.S. Prime Lending Rate as published in the Wall Street Journal, (b) with respect to Term Loans issued on the Closing Date, 2.00%, (c) the federal funds effective rate from time to time, plus 0.50%, and (d) the adjusted LIBOR rate, as defined below, for a one-month interest period, plus 1.00%. The adjusted LIBOR rate is equal to the rate per annum (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered in the interbank Eurodollar market for the applicable interest period (one, two, three or six months), as quoted on Reuters screen LIBOR (or any successor page or service). The financing commitments of the Lenders extending the revolving credit facility are subject to various conditions, as set forth in the credit agreement. The credit agreement includes financial covenants relating to maximum total leverage ratio, minimum consolidated interest coverage ratio and limitation on capital expenditures. As of December 31, 2015, we were in compliance with these financial covenants. Our obligations are secured pursuant to a security agreement, under which we granted a security interest in substantially all of our assets, including the capital stock of our domestic subsidiaries and 65% of the capital stock of our foreign subsidiaries. A summary of our credit agreement as of December 31, 2015 and December 31, 2014 is as follows (dollars in thousands): December 31, 2015 2014 Outstanding principal balance on the term loan, less unamortized discount of $6.5 million and $8.0 million, respectively $ 287,457 $ 288,994 Outstanding balance on the revolving credit facility 31,000 10,000 Letters of credit issued with proceeds from revolving credit facility 4,144 6,329 Borrowing capacity 14,856 33,671 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: 2016 $ 3,000 2017 3,000 2018 3,000 2019 285,000 $ 294,000 Asset Retirement Obligations In prior years, we recorded asset retirement obligations (“ARO”) related to future estimated removal costs of leasehold improvements for certain data center leased properties. We were able to reasonably estimate the liabilities on these properties in order to record the ARO and the corresponding asset retirement cost in our data center services segment at its fair value. We calculated the fair value by discounting the estimated amount to present value using the applicable Treasury bill rate adjusted for our credit non-performance risk. As of December 31, 2015 and 2014, the balance of the present value ARO was $0.2 million and $0, which we included in “Other current liabilities,” respectively, and $2.6 million and $2.5 million, which we included in “Other long-term liabilities,” respectively, in the consolidated balance sheets. We included all asset retirement costs in “Property and equipment, net” in the consolidated balance sheets as of December 31, 2015 and 2014, and depreciated those costs using the straight-line method over the remaining term of the related lease. We have other capital lease agreements that require us to decommission physical space for which we have not yet recorded an ARO. Due to the uncertainty of specific decommissioning obligations, timing and related costs, we cannot reasonably estimate an ARO for these properties and we have not recorded a liability at this time for such properties. Capital Leases We record capital lease obligations and leased property and equipment at the lesser of the present value of future lease payments based upon the terms of the related lease or the fair value of the assets held under capital leases. As of December 31, 2015, our capital leases had expiration dates ranging from 2016 to 2039. Future minimum capital lease payments and the present value of the minimum lease payments for all capital leases as of December 31, 2015, are as follows (in thousands): 2016 $ 13,176 2017 12,376 2018 11,900 2019 10,085 2020 7,187 Thereafter 27,682 Remaining capital lease payments 82,406 Less: amounts representing imputed interest (25,293 ) Present value of minimum lease payments 57,113 Less: current portion (8,421 ) $ 48,692 Operating Leases We have entered into leases for data center, private network access points (“P-NAPs”) and office space that are classified as operating leases. Initial lease terms range from three to 25 years and contain various periods of free rent and renewal options. However, we record rent expense on a straight-line basis over the initial lease term and any renewal periods that are reasonably assured. Certain leases require that we maintain letters of credit. Future minimum lease payments on non-cancelable operating leases having terms in excess of one year were as follows at December 31, 2015 (in thousands): 2016 $ 26,727 2017 24,439 2018 18,170 2019 10,031 2020 4,103 Thereafter 8,368 $ 91,838 Rent expense was $21.6 million, $21.3 million and $23.8 million during the years ended December 31, 2015, 2014 and 2013, respectively. Other Commitments We have entered into commitments primarily related to IP, telecommunications and data center services. Future minimum payments under these service commitments having terms in excess of one year were as follows at December 31, 2015 (in thousands): 2016 $ 7,026 2017 2,803 2018 807 2019 451 2020 79 Thereafter — $ 11,166 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 was captioned Grisolia v. Internap Corp., et al., Case No. 2015cv265926 (Ga. Sup. Ct.) and the complaint alleged, 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 alleged that the credit agreement contained a so-called “dead hand proxy put” provision that (a) defined 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 coerced stockholders and entrenched the members of our board of directors. The Plaintiff further claimed 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 sought, among other things, declaratory and injunctive relief, as well as an award of costs and disbursements, including attorneys’ and experts’ fees. On October 30, 2015, we, along with our lenders, amended the credit agreement to remove the provision which was the subject of the litigation. The parties have agreed that the amendment moots the Plaintiff’s claims. The parties filed a stipulation of dismissal and, on January 28, 2016, the court entered an order dismissing the case. We recorded $0.4 million as litigation expense in “General and administrative” in the accompanying statements of operations and comprehensive loss for the year ended December 31, 2015. 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. |
OPERATING SEGMENT AND GEOGRAPHI
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION | 12. OPERATING SEGMENT AND GEOGRAPHIC INFORMATION Operating Segment Information Effective January 1, 2016, we changed our organizational structure in an effort to create more effective and efficient business operations and to improve customer and product focus. In that regard, we revised the information that our chief executive officer, who is also our chief operating decision maker, regularly reviews for purposes of allocating resources and assessing performance. As a result, beginning January 1, 2016, we now report our financial performance based on our two new reportable segments, Data Center and Network Services and Cloud and Hosting Services, as follows: Data Center and Network Services Our Data Center and Network Services segment consists of colocation and Internet Protocol (“IP”) connectivity services. Colocation Colocation involves providing physical space within data centers and associated services such as power, interconnection, environmental controls, monitoring and security while allowing our customers to deploy and manage their servers, storage and other equipment in our secure data centers. We sell our colocation services at 51 data centers across North America, Europe and the Asia-Pacific region. We refer to 15 of these facilities as “company-controlled,” meaning we control the data center operations, staffing and infrastructure and have negotiated long-term leases for the facilities. For company-controlled facilities, in most cases we design the data center infrastructure, procure the capital equipment, deploy the infrastructure and are responsible for the operation and maintenance of the facility. We refer to the remaining 36 data centers as “partner” sites. In these locations, a third party designs and deploys the infrastructure and provides for the operation and maintenance of the facility. IP Connectivity IP connectivity includes our patented Performance IP™ service, content delivery network services, IP routing hardware and software platform and Managed Internet Route Optimizer™ Controller. By intelligently routing traffic with redundant, high-speed connections over multiple, major Internet backbones, our IP connectivity provides high-performance and highly-reliable delivery of content, applications and communications to end users globally. We deliver our IP connectivity through 86 IP service points around the world. Cloud and Hosting Services Our cloud and hosting services segment consists of hosted Infrastructure-as-a-Service as a cloud platform or via managed hosting. For both Infrastructure-as-a-Service options, we provision and maintain the hardware, data center infrastructure and interconnection, while allowing our customers to own and manage their software applications and content. Cloud Cloud services involve providing compute and storage services via an integrated platform that includes servers, storage and network. We built our next generation cloud platform with our high-density colocation, Performance IP service and OpenStack, a leading open source technology for cloud services. We deliver our cloud services in eight locations across North America, Europe and the Asia-Pacific region. Managed Hosting Managed hosting involves providing a single tenant infrastructure environment consisting of servers, storage and network. We deliver this customizable infrastructure platform based on enterprise-class technology to support complex application and compliance requirements for our customers. We deliver our managed hosting services in 11 locations across North America, Europe and the Asia-Pacific region. 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. Year Ended December 31, 2015 2014 2013 Revenues: Data center and network services $ 213,040 $ 226,528 $ 230,945 Cloud and hosting services 105,253 108,431 52,397 Total revenues 318,293 334,959 283,342 Direct costs of sales and services, exclusive of depreciation and amortization: Data center and network services 104,105 115,820 114,847 Cloud and hosting services 27,335 29,126 17,165 Total direct costs of sales and services, exclusive of depreciation and amortization 131,440 144,946 132,012 Segment profit: Data center and network services 108,935 110,708 116,098 Cloud and hosting services 77,918 79,305 35,232 Total segment profit 186,853 190,013 151,330 Exit activities, restructuring and impairments 2,278 4,520 1,414 Other operating expenses, including direct costs of customer support, depreciation and amortization 210,470 199,832 157,403 Loss from operations (25,895 ) (14,339 ) (7,487 ) Non-operating expenses 26,408 26,775 12,841 Loss before income taxes and equity in (earnings) of equity-method investment $ (52,303 ) $ (41,114 ) $ (20,328 ) Total assets by segment are as follows (in thousands): December 31, 2015 2014 Data center and network services $ 309,240 $ 286,689 Cloud and hosting services 224,831 281,340 Corporate 20,540 22,706 $ 554,611 $ 590,735 We present goodwill by segment in note 7, and as discussed in that note, we did not record an impairment charge during the years ended December 31, 2015 and 2014. Geographic Information Revenues are allocated to countries based on location of services. Revenues, by country with revenues over 10% of total revenues, are as follows (in thousands): Year Ended December 31, 2015 2014 2013 Revenues: United States $ 245,853 $ 258,770 $ 257,591 Canada 47,021 47,479 4,303 Other countries 25,419 28,710 21,448 $ 318,293 $ 334,959 $ 283,342 Net property and equipment, by country with assets over 10% of total property and equipment, is as follows (in thousands): December 31, 2015 2014 United States $ 272,178 $ 278,065 Canada 54,286 60,320 Other countries 2,236 3,760 $ 328,700 $ 342,145 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |
STOCK-BASED COMPENSATION PLANS | 13. STOCK-BASED COMPENSATION PLANS We have granted employees options to purchase shares of our common stock and issued shares of common stock subject to vesting. We measure stock-based compensation cost at the grant date based on the calculated fair value of the option or award. We recognize the expense over the employees’ requisite service period, generally the vesting period of the option or award. We estimate the fair value of stock options at the grant date using the Black-Scholes option pricing model. Stock option pricing model input assumptions such as expected term, expected volatility and risk-free interest rate, impact the fair value estimate. Further, the forfeiture rate impacts the amount of aggregate compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. The following table summarizes the amount of stock-based compensation, net of estimated forfeitures, included in the consolidated statements of operations and comprehensive loss (in thousands): Year Ended December 31, 2015 2014 2013 Direct costs of customer support $ 1,901 $ 1,448 $ 1,108 Sales and marketing 2,101 1,147 1,110 General and administrative 4,779 4,587 4,525 $ 8,781 $ 7,182 $ 6,743 We have not recognized any tax benefits associated with stock-based compensation due to our tax net operating losses. During the three years ended December 31, 2015, 2014 and 2013, we capitalized $0.3 million, $0.3 million and $0.4 million, respectively, of stock-based compensation. The significant weighted average assumptions used for estimating the fair value of the option grants under our stock-based compensation plans during the years ended December 31, 2015, 2014 and 2013, were expected terms of 4.5, 4.6 and 4.4 years, respectively; historical volatilities of 40%, 47% and 66%, respectively; risk free interest rates of 1.4%, 1.4% and 0.7%, respectively and no dividend yield. The weighted average estimated fair value per share of our stock options at grant date was $3.23, $3.13 and $4.46 during the years ended December 31, 2015, 2014 and 2013, respectively. The expected term represents the weighted average period of time that the stock options are expected to be outstanding, giving consideration to the vesting schedules and our historical exercise patterns. Because our stock options are not publicly traded, assumed volatility is based on the historical volatility of our stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected term of the options. We have also used historical data to estimate stock option exercises, employee terminations and forfeiture rates. Under our 2014 Stock Incentive Plan (the “2014 Plan”), we may issue stock options, stock appreciation rights, restricted stock and restricted stock units to eligible employees and directors. Our historical practice has been to grant only stock options and restricted stock. The compensation committee of our board of directors administers the 2014 Plan. As of December 31, 2015, 2.2 million shares of stock were available for issuance. For all stock-based compensation plans, the exercise price for each stock option may not be less than the fair market value of a share of our common stock on the grant date. Stock options generally have a maximum term of 10 years from the grant date. Stock options become exercisable as determined at the grant date by the compensation committee of our board of directors. Stock options generally vest 25% after one year and monthly or quarterly over the following three years. Conditions, if any, under which stock will be issued under stock grants or cash or stock will be paid under restricted stock units and the conditions under which the interest in any stock that has been issued will become non-forfeitable are determined at the grant date by the compensation committee. All awards under the 2014 Plan are subject to minimum vesting requirements unless otherwise determined by the compensation committee: a minimum one-year vesting period for time-based stock option and stock appreciation rights and a minimum three-year vesting period for time-based stock grants, except as described below for non-employee directors. If awards are performance-based, then performance must be measured over a period of at least one year. The 2014 Plan limits the number of shares that may be granted as full value awards (that is, grants other than in the form of stock options or stock appreciation rights) to 50% of the total number of shares available for issuance. In general, when awards granted under the 2014 Plan expire or are canceled without having been fully exercised, the shares reserved for those awards will be returned to the share reserve and be available for future awards. However, shares of common stock that are delivered by the grantee or withheld by us as payment of the exercise price in connection with the exercise of an option or payment of the tax withholding obligation in connection with any award will not be returned to the share reserve and will not be available for future awards. We have reserved sufficient common stock to satisfy stock option exercises with newly issued stock. However, we may also use treasury stock to satisfy stock option exercises. During 2015, 2014 and 2013, the value of the equity grants received by non-employee directors was $118,000, $96,000 and $94,000, respectively, in the form of restricted stock that vests on the date of our annual meeting of stockholders in the year following grant. Stock option activity during the year ended December 31, 2015 under all of our stock-based compensation plans was as follows (shares in thousands): Shares Weighted Balance, December 31, 2014 5,928 $ 7.07 Granted 1,344 9.17 Exercised (856 ) 7.06 Forfeitures and post-vesting cancellations (911 ) 8.50 Balance, December 31, 2015 5,505 7.35 Exercisable, December 31, 2015 3,659 6.68 Fully vested and exercisable stock options and stock options expected to vest as of December 31, 2015 are further summarized as follows (shares in thousands): Fully Expected Total shares 3,659 5,161 Weighted-average exercise price $ 6.68 7.26 Aggregate intrinsic value $ 3,387 3,387 Weighted-average remaining contractual term (in years) 3.4 4.7 The total intrinsic value of stock options exercised was $2.1 million, $0.6 million and $1.2 million during the years ended December 31, 2015, 2014 and 2013, respectively. None of our stock options or the underlying shares is subject to any right to repurchase by us. Restricted stock activity during the year ended December 31, 2015 was as follows (shares in thousands): Shares Weighted- Unvested balance, December 31, 2014 769 $ 6.89 Granted 1,122 9.27 Vested (540 ) 7.02 Forfeited (213 ) 8.36 Unvested balance, December 31, 2015 1,138 8.90 The total fair value of restricted stock vested during the years ended December 31, 2015, 2014 and 2013 was $4.6 million, $3.5 million and $4.7 million, respectively. At December 31, 2015, the total intrinsic value of all unvested restricted stock was $7.3 million. Total unrecognized compensation costs related to unvested stock-based compensation as of December 31, 2015 is as follows (dollars in thousands): Stock Restricted Total Unrecognized compensation $ 4,458 $ 5,513 $ 9,971 Weighted-average remaining recognition period (in years) 2.7 1.9 2.2 |
EMPLOYEE RETIREMENT PLAN
EMPLOYEE RETIREMENT PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE RETIREMENT PLAN | 14. EMPLOYEE RETIREMENT PLAN We sponsor a defined contribution retirement savings plan that qualifies under Section 401(k) of the Internal Revenue Code. Plan participants may elect to have a portion of their pre-tax compensation contributed to the plan, subject to certain guidelines issued by the Internal Revenue Service. Employer contributions are discretionary and were $0.8 million for the years ended December 31, 2015, 2014 and 2013, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 15. INCOME TAXES The loss from continuing operations before income taxes and equity in (earnings) of equity-method investment is as follows (in thousands): Year Ended December 31, 2015 2014 2013 United States $ (31,572 ) $ (32,684 ) $ (17,066 ) Foreign (20,731 ) (8,430 ) (3,262 ) Loss from continuing operations before income taxes and equity in (earnings) of equity-method investment $ (52,303 ) $ (41,114 ) $ (20,328 ) The current and deferred income tax benefit is as follows (in thousands): Year Ended December 31, 2015 2014 2013 Current: Federal $ — $ — $ (420 ) State 152 127 122 Foreign 158 121 12 310 248 (286 ) Deferred: State — — 25 Foreign (3,970 ) (1,609 ) (24 ) (3,970 ) (1,609 ) 1 Net income tax benefit $ (3,660 ) $ (1,361 ) $ (285 ) A reconciliation of the effect of applying the federal statutory rate and the effective income tax rate on our income tax benefit is as follows: Year Ended December 31, 2015 2014 2013 Federal income tax at statutory rates (34 )% (34 )% (34 )% Foreign income tax 4 — — State income tax (4 ) (4 ) (4 ) Other permanent differences — 2 3 Statutory tax rate change — — 1 Compensation 3 4 5 Capital loss expiration — — 11 Acquisition costs — — 6 Change in valuation allowance 24 29 11 Effective tax rate (7 )% (3 )% (1 )% Temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of deferred taxes related to the following (in thousands): December 31, 2015 2014 Current deferred income tax assets: Provision for doubtful accounts $ — $ 2,998 Accrued compensation — 1,673 Other accrued expenses — 4 Deferred revenue — 844 Restructuring liability — 687 Other — 208 Current deferred income tax assets — 6,414 Less: valuation allowance — (5,781 ) Net current deferred income tax assets — 633 Long-term deferred income tax (liabilities) assets: Property and equipment 52,551 45,719 Goodwill 3,338 3,388 Intangible assets (19,049 ) (20,090 ) Deferred revenue, less current portion 2,540 1,225 Restructuring liability, less current portion 1,474 1,026 Deferred rent 3,482 4,119 Stock-based compensation 5,578 4,667 Provision for doubtful accounts 2,299 — U.S. net operating loss carryforwards 78,570 69,457 Foreign net operating loss carryforwards, less current portion 10,238 10,052 Tax credit carryforwards 3,683 3,246 Other 2,726 1,771 Long-term deferred income tax assets 147,430 124,580 Less: valuation allowance (148,310 ) (130,236 ) Net long-term deferred income tax (liabilities) assets (880 ) (5,656 ) Net deferred tax liabilities $ (880 ) $ (5,023 ) In November 2015, the Financial Accounting Standards Board issued guidance to simplify the presentation of deferred income taxes, which require deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. We have elected early adoption as of December 31, 2015 and prospectively applied. As of December 31, 2015, we had U.S. net operating loss carryforwards for federal tax purposes of $234.4 million that will expire in tax years 2018 through 2035. Of the total U.S. net operating loss carryforwards, $27.7 million of net operating losses related to the deduction of stock-based compensation that will be tax-effected and the benefit credited to additional paid-in capital when realized. In addition, we have alternative minimum tax, research and development tax, foreign tax and state & local tax credits carryforwards of approximately $1.3 million. Alternative minimum tax credits have an indefinite carryforward period while our research and development credits will begin to expire in 2026. Finally, we have foreign net operating loss carryforwards of $43.7 million that will begin to expire in tax year 2015. We determined that through December 31, 2015, no further ownership changes have occurred since 2001 pursuant to Section 382 of the Internal Revenue Code (“Section 382”). Therefore, as of December 31, 2015, no additional material limitations existed on the U.S. net operating losses related to Section 382. However, if we experience subsequent changes in stock ownership as defined by Section 382, we may have additional limitations on the future utilization of our U.S. net operating losses. A deferred tax asset is also created by accelerated depreciable lives of fixed assets for financial reporting purposes compared to income tax purposes. Network equipment and leasehold improvements comprise the majority of the income tax basis differences. These assets are deductible over a shorter life for financial reporting than for income tax purposes. As we retire assets in the future, the income tax basis differences will reverse and become deductible for income taxes. We periodically evaluate the recoverability of the deferred tax assets and the appropriateness of the valuation allowance. As of December 31, 2015, we established a valuation allowance of $142.7 million against the U.S. deferred tax asset and $5.6 million against the foreign deferred tax asset that we do not believe are more likely than not to be realized. We will continue to assess the requirement for a valuation allowance on a quarterly basis and, at such time when we determine that it is more likely than not that the deferred tax assets will be realized, we will reduce the valuation allowance accordingly. Changes in our deferred tax asset valuation allowance are summarized as follows (in thousands): Year Ended December 31, 2015 2014 2013 Balance, January 1, $ 136,017 $ 126,568 $ 124,433 Increase in deferred tax assets 12,293 9,449 2,135 Balance, December 31, $ 148,310 $ 136,017 $ 126,568 We intend to reinvest future earnings indefinitely within each country. Accordingly, we have not recorded deferred taxes for the difference between our financial and tax basis investment in foreign entities. Based on negative cumulative earnings from foreign operations, we estimate that we will not incur incremental tax costs in the hypothetical instance of a repatriation and thus no deferred asset or liability would be recorded in our consolidated financial statements. Our accounting for uncertainty in income taxes requires us to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, we must measure the tax position to determine the amount to recognize in the financial statements. Changes in our unrecognized tax benefits are summarized as follows (in thousands): Year Ended December 31, 2015 2014 2013 Unrecognized tax benefits balance, January 1, $ 408 $ 408 $ 341 Addition for tax positions taken in a prior year — — 408 Deduction for tax positions taken in a prior year (408 ) — (341 ) Unrecognized tax benefits balance, December 31, $ — $ 408 $ 408 During 2013, we recorded $0.4 million of additional unrecognized tax benefits through purchase accounting from the iWeb acquisition related to participation interest deducted in a prior year. No uncertain tax positions were recorded during 2014. During 2015, the statute of limitation for the iWeb uncertain tax position expired. Accordingly, this amount was removed from the uncertain tax position balance. We classify interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations and comprehensive loss as a component of “Benefit for income taxes.” As of December 31, 2015, 2014 and 2013, we had an accrual of $0 for interest and penalties related to uncertain tax positions. Our federal income tax returns remain open to examination for the tax years 2012 through 2014; however, tax authorities have the right to adjust the net operating loss carryovers for years prior to 2012. Returns filed in other jurisdictions are subject to examination for years prior to 2012. |
UNAUDITED QUARTERLY RESULTS
UNAUDITED QUARTERLY RESULTS | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
UNAUDITED QUARTERLY RESULTS | 16. UNAUDITED QUARTERLY RESULTS The following table sets forth selected unaudited quarterly data during the years ended December 31, 2015 and 2014. The quarterly operating results below are not necessarily indicative of those in future periods (in thousands, except for share data). 2015 Quarter Ended March 31 June 30 September December Revenues $ 80,786 $ 80,432 $ 78,318 $ 78,756 Direct costs of sales and services, exclusive of depreciation and amortization 33,346 32,978 33,681 31,434 Direct costs of customer support 9,118 9,090 9,173 9,094 Exit activities, restructuring and impairments 265 59 920 1,033 Net loss (10,442 ) (12,534 ) (14,197 ) (11,269 ) Basic and diluted net loss per share (0.20 ) (0.24 ) (0.27 ) (0.22 ) 2014 Quarter Ended March 31 June 30 September December Revenues $ 81,961 $ 84,068 $ 84,667 $ 84,263 Direct costs of 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 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 ) |
VALUATION AND QUALIFYING ACCOUN
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS) Balance at Charges to Deductions Balance at 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 Year ended December 31, 2015: Allowance for doubtful accounts 2,121 1,354 (1,724 ) (1) 1,751 (1) Deductions in the allowance for doubtful accounts represent write-offs of uncollectible accounts net of recoveries. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Accounting Principles | Accounting Principles We prepare our consolidated financial statements and accompanying notes in accordance with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. We have eliminated inter-company transactions and balances in consolidation. |
Estimates and Assumptions | Estimates and Assumptions The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expense and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, doubtful accounts, goodwill and intangible assets, accruals, stock-based compensation, income taxes, restructuring charges, leases, long-term service contracts, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly-liquid investments purchased with an original maturity of three months or less at the date of purchase and money market mutual funds to be cash equivalents. We maintain our cash and cash equivalents at major financial institutions and may at times exceed federally insured limits. We believe that the risk of loss is minimal. To date, we have not experienced any losses related to cash and cash equivalents. |
Investment in Joint Venture | Investment in Joint Venture We account for investments that provide us with the ability to exercise significant influence, but not control, over an investee using the equity method of accounting. Significant influence, but not control, is generally deemed to exist if we have an ownership interest in the voting stock of the investee of between 20% and 50%, although we consider other factors, such as minority interest protections, in determining whether the equity method of accounting is appropriate. As of December 31, 2015, Internap Japan Co., Ltd. (“Internap Japan”), a joint venture with NTT-ME Corporation and Nippon Telegraph and Telephone Corporation (“NTT Holdings”), qualified for equity method accounting. We record our proportional share of the income and losses of Internap Japan one month in arrears on the accompanying consolidated balance sheets as a long-term investment and our share of Internap Japan’s income and losses, net of taxes, as a separate caption in our accompanying consolidated statements of operations and comprehensive loss. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of our financial instruments, including cash and cash equivalents, accounts receivable and other current liabilities, approximate fair value due to the short-term nature of these assets and liabilities. Due to the nature of our credit agreement and variable interest rates, the fair value of our debt approximates the carrying value. We measure and report certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents. The major categories of nonfinancial assets and liabilities that we measure at fair value include reporting units measured at fair value in step one of our goodwill impairment test. |
Financial Instrument Credit Risk | Financial Instrument Credit Risk Financial instruments that potentially subject us to a concentration of credit risk principally consist of cash, cash equivalents, marketable securities and trade receivables. Given the needs of our business, we may invest our cash and cash equivalents in money market funds. |
Property and Equipment | Property and Equipment We carry property and equipment at original acquisition cost less accumulated depreciation and amortization. We calculate depreciation and amortization on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives used for network equipment are generally five years; furniture, equipment and software are three to seven years; and leasehold improvements are 10 to 25 years or over the lease term, depending on the nature of the improvement. We capitalize additions and improvements that increase the value or extend the life of an asset. We expense maintenance and repairs as incurred. We charge gains or losses from disposals of property and equipment to operations. |
Leases | Leases We record leases in which we have substantially all of the benefits and risks of ownership as capital leases and all other leases as operating leases. For leases determined to be capital leases, we record the assets held under capital lease and related obligations at the lesser of the present value of aggregate future minimum lease payments or the fair value of the assets held under capital lease. We amortize the asset over its estimated useful life or over the lease term, depending on the nature of the asset. The duration of lease obligations and commitments ranges from three years for equipment to 25 years for facilities. For leases determined to be operating leases, we record lease expense on a straight-line basis over the lease term. Certain leases include renewal options that, at the inception of the lease, are considered reasonably assured of being renewed. The lease term begins when we control the leased property, which is typically before lease payments begin under the terms of the lease. We record the difference between the expense in our consolidated statements of operations and comprehensive loss and the amount we pay as deferred rent, which we include in our consolidated balance sheets. |
Costs of Computer Software Development | Costs of Computer Software Development We capitalize software development costs incurred during the application development stage. Amortization begins once the software is ready for its intended use and is computed based on the straight-line method over the economic life. Judgment is required in determining which software projects are capitalized and the resulting economic life. We capitalized $4.6 million, $6.2 million and $7.5 million in internal-use software costs during the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015 and 2014, the balance of unamortized internal-use software costs was $18.0 million and $17.7 million, respectively. During the years ended December 31, 2015, 2014 and 2013, amortization expense was $6.6 million, $6.7 million and $4.2 million, respectively. |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets We periodically evaluate the carrying value of our long-lived assets, including, but not limited to, property and equipment. We consider the carrying value of a long-lived asset impaired when the undiscounted cash flows from such asset are separately identifiable and we estimate them to be less than its carrying value. In that event, we would recognize a loss based on the amount by which the carrying value exceeds the fair value of the long-lived asset. We determine fair value based on either market quotes, if available, or discounted cash flows using a discount rate commensurate with the risk inherent in our current business model for the specific asset being valued. We would determine losses on long-lived assets to be disposed of in a similar manner, except that we would reduce fair values by the cost of disposal. We charge losses due to impairment of long-lived assets to operations during the period in which we identify the impairment. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets 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 as 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 have not identified any impairment indicators in our IP services reporting unit subsequent to the annual impairment review, the fair value of this reporting unit exceeded its carrying value by 13% as of August 1, 2015. If revenue for such reporting unit continues to decline, we may be at risk for future impairment. At December 31, 2015, goodwill attributable to the IP services reporting unit was $33.7 million. We did identify an impairment indicator for our IP products reporting unit in that actual 2015 revenue did not meet projections. At December 31, 2015, we recalculated the fair value using revised revenue projections for the rollout of our new product, Managed Internet Route Optimizer Controller, which replaced our previous generation of route optimization hardware, and the fair value of this reporting unit substantially exceed the carrying value. However, since this is a new product without an established historical revenue pattern, the IP products reporting unit may be at future risk of impairment if we do not meet our revised projections. At December 31, 2015, goodwill attributable to the IP products reporting unit was $5.8 million. Other intangible assets have finite lives and we record these assets at cost less accumulated amortization. We record amortization of acquired and developed technologies to be sold using the greater of (a) the ratio of current revenues to total and anticipated future revenues for the applicable technology or (b) the straight-line method over the remaining estimated economic life, which is five to eight years. We amortize the cost of customer relationship and trade names over their useful lives of 10 to 15 years. We assess other intangible assets on a quarterly basis whenever any events have occurred or circumstances have changed that would indicate that impairment could exist. Our assessment is based on estimated future cash flows directly associated with the asset or asset group. If we determine that the carrying value is not recoverable, we may record an impairment charge, reduce the estimated remaining useful life or both. We concluded that no impairment indicators existed, with the exception of the phase-out of the iWeb trade name further described in note 7, to cause us to reassess our other intangible assets during the year ended December 31, 2015. |
Derivatives | Derivatives We use derivatives only to reduce exposure to specific identified risks including managing the overall cost of capital and translational and transactional exposure arising from foreign transactions and ensuring the certainty of outcome as it relates to commodity pricing exposure. We do not use derivatives for any other purpose. |
Exit Activities and Restructuring | Exit Activities and Restructuring When circumstances warrant, we may elect to exit certain business activities or change the manner in which we conduct ongoing operations. If we make such a change, we will estimate the costs to exit a business or restructure ongoing operations. The components of the estimates may include estimates and assumptions regarding the timing and costs of future events and activities that represent our best expectations based on known facts and circumstances at the time of estimation. If circumstances warrant, we will adjust our previous estimates to reflect what we then believe to be a more accurate representation of expected future costs. Because our estimates and assumptions regarding exit activities and restructuring charges include probabilities of future events, such as our ability to find a sublease tenant within a reasonable period of time or the rate at which a sublease tenant will pay for the available space, such estimates are inherently vulnerable to changes due to unforeseen circumstances that could materially and adversely affect our results of operations. We monitor market conditions at each period end reporting date and will continue to assess our key assumptions and estimates used in the calculation of our exit activities and restructuring accrual. |
Taxes | Taxes We account for income taxes under the liability method. We determine deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, and we measure the tax assets and liabilities using the enacted tax rates and laws that will be in effect when we expect the differences to reverse. We maintain a valuation allowance to reduce our deferred tax assets to their estimated realizable value. We may recognize deferred tax assets in future periods if and when we estimate them to be realizable and supported by historical trends of profitability and future expectations within each tax jurisdiction. We evaluate liabilities for uncertain tax positions, and we recognized $0 and $0.4 million for associated liabilities during the years ended December 31, 2015 and 2014, respectively. We recorded nominal interest and penalties arising from the underpayment of income taxes in “Benefit for income taxes” in our accompanying consolidated statements of operations and comprehensive loss. As of December 31, 2015 and 2014, we accrued $0 for interest and penalties related to uncertain tax positions. We account for telecommunication, sales and other similar taxes on a net basis in “General and administrative” expense in our accompanying consolidated statements of operations and comprehensive loss. |
Stock-Based Compensation | Stock-Based Compensation We measure stock-based compensation cost at the grant date based on the calculated fair value of the award. We recognize the expense over the employee’s requisite service period, generally the vesting period of the award. The fair value of restricted stock is the market value on the date of grant. The fair value of stock options is estimated at the grant date using the Black-Scholes option pricing model with weighted average assumptions for the activity under our stock plans. Option pricing model input assumptions, such as expected term, expected volatility and risk-free interest rate, impact the fair value estimate. Further, the forfeiture rate impacts the amount of aggregate compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. The expected term represents the weighted average period of time that we expect granted options to be outstanding, considering the vesting schedules and our historical exercise patterns. Because our options are not publicly traded, we assume volatility based on the historical volatility of our stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected option term. We have also used historical data to estimate option exercises, employee termination and stock option forfeiture rates. Changes in any of these assumptions could materially impact our results of operations in the period the change is made. We do not recognize a deferred tax asset for unrealized tax benefits associated with the tax deductions in excess of the compensation recorded (excess tax benefit). We apply the “with and without” approach for utilization of tax attributes upon realization of net operating losses in the future. This method allocates stock-based compensation benefits last among other tax benefits recognized. In addition, we apply the “direct only” method of calculating the amount of windfalls or shortfalls. |
Treasury Stock | Treasury Stock As permitted by our stock-based compensation plans, we acquire shares of treasury stock as payment of statutory minimum payroll taxes due from employees for stock-based compensation. However, we do not use shares of treasury stock acquired from employees in this manner to issue new equity awards under our stock-based compensation plans. |
Revenue Recognition | Revenue Recognition We generate revenues primarily from the sale of data center services, including colocation, hosting and cloud, and IP services. Our revenues typically consist of monthly recurring revenues from contracts with terms of one year or more. We recognize the monthly minimum as revenue each month provided that we have entered into an enforceable contract, we have delivered the service to the customer, the fee for the service is fixed or determinable and collection is reasonably assured. We record installation fees as deferred revenue and recognize the revenue ratably over the estimated customer life. For our data center services revenue, we determine colocation revenues by occupied square feet and both allocated and variable-based usage, which includes both physical space for hosting customers’ network and other equipment plus associated services such as power and network connectivity, environmental controls and security. We determine hosting revenues by the number of servers utilized (physical or virtual) and cloud revenues by the amount of processing and storage consumed. We recognize IP services revenues on fixed-commitment or usage-based pricing. IP service contracts usually have fixed minimum commitments based on a certain level of bandwidth usage with additional charges for any usage over a specified limit. If a customer’s usage of our services exceeds the monthly minimum, we recognize revenue for such excess in the period of the usage. We use contracts and sales or purchase orders as evidence of an arrangement. We test for availability or connectivity to verify delivery of our services. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We also enter into multiple-element arrangements, or bundled services. When we enter into such arrangements, we account for each element separately over its respective service period provided that we have objective evidence of fair value for the separate elements. Objective evidence of fair value includes the price charged for the element when sold separately. If we cannot objectively determine the fair value of each element, we recognize the total value of the arrangement ratably over the entire service period to the extent that we have begun to provide the services, and we have satisfied other revenue recognition criteria. For multiple-deliverable revenue arrangements we allocate arrangement consideration at the inception of an arrangement to all deliverables using the relative selling price method. The hierarchy for determining the selling price of a deliverable includes (a) vendor-specific objective evidence, if available, (b) third-party evidence, if vendor-specific objective evidence is not available and (c) best estimated selling price, if neither vendor-specific nor third-party evidence is available. Vendor-specific objective evidence is generally limited to the price charged when we sell the same or similar service separately. If we seldom sell a service separately, it is unlikely that we will determine vendor-specific objective evidence for the service. We define vendor-specific objective evidence as an average price of recent standalone transactions that we price within a narrow range that we define. We determine third-party evidence based on the prices charged by our competitors for a similar deliverable when sold separately. It is difficult for us to obtain sufficient information on competitor pricing to substantiate third-party evidence and therefore we may not always be able to use this measure. If we are unable to establish selling price using vendor-specific objective evidence or third-party evidence, we use best estimated selling price in our allocation of arrangement consideration. The objective of best estimated selling price is to determine the price at which we would transact if we sold the service on a standalone basis. Our determination of best estimated selling price involves a weighting of several factors including, but not limited to, pricing practices and market conditions. We analyze the selling prices used in our allocation of arrangement consideration on an annual basis at a minimum. We will analyze selling prices on a more frequent basis if a significant change in our business necessitates a more timely analysis or if we experience significant variances in our selling prices. We account for each deliverable within a multiple-deliverable revenue arrangement as a separate unit of accounting if both of the following criteria are met: (a) the delivered item or items have value to the customer on a standalone basis and (b) for an arrangement that includes a general right of return for the delivered item(s), we consider delivery or performance of the undelivered item(s) probable and substantially in our control. We consider a deliverable to have standalone value if we sell this item separately or if the item is sold by another vendor or could be resold by the customer. Further, our revenue arrangements generally do not include a right of return relative to delivered services. We combine deliverables not meeting the criteria for being a separate unit of accounting with a deliverable that does meet that criterion. We then determine the appropriate allocation of arrangement consideration and recognition of revenue for the combined unit of accounting. Deferred revenue consists of revenue for services to be delivered in the future and consists primarily of advance billings, which we amortize over the respective service period. We defer and amortize revenues associated with billings for installation of customer network equipment over the estimated life of the customer relationship, which was, on average, approximately six years for 2015, 2014 and 2013. We defer and amortize revenues for installation services because the installation service is integral to our primary service offering and does not have value to customers on a stand-alone basis. We also defer and amortize the associated incremental direct costs. We routinely review the collectability of our accounts receivable and payment status of our customers. If we determine that collection of revenue is uncertain, we do not recognize revenue until collection is reasonably assured. Additionally, we maintain an allowance for doubtful accounts resulting from the inability of our customers to make required payments on accounts receivable. We base the allowance for doubtful accounts on general customer information, which primarily includes our historical cash collection experience and the aging of our accounts receivable, as well as historical write-offs as a percentage of revenue. We assess the payment status of customers by reference to the terms under which we provide services or goods, with any payments not made on or before their due date considered past-due. Once we have exhausted all collection efforts, we write the uncollectible balance off against the allowance for doubtful accounts. We routinely perform credit checks for new and existing customers and require deposits or prepayments for customers that we perceive as being a credit risk. In addition, we record a reserve amount for potential credits to be issued under our service level agreements and other sales adjustments. |
Research and Development Costs | Research and Development Costs We include research and development costs in general and administrative costs and we expense them as incurred. These costs primarily relate to our development and enhancement of IP routing technology, hosting and cloud technologies and network engineering costs associated with changes to the functionality of our services. Research and development costs were $2.2 million, $2.8 million and $2.1 million during the years ended December 31, 2015, 2014 and 2013, respectively. These costs do not include $6.5 million, $8.5 million and $7.5 million of internal-use and available for sale software costs capitalized during the years ended December 31, 2015, 2014 and 2013, respectively. |
Advertising Costs | Advertising Costs We expense all advertising costs as incurred. Advertising costs during the years ended December 31, 2015, 2014 and 2013 were $4.9 million, $6.5 million and $3.1 million, respectively. |
Net Loss Per Share | 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): Year Ended December 31, 2015 2014 2013 Net loss and net loss available to common stockholders $ (48,443 ) $ (39,494 ) $ (19,830 ) Weighted average shares outstanding, basic and diluted 51,898 51,237 51,135 Net loss per share, basic and diluted $ (0.93 ) $ (0.77 ) $ (0.39 ) Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans 6,655 6,696 6,795 |
Segment Information and Operating Costs and Expenses | Segment Information and Operating Costs and Expenses We align our reportable segments with the internal reporting that management uses for making operating decisions and assessing performance. Effective January 1, 2016, as further described in note 12, we operate in two business segments: data center and network services and cloud and hosting services. We include the operations of iWeb Technologies Inc. (“iWeb”), acquired in November 2013, in our cloud and hosting services segment. In addition, in conjunction with the change in our organizational structure, we reclassified certain costs included in the expense categories on our consolidated statement of operations, which resulted in the following: a reclassification of "Sales and marketing" and "General and administrative" to "Sales, general and administrative" and "Direct costs of amortization of acquired and developed technologies" to "Depreciation and amortization" included on our consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Effective January 1, 2016, we adopted new guidance that required debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, which is consistent with the presentation of debt discounts. The guidance, applied retrospectively, was effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Adoption did not have a material impact on our financial condition and had no impact on our result of operations. Our restatement of prior year amounts from assets to liabilities was $0.9 million and $1.0 million at December 31, 2015 and 2014, respectively. In November 2015, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify the presentation of deferred income taxes, which require deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. We have elected early adoption as of December 31, 2015 and prospectively applied the guidance. We did not retrospectively adjust prior periods. Had we retrospectively applied the guidance at December 31, 2014, the impact on the accompanying consolidated balance sheet would have been a decrease in “Current deferred tax asset” of $0.6 million with a decrease in “Long-term deferred tax liability” of $0.6 million. 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. We expect adoption will not have a material impact on our financial condition or result of operations. 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. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of basic and diluted net loss per share | Year Ended December 31, 2015 2014 2013 Net loss and net loss available to common stockholders $ (48,443 ) $ (39,494 ) $ (19,830 ) Weighted average shares outstanding, basic and diluted 51,898 51,237 51,135 Net loss per share, basic and diluted $ (0.93 ) $ (0.77 ) $ (0.39 ) Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans 6,655 6,696 6,795 |
ACQUISITION (Tables)
ACQUISITION (Tables) - iWeb Group Inc | 12 Months Ended |
Dec. 31, 2015 | |
Business Acquisition [Line Items] | |
Schedule of purchase price allocation | 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 |
Schedule of intangible assets acquired | Fair Value Weighted Customer relationships $ 22,200 15 years Trade name (1) 15,100 30 years Beneficial leasehold interest 858 14 years Internally developed software 2,767 5 years Total intangible assets $ 40,925 (1) During 2015, as further described in note 7, we accelerated the useful life of the iWeb trade name to support our long-term strategy. At December 31, 2015, the unamortized balance was zero. |
Schedule of unaudited pro forma results | (in thousands) Unaudited pro forma revenue $ 323,000 Unaudited pro forma net loss (32,000 ) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value hierarchy for financial assets measured at fair value on a recurring basis | Level 1 Level 2 Level 3 Total December 31, 2015: Foreign currency contracts (note 10) $ — $ 1,019 $ — $ 1,019 Interest rate swap (note 10) — 728 — 728 Asset retirement obligations (1) — — 2,803 2,803 December 31, 2014: Interest rate swap (note 10) — 813 — 813 Asset retirement obligations (1) — — 2,471 2,471 (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. |
Schedule of changes in asset retirement obligations | December 31, 2015 2014 Balance, January 1 $ 2,471 $ 2,357 Accrued estimated obligation, less fair value adjustment — 1,338 Subsequent revision of estimated obligation 70 (68 ) Accretion (1) 262 244 Payments — (1,319 ) Gain on settlement (2) — (81 ) Balance, December 31 $ 2,803 $ 2,471 (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. |
Schedule of fair value of term loan and revolving credit facility | December 31, 2015 2014 Carrying Fair Carrying Fair Term loan $ 294,000 303,000 $ 297,000 313,000 Revolving credit facility 31,000 30,400 10,000 9,900 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2015 2014 Network equipment $ 215,333 $ 194,441 Network equipment under capital lease 10,126 8,023 Furniture and equipment 18,957 19,811 Software 49,769 41,595 Leasehold improvements 378,747 380,376 Land — 254 Building — 696 Buildings under capital lease 63,117 64,323 Property and equipment, gross 736,049 709,519 Less: accumulated depreciation and amortization ($31,784 and $25,209 related to capital leases at December 31, 2015 and 2014, respectively) (407,349 ) (367,374 ) $ 328,700 $ 342,145 |
Schedule of summary of depreciation and amortization of property and equipment associated with direct costs | Year ended December 31, 2015 2014 2013 Direct costs of network, sales and services $ 70,080 $ 70,579 $ 44,799 Other depreciation and amortization 19,125 4,672 3,382 Subtotal 89,205 75,251 48,181 Amortization of acquired and developed technologies 3,450 5,918 4,967 Total depreciation and amortization $ 92,655 $ 81,169 $ 53,148 |
INVESTMENT IN JOINT VENTURE (Ta
INVESTMENT IN JOINT VENTURE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of investment activity of joint venture | Year Ended December 31, 2015 2014 Investment balance, January 1 $ 2,622 $ 2,602 Proportional share of net income 200 259 Unrealized foreign currency translation loss, net (54 ) (239 ) Investment balance, December 31 $ 2,768 $ 2,622 |
GOODWILL AND OTHER INTANGIBLE30
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | December 31, 2015 and 2014 Data Center and Network Services $ 80,104 Cloud and hosting services 50,209 130,313 |
Schedule of components of amortizing intangible assets, including capitalized software | December 31, 2015 December 31, 2014 Gross Accumulated Gross Accumulated Acquired and developed technology $ 52,783 (43,807 ) $ 52,512 $ (40,718 ) Customer relationships and trade names (1) 69,548 (45,637 ) 69,548 (28,797 ) $ 122,331 (89,444 ) $ 122,060 $ (69,515 ) (1) During 2015, we 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 year ended December 31, 2015, the additional amortization expense was $14.0 million. At December 31, 2015, the unamortized balance was zero. |
Schedule of finite-lived intangible assets, future amortization expense | 2016 $ 5,242 2017 4,488 2018 4,321 2019 3,714 2020 2,614 Thereafter 12,508 $ 32,887 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | December 31, 2015 2014 Compensation and benefits payable $ 5,906 $ 7,239 Property, sales, and other taxes 996 1,512 Customer credit balances 1,179 1,815 Other 2,656 2,554 $ 10,737 $ 13,120 |
EXIT ACTIVITIES AND RESTRUCTU32
EXIT ACTIVITIES AND RESTRUCTURING (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of transactions and balances for exit activities and restructuring charges | Balance Initial Plan Cash Balance Real estate obligations: 2015 exit activities $ — $ 1,538 $ — $ (531 ) $ 1,007 2014 exit activities 2,010 — 244 (553 ) 1,701 2007 restructuring 2,325 — 660 (1,815 ) 1,170 Other 175 — (6 ) (169 ) — $ 4,510 $ 1,538 $ 898 $ (3,068 ) $ 3,878 Balance Initial Plan Cash Balance Real estate obligations: 2014 exit activities $ — $ 3,499 $ 17 $ (1,506 ) $ 2,010 2007 restructuring 3,296 — 1,055 (2,026 ) 2,325 Other 867 — 21 (713 ) 175 $ 4,163 $ 3,499 $ 1,093 $ (4,245 ) $ 4,510 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of the activity of the foreign currency contracts | Unrealized loss, net of $0.3 million income tax, included in “Accumulated items of other comprehensive loss” in the accompanying consolidated balance sheets $ 745 Realized loss on effective portion, included as compensation expense primarily in “Direct costs of customer support” and “General and administrative” in the accompanying consolidated statements of operations and comprehensive loss 691 |
Schedule of activity of interest rate swaps | Year Ended December 31, 2015 2014 Gain (loss) recorded as the effective portion of the change in fair value 84 (36 ) Interest payments reclassified as an increase to interest expense 798 806 |
COMMITMENTS, CONTINGENCIES AN34
COMMITMENTS, CONTINGENCIES AND LITIGATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of credit agreements | December 31, 2015 2014 Outstanding principal balance on the term loan, less unamortized discount of $6.5 million and $8.0 million, respectively $ 287,457 $ 288,994 Outstanding balance on the revolving credit facility 31,000 10,000 Letters of credit issued with proceeds from revolving credit facility 4,144 6,329 Borrowing capacity 14,856 33,671 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: 2016 $ 3,000 2017 3,000 2018 3,000 2019 285,000 $ 294,000 |
Schedule of future minimum capital lease payments and the present value of the minimum lease payments for all capital leases | 2016 $ 13,176 2017 12,376 2018 11,900 2019 10,085 2020 7,187 Thereafter 27,682 Remaining capital lease payments 82,406 Less: amounts representing imputed interest (25,293 ) Present value of minimum lease payments 57,113 Less: current portion (8,421 ) $ 48,692 |
Schedule of future minimum rental payments for operating leases | 2016 $ 26,727 2017 24,439 2018 18,170 2019 10,031 2020 4,103 Thereafter 8,368 $ 91,838 |
Schedule of future minimum payments under service commitments | 2016 $ 7,026 2017 2,803 2018 807 2019 451 2020 79 Thereafter — $ 11,166 |
OPERATING SEGMENT AND GEOGRAP35
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 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 | Year Ended December 31, 2015 2014 2013 Revenues: Data center and network services $ 213,040 $ 226,528 $ 230,945 Cloud and hosting services 105,253 108,431 52,397 Total revenues 318,293 334,959 283,342 Direct costs of sales and services, exclusive of depreciation and amortization: Data center and network services 104,105 115,820 114,847 Cloud and hosting services 27,335 29,126 17,165 Total direct costs of sales and services, exclusive of depreciation and amortization 131,440 144,946 132,012 Segment profit: Data center and network services 108,935 110,708 116,098 Cloud and hosting services 77,918 79,305 35,232 Total segment profit 186,853 190,013 151,330 Exit activities, restructuring and impairments 2,278 4,520 1,414 Other operating expenses, including direct costs of customer support, depreciation and amortization 210,470 199,832 157,403 Loss from operations (25,895 ) (14,339 ) (7,487 ) Non-operating expenses 26,408 26,775 12,841 Loss before income taxes and equity in (earnings) of equity-method investment $ (52,303 ) $ (41,114 ) $ (20,328 ) |
Schedule of total assets by segment | December 31, 2015 2014 Data center and network services $ 309,240 $ 286,689 Cloud and hosting services 224,831 281,340 Corporate 20,540 22,706 $ 554,611 $ 590,735 |
Schedule of revenues by country | Year Ended December 31, 2015 2014 2013 Revenues: United States $ 245,853 $ 258,770 $ 257,591 Canada 47,021 47,479 4,303 Other countries 25,419 28,710 21,448 $ 318,293 $ 334,959 $ 283,342 |
Schedule of net property and equipment by country | December 31, 2015 2014 United States $ 272,178 $ 278,065 Canada 54,286 60,320 Other countries 2,236 3,760 $ 328,700 $ 342,145 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |
Schedule of stock-based compensation, net of estimated forfeitures | Year Ended December 31, 2015 2014 2013 Direct costs of customer support $ 1,901 $ 1,448 $ 1,108 Sales and marketing 2,101 1,147 1,110 General and administrative 4,779 4,587 4,525 $ 8,781 $ 7,182 $ 6,743 |
Schedule of stock option activity of stock-based compensation plans | Shares Weighted Balance, December 31, 2014 5,928 $ 7.07 Granted 1,344 9.17 Exercised (856 ) 7.06 Forfeitures and post-vesting cancellations (911 ) 8.50 Balance, December 31, 2015 5,505 7.35 Exercisable, December 31, 2015 3,659 6.68 |
Schedule of fully vested and exercisable stock options and stock options expected to vest | Fully Expected Total shares 3,659 5,161 Weighted-average exercise price $ 6.68 7.26 Aggregate intrinsic value $ 3,387 3,387 Weighted-average remaining contractual term (in years) 3.4 4.7 |
Schedule of restricted stock activity | Shares Weighted- Unvested balance, December 31, 2014 769 $ 6.89 Granted 1,122 9.27 Vested (540 ) 7.02 Forfeited (213 ) 8.36 Unvested balance, December 31, 2015 1,138 8.90 |
Schedule of unrecognized compensation costs related to unvested stock-based compensation | Stock Restricted Total Unrecognized compensation $ 4,458 $ 5,513 $ 9,971 Weighted-average remaining recognition period (in years) 2.7 1.9 2.2 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of loss from continuing operations before income taxes and equity in (earnings) of equity-method investment | Year Ended December 31, 2015 2014 2013 United States $ (31,572 ) $ (32,684 ) $ (17,066 ) Foreign (20,731 ) (8,430 ) (3,262 ) Loss from continuing operations before income taxes and equity in (earnings) of equity-method investment $ (52,303 ) $ (41,114 ) $ (20,328 ) |
Schedule of current and deferred income tax (benefit) provision | Year Ended December 31, 2015 2014 2013 Current: Federal $ — $ — $ (420 ) State 152 127 122 Foreign 158 121 12 310 248 (286 ) Deferred: State — — 25 Foreign (3,970 ) (1,609 ) (24 ) (3,970 ) (1,609 ) 1 Net income tax benefit $ (3,660 ) $ (1,361 ) $ (285 ) |
Schedule of effective income tax rate reconciliation | Year Ended December 31, 2015 2014 2013 Federal income tax at statutory rates (34 )% (34 )% (34 )% Foreign income tax 4 — — State income tax (4 ) (4 ) (4 ) Other permanent differences — 2 3 Statutory tax rate change — — 1 Compensation 3 4 5 Capital loss expiration — — 11 Acquisition costs — — 6 Change in valuation allowance 24 29 11 Effective tax rate (7 )% (3 )% (1 )% |
Schedule of deferred tax assets and liabilities | December 31, 2015 2014 Current deferred income tax assets: Provision for doubtful accounts $ — $ 2,998 Accrued compensation — 1,673 Other accrued expenses — 4 Deferred revenue — 844 Restructuring liability — 687 Other — 208 Current deferred income tax assets — 6,414 Less: valuation allowance — (5,781 ) Net current deferred income tax assets — 633 Long-term deferred income tax (liabilities) assets: Property and equipment 52,551 45,719 Goodwill 3,338 3,388 Intangible assets (19,049 ) (20,090 ) Deferred revenue, less current portion 2,540 1,225 Restructuring liability, less current portion 1,474 1,026 Deferred rent 3,482 4,119 Stock-based compensation 5,578 4,667 Provision for doubtful accounts 2,299 — U.S. net operating loss carryforwards 78,570 69,457 Foreign net operating loss carryforwards, less current portion 10,238 10,052 Tax credit carryforwards 3,683 3,246 Other 2,726 1,771 Long-term deferred income tax assets 147,430 124,580 Less: valuation allowance (148,310 ) (130,236 ) Net long-term deferred income tax (liabilities) assets (880 ) (5,656 ) Net deferred tax liabilities $ (880 ) $ (5,023 ) |
Schedule of summary of changes in deferred tax asset valuation allowance | Year Ended December 31, 2015 2014 2013 Balance, January 1, $ 136,017 $ 126,568 $ 124,433 Increase in deferred tax assets 12,293 9,449 2,135 Balance, December 31, $ 148,310 $ 136,017 $ 126,568 |
Schedule of changes in unrecognized tax benefits | Year Ended December 31, 2015 2014 2013 Unrecognized tax benefits balance, January 1, $ 408 $ 408 $ 341 Addition for tax positions taken in a prior year — — 408 Deduction for tax positions taken in a prior year (408 ) — (341 ) Unrecognized tax benefits balance, December 31, $ — $ 408 $ 408 |
UNAUDITED QUARTERLY RESULTS (Ta
UNAUDITED QUARTERLY RESULTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly financial information | 2015 Quarter Ended March 31 June 30 September December Revenues $ 80,786 $ 80,432 $ 78,318 $ 78,756 Direct costs of sales and services, exclusive of depreciation and amortization 33,346 32,978 33,681 31,434 Direct costs of customer support 9,118 9,090 9,173 9,094 Exit activities, restructuring and impairments 265 59 920 1,033 Net loss (10,442 ) (12,534 ) (14,197 ) (11,269 ) Basic and diluted net loss per share (0.20 ) (0.24 ) (0.27 ) (0.22 ) 2014 Quarter Ended March 31 June 30 September December Revenues $ 81,961 $ 84,068 $ 84,667 $ 84,263 Direct costs of 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 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 ) |
DESCRIPTION OF THE COMPANY AN39
DESCRIPTION OF THE COMPANY AND NATURE OF OPERATIONS (Detail Textuals) | 12 Months Ended |
Dec. 31, 2015CenterPoint | |
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | |
Number of data centers | Center | 51 |
Number of internet protocol service points | Point | 86 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of basic and diluted net loss per share - (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounting Policies [Abstract] | |||||||||||
Net loss and net loss available to common stockholders | $ (11,269) | $ (14,197) | $ (12,534) | $ (10,442) | $ (8,257) | $ (9,377) | $ (11,185) | $ (10,675) | $ (48,443) | $ (39,494) | $ (19,830) |
Weighted average shares outstanding, basic and diluted | 51,898 | 51,237 | 51,135 | ||||||||
Net loss per share, basic and diluted | $ (0.22) | $ (0.27) | $ (0.24) | $ (0.20) | $ (0.16) | $ (0.18) | $ (0.22) | $ (0.21) | $ (0.93) | $ (0.77) | $ (0.39) |
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans | 6,655 | 6,696 | 6,795 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounting Policies [Line Items] | |||
Capitalized cost of internal-use software | $ 4.6 | $ 6.2 | $ 7.5 |
Unamortized software costs | 18 | 17.7 | |
Amortization expense capitalized | $ 6.6 | $ 6.7 | $ 4.2 |
IP services | |||
Accounting Policies [Line Items] | |||
Incremental fair value of goddwill than carryig value | 13.00% | ||
Goodwill | $ 33.7 | ||
IP Products | |||
Accounting Policies [Line Items] | |||
Goodwill | $ 5.8 | ||
Network equipment | |||
Accounting Policies [Line Items] | |||
Estimated useful lives of assets (in years) | five years | ||
Furniture Equipment and Software | |||
Accounting Policies [Line Items] | |||
Estimated useful lives of assets (in years) | three to seven years | ||
Leasehold improvements | |||
Accounting Policies [Line Items] | |||
Estimated useful lives of assets (in years) | 10 to 25 years or over the lease term | ||
Minimum | |||
Accounting Policies [Line Items] | |||
Percentage of ownership interest in the voting stock | 20.00% | ||
Minimum | Acquired technology | |||
Accounting Policies [Line Items] | |||
Amortized period of assets | 5 years | ||
Minimum | Customer relationships and trade names | |||
Accounting Policies [Line Items] | |||
Amortized period of assets | 10 years | ||
Minimum | Leasehold improvements | |||
Accounting Policies [Line Items] | |||
Duration of lease obligations and commitments | 3 years | ||
Maximum | |||
Accounting Policies [Line Items] | |||
Percentage of ownership interest in the voting stock | 50.00% | ||
Maximum | Acquired technology | |||
Accounting Policies [Line Items] | |||
Amortized period of assets | 8 years | ||
Maximum | Customer relationships and trade names | |||
Accounting Policies [Line Items] | |||
Amortized period of assets | 15 years | ||
Maximum | Leasehold improvements | |||
Accounting Policies [Line Items] | |||
Duration of lease obligations and commitments | 25 years |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 1) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)Segment | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Summary Of Significant Accounting Policy [Line Items] | |||
Uncertain tax positions | $ 0 | $ 400 | |
Unrecognized accrued interest and penalties related to tax positions | 0 | 0 | |
Advertising costs | $ 4,900 | 6,500 | $ 3,100 |
Number of operating segments | Segment | 2 | ||
Current deferred tax asset - prior period increse decrease | 633 | ||
Restatement of prior year from assets to liabilities | $ 900 | 1,000 | |
IP services | |||
Summary Of Significant Accounting Policy [Line Items] | |||
Research and development costs | 2,200 | 2,800 | 2,100 |
Excluded capitalized cost of internal-use software | $ 6,500 | 8,500 | $ 7,500 |
Prior period increase decrease | |||
Summary Of Significant Accounting Policy [Line Items] | |||
Current deferred tax asset - prior period increse decrease | 600 | ||
Long-term deferred tax liability - prioe period increase decrease | $ 600 |
ACQUISITION - Summary of purcha
ACQUISITION - Summary of purchase price allocation (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||
Goodwill | $ 130,313 | $ 130,313 |
iWeb Group Inc | ||
Business Acquisition [Line Items] | ||
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) | |
Total purchase consideration | $ 145,713 |
ACQUISITION - Summary of purc44
ACQUISITION - Summary of purchase price allocation (Parentheticals)(Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Business Acquisition [Line Items] | |
Unamortized part of intangible assets acquired | $ 5,242 |
iWeb Group Inc | |
Business Acquisition [Line Items] | |
Cash acquired from acquisition | $ 1,300 |
ACQUISITION - Summary of intang
ACQUISITION - Summary of intangible assets acquired (Details 1) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($) | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, fair value | $ 2,767 | |
iWeb Group Inc | Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, fair value | $ 22,200 | |
Intangible assets, weighted average useful life | 15 years | |
iWeb Group Inc | Trade name | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, fair value | $ 15,100 | [1] |
Intangible assets, weighted average useful life | 30 years | [1] |
iWeb Group Inc | Beneficial leasehold interest | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, fair value | $ 858 | |
Intangible assets, weighted average useful life | 14 years | |
iWeb Group Inc | Internally developed software | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, fair value | $ 2,767 | |
Intangible assets, weighted average useful life | 5 years | |
[1] | During 2015, as further described in note 7, we accelerated the useful life of the iWeb trade name to support our long-term strategy. At December 31, 2015, the unamortized balance was zero. |
ACQUISITION - Unaudited Supplem
ACQUISITION - Unaudited Supplemental Financial Information (Details 2) - iWeb Group Inc $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Business Acquisition [Line Items] | |
Unaudited pro forma revenue | $ 323,000 |
Unaudited pro forma net loss | $ (32,000) |
ACQUISITION (Detail Textuals)
ACQUISITION (Detail Textuals) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($)Center | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($)Center | |
Business Acquisition [Line Items] | |||||||||||
Number of data centers | Center | 51 | ||||||||||
Total revenues | $ 78,756 | $ 78,318 | $ 80,432 | $ 80,786 | $ 84,263 | $ 84,667 | $ 84,068 | $ 81,961 | |||
Loss before income tax | $ (52,303) | $ (41,114) | $ (20,328) | ||||||||
Acquisitions, net of cash paid | $ (74) | 144,487 | |||||||||
Total amount available under the revolving credit facility | 350,000 | ||||||||||
iWeb Group Inc | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Total purchase consideration | 145,713 | 145,713 | |||||||||
Acquisitions, net of cash paid | 144,400 | ||||||||||
Cash acquired from acquisition | 1,300 | ||||||||||
Total amount available under the revolving credit facility | $ 350,000 | $ 350,000 | 350,000 | ||||||||
iWeb Group Inc | General and administrative | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition-related expenses | $ 4,200 | ||||||||||
iWeb Group Inc | Data center services | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Number of data centers | Center | 4 | ||||||||||
Total revenues | $ 3,600 | ||||||||||
Loss before income tax | $ 400 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of fair value hierarchy for financial assets (cash equivalents and investments in marketable securities) measured at fair value on recurring basis - (Details) - Recurring basis - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
Level 1 | Foreign currency contracts | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Assets, Fair value | |||
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] | |||
Assets, Fair value | [1] | ||
Level 2 | Foreign currency contracts | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Assets, Fair value | 1,019 | ||
Level 2 | Interest rate swap | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities, Fair value | 728 | 813 | |
Level 2 | Asset retirement obligations | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Assets, Fair value | [1] | ||
Level 3 | Foreign currency contracts | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Assets, Fair value | |||
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] | |||
Assets, Fair value | [1] | 2,803 | 2,471 |
Total | Foreign currency contracts | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Assets, Fair value | 1,019 | ||
Total | Interest rate swap | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities, Fair value | 728 | 813 | |
Total | Asset retirement obligations | |||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | |||
Assets, Fair value | [1] | $ 2,803 | $ 2,471 |
[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. |
FAIR VALUE MEASUREMENTS - Sum49
FAIR VALUE MEASUREMENTS - Summary of changes in our Level 3 financial asset, accrued contingent consideration (Details 1) - Asset retirement obligations - Level 3 - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance, January 1 | $ 2,471 | $ 2,357 | |
Accrued estimated obligation, less fair value adjustment | 1,338 | ||
Subsequent revision of estimated obligation | 70 | (68) | |
Accretion | [1] | 262 | 244 |
Payments | (1,319) | ||
Gain on settlement | [2] | (81) | |
Balance, December 31 | $ 2,803 | $ 2,471 | |
[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. |
FAIR VALUE MEASUREMENTS - Sum50
FAIR VALUE MEASUREMENTS - Summary of information about our term loan, revolving credit facility and other liabilities - (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | $ 294,000 | $ 297,000 |
Revolving credit facility | 31,000 | 10,000 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | 303,000 | 313,000 |
Revolving credit facility | $ 30,400 | $ 9,900 |
PROPERTY AND EQUIPMENT - Summar
PROPERTY AND EQUIPMENT - Summary of property and equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 736,049 | $ 709,519 |
Less: accumulated depreciation and amortization ($25,209 and $17,786 related to capital leases at December 31, 2014 and 2013, respectively) | (407,349) | (367,374) |
Property and equipment, net | 328,700 | 342,145 |
Network equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 215,333 | 194,441 |
Network equipment under capital lease | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 10,126 | 8,023 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 18,957 | 19,811 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 49,769 | 41,595 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 378,747 | 380,376 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 254 | |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 696 | |
Buildings under capital lease | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 63,117 | $ 64,323 |
PROPERTY AND EQUIPMENT - Summ52
PROPERTY AND EQUIPMENT - Summary of property and equipment (Parentheticals) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Accumulated depreciation and amortization related to capital leases | $ 31,784 | $ 25,209 |
PROPERTY AND EQUIPMENT - Summ53
PROPERTY AND EQUIPMENT - Summary of depreciation and amortization of property and equipment (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | |||||||||||
Direct costs of network, sales and services | $ 70,080 | $ 70,579 | $ 44,799 | ||||||||
Other depreciation and amortization | 19,125 | 4,672 | 3,382 | ||||||||
Subtotal | 92,655 | 81,169 | 53,148 | ||||||||
Amortization of acquired and developed technologies | $ 892 | $ 816 | $ 592 | $ 1,150 | $ 1,383 | $ 1,524 | $ 1,551 | $ 1,461 | 3,450 | 5,918 | 4,967 |
Total depreciation and amortization | $ 92,655 | $ 81,169 | $ 53,148 |
PROPERTY AND EQUIPMENT (Detail
PROPERTY AND EQUIPMENT (Detail Textuals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | |||
Asset retired | $ 33.3 | $ 17.9 | $ 8.1 |
Asset retired accumulated depreciation | $ 32.6 | $ 17.4 | $ 8.1 |
INVESTMENT IN JOINT VENTURE - S
INVESTMENT IN JOINT VENTURE - Summary of investment activity in joint venture in IP services operating segment - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity Method Investments [Roll Forward] | |||
Investment balance, January 1 | $ 2,622 | $ 2,602 | |
Proportional share of net income | 200 | 259 | $ 213 |
Unrealized foreign currency translation loss, net | (54) | (239) | |
Investment balance, December 31 | $ 2,768 | $ 2,622 | $ 2,602 |
INVESTMENT IN JOINT VENTURE (De
INVESTMENT IN JOINT VENTURE (Detail Textuals) - Internap Japan $ in Millions | Dec. 31, 2015USD ($) |
Schedule of Equity Method Investments [Line Items] | |
Investment in joint venture | $ 4.1 |
Percentage of interest in joint venture | 51.00% |
GOODWILL AND OTHER INTANGIBLE57
GOODWILL AND OTHER INTANGIBLE ASSETS - Summary of carrying amount of goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill [Line Items] | ||
Net | $ 130,313 | $ 130,313 |
Data Center and Network Services | ||
Goodwill [Line Items] | ||
Net | 80,104 | 80,104 |
Cloud and hosting services | ||
Goodwill [Line Items] | ||
Net | $ 50,209 | $ 50,209 |
GOODWILL AND OTHER INTANGIBLE58
GOODWILL AND OTHER INTANGIBLE ASSETS - Summary of components of amortizing intangible assets, including capitalized software (Details 1) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 122,331 | $ 122,060 | |
Accumulated Amortization | (89,444) | (69,515) | |
Acquired and developed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 52,783 | 52,512 | |
Accumulated Amortization | (43,807) | (40,718) | |
Customer relationships and trade names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | [1] | 69,548 | 69,548 |
Accumulated Amortization | [1] | $ (45,637) | $ (28,797) |
[1] | During 2015, we 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 year ended December 31, 2015, the additional amortization expense was $14.0 million. At December 31, 2015, the unamortized balance was zero. |
GOODWILL AND OTHER INTANGIBLE59
GOODWILL AND OTHER INTANGIBLE ASSETS - Summary of components of amortizing intangible assets, including capitalized software (Parentheticals) (Details 1) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Additional amortization expense | $ 14,000,000 |
Unamortized balance | $ 0 |
GOODWILL AND OTHER INTANGIBLE60
GOODWILL AND OTHER INTANGIBLE ASSETS - Summary of remaining amortization expense (Details 2) $ in Thousands | Dec. 31, 2015USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,016 | $ 5,242 |
2,017 | 4,488 |
2,018 | 4,321 |
2,019 | 3,714 |
2,020 | 2,614 |
Thereafter | 12,508 |
Finite-lived intangible assets, Total | $ 32,887 |
GOODWILL AND OTHER INTANGIBLE61
GOODWILL AND OTHER INTANGIBLE ASSETS (Detail Textuals ) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill [Line Items] | |||
Amortization expense for intangible assets | $ 20,300 | $ 9,100 | $ 5,900 |
Goodwill | 130,313 | $ 130,313 | |
IP Products | |||
Goodwill [Line Items] | |||
Goodwill | $ 5,800 |
ACCRUED LIABILITIES - Summary o
ACCRUED LIABILITIES - Summary of accrued liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Compensation and benefits payable | $ 5,906 | $ 7,239 |
Property, sales, and other taxes | 996 | 1,512 |
Customer credit balances | 1,179 | 1,815 |
Other | 2,656 | 2,554 |
Accrued liabilities, current, total | $ 10,737 | $ 13,120 |
EXIT ACTIVITIES AND RESTRUCTU63
EXIT ACTIVITIES AND RESTRUCTURING - Exit activities and restructuring charges for Real estate obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Restructuring Reserve [Roll Forward] | ||
Balance | $ 4,510 | $ 4,163 |
Initial Charges | 1,538 | 3,499 |
Plan Adjustments | 898 | 1,093 |
Cash Payments | (3,068) | (4,245) |
Balance | 3,878 | 4,510 |
Data center and network services | Exit activities and Restructuring charges | 2015 exit activities | ||
Restructuring Reserve [Roll Forward] | ||
Balance | ||
Initial Charges | 1,538 | |
Plan Adjustments | ||
Cash Payments | (531) | |
Balance | 1,007 | |
Data center and network services | Exit activities and Restructuring charges | 2014 exit activities | ||
Restructuring Reserve [Roll Forward] | ||
Balance | 2,010 | |
Initial Charges | 3,499 | |
Plan Adjustments | 244 | 17 |
Cash Payments | (553) | (1,506) |
Balance | 1,701 | 2,010 |
Data center and network services | Exit activities and Restructuring charges | 2007 restructuring | ||
Restructuring Reserve [Roll Forward] | ||
Balance | 2,325 | 3,296 |
Initial Charges | ||
Plan Adjustments | 660 | 1,055 |
Cash Payments | (1,815) | (2,026) |
Balance | 1,170 | 2,325 |
Data center and network services | Exit activities and Restructuring charges | Other | ||
Restructuring Reserve [Roll Forward] | ||
Balance | 175 | 867 |
Initial Charges | ||
Plan Adjustments | (6) | 21 |
Cash Payments | (169) | (713) |
Balance | $ 175 |
DERIVATIVES (Details)
DERIVATIVES (Details) - Foreign currency contracts $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Derivative [Line Items] | |
Unrealized loss, net of $0.3 million income tax, included in Accumulated items of other comprehensive loss in the accompanying consolidated balance sheets | $ 745 |
Realized loss on effective portion, included as compensation expense primarily in "Direct costs of customer support" and "General and administrative" in the accompanying consolidated statements of operations and comprehensive loss | $ 691 |
DERIVATIVES (Parentheticals) (D
DERIVATIVES (Parentheticals) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Designated as Hedging Instrument | Cash Flow Hedging | Foreign currency contracts | |
Derivative [Line Items] | |
Tax on unrealized losses arising from foreign currency contracts | $ 0.3 |
DERIVATIVES (Details 1)
DERIVATIVES (Details 1) - Interest rate swap - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative [Line Items] | ||
Gain (loss) recorded as the effective portion of the change in fair value | $ 84 | $ (36) |
Interest payments reclassified as an increase to interest expense | $ 798 | $ 806 |
DERIVATIVES (Detail Textuals)
DERIVATIVES (Detail Textuals) - Designated as Hedging Instrument - Cash Flow Hedging CAD in Millions, $ in Millions | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2015CAD | |
Interest rate swap | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 150 | |
Foreign currency contracts exchange rate | 1.5 | 1.5 |
Interest rate swap | Other comprehensive loss | ||
Derivative [Line Items] | ||
Estimated reclassification of additional increase in interest expense as on December 31, 2016 | $ 0.8 | |
Interest rate swap | Other long-term liabilities | ||
Derivative [Line Items] | ||
Fair value of derivatives | 0.8 | |
Interest rate swap | Other current liabilities | ||
Derivative [Line Items] | ||
Fair value of derivatives | $ 0.7 | |
Foreign currency contracts | June 2016 | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | CAD | CAD 6 | |
Foreign currency contracts exchange rate | 1.268 | 1.268 |
Foreign currency contracts | June 2017 | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | CAD | CAD 12 | |
Foreign currency contracts exchange rate | 1.2855 | 1.2855 |
Foreign currency contracts | Other long-term liabilities | ||
Derivative [Line Items] | ||
Fair value of derivatives | $ 0.3 | |
Foreign currency contracts | Other current liabilities | ||
Derivative [Line Items] | ||
Fair value of derivatives | $ 0.7 |
COMMITMENTS, CONTINGENCIES AN68
COMMITMENTS, CONTINGENCIES AND LITIGATION -Credit Agreement (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Line of Credit Facility [Line Items] | |||
Borrowing capacity | $ 14,856 | $ 33,671 | |
Term Loan | |||
Line of Credit Facility [Line Items] | |||
Outstanding principal balance | $ 287,457 | $ 288,994 | $ 290,608 |
Interest rate | 6.00% | 6.00% | |
Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Outstanding principal balance | $ 31,000 | $ 10,000 | |
Letters of credit issued with proceeds from revolving credit facility | $ 4,144 | $ 6,329 | |
Interest rate | 4.70% | 4.70% |
COMMITMENTS, CONTINGENCIES AN69
COMMITMENTS, CONTINGENCIES AND LITIGATION -Credit Agreement (Details 1) - Term Loan $ in Thousands | Dec. 31, 2015USD ($) |
Line of Credit Facility [Line Items] | |
2,016 | $ 3,000 |
2,017 | 3,000 |
2,018 | 3,000 |
2,019 | 285,000 |
Total term loan | $ 294,000 |
COMMITMENTS, CONTINGENCIES AN70
COMMITMENTS, CONTINGENCIES AND LITIGATION -Capital Leases (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Commitments and Contingencies Disclosure [Abstract] | ||
2,016 | $ 13,176 | |
2,017 | 12,376 | |
2,018 | 11,900 | |
2,019 | 10,085 | |
2,020 | 7,187 | |
Thereafter | 27,682 | |
Remaining capital lease payments | 82,406 | |
Less: amounts representing imputed interest | (25,293) | |
Present value of minimum lease payments | 57,113 | |
Less: current portion | (8,421) | |
Capital lease obligations | $ 48,692 | $ 52,686 |
COMMITMENTS, CONTINGENCIES, CON
COMMITMENTS, CONTINGENCIES, CONCENTRATIONS OF RISK AND LITIGATION - Summary of future minimum lease payments on non-cancelable operating leases (Details 3) $ in Thousands | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 26,727 |
2,017 | 24,439 |
2,018 | 18,170 |
2,019 | 10,031 |
2,020 | 4,103 |
Thereafter | 8,368 |
Operating leases, future minimum payments due, Total | $ 91,838 |
COMMITMENTS, CONTINGENCIES, C72
COMMITMENTS, CONTINGENCIES, CONCENTRATIONS OF RISK AND LITIGATION - Summary of future minimum payments under service commitments (Details 4) - IP, Telecommunications and Data Center Services $ in Thousands | Dec. 31, 2015USD ($) |
Schedule Of Commitments And Contingencies [Line Items] | |
2,016 | $ 7,026 |
2,017 | 2,803 |
2,018 | 807 |
2,019 | 451 |
2,020 | 79 |
Thereafter | |
Total contractual commitments future minimum payments due | $ 11,166 |
COMMITMENTS, CONTINGENCIES AN73
COMMITMENTS, CONTINGENCIES AND LITIGATION - Credit Agreement (Detail Textuals) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 26, 2013 | Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2014 | |
Commitment Contingencies and Litigation [Line Items] | ||||
Credit limit | $ 350,000,000 | |||
Loss on extinguishment of debt | $ 900,000 | 881,000 | ||
Percentage of capital stock secured of foreign subsidiaries | 65.00% | |||
Debt discount | 9,500,000 | |||
Base rate | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Description of interest rate used | The base rate is equal to the highest of (a) the adjusted U.S. Prime Lending Rate as published in the Wall Street Journal, (b) with respect to Term Loans issued on the Closing Date, 2.00%, (c) the federal funds effective rate from time to time, plus 0.50%, and (d) the adjusted LIBOR rate, as defined below, for a one-month interest period, plus 1.00% | |||
LIBOR | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Description of interest rate used | The adjusted LIBOR rate is equal to the rate per annum (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered in the interbank Eurodollar market for the applicable interest period (one, two, three or six months), as quoted on Reuters screen LIBOR (or any successor page or service). | |||
Revolving credit facility | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Credit limit | 50,000,000 | |||
Revolving credit facility | Base rate | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Interest rate | 3.50% | |||
Revolving credit facility | LIBOR | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Interest rate | 4.50% | |||
Term Loan | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Credit limit | $ 300,000,000 | |||
Repayment of loan | $ 750,000 | |||
Frequency of repayment of loan | Quarterly | |||
Term loan, unamortized discount | $ 6,500,000 | $ 8,000,000 | ||
Term Loan | Base rate | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Interest rate | 4.00% | |||
Term Loan | LIBOR | ||||
Commitment Contingencies and Litigation [Line Items] | ||||
Interest rate | 5.00% |
COMMITMENTS, CONTINGENCIES AN74
COMMITMENTS, CONTINGENCIES AND LITIGATION - Capital Leases (Detail Textuals 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitment Contingencies and Litigation [Line Items] | |||
Rent expense | $ 21,600,000 | $ 21,300,000 | $ 23,800,000 |
Other current liabilities | |||
Commitment Contingencies and Litigation [Line Items] | |||
Asset retirement obligation | 200,000 | 0 | |
Other long-term liabilities | |||
Commitment Contingencies and Litigation [Line Items] | |||
Asset retirement obligation | 2,600,000 | $ 2,500,000 | |
General and administrative | |||
Commitment Contingencies and Litigation [Line Items] | |||
Litigation expense | $ 400,000 | ||
Minimum | |||
Commitment Contingencies and Litigation [Line Items] | |||
Initial lease terms | 3 years | ||
Maximum | |||
Commitment Contingencies and Litigation [Line Items] | |||
Initial lease terms | 25 years |
OPERATING SEGMENT AND GEOGRAP75
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION - Summary of operating results for business segments - (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues: | |||||||||||
Total revenues | $ 78,756 | $ 78,318 | $ 80,432 | $ 80,786 | $ 84,263 | $ 84,667 | $ 84,068 | $ 81,961 | |||
Direct costs of sales and services, exclusive of depreciation and amortization: | |||||||||||
Total direct costs of sales and services, exclusive of depreciation and amortization | 31,434 | 33,681 | 32,978 | 33,346 | 35,475 | 37,148 | 36,562 | 35,760 | |||
Segment profit: | |||||||||||
Exit activities, restructuring and impairments | $ 1,033 | $ 920 | $ 59 | $ 265 | $ 1,518 | $ 56 | $ 1,561 | $ 1,384 | $ 2,278 | $ 4,520 | $ 1,414 |
Loss from operations | (25,895) | (14,339) | (7,487) | ||||||||
Non-operating expenses | 26,408 | 26,775 | 12,841 | ||||||||
Loss before income taxes and equity in (earnings) of equity-method investment | (52,303) | (41,114) | (20,328) | ||||||||
Operating Segments | |||||||||||
Revenues: | |||||||||||
Total revenues | 318,293 | 334,959 | 283,342 | ||||||||
Direct costs of sales and services, exclusive of depreciation and amortization: | |||||||||||
Total direct costs of sales and services, exclusive of depreciation and amortization | 131,440 | 144,946 | 132,012 | ||||||||
Segment profit: | |||||||||||
Total segment profit | 186,853 | 190,013 | 151,330 | ||||||||
Operating Segments | Data center and network services | |||||||||||
Revenues: | |||||||||||
Total revenues | 213,040 | 226,528 | 230,945 | ||||||||
Direct costs of sales and services, exclusive of depreciation and amortization: | |||||||||||
Total direct costs of sales and services, exclusive of depreciation and amortization | 104,105 | 115,820 | 114,847 | ||||||||
Segment profit: | |||||||||||
Total segment profit | 108,935 | 110,708 | 116,098 | ||||||||
Operating Segments | Cloud and hosting services | |||||||||||
Revenues: | |||||||||||
Total revenues | 105,253 | 108,431 | 52,397 | ||||||||
Direct costs of sales and services, exclusive of depreciation and amortization: | |||||||||||
Total direct costs of sales and services, exclusive of depreciation and amortization | 27,335 | 29,126 | 17,165 | ||||||||
Segment profit: | |||||||||||
Total segment profit | 77,918 | 79,305 | 35,232 | ||||||||
Segment Reconciling Items | |||||||||||
Segment profit: | |||||||||||
Exit activities, restructuring and impairments | 2,278 | 4,520 | 1,414 | ||||||||
Other operating expenses, including direct costs of customer support, depreciation and amortization | 210,470 | 199,832 | 157,403 | ||||||||
Loss from operations | (25,895) | (14,339) | (7,487) | ||||||||
Non-operating expenses | 26,408 | 26,775 | 12,841 | ||||||||
Loss before income taxes and equity in (earnings) of equity-method investment | $ (52,303) | $ (41,114) | $ (20,328) |
OPERATING SEGMENT AND GEOGRAP76
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION - Summary of total assets by segment - (Details 1) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 554,611 | $ 590,735 |
Operating Segments | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 554,611 | 590,735 |
Operating Segments | Data center and network services | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 309,240 | 286,689 |
Operating Segments | Cloud and hosting services | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 224,831 | 281,340 |
Corporate | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 20,540 | $ 22,706 |
OPERATING SEGMENT AND GEOGRAP77
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION - Summary of revenues by country (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | |||||||||||
Total revenues | $ 78,756 | $ 78,318 | $ 80,432 | $ 80,786 | $ 84,263 | $ 84,667 | $ 84,068 | $ 81,961 | |||
Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenues | $ 318,293 | $ 334,959 | $ 283,342 | ||||||||
Operating Segments | United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenues | 245,853 | 258,770 | 257,591 | ||||||||
Operating Segments | Canada | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenues | 47,021 | 47,479 | 4,303 | ||||||||
Operating Segments | Other countries | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenues | $ 25,419 | $ 28,710 | $ 21,448 |
OPERATING SEGMENT AND GEOGRAP78
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION - Summary of net property and equipment by country (Details 3) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 328,700 | $ 342,145 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 328,700 | 342,145 |
Operating Segments | UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 272,178 | 278,065 |
Operating Segments | CANADA | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 54,286 | 60,320 |
Operating Segments | Other countries | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 2,236 | $ 3,760 |
OPERATING SEGMENT AND GEOGRAP79
OPERATING SEGMENT AND GEOGRAPHIC INFORMATION (Detail Textuals) | 12 Months Ended |
Dec. 31, 2015Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Percentage threshold of revenue | 10.00% |
Percentage threshold of property and equipment | 10.00% |
STOCK-BASED COMPENSATION PLAN80
STOCK-BASED COMPENSATION PLANS - Summary of amount of stock-based compensation, net of estimated forfeitures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation | $ 8,781 | $ 7,182 | $ 6,743 |
Direct costs of customer support | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation | 1,901 | 1,448 | 1,108 |
Sales and marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation | 2,101 | 1,147 | 1,110 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation | $ 4,779 | $ 4,587 | $ 4,525 |
STOCK-BASED COMPENSATION PLAN81
STOCK-BASED COMPENSATION PLANS - Summary of stock option activity (Details 1) - Stock Options shares in Thousands | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Shares | |
Balance, December 31, 2014 | shares | 5,928 |
Granted | shares | 1,344 |
Exercised | shares | (856) |
Forfeitures and post-vesting cancellations | shares | (911) |
Balance, December 31, 2015 | shares | 5,505 |
Exercisable, December 31, 2015 | shares | 3,659 |
Weighted Average Exercise Price | |
Balance, December 31, 2014 | $ / shares | $ 7.07 |
Granted | $ / shares | 9.17 |
Exercised | $ / shares | 7.06 |
Forfeitures and post-vesting cancellations | $ / shares | 8.50 |
Balance, December 31, 2015 | $ / shares | 7.35 |
Exercisable, December 31, 2015 | $ / shares | $ 6.68 |
STOCK-BASED COMPENSATION PLAN82
STOCK-BASED COMPENSATION PLANS - Summary of fully vested and exercisable stock options and stock options expected to vest (Details 2) - Stock Options $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fully Vested and Exercisable, Total shares | shares | 3,659 |
Fully Vested and Exercisable, Weighted-average exercise price | $ / shares | $ 6.68 |
Fully Vested and Exercisable, Aggregate intrinsic value | $ | $ 3,387 |
Fully Vested and Exercisable, Weighted-average remaining contractual term (in years) | 3 years 4 months 24 days |
Expected to Vest, Total shares | shares | 5,161 |
Expected to Vest, Weighted-average exercise price | $ / shares | $ 7.26 |
Expected to Vest, Aggregate intrinsic value | $ | $ 3,387 |
Expected to Vest, Weighted-average remaining contractual term (in years) | 4 years 8 months 12 days |
STOCK-BASED COMPENSATION PLAN83
STOCK-BASED COMPENSATION PLANS - Summary of restricted stock activity (Details 3) - Restricted Stock shares in Thousands | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Shares | |
Unvested balance, December 31, 2014 | shares | 769 |
Granted | shares | 1,122 |
Vested | shares | (540) |
Forfeited | shares | (213) |
Unvested balance, December 31, 2015 | shares | 1,138 |
Weighted-Average Grant Date Fair Value | |
Unvested balance, December 31, 2014 | $ / shares | $ 6.89 |
Granted | $ / shares | 9.27 |
Vested | $ / shares | 7.02 |
Forfeited | $ / shares | 8.36 |
Unvested balance, December 31, 2015 | $ / shares | $ 8.90 |
STOCK-BASED COMPENSATION PLAN84
STOCK-BASED COMPENSATION PLANS - Summary of total unrecognized compensation costs related to unvested stock-based compensation (Details 4) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation | $ 9,971 |
Weighted-average remaining recognition period (in years) | 2 years 2 months 12 days |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation | $ 4,458 |
Weighted-average remaining recognition period (in years) | 2 years 8 months 12 days |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation | $ 5,513 |
Weighted-average remaining recognition period (in years) | 1 year 10 months 24 days |
STOCK-BASED COMPENSATION PLAN85
STOCK-BASED COMPENSATION PLANS (Detail Textuals) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Service Share-Based Compensation, Allocation Of Recognized Period Costs [Line Items] | |||
Capitalized stock-based compensation | $ 0.3 | $ 0.3 | $ 0.4 |
Stock Options | |||
Employee Service Share-Based Compensation, Allocation Of Recognized Period Costs [Line Items] | |||
Fair value stock option pricing model | Black-Scholes option pricing model | Black-Scholes option pricing model | Black-Scholes option pricing model |
Expected terms | 4 years 6 months | 4 years 7 months 6 days | 4 years 4 months 24 days |
Volatility rate | 40.00% | 47.00% | 66.00% |
Risk free interest rate | 1.40% | 1.40% | 0.70% |
Weighted average grant date fair value | $ 3.23 | $ 3.13 | $ 4.46 |
STOCK-BASED COMPENSATION PLAN86
STOCK-BASED COMPENSATION PLANS (Detail Textuals 1) - USD ($) shares in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Restricted Stock | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total fair value of all vested restricted stock | $ 4,600,000 | $ 3,500,000 | $ 4,700,000 |
Total fair value of all unvested restricted stock | 7,300,000 | ||
Restricted Stock | Non-employee directors | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Value of equity compensation per each non-employee directors | 118,000 | 96,000 | 94,000 |
Stock Options | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total intrinsic value of stock option | $ 2,100,000 | $ 600,000 | $ 1,200,000 |
2014 Incentive Stock Plan | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Shares authorized for grant, percentage | 50.00% | ||
Number of shares available for issuance | 2.2 | ||
Performance based awards measurement period | 1 year | ||
2014 Incentive Stock Plan | Stock Options | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock options, maximum term | 10 years | ||
Stock options, first year vesting percentage | 25.00% | ||
Share based compensation, vesting period | 1 year | ||
2014 Incentive Stock Plan | Time Based Stock Options | Minimum | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share based compensation, vesting period | 1 year | ||
2014 Incentive Stock Plan | Stock Appreciation Rights (SARs) | Minimum | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share based compensation, vesting period | 1 year | ||
2014 Incentive Stock Plan | Time Based Stock Grants | Minimum | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share based compensation, vesting period | 3 years | ||
2014 Incentive Stock Plan | Non-Forfeitable Stock | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share based compensation, vesting period | 3 years |
EMPLOYEE RETIREMENT PLAN (Detai
EMPLOYEE RETIREMENT PLAN (Detail Textuals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | |||
Employer contributions | $ 0.8 | $ 0.8 | $ 0.8 |
INCOME TAXES - Loss from contin
INCOME TAXES - Loss from continuing operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (31,572) | $ (32,684) | $ (17,066) |
Foreign | (20,731) | (8,430) | (3,262) |
Loss before income taxes and equity in earnings of equity-method investment | $ (52,303) | $ (41,114) | $ (20,328) |
INCOME TAXES - Summary of curre
INCOME TAXES - Summary of current and deferred income tax provision (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | |||
Federal | $ (420) | ||
State | 152 | 127 | 122 |
Foreign | 158 | 121 | 12 |
Total current income tax provision | 310 | 248 | (286) |
Deferred: | |||
State | 25 | ||
Foreign | (3,970) | (1,609) | (24) |
Total deferred income tax provision | (3,970) | (1,609) | 1 |
Net income tax benefit | $ (3,660) | $ (1,361) | $ (285) |
INCOME TAXES - Summary of recon
INCOME TAXES - Summary of reconciliation of effect of applying federal statutory rate and effective income tax rate on income tax provision (Details 2) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Federal income tax at statutory rates | (34.00%) | (34.00%) | (34.00%) |
Foreign income tax | 4.00% | ||
State income tax | (4.00%) | (4.00%) | (4.00%) |
Other permanent differences | 2.00% | 3.00% | |
Statutory tax rate change | 1.00% | ||
Compensation | 3.00% | 4.00% | 5.00% |
Capital loss expiration | 11.00% | ||
Acquisition costs | 6.00% | ||
Change in valuation allowance | 24.00% | 29.00% | 11.00% |
Effective tax rate | (7.00%) | (3.00%) | (1.00%) |
INCOME TAXES - Summary of tempo
INCOME TAXES - Summary of temporary differences between financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of deferred taxes (Details 3) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current deferred income tax assets: | ||
Provision for doubtful accounts | $ 2,998 | |
Accrued compensation | 1,673 | |
Other accrued expenses | 4 | |
Deferred revenue | 844 | |
Restructuring liability | 687 | |
Other | 208 | |
Current deferred income tax assets | 6,414 | |
Less: valuation allowance | (5,781) | |
Net current deferred income tax assets | 633 | |
Long-term deferred income tax (liabilities) assets: | ||
Property and equipment | 52,551 | 45,719 |
Goodwill | 3,338 | 3,388 |
Intangible assets | (19,049) | (20,090) |
Deferred revenue, less current portion | 2,540 | 1,225 |
Restructuring liability, less current portion | 1,474 | 1,026 |
Deferred rent | 3,482 | 4,119 |
Stock-based compensation | 5,578 | 4,667 |
Provision for doubtful accounts | 2,299 | |
U.S. net operating loss carryforwards | 78,570 | 69,457 |
Foreign net operating loss carryforwards, less current portion | 10,238 | 10,052 |
Tax credit carryforwards | 3,683 | 3,246 |
Other | 2,726 | 1,771 |
Long-term deferred income tax assets | 147,430 | 124,580 |
Less: valuation allowance | (148,310) | (130,236) |
Net long-term deferred income tax (liabilities) assets | (880) | (5,656) |
Net deferred tax liabilities | $ (880) | $ (5,023) |
INCOME TAXES - Summary of chang
INCOME TAXES - Summary of changes in deferred tax asset valuation allowance (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred Tax Assets [Roll Forward] | |||
Balance, January 1, | $ 136,017 | $ 126,568 | $ 124,433 |
Increase in deferred tax assets | 12,293 | 9,449 | 2,135 |
Balance, December 31, | $ 148,310 | $ 136,017 | $ 126,568 |
INCOME TAXES - Summary of cha93
INCOME TAXES - Summary of changes in unrecognized tax benefits (Details 5) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits balance, January 1, | $ 408 | $ 408 | $ 341 |
Addition for tax positions taken in a prior year | 408 | ||
Deduction for tax positions taken in a prior year | (408) | (341) | |
Unrecognized tax benefits balance, December 31, | $ 408 | $ 408 |
INCOME TAXES (Detail Textuals)
INCOME TAXES (Detail Textuals) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax [Line Items] | ||||
Deferred tax asset, Valuation allowance | $ 148,310 | $ 136,017 | $ 126,568 | $ 124,433 |
Research and Developement | ||||
Income Tax [Line Items] | ||||
Minimum tax and research and development tax credit carryforwards | 1,300 | |||
U.S. Tax Authority | ||||
Income Tax [Line Items] | ||||
Net operating loss carryforwards | 234,400 | |||
Operating loss carryforwards deduction of stock-based compensation | 27,700 | |||
Deferred tax asset, Valuation allowance | 142,700 | |||
Foreign Tax Authority | ||||
Income Tax [Line Items] | ||||
Net operating loss carryforwards | 43,700 | |||
Deferred tax asset, Valuation allowance | $ 5,600 |
INCOME TAXES (Detail Textuals 1
INCOME TAXES (Detail Textuals 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Additions to unrecognized tax benefits | $ 408 | ||
Liabilities recorded in the form of interest and penalties | $ 0 | $ 0 | $ 0 |
UNAUDITED QUARTERLY RESULTS - S
UNAUDITED QUARTERLY RESULTS - Summary of unaudited quarterly data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 78,756 | $ 78,318 | $ 80,432 | $ 80,786 | $ 84,263 | $ 84,667 | $ 84,068 | $ 81,961 | |||
Direct costs of sales and services, exclusive of depreciation and amortization | 31,434 | 33,681 | 32,978 | 33,346 | 35,475 | 37,148 | 36,562 | 35,760 | |||
Direct costs of customer support | 9,094 | 9,173 | 9,090 | 9,118 | 9,211 | 9,114 | 9,553 | 8,927 | $ 36,475 | $ 36,804 | $ 29,687 |
Exit activities, restructuring and impairments | 1,033 | 920 | 59 | 265 | 1,518 | 56 | 1,561 | 1,384 | 2,278 | 4,520 | 1,414 |
Net loss | $ (11,269) | $ (14,197) | $ (12,534) | $ (10,442) | $ (8,257) | $ (9,377) | $ (11,185) | $ (10,675) | $ (48,443) | $ (39,494) | $ (19,830) |
Basic and diluted net loss per share | $ (0.22) | $ (0.27) | $ (0.24) | $ (0.20) | $ (0.16) | $ (0.18) | $ (0.22) | $ (0.21) | $ (0.93) | $ (0.77) | $ (0.39) |
SCHEDULE VALUATION AND QUALIFYI
SCHEDULE VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - Allowance for doubtful accounts - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Balance at Beginning of Fiscal Period | $ 2,121 | $ 1,995 | $ 1,809 | |
Charges to Costs and Expense | 1,354 | 1,469 | 1,861 | |
Deductions | [1] | (1,724) | (1,343) | (1,675) |
Balance at End of Fiscal Period | $ 1,751 | $ 2,121 | $ 1,995 | |
[1] | Deductions in the allowance for doubtful accounts represent write-offs of uncollectible accounts net of recoveries. |