UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 20, 2014
Internap Network Services Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware (State or Other Jurisdiction |
001-31989 (Commission File Number) |
91-2145721 (IRS Employer |
One Ravinia Drive, Suite 1300, Atlanta, Georgia (Address of Principal Executive Offices) |
30346 (Zip Code) |
Registrant’s telephone number, including area code: (404) 302-9700
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
£ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
£ | Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12) |
£ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Securities Act (17 CFR 240.14d-2(b)) |
£ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Securities Act (17 CFR 240.13e-2(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On February 20, 2014, Internap Network Services Corporation (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2013. A copy of the press release is attached hereto as Exhibit 99.1 hereto and is incorporated herein by reference.
The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to this or such filing. The information in this report, including the exhibit hereto, shall be deemed to be “furnished” and therefore shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
The following exhibit is furnished with this Current Report on Form 8-K:
Exhibit No. |
Description | |
99.1 |
Press Release dated February 20, 2014. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
INTERNAP NETWORK SERVICES CORPORATION | ||
Date: February 20, 2014 | By: | /s/ Kevin M. Dotts |
Kevin M. Dotts Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release of the Company dated February 20, 2014. |
Exhibit 99.1
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2013 revenue of $283.3 million, fourth quarter revenue of $74.1 million
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●
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2013 segment margin1 of 53.4%, fourth quarter segment margin of 54.5%
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●
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2013 adjusted EBITDA2 of $58.0 million, fourth quarter adjusted EBITDA of $15.7 million
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2013 adjusted EBITDA margin2 of 20.5%, fourth quarter adjusted EBITDA margin of 21.1%
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●
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Completes acquisition of hosting and cloud provider iWeb
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●
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Launches new company-controlled data center in New York Metro market
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Fourth Quarter
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Full Year
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|||||||||||||||||||||||
2013
|
2012
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Growth
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2013
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2012
|
Growth
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|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Data center services
|
$ | 49,686 | $ | 43,716 | 14 | % | $ | 185,147 | $ | 167,286 | 11 | % | ||||||||||||
IP services
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24,401 | 26,032 | -6 | % | 98,195 | 106,306 | -8 | % | ||||||||||||||||
Total Revenues
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$ | 74,087 | $ | 69,748 | 6 | % | $ | 283,342 | $ | 273,592 | 4 | % | ||||||||||||
Operating Expenses
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$ | 79,942 | $ | 67,699 | 18 | % | $ | 290,829 | $ | 269,828 | 8 | % | ||||||||||||
GAAP Net (Loss) Income
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$ | (10,450 | ) | $ | 21 | -49,862 | % | $ | (19,830 | ) | $ | (4,318 | ) | 359 | % | |||||||||
Normalized Net (Loss) Income2
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$ | (4,378 | ) | $ | 2,107 | -308 | % | $ | (7,463 | ) | $ | 2,962 | -352 | % | ||||||||||
Segment Profit
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$ | 40,394 | $ | 36,163 | 12 | % | $ | 151,330 | $ | 142,638 | 6 | % | ||||||||||||
Segment Profit Margin
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54.5 | % | 51.8 | % |
270 BPS
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53.4 | % | 52.1 | % |
130 BPS
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||||||||||||||
Adjusted EBITDA
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$ | 15,651 | $ | 14,964 | 5 | % | $ | 58,037 | $ | 51,854 | 12 | % | ||||||||||||
Adjusted EBITDA Margin
|
21.1 | % | 21.5 | % |
-40 BPS
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20.5 | % | 19.0 | % |
150 BPS
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1 |
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●
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Revenue for the full-year 2013 was $283.3 million compared with $273.6 million in 2012. The increase in annual revenue was due to growth in our data center services segment, which includes $3.6 million of revenue attributable to the fourth quarter 2013 acquisition of iWeb. Revenue for the fourth quarter of 2013 was $74.1 million, an increase of 6% year-over-year and 6% compared with the third quarter of 2013. Quarterly revenue from data center services increased year-over-year and sequentially. IP services revenue in the quarter decreased year-over-year and increased sequentially. We achieved our highest annual and quarterly revenue levels in the history of the company in 2013 and fourth quarter 2013.
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Data center services revenue for the full-year 2013 increased 11% to $185.2 million. Fourth quarter data center services revenue was $49.7 million, up 14% compared with the fourth quarter of 2012 and 9% over the third quarter of 2013. The year-over-year revenue increase was predominantly attributable to increased sales of colocation in company-controlled data centers, hosting and cloud services. The sequential increase was driven by organic growth in the data center services segment and the acquisition of iWeb, partially offset by decreased sales in our partner data centers.
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●
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IP services revenue for the full-year 2013 decreased 8% to $98.2 million. Fourth quarter IP services revenue was $24.4 million, a decrease of 6% compared with the fourth quarter of 2012 and an increase of 1% from the third quarter of 2013. The year-over-year revenue decrease was driven by per unit declines in IP and the loss of legacy contracts at higher effective prices, partially offset by an increase in overall traffic. Sequentially, traffic growth and non-recurring revenue offset per unit price declines in IP.
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GAAP net loss was $(19.8) million, or $(0.39) per share for the full-year 2013 compared with $(4.3) million, or $(0.09) per share in 2012. GAAP net loss in the fourth quarter was $(10.4) million, or $(0.21) per share.
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Normalized net loss was $(7.5) million, or $(0.15) per share for the full-year 2013. Normalized net income for the full-year 2012 was $3.0 million, or $0.06 per share. Normalized net loss in the fourth quarter was $(4.4) million, or $(0.09) per share.
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Segment profit in 2013 was $151.3 million, an increase of 6% year-over-year. Segment profit in the fourth quarter increased 12% compared with the fourth quarter 2012 and 10% sequentially to $40.4 million. Annual segment margin was 53.4% in 2013, an increase of 130 basis points over 2012. Fourth quarter segment margin was 54.5%, an increase of 270 basis points year-over-year and 160 basis points compared with the third quarter of 2013. We achieved the highest annual and quarterly segment profit and segment margin levels in the history of the company in 2013 and fourth quarter 2013.
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Annual data center services segment profit increased 21% to $92.6 million. Fourth quarter data center services segment profit increased 26% year-over-year and 15% sequentially to $25.6 million. Data center services segment profit margin was 50.0% in 2013 and 51.5% in the fourth quarter of 2013, representing year-over year increases of 420 basis points and 510 basis points, respectively. An increasing proportion of higher-margin services, specifically colocation sold in company-controlled data centers, hosting and cloud services, benefited data center services segment profit compared with the full-year and fourth quarter of 2013. Sequentially, lower seasonal power costs, increased company-controlled colocation, hosting and cloud services revenue and the acquisition of iWeb drove data center services segment profit and margin higher.
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IP services segment profit for the full-year 2013 decreased 11% to $58.7 million. Fourth quarter IP services segment profit was $14.8 million, a decrease of 7% compared with the fourth quarter of 2012 and an increase of 2% from the third quarter of 2013. IP services segment profit margin was 59.8% in 2013 and 60.7% in the fourth quarter of 2013, representing year-over year declines of 220 basis points and 30 basis points, respectively. Decreased IP services revenue more than offset lower costs, driving the year-over-year declines in IP services segment profit and margin. Sequentially, higher IP services revenue led to an increase in IP segment profit.
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Full-year 2013 adjusted EBITDA increased 12% year-over-year to $58.0 million. Fourth quarter 2013 adjusted EBITDA increased 5% year-over-year and 10% sequentially to $15.7 million. Adjusted EBITDA margin was 20.5% in 2013 and 21.1% in the fourth quarter of 2013, representing a year-over-year increase of 150 basis points and a year-over-year decrease of 40 basis points, respectively. Sequentially, fourth quarter adjusted EBITDA margin increased 70 basis points. The year-over-year and sequential increases in adjusted EBITDA were attributable to increased segment profit in our data center services segment. The year-over-year decrease in adjusted EBITDA margin was driven by higher general and administrative expense, which outweighed the year-over-year increase in segment profit. Full-year 2013 and fourth quarter 2013 represent the highest annual and quarterly adjusted EBITDA levels in the history of the company.
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2 |
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Cash and cash equivalents totaled $35.0 million at December 31, 2013. Total debt was $345.9 million, net of discount, at the end of the quarter, including $55.3 million in capital lease obligations.
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Cash generated from operations for the 12 and three months ended December 31, 2013 were $33.7 million and $7.1 million, respectively. Capital expenditures over the same periods were $63.6 million and $28.5 million, respectively.
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We had approximately 13,000 customers at December 31, 2013.
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On November 26, 2013, we completed the acquisition of iWeb, a provider of hosting and cloud services, in an all cash transaction valued at approximately $145.0 million.
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Concurrently with the acquisition of iWeb, we entered into a $350.0 million credit agreement and extinguished our previous credit facility. The new credit agreement includes a term loan of $300.0 million and a revolving credit facility of $50.0 million.
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In December, we opened a new company-controlled data center to expand capacity in the New York Metro market. This facility will add 55,000 net sellable square feet at full deployment and features the latest in data center design elements to enable power configurations of up to 18kW per rack and concurrent maintainability for complete infrastructure redundancy. We designed this hybrid-enabled facility to seamlessly connect colocation, hosting, virtual and bare-metal cloud environments through a secure Layer 2 Virtual Local Area Network.
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We announced the expansion of company-controlled data center capacity in Santa Clara, California. The facility will add an incremental 5,300 net sellable square feet which we expect to be operational in the first quarter of 2014.
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We launched the beta availability of our next generation public cloud, AgileCLOUD. It is the first cloud platform that fully exposes both virtualized and bare-metal compute instances over a native OpenStack API and delivers significant performance, interoperability and flexibility benefits.
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Internap received the 2013 Cloud Computing Excellence Award for our bare-metal cloud service.
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1
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Segment margin and segment profit are non-GAAP financial measures which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP and non-GAAP information related to segment profit and segment margin are contained in the table entitled “Segment Profit and Segment Margin” in the attachment.
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2
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Adjusted EBITDA, adjusted EBITDA margin and normalized net (loss) income are non-GAAP financial measures and are defined in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP information and non-GAAP information related to adjusted EBITDA and normalized net (loss) income are contained in the tables entitled “Reconciliation of (Loss) Income from Operations to Adjusted EBITDA,” and “Reconciliation of Net (Loss) Income and Basic and Diluted Net (Loss) Income Per Share to Normalized Net (Loss) Income and Basic and Diluted Normalized Net (Loss) Income Per Share” in the attachment.
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3 |
Press Contact:
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Investor Contact:
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Mariah Torpey
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Michael Nelson
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(781) 418-2404
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(404) 302-9700
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internap@daviesmurphy.com
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ir@internap.com
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4 |
INTERNAP NETWORK SERVICES CORPORATION
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share amounts)
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Three Months Ended December 31,
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Year Ended December 31,
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|||||||||||||||
2013
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2012
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2013
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2012
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|||||||||||||
Revenues:
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||||||||||||||||
Data center services
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$ | 49,686 | $ | 43,716 | $ | 185,147 | $ | 167,286 | ||||||||
Internet protocol (IP) services
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24,401 | 26,032 | 98,195 | 106,306 | ||||||||||||
Total revenues
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74,087 | 69,748 | 283,342 | 273,592 | ||||||||||||
Operating costs and expenses:
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||||||||||||||||
Direct costs of network, sales and services, exclusive of depreciation and amortization, shown below:
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Data center services
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24,103 | 23,445 | 92,564 | 90,604 | ||||||||||||
IP services
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9,590 | 10,140 | 39,448 | 40,350 | ||||||||||||
Direct costs of customer support
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7,635 | 6,556 | 29,687 | 26,664 | ||||||||||||
Direct costs of amortization of acquired technologies
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1,324 | 1,179 | 4,967 | 4,718 | ||||||||||||
Sales and marketing
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8,191 | 7,369 | 31,800 | 31,343 | ||||||||||||
General and administrative
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14,780 | 8,750 | 42,759 | 38,635 | ||||||||||||
Depreciation and amortization
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14,105 | 9,685 | 48,181 | 36,147 | ||||||||||||
Loss (gain) on disposal of property and equipment, net
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5 | (35 | ) | 9 | (55 | ) | ||||||||||
Exit activities, restructuring and impairments
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209 | 610 | 1,414 | 1,422 | ||||||||||||
Total operating costs and expenses
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79,942 | 67,699 | 290,829 | 269,828 | ||||||||||||
(Loss) income from operations
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(5,855 | ) | 2,049 | (7,487 | ) | 3,764 | ||||||||||
Non-operating expenses:
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||||||||||||||||
Interest expense
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4,022 | 2,232 | 11,346 | 7,566 | ||||||||||||
Loss on extinguishment of debt
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881 | - | 881 | - | ||||||||||||
Other, net
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(65 | ) | (131 | ) | 614 | 283 | ||||||||||
Total non-operating expenses
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4,838 | 2,101 | 12,841 | 7,849 | ||||||||||||
Loss before income taxes and equity in (earnings) of equity-method investment
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(10,693 | ) | (52 | ) | (20,328 | ) | (4,085 | ) | ||||||||
(Benefit) provision for income taxes
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(187 | ) | (50 | ) | (285 | ) | 453 | |||||||||
Equity in (earnings) of equity-method investment, net of taxes
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(56 | ) | (23 | ) | (213 | ) | (220 | ) | ||||||||
Net (loss) income
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$ | (10,450 | ) | $ | 21 | $ | (19,830 | ) | $ | (4,318 | ) | |||||
Basic and diluted net (loss) income per share
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$ | (0.21 | ) | $ | 0.00 | $ | (0.39 | ) | $ | (0.09 | ) | |||||
Weighted average shares outstanding used in computing net (loss) income per share:
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Basic
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50,898 | 50,606 | 51,135 | 50,761 | ||||||||||||
Diluted
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50,898 | 51,227 | 51,135 | 50,761 |
5 |
INTERNAP NETWORK SERVICES CORPORATION
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands, except par value amounts)
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December 31,
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December 31,
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|||||||
2013
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2012
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|||||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 35,018 | $ | 28,553 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1,995 and $1,809, respectively
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23,927 | 19,035 | ||||||
Deferred tax asset
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371 | - | ||||||
Prepaid expenses and other assets
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22,533 | 13,438 | ||||||
Total current assets
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81,849 | 61,026 | ||||||
Property and equipment, net
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331,963 | 248,095 | ||||||
Investment in joint venture
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2,602 | 3,000 | ||||||
Intangible assets, net
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57,699 | 21,342 | ||||||
Goodwill
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130,387 | 59,605 | ||||||
Deposits and other assets
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7,999 | 5,735 | ||||||
Deferred tax asset
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1,742 | 1,909 | ||||||
Total assets
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$ | 614,241 | $ | 400,712 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$ | 29,774 | $ | 22,158 | ||||
Accrued liabilities
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13,549 | 11,386 | ||||||
Deferred revenues
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6,729 | 2,991 | ||||||
Capital lease obligations
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5,489 | 4,504 | ||||||
Term loan, less discount of $1,387 and $239, respectively
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1,613 | 3,261 | ||||||
Exit activities and restructuring liability
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2,286 | 2,508 | ||||||
Other current liabilities
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2,493 | 169 | ||||||
Total current liabilities
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61,933 | 46,977 | ||||||
Deferred revenues
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3,804 | 2,669 | ||||||
Capital lease obligations
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49,800 | 44,054 | ||||||
Revolving credit facility
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- | 30,501 | ||||||
Term loan, less discount of $8,006 and $388, respectively
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288,994 | 61,612 | ||||||
Exit activities and restructuring liability
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1,877 | 3,365 | ||||||
Deferred rent
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14,617 | 15,026 | ||||||
Deferred tax liability
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8,591 | - | ||||||
Other long-term liabilities
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2,415 | 903 | ||||||
Total liabilities
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432,031 | 205,107 | ||||||
Commitments and contingencies
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Stockholders’ equity:
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||||||||
Preferred stock, $0.001 par value; 20,000 shares authorized; no shares issued or outstanding
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- | - | ||||||
Common stock, $0.001 par value; 120,000 shares authorized; 54,023 and 53,459 shares outstanding, respectively
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54 | 54 | ||||||
Additional paid-in capital
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1,253,106 | 1,243,801 | ||||||
Treasury stock, at cost; 461 and 267 shares, respectively
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(3,474 | ) | (1,845 | ) | ||||
Accumulated deficit
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(1,066,020 | ) | (1,046,190 | ) | ||||
Accumulated items of other comprehensive loss
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(1,456 | ) | (215 | ) | ||||
Total stockholders’ equity
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182,210 | 195,605 | ||||||
Total liabilities and stockholders’ equity
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$ | 614,241 | $ | 400,712 |
6 |
INTERNAP NETWORK SERVICES CORPORATION
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands)
|
Three Months Ended December 31,
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Year Ended December 31,
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|||||||||||||||
2013
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2012
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2013
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2012
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Cash Flows from Operating Activities:
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Net (loss) income
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$ | (10,450 | ) | $ | 21 | $ | (19,830 | ) | $ | (4,318 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities:
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||||||||||||||||
Depreciation and amortization
|
15,430 | 10,864 | 53,148 | 40,865 | ||||||||||||
Loss (gain) on disposal of property and equipment, net
|
1 | (35 | ) | 9 | (55 | ) | ||||||||||
Impairment of capitalized software
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- | 180 | 520 | 438 | ||||||||||||
Stock-based compensation expense, net of capitalized amount
|
1,653 | 1,476 | 6,743 | 5,858 | ||||||||||||
Equity in (earnings) of equity-method investment
|
(56 | ) | (23 | ) | (213 | ) | (220 | ) | ||||||||
Provision for doubtful accounts
|
784 | 99 | 1,861 | 932 | ||||||||||||
Non-cash portion of loss on extinguishment of debt
|
841 | - | 841 | - | ||||||||||||
Non-cash change in capital lease obligations
|
(22 | ) | 36 | 99 | 705 | |||||||||||
Non-cash change in accrued contingent consideration
|
- | (195 | ) | - | 124 | |||||||||||
Non-cash change in exit activities and restructuring liability
|
264 | 485 | 1,185 | 1,171 | ||||||||||||
Non-cash change in deferred rent
|
(536 | ) | (346 | ) | (1,907 | ) | (1,073 | ) | ||||||||
Deferred taxes
|
(292 | ) | (88 | ) | (67 | ) | 204 | |||||||||
Other, net
|
200 | 61 | 706 | (199 | ) | |||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable
|
(2,734 | ) | 1,868 | (5,777 | ) | (1,428 | ) | |||||||||
Prepaid expenses, deposits and other assets
|
(220 | ) | (374 | ) | (218 | ) | (671 | ) | ||||||||
Accounts payable
|
6,107 | (4,127 | ) | 3,992 | 413 | |||||||||||
Accrued and other liabilities
|
(4,039 | ) | 1,478 | (5,062 | ) | 2,304 | ||||||||||
Deferred revenues
|
837 | 198 | 1,149 | 862 | ||||||||||||
Exit activities and restructuring liability
|
(715 | ) | (718 | ) | (2,895 | ) | (2,890 | ) | ||||||||
Other liabilities
|
12 | - | (601 | ) | 720 | |||||||||||
Net cash flows provided by operating activities
|
7,065 | 10,860 | 33,683 | 43,742 | ||||||||||||
Cash Flows from Investing Activities:
|
||||||||||||||||
Purchases of property and equipment
|
(28,208 | ) | (10,333 | ) | (62,798 | ) | (74,947 | ) | ||||||||
Additions to aquired technology
|
(325 | ) | - | (801 | ) | - | ||||||||||
Payment of accrued contingent consideration
|
- | (4,750 | ) | - | (4,750 | ) | ||||||||||
Acquisition, net of cash received
|
(144,487 | ) | - | (144,487 | ) | - | ||||||||||
Net cash flows used in investing activities
|
(173,020 | ) | (15,083 | ) | (208,086 | ) | (79,697 | ) | ||||||||
Cash Flows from Financing Activities:
|
||||||||||||||||
Proceeds from credit agreements
|
300,000 | 8,172 | 320,000 | 40,401 | ||||||||||||
Principal payments on credit agreements
|
(113,375 | ) | (875 | ) | (116,000 | ) | (3,250 | ) | ||||||||
Payment of debt issuance costs
|
(12,415 | ) | - | (12,415 | ) | (543 | ) | |||||||||
Deposit collateral on credit agreement
|
(6,461 | ) | - | (6,461 | ) | - | ||||||||||
Payments on capital lease obligations
|
(1,180 | ) | (1,007 | ) | (4,655 | ) | (3,303 | ) | ||||||||
Proceeds from exercise of stock options
|
162 | 224 | 2,138 | 2,469 | ||||||||||||
Tax withholdings related to net share settlements of restricted stock awards
|
(187 | ) | (129 | ) | (1,630 | ) | (1,085 | ) | ||||||||
Other, net
|
(43 | ) | (28 | ) | (167 | ) | (118 | ) | ||||||||
Net cash flows provided by financing activities
|
166,501 | 6,357 | 180,810 | 34,571 | ||||||||||||
Effect of exchange rates on cash and cash equivalents
|
31 | 44 | 58 | 165 | ||||||||||||
Net increase (decrease) in cash and cash equivalents
|
577 | 2,178 | 6,465 | (1,219 | ) | |||||||||||
Cash and cash equivalents at beginning of period
|
34,441 | 26,375 | 28,553 | 29,772 | ||||||||||||
Cash and cash equivalents at end of period
|
$ | 35,018 | $ | 28,553 | $ | 35,018 | $ | 28,553 |
7 |
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●
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Adjusted EBITDA is (loss) income from operations plus depreciation and amortization, loss (gain) on disposals of property and equipment, exit activities, restructuring and impairments, stock-based compensation and acquisition costs.
|
|
●
|
Adjusted EBITDA margin is adjusted EBITDA as a percentage of revenues.
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●
|
Normalized net (loss) income is net (loss) income plus exit activities, restructuring and impairments, stock-based compensation and acquisition costs.
|
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●
|
Normalized diluted shares outstanding are diluted shares of common stock outstanding used in GAAP net loss per share calculations, excluding the dilutive effect of stock-based compensation using the treasury stock method.
|
|
●
|
Normalized net (loss) income per share is normalized net (loss) income divided by basic and normalized diluted shares outstanding.
|
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●
|
Segment profit is segment revenues less direct costs of network, sales and services, exclusive of depreciation and amortization for the segment, as presented in the notes to our consolidated financial statements. Segment profit does not include direct costs of customer support, direct costs of amortization of acquired technologies or any other depreciation or amortization associated with direct costs.
|
|
●
|
Segment margin is segment profit as a percentage of segment revenues.
|
8 |
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EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, income taxes, depreciation and amortization, which can vary substantially from company-to-company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and
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investors commonly adjust EBITDA information to eliminate the effect of disposals of property and equipment, impairments, restructuring and stock-based compensation which vary widely from company-to-company and impair comparability.
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as a measure of operating performance to assist in comparing performance from period-to-period on a consistent basis;
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as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and
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in communications with the board of directors, analysts and investors concerning our financial performance.
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10 |
Three Months Ended
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December 31, 2013
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September 30, 2013
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December 31, 2012
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(Loss) income from operations (GAAP)
|
$ | (5,855 | ) | $ | (1,354 | ) | $ | 2,049 | ||||
Depreciation and amortization, including amortization of acquired technologies
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15,429 | 13,537 | 10,864 | |||||||||
Loss (gain) on disposal of property and equipment, net
|
5 | 4 | (35 | ) | ||||||||
Exit activities, restructuring and impairments
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209 | 274 | 610 | |||||||||
Stock-based compensation
|
1,653 | 1,709 | 1,476 | |||||||||
Acquisition costs
|
4,210 | - | - | |||||||||
Adjusted EBITDA (non-GAAP)
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$ | 15,651 | $ | 14,170 | $ | 14,964 |
11 |
Three Months Ended
|
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December 31, 2013
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September 30, 2013
|
December 31, 2012
|
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Net (loss) income (GAAP)
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$ | (10,450 | ) | $ | (4,035 | ) | $ | 21 | ||||
Exit activities, restructuring and impairments
|
209 | 274 | 610 | |||||||||
Stock-based compensation
|
1,653 | 1,709 | 1,476 | |||||||||
Acquisition costs
|
4,210 | - | - | |||||||||
Normalized net (loss) income (non-GAAP)
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(4,378 | ) | (2,052 | ) | 2,107 | |||||||
Normalized net income allocable to participating securities (non-GAAP)
|
- | - | (45 | ) | ||||||||
Normalized net (loss) income available to common stockholders (non-GAAP)
|
$ | (4,378 | ) | $ | (2,052 | ) | $ | 2,062 | ||||
Participating securities (GAAP)
|
1,049 | 1,008 | 1,109 | |||||||||
Weighted average shares outstanding used in per share calculation:
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Basic (GAAP)
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50,898 | 50,882 | 50,606 | |||||||||
Diluted (GAAP)
|
50,898 | 50,882 | 51,227 | |||||||||
Add potentially dilutive securities
|
- | - | - | |||||||||
Less dilutive effect of stock-based compensation under the treasury stock method
|
- | - | (152 | ) | ||||||||
Normalized diluted shares (non-GAAP)
|
50,898 | 50,882 | 51,075 | |||||||||
(Loss) income per share (GAAP):
|
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Basic and diluted
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$ | (0.21 | ) | $ | (0.08 | ) | $ | - | ||||
Normalized net (loss) income per share (non-GAAP):
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Basic and diluted
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$ | (0.09 | ) | $ | (0.04 | ) | $ | 0.04 |
12 |
Three Months Ended
|
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December 31, 2013
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September 30, 2013
|
December 31, 2012
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Revenues:
|
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Data center services
|
$ | 49,686 | $ | 45,488 | $ | 43,716 | ||||||
IP services
|
24,401 | 24,084 | 26,032 | |||||||||
Total
|
74,087 | 69,572 | 69,748 | |||||||||
Direct cost of network, sales and services, exclusive of
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depreciation and amortization:
|
||||||||||||
Data center services
|
24,103 | 23,171 | 23,445 | |||||||||
IP services
|
9,590 | 9,624 | 10,140 | |||||||||
Total
|
33,693 | 32,795 | 33,585 | |||||||||
Segment Profit:
|
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Data center services
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25,583 | 22,317 | 20,271 | |||||||||
IP services
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14,811 | 14,460 | 15,892 | |||||||||
Total
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$ | 40,394 | $ | 36,777 | $ | 36,163 | ||||||
Segment Margin:
|
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Data center services
|
51.5 | % | 49.1 | % | 46.4 | % | ||||||
IP services
|
60.7 | % | 60.0 | % | 61.0 | % | ||||||
Total
|
54.5 | % | 52.9 | % | 51.8 | % |
13 |