Nature of Business and Basis of Presentation (Notes)

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business and Basis of Presentation

Nature of Business and Basis of Presentation

Akamai Technologies, Inc. (the “Company”) provides cloud services for delivering, optimizing and securing online content and business applications. The Company's globally distributed platform comprises more than 140,000 servers in approximately 1,200 networks in over 90 countries. The Company was incorporated in Delaware in 1998 and is headquartered in Cambridge, Massachusetts. The Company currently operates in one industry segment: providing services for accelerating and improving the delivery of content and applications over the Internet.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements.

Revision of Prior Period Amounts

In the first quarter of 2013, the Company conducted a reevaluation of its business model. Following the review, the Company determined it was appropriate to change the classification of cost of services and support and cost of network build-out and support from sales and marketing and general and administrative expenses, respectively, to costs of revenue because such costs directly support the Company's revenue. The Company has concluded that the prior classification was an error and that it is immaterial to all annual and quarterly periods previously presented. However, to facilitate period-over-period comparisons, the Company has revised its prior period financial statements to reflect the corrections in the period in which the expenses were incurred.

The effect of the revisions to the consolidated statements of operations is as follows for the years ended December 31, 2012 and 2011 (in thousands):

	2012							2011
	As Previously Reported		Adjustment			As Revised		As Previously Reported		Adjustment			As Revised
Cost of revenue	$	431,911	$	97,989		$	529,900	$	374,543	$	79,162		$	453,705
Research and development	74,744		—			74,744		52,333		—			52,333
Sales and marketing	304,404		(81,056		)	223,348		227,331		(64,314		)	163,017
General and administrative	227,033		(16,933		)	210,100		191,726		(14,848		)	176,878
Amortization of acquired intangible assets	20,962		—			20,962		17,070		—			17,070
Restructuring charges	406		—			406		4,886		—			4,886
Total costs and operating expenses	$	1,059,460	$	—		$	1,059,460	$	867,889	$	—		$	867,889

The classification error did not affect reported revenue, total costs and operating expenses, income from operations, net income, net income per share, cash flows or any balance sheet line item.

During the third quarter of 2013, the Company identified immaterial classification errors in its historical consolidated statements of cash flows. The errors relate to the timing of cash payments for property and equipment, cash receipts from employees for common stock related to the Company's employee stock purchase plan and cash payments for lease deposits. The cash flows for these items were improperly reflected as changes in operating assets and liabilities rather than as investing or financing activities. There was no impact to the net change in cash and cash equivalents. The Company concluded these errors are immaterial to all annual and quarterly periods previously presented and has reflected the corrections as a revision to the consolidated statements of cash flows previously filed.

The effect of the revisions to the consolidated statements of cash flows is as follows for the years ended December 31, 2012 and 2011 (in thousands):

	2012									2011
	As Previously Reported			Adjustment			As Revised			As Previously Reported			Adjustment			As Revised
Cash flows from operating activities:
Changes in operating assets and liabilities, net of effects from acquisitions:
Prepaid expenses and other current assets	$	6,066		$	291		$	6,357		$	(7,014	)	$	2,186		$	(4,828	)
Accounts payable and accrued expenses	59,653			(981		)	58,672			15,184			(7,970		)	7,214
Other non-current assets and liabilities	(4,070		)	305			(3,765		)	8,704			(493		)	8,211
Net cash provided by operating activities	530,405			(385		)	530,020			452,555			(6,277		)	446,278
Cash flows from investing activities:
Purchases of property and equipment	(165,642		)	(1,131		)	(166,773		)	(140,218		)	6,773			(133,445		)
Other non-current assets and liabilities	(250		)	1,062			812			272			(546		)	(274		)
Net cash (used in) provided by investing activities	(779,041		)	(69		)	(779,110		)	171,123			6,227			177,350
Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock plans	44,660			454			45,114			25,252			50			25,302
Net cash used in financing activities	(108,483		)	454			(108,029		)	(294,088		)	50			(294,038		)
Net (decrease) increase in cash and cash equivalents	(357,208		)	—			(357,208		)	327,331			—			327,331