DELAWARE
|
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91-2145721
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(State
or Other Jurisdiction of
Incorporation
or Organization)
|
|
(I.R.S.
Employer
Identification
Number)
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Pages
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3
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4
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4
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5
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6
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7
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9
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16
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23
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23
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PART
II. OTHER INFORMATION
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24
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24
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24
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24
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SIGNATURES
|
|
· |
our
ability to complete successfully the integration of acquired
companies,
including VitalStream Holdings,
Inc.;
|
·
|
our
ability to compete against existing and future competitors;
|
· |
our
ability to respond successfully to the evolution of the high
performance
Internet connectivity, content delivery, streaming, and related
services
industries;
|
·
|
the
performance of our network operations centers, network access
points or
computer systems;
|
· |
our
ability to reduce future costs;
|
· |
our
adoption of new accounting
standards;
|
· |
the
impact of in-process research and development;
|
· |
the
meeting of our cash requirements in
2007;
|
· |
the
results of pending litigation;
|
· |
the
future demand for, and supply of, data center
services;
|
· |
the
impact of our merger with VitalStream on our revenue and direct cost
of
network sales and services;
|
· |
future
cash flows and profitability;
|
· |
future
expenses;
|
· |
the
sufficiency of cash for future business operations; and
|
· |
the
availability of future financing.
|
Three
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Revenues:
|
|||||||
Internet
protocol (IP) services
|
$
|
29,037
|
$
|
27,046
|
|||
Data
center services
|
18,303
|
11,726
|
|||||
Content
delivery network (CDN) services
|
2,052
|
--
|
|||||
Other
|
4,142
|
3,853
|
|||||
Total
revenues
|
53,534
|
42,625
|
|||||
|
|||||||
Operating
expenses:
|
|||||||
Direct
cost of network, sales and services, exclusive of depreciation and
amortization shown below:
|
|||||||
IP
services
|
10,223
|
9,180
|
|||||
Data
center services
|
14,305
|
10,375
|
|||||
CDN
services
|
663
|
--
|
|||||
Other
|
3,438
|
2,662
|
|||||
Direct
cost of amortization of acquired technology
|
653
|
137
|
|||||
Direct
cost of customer support
|
3,388
|
2,897
|
|||||
Product
development
|
1,255
|
1,225
|
|||||
Sales
and marketing
|
6,189
|
6,970
|
|||||
General
and administrative
|
7,832
|
5,190
|
|||||
Restructuring
and asset impairment
|
11,349
|
--
|
|||||
Acquired
in-process research and development
|
450
|
--
|
|||||
Depreciation
and amortization
|
4,912
|
3,795
|
|||||
(Gain)
loss on disposals of property and equipment
|
(4
|
)
|
2
|
||||
Total
operating costs and expenses
|
64,653
|
42,433
|
|||||
(Loss)
income from operations
|
(11,119
|
)
|
192
|
||||
Non-operating
(income) expense:
|
|||||||
Interest
income
|
(693
|
)
|
(424
|
)
|
|||
Interest
expense
|
223
|
251
|
|||||
Other,
net
|
2
|
(129
|
)
|
||||
Total
non-operating (income) expense
|
(468
|
)
|
(302
|
)
|
|||
|
|||||||
(Loss)
income before income taxes and equity in earnings of unconsolidated
subsidiary
|
(10,651
|
)
|
494
|
||||
Provision
for income taxes
|
50
|
--
|
|||||
Equity
in (earnings) of equity-method investment, net of taxes
|
(6
|
)
|
(47
|
)
|
|||
Net
(loss) income
|
$
|
(10,695
|
)
|
$
|
541
|
||
|
|||||||
|
|||||||
Net
(loss) income per share:
|
|||||||
Basic
|
$
|
(0.26
|
)
|
$
|
0.02
|
||
Diluted
|
$
|
(0.26
|
)
|
$
|
0.02
|
||
|
|||||||
Weighted
average shares used in per share calculations:
|
|||||||
Basic
|
40,997
|
34,293
|
|||||
Diluted
|
40,997
|
34,457
|
|||||
|
|
March
31,
2007
|
December
31,
2006
|
|||||
ASSETS
|
|
|
|||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
52,172
|
$
|
45,591
|
|||
Short-term
investments in marketable securities
|
14,203
|
13,291
|
|||||
Accounts
receivable, net of allowance of $1,248 and $888,
respectively
|
25,668
|
20,282
|
|||||
Inventory
|
463
|
474
|
|||||
Prepaid
expenses and other assets
|
8,981
|
3,818
|
|||||
|
|||||||
Total
current assets
|
101,487
|
83,456
|
|||||
|
|||||||
Property
and equipment, net of accumulated depreciation of $151,780 and $151,269,
respectively
|
55,347
|
47,493
|
|||||
Investments
|
2,091
|
2,135
|
|||||
Intangible
assets, net of accumulated amortization of $19,443 and $18,644,
respectively
|
47,486
|
1,785
|
|||||
Goodwill
|
190,967
|
36,314
|
|||||
Restricted
cash
|
903
|
--
|
|||||
Deposits
and other assets
|
1,760
|
2,519
|
|||||
|
|||||||
Total
assets
|
$
|
400,041
|
$
|
173,702
|
|||
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Notes
payable, current portion
|
$
|
7,871
|
$
|
4,375
|
|||
Accounts
payable
|
16,771
|
8,776
|
|||||
Accrued
liabilities
|
10,650
|
8,689
|
|||||
Deferred
revenue, current portion
|
3,578
|
3,260
|
|||||
Capital
lease obligations, current portion
|
1,316
|
347
|
|||||
Restructuring
liability, current portion
|
5,602
|
1,400
|
|||||
Other
current liabilities
|
98
|
84
|
|||||
|
|||||||
Total
current liabilities
|
45,886
|
26,931
|
|||||
|
|||||||
Notes
payable, less current portion
|
2,188
|
3,281
|
|||||
Deferred
revenue, less current portion
|
1,332
|
1,080
|
|||||
Capital
lease obligations, less current portion
|
963
|
83
|
|||||
Restructuring
liability, less current portion
|
8,765
|
3,384
|
|||||
Deferred
rent
|
10,431
|
11,432
|
|||||
Other
long-term liabilities
|
959
|
986
|
|||||
|
|||||||
Total
liabilities
|
70,524
|
47,177
|
|||||
|
|||||||
Commitments
and Contingencies
|
|||||||
|
|||||||
Stockholders'
equity:
|
|||||||
Preferred
stock, $0.001 par value, 200,000 shares authorized, no shares issued
or
outstanding
|
--
|
--
|
|||||
Common
stock, $0.001 par value, 60,000 shares authorized, 48,966 and 35,873
shares issued and outstanding, respectively
|
49
|
36
|
|||||
Additional
paid-in capital
|
1,196,253
|
982,624
|
|||||
Accumulated
deficit
|
(867,150
|
)
|
(856,455
|
)
|
|||
Accumulated
items of other comprehensive income
|
365
|
320
|
|||||
|
|||||||
Total
stockholders' equity
|
329,517
|
126,525
|
|||||
|
|||||||
Total
liabilities and stockholders' equity
|
$
|
400,041
|
$
|
173,702
|
|
Three
months ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
(loss) income
|
$
|
(10,695
|
)
|
$
|
541
|
||
Adjustments
to reconcile net (loss) income to net cash used in operating
activities:
|
|||||||
Asset
impairment
|
2,454
|
--
|
|||||
Acquired
in-process research and development
|
450
|
--
|
|||||
Depreciation
and amortization
|
5,565
|
3,932
|
|||||
(Gain)
loss on disposal of assets
|
(4
|
)
|
2
|
||||
Provision
for doubtful accounts
|
189
|
(23
|
)
|
||||
(Income)
loss from equity method investment
|
(6
|
)
|
(47
|
)
|
|||
Non-cash
changes in deferred rent
|
(1,133
|
)
|
1,116
|
||||
Stock-based
compensation expense
|
1,625
|
1,511
|
|||||
Other,
net
|
14
|
--
|
|||||
Changes
in operating assets and liabilities, excluding effects of
acquisition:
|
|||||||
Accounts
receivable
|
(2,281
|
)
|
2,002
|
||||
Inventory
|
(41
|
)
|
169
|
||||
Prepaid
expenses, deposits and other assets
|
(2,343
|
)
|
(928
|
)
|
|||
Accounts
payable
|
4,884
|
(1,369
|
)
|
||||
Accrued
expense and other liabilities
|
(2,580
|
)
|
(897
|
)
|
|||
Deferred
revenue
|
456
|
(120
|
)
|
||||
Accrued
restructuring charge
|
9,584
|
(344
|
)
|
||||
|
|||||||
Net
cash provided by operating activities
|
6,138
|
5,545
|
|||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchases
of property and equipment
|
(3,786
|
)
|
(1,391
|
)
|
|||
Purchases
of short-term investments in marketable securities
|
(6,367
|
)
|
(2,996
|
)
|
|||
Maturities
of short-term investments in marketable securities
|
5,536
|
4,704
|
|||||
Proceeds
from disposal of property and equipment
|
--
|
15
|
|||||
Cash
received from acquisition, net of costs incurred for the
transaction
|
3,203
|
--
|
|||||
|
|||||||
Net
cash (used in) provided by investing activities
|
(1,414
|
)
|
332
|
||||
|
|||||||
Subtotal
carried forward
|
4,724
|
5,877
|
|
Three
months ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
|
|
||||||
Subtotal
carried forward
|
4,724
|
5,877
|
|||||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Principal
payments on notes payable
|
(1,260
|
)
|
(1,094
|
)
|
|||
Payments
on capital lease obligations
|
(594
|
)
|
(135
|
)
|
|||
Proceeds
from exercise of stock options
|
3,723
|
906
|
|||||
Other,
net
|
(12
|
)
|
19
|
||||
|
|||||||
Net
cash provided by (used in) financing activities
|
1,857
|
(304
|
)
|
||||
|
|||||||
Net
increase in cash and cash equivalents
|
6,581
|
5,573
|
|||||
Cash
and cash equivalents at beginning of period
|
45,591
|
24,434
|
|||||
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
52,172
|
$
|
30,007
|
|||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH INFORMATION:
|
|||||||
Common
stock issued and stock options assumed for acquisition of
VitalStream
|
$
|
208,293
|
--
|
|
Common Stock
|
Additional
Paid-In
Capital
|
|
|
Accumulated
Items
of
Comprehensive
Income
|
Total
Stockholders'
Equity
|
||||||||||||||||
|
Shares
|
Par
Value
|
Deferred Stock
Compensation
|
Accumulated
Deficit
|
||||||||||||||||||
Three
months ended March 31, 2007:
|
||||||||||||||||||||||
Balance,
December 31, 2006
|
35,873
|
$
|
36
|
$
|
982,624
|
$
|
--
|
$
|
(856,455
|
)
|
$
|
320
|
$
|
126,525
|
||||||||
Net
loss
|
--
|
--
|
--
|
--
|
(10,695
|
)
|
--
|
(10,695
|
)
|
|||||||||||||
Change
in unrealized gains and losses on investments, net of
taxes
|
--
|
--
|
--
|
--
|
--
|
83
|
83
|
|||||||||||||||
Foreign
currency translation adjustment
|
--
|
--
|
--
|
--
|
--
|
(38
|
)
|
(38
|
)
|
|||||||||||||
Total
comprehensive loss
|
--
|
--
|
--
|
--
|
--
|
--
|
(10,650
|
)
|
||||||||||||||
Stock
issued in connection with VitalStream acquisition
|
12,206
|
12
|
208,281
|
--
|
--
|
--
|
208,293
|
|||||||||||||||
Exercise
of stock options
|
575
|
1
|
3,723
|
--
|
--
|
--
|
3,724
|
|||||||||||||||
Stock-based
compensation
|
312
|
--
|
1,625
|
--
|
--
|
--
|
1,625
|
|||||||||||||||
Balance, March
31, 2007
|
48,966
|
$
|
49
|
$
|
1,196,253
|
$
|
--
|
$
|
(867,150
|
)
|
$
|
365
|
$
|
329,517
|
Common Stock
|
Additional
Paid-In
Capital
|
Accumulated
Items
of
Comprehensive
Income
|
Total
Stockholders'
Equity
|
|||||||||||||||||||
Shares
|
Par
Value
|
Deferred Stock
Compensation
|
Accumulated
Deficit
|
|||||||||||||||||||
Three
months ended March 31, 2006:
|
||||||||||||||||||||||
Balance,
December 31, 2005
|
34,168
|
$
|
34
|
$
|
970,221
|
$
|
(420
|
)
|
$
|
(860,112
|
)
|
$
|
5
|
$
|
109,728
|
|||||||
Net
income
|
--
|
--
|
--
|
--
|
541
|
--
|
541
|
|||||||||||||||
Change
in unrealized gains and losses on investments, net of
taxes
|
--
|
--
|
--
|
--
|
--
|
50
|
50
|
|||||||||||||||
Foreign
currency translation adjustment
|
--
|
--
|
--
|
--
|
--
|
36
|
36
|
|||||||||||||||
Total
comprehensive income
|
--
|
--
|
--
|
--
|
--
|
--
|
627
|
|||||||||||||||
Reclassification
of deferred stock compensation resulting from implementation of
FAS
123(R)
|
--
|
--
|
(420
|
)
|
420
|
--
|
--
|
--
|
||||||||||||||
Exercise
of stock options
|
207
|
--
|
906
|
--
|
--
|
--
|
906
|
|||||||||||||||
Stock-based
compensation
|
25
|
--
|
1,511
|
--
|
--
|
--
|
1,511
|
|||||||||||||||
Balance, March
31, 2006
|
34,400
|
$
|
34
|
$
|
972,218
|
$
|
--
|
$
|
(859,571
|
)
|
$
|
91
|
$
|
112,772
|
1. |
Nature
Of Operations And Basis Of
Presentation
|
2. |
Business
Combination
|
|
|
|||
Value
of Internap stock issued
|
$
|
197,272
|
||
Estimated
fair value of options assumed
|
11,021
|
|||
Estimated
direct transaction costs
|
5,729
|
|||
Total
preliminary estimated purchase price
|
$
|
214,022
|
|
|
Estimated
|
|||||
|
Amount
|
Useful
Life
|
|||||
|
|
||||||
Net
tangible assets
|
$
|
12,419
|
--
|
||||
Identifiable
intangible assets:
|
|||||||
Developed
technologies
|
36,000
|
8
years
|
|||||
Customer
relationships
|
9,000
|
9
years
|
|||||
Trade
name and other
|
1,500
|
3-6
years
|
|||||
Acquired
in-process research and development
|
450
|
--
|
|||||
Goodwill
|
154,653
|
--
|
|||||
Total
preliminary estimated purchase price
|
$
|
214,022
|
|
Three
Months Ended March 31,
|
||||||
|
2007
|
2006
|
|||||
Pro
forma revenue
|
$
|
55,862
|
$
|
48,329
|
|||
Pro
forma net loss
|
(14,213
|
)
|
(1,989
|
)
|
|||
Pro
forma net loss per share, basic and diluted
|
(0.31
|
)
|
(0.04
|
)
|
3. |
Segments
|
Three
Months Ended March 31, 2007
|
||||||||||||||||||||||||
IP
Services
|
Data
Center
|
CDN
Services
|
Other
|
Corporate
Allocations
|
Total
|
|||||||||||||||||||
Revenue
|
|
$
|
29,037
|
|
|
$
|
18,303
|
|
|
$
|
2,052
|
|
|
$
|
4,142
|
|
|
$
|
--
|
|
|
$
|
53,534
|
|
Direct
costs of network, sales and services, exclusive of depreciation and
amortization
|
|
|
10,223
|
|
|
|
14,305
|
|
|
|
663
|
|
|
|
3,438
|
|
|
|
--
|
|
|
|
28,629
|
|
Segment
gross profit
|
|
18,814
|
3,998
|
1,389
|
704
|
--
|
24,905
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct
costs of amortization of acquired technology
|
104
|
--
|
549
|
--
|
--
|
653
|
||||||||||||||||||
Direct
costs of customer support
|
--
|
--
|
--
|
--
|
3,388
|
3,388
|
||||||||||||||||||
Depreciation
and amortization associated with direct costs of network, sales and
services
|
--
|
--
|
--
|
--
|
4,078
|
4,078
|
||||||||||||||||||
Other
depreciation and amortization
|
--
|
--
|
--
|
--
|
834
|
834
|
||||||||||||||||||
Other
operating costs and expenses
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
27,071
|
|
|
|
27,071
|
|
Income
(loss) from operations
|
|
$
|
18,710
|
|
|
$
|
3,998
|
|
|
$
|
840
|
|
|
$
|
704
|
|
|
$
|
(35,371
|
)
|
|
$
|
(11,119
|
)
|
Three
Months Ended March 31, 2006
|
||||||||||||||||||||||||
IP
Services
|
Data
Center
|
CDN
Services
|
Other
|
Corporate
Allocations
|
Total
|
|||||||||||||||||||
Revenue
|
|
$
|
27,046
|
|
|
$
|
11,726
|
|
|
$
|
--
|
|
|
$
|
3,853
|
|
|
$
|
--
|
|
|
$
|
42,625
|
|
Direct
costs of network, sales and services, exclusive of depreciation and
amortization
|
|
|
9,180
|
|
|
|
10,375
|
|
|
|
--
|
|
|
|
2,662
|
|
|
|
--
|
|
|
|
22,217
|
|
Segment
gross profit
|
|
17,866
|
1,351
|
--
|
1,191
|
--
|
20,408
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct
costs of amortization of acquired technology
|
137
|
--
|
--
|
--
|
--
|
137
|
||||||||||||||||||
Direct
costs of customer support
|
--
|
--
|
--
|
--
|
2,897
|
2,897
|
||||||||||||||||||
Depreciation
and amortization associated with direct costs of network, sales and
services
|
--
|
--
|
--
|
--
|
2,969
|
2,969
|
||||||||||||||||||
Other
depreciation and amortization
|
--
|
--
|
--
|
--
|
826
|
826
|
||||||||||||||||||
Other
operating costs and expenses
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
13,387
|
|
|
|
13,387
|
|
Income
(loss) from operations
|
|
$
|
17,729
|
|
|
$
|
1,351
|
|
|
$
|
--
|
|
|
$
|
1,191
|
|
|
$
|
(20,079
|
)
|
|
$
|
192
|
|
4. |
Stock-Based
Compensation
|
5. |
Net
(Loss) Income Per Share
|
|
Three
months ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Net
(loss) income
|
$
|
(10,695
|
)
|
$
|
541
|
||
|
|||||||
Weighed
average shares outstanding, basic
|
40,997
|
34,293
|
|||||
|
|||||||
Effect
of dilutive securities:
|
|||||||
Unvested
restricted stock awards
|
--
|
58
|
|||||
Stock
options
|
--
|
106
|
|||||
Weighted
average shares outstanding, diluted
|
40,997
|
34,457
|
|||||
|
|||||||
Basic
net income (loss) per share
|
$
|
(0.26
|
)
|
$
|
0.02
|
||
Diluted
net income (loss) per share
|
$
|
(0.26
|
)
|
$
|
0.02
|
||
|
|||||||
Anti-dilutive
securities not included in diluted net income (loss) per share
calculation:
|
|||||||
Options
to purchase common stock
|
4,083
|
1,850
|
|||||
Unvested
restricted stock awards
|
438
|
29
|
|||||
Warrants
to purchase common stock
|
34
|
1,483
|
|||||
|
|||||||
Total
anti-dilutive securities
|
4,555
|
3,362
|
6. |
Goodwill
and Other Intangible
Assets
|
|
March
31, 2007
|
December
31, 2006
|
|||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|||||||||
|
|
|
|
|
|||||||||
Contract
based
|
$
|
25,018
|
$
|
(14,437
|
)
|
$
|
14,518
|
$
|
(14,291
|
)
|
|||
Technology
based
|
41,911
|
(5,006
|
)
|
5,911
|
(4,353
|
)
|
|||||||
|
$
|
66,929
|
$
|
(19,443
|
)
|
$
|
20,429
|
$
|
(18,644
|
)
|
Remainder
of 2007
|
|
$
|
5,443
|
2008
|
|
|
6,243
|
2009
|
|
|
6,243
|
2010
|
|
|
6,039
|
2011
|
|
|
5,728
|
2012
|
|
|
5,728
|
Thereafter
|
|
|
12,062
|
|
|
$
|
47,486
|
7. |
Restructuring
and Impairment of Long-Lived
Assets
|
December
31,
2006
Restructuring Liability
|
Restructuring
and
Impairment
Charge
|
Cash
Reductions
|
Non-cash
Write-
Downs
|
Non-cash
Plan
Adjustments
|
March
31,
2007
Restructuring
Liability
|
||||||||||||||
Restructuring
costs
|
|||||||||||||||||||
Real
estate obligations
|
$
|
—
|
$
|
7,755
|
$
|
—
|
$
|
—
|
$
|
1,346
|
$
|
9,101
|
|||||||
Employee
separations
|
—
|
1,140
|
(276
|
)
|
—
|
—
|
864
|
||||||||||||
|
|||||||||||||||||||
Total
restructuring costs
|
—
|
8,895
|
(276
|
)
|
—
|
1,346
|
9,965
|
||||||||||||
|
|||||||||||||||||||
Asset
impairments
|
|||||||||||||||||||
Leasehold
improvements
|
—
|
897
|
—
|
(897
|
)
|
—
|
—
|
||||||||||||
Other
|
—
|
471
|
—
|
(471
|
)
|
—
|
—
|
||||||||||||
|
|||||||||||||||||||
Total
asset impairments
|
—
|
1,368
|
—
|
(1,368
|
)
|
—
|
—
|
||||||||||||
|
|||||||||||||||||||
Total
|
$
|
—
|
$
|
10,263
|
$
|
(276
|
)
|
$
|
(1,368
|
)
|
$
|
1,346
|
$
|
9,965
|
|||||
Restructuring
liability balance, December 31, 2006
|
$
|
4,784
|
||
Less:
Cash reductions relating to real estate activities
|
(382
|
)
|
||
Restructuring
liability balance, March 31, 2007
|
$
|
4,402
|
Restructuring
liability balance, December 31, 2005
|
$
|
6,277
|
||
Less:
Cash reductions relating to real estate activities
|
(344
|
)
|
||
Restructuring
liability balance, March 31, 2006
|
$
|
5,933
|
8. |
Income
Taxes
|
9. |
Contingencies
and Litigation
|
10. |
Rights
Agreement
|
11. |
Recent
Accounting Pronouncements
|
ITEM 2. |
MANAGEMENT’S
DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
|
· |
costs
of license fees for operating systems software, advertising royalties
to
content rights owners and advertising distribution costs;
|
· |
costs
incurred for providing additional third party services to our customers;
and
|
· |
costs
of FCP solution and similar products
sold.
|
Three
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Revenues:
|
|
|
|||||
Internet
protocol (IP) services
|
54.3
|
%
|
63.5
|
%
|
|||
Data
center services
|
34.2
|
27.5
|
|||||
Content
delivery network (CDN) services
|
3.8
|
--
|
|||||
Other
|
7.7
|
9.0
|
|||||
Total
revenues
|
100.0
|
100.0
|
|||||
|
|||||||
Operating
expenses:
|
|||||||
Direct
cost of network, sales and services, exclusive of depreciation
and
amortization shown below:
|
|||||||
IP
services
|
19.1
|
21.5
|
|||||
Data
center services
|
26.7
|
24.3
|
|||||
CDN
services
|
1.2
|
--
|
|||||
Other
|
6.4
|
6.2
|
|||||
Direct
cost of amortization of acquired technology
|
1.2
|
0.3
|
|||||
Direct
cost of customer support
|
6.3
|
6.8
|
|||||
Product
development
|
2.3
|
2.9
|
|||||
Sales
and marketing
|
11.6
|
16.4
|
|||||
General
and administrative
|
14.6
|
12.2
|
|||||
Restructuring
and asset impairment
|
21.2
|
--
|
|||||
Acquired
in-process research and development
|
0.9
|
--
|
|||||
Depreciation
and amortization
|
9.2
|
8.9
|
|||||
Total
operating costs and expenses
|
120.7
|
99.5
|
|||||
(Loss)
income from operations
|
(20.7
|
)%
|
0.5
|
%
|
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Direct
cost of customer support
|
$
|
333
|
$
|
378
|
|||
Product
development
|
201
|
159
|
|||||
Sales
and marketing
|
526
|
585
|
|||||
General
and administrative
|
565
|
389
|
|||||
$
|
1,625
|
$
|
1,511
|
1. |
To
approve the issuance of shares of Internap common stock in the
merger
contemplated by the Agreement and Plan of Merger, dated as of October
12,
2006, by and among Intnerap, Ivy Acquisition Corp., and VitalStream,
and
the adoption of that Agreement and Plan of Merger.
|
2. |
To
adjourn the special meeting if necessary to solicit additional
proxies in
favor of proposal to issue additional shares.
|
Exhibit
Number
|
|
Description
|
10.1*
|
2007
Executive Bonus Award Incentive Plan.
|
|
31.1*
|
|
Rule
13a-14(a)/15d-14(a) Certification, executed by James P. DeBlasio,
President, Chief Executive Officer and Director of the
Company.
|
|
|
|
31.2*
|
|
Rule
13a-14(a)/15d-14(a) Certification, executed by David A. Buckel,
Vice
President and Chief Financial Officer of the Company.
|
|
|
|
32.1*
|
|
Section
1350 Certification, executed by James P. DeBlasio, President, Chief
Executive Officer and Director of the Company.
|
|
|
|
32.2*
|
|
Section
1350 Certification, executed by David A. Buckel, Vice President
and Chief
Financial Officer of the Company.
|
*
Documents
filed herewith.
|
|
|
|
|
INTERNAP
NETWORK SERVICES CORPORATION
(Registrant)
|
|
|
|
|
|
By:
|
/s/
David A. Buckel
|
|
David
A. Buckel
|
|
|
Vice
President and Chief Financial Officer
|
|
|
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
Date:
May 10, 2007
|