Internap Reports First Quarter 2008 Financial Results

INTERNAP NETWORK SERVICES CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
		Three Months Ended March 31,
		2008			2007(2)
Revenues:
Internet protocol (IP) services		$	31,124		$	29,316
Data center services			25,185			18,098
Content delivery network (CDN) services			5,744			2,052
Other			—			4,068
Total revenues			62,053			53,534
Operating costs and expenses:
Direct costs of network, sales and services, exclusive of depreciation and amortization shown below:
IP services			11,290			10,340
Data center services			18,124			14,305
CDN services			1,949			663
Other			—			3,321
Direct costs of amortization of acquired technology			1,229			653
Direct costs of customer support			4,365			3,388
Product development			2,291			1,255
Sales and marketing			8,829			6,189
General and administrative			8,003			7,832
Restructuring and asset impairment			—			11,349
Acquired in-process research and development			—			450
Depreciation and amortization			5,381			4,912
(Gain) loss on disposals of property and equipment			(16	)		(4	)
Total operating costs and expenses			61,445			64,653
Income (loss) from operations			608			(11,119	)
Non-operating (income) expense:
Interest income			(701	)		(693	)
Interest expense			310			223
Other, net			81			2
Total non-operating (income) expense			(310	)		(468	)
Income (loss) before income taxes and equity in earnings of equity method investment			918			(10,651	)
Provision for income taxes			251			50
Equity in (earnings) of equity-method investment, net of taxes			(72	)		(6	)
Net income (loss)		$	739		$	(10,695	)
Net income (loss) per share:
Basic		$	0.02		$	(0.26	)
Diluted		$	0.01		$	(0.26	)
Weighted average shares used in per share calculations:
Basic			49,110			40,997
Diluted			49,330			40,997
2 Revenues and direct costs of network sales and services, exclusive of depreciation and amortization, for the three months ended March 31, 2007 have been reclassified to conform to the current presentation.

INTERNAP NETWORK SERVICES CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
	March 31, 2008			December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	49,850		$	52,030
Short-term investments in marketable securities		12,429			19,569
Accounts receivable, net of allowance of $5,124 and $5,470, respectively		32,956			36,429
Inventory		502			304
Prepaid expenses and other assets		10,445			8,464
Deferred tax asset, current portion		749			479
Total current assets		106,931			117,275
Property and equipment, net of accumulated depreciation of $170,421 and $165,543, respectively		70,596			65,491
Investments		8,085			1,138
Intangible assets, net of accumulated amortization of $25,482 and $23,921, respectively		41,448			43,008
Goodwill		190,677			190,677
Restricted cash		2,127			4,120
Deferred tax asset, non-current		2,610			3,014
Deposits and other assets		3,497			2,287
Total assets	$	425,971		$	427,010
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, current portion	$	3,667		$	2,413
Accounts payable		18,150			19,624
Accrued liabilities		8,589			10,159
Deferred revenue, current portion		3,765			4,807
Capital lease obligations, current portion		833			805
Restructuring liability, current portion		2,051			2,396
Other current liabilities		110			108
Total current liabilities		37,165			40,312
Notes payable, less current portion		16,121			17,354
Deferred revenue, less current portion		2,842			2,275
Capital lease obligations, less current portion		233			452
Restructuring liability, less current portion		7,389			7,697
Deferred rent		11,567			11,011
Deferred tax liability		515			398
Other long-term liabilities		849			878
Total liabilities		76,681			80,377
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 200,000 shares authorized, none issued or outstanding		—			—
Common stock, $0.001 par value; 60,000 shares authorized; 50,257 and 49,759 shares issued at March 31, 2008 and December 31, 2007, respectively; and 50,234 and 49,759 shares outstanding at March 31, 2008 and December 31, 2007, respectively		50			50
Additional paid-in capital		1,210,532			1,208,191
Accumulated deficit		(861,271	)		(862,010	)
Accumulated items of other comprehensive income		114			402
Treasury stock, at cost, 23 shares at March 31, 2008		(135	)		—
Total stockholders' equity		349,290			346,633
Total liabilities and stockholders' equity	$	425,971		$	427,010

INTERNAP NETWORK SERVICES CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
		Three months ended March 31,
		2008				2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	739			$	(10,695	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Asset impairment			—				2,454
Acquired in-process research and development			—				450
Depreciation and amortization			6,610				5,565
Gain on disposal of assets			(16	)			(4	)
Provision for doubtful accounts and billing adjustments			655