Document

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported):
August 2, 2016
LIMELIGHT NETWORKS, INC.
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
 
 
Delaware
 
001-33508
 
20-1677033
(State or other jurisdiction of
incorporation or organization)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification Number)
222 South Mill Avenue, 8th Floor
Tempe, AZ 85281
(Address, including zip code, of principal executive offices)
(602) 850-5000
(Registrant’s telephone number, including area code)
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 Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 





This Form 8-K/A amends certain information provided in the earnings release (the “Earnings Release”) attached as Exhibit 99.1 to Limelight Network, Inc.’s (the “Company”) Current Report on Form 8-K furnished by the Company to the Securities and Exchange Commission on July 27, 2016 (the “Original Report”). The revised information will also be included in the Company's Quarterly Report on Form 10-Q, to be filed later this week.
Item 2.02
Results of Operations and Financial Condition.
 
On July 27, 2016, the Company issued the Original Report, which included a press release regarding its financial results for the quarter ended June 30, 2016, and certain other information. Subsequent to the Original Report, the Company entered into a settlement and licensing agreement with Akamai Technologies to bring the longstanding battle over the '703 patent to a conclusion. A press release announcing the settlement and licensing agreement was attached as Exhibit 99.1 of the Current Report on Form 8-K furnished on August 1, 2016. The agreement settles all asserted and unasserted claims with respect to the licensed patents, which allows us to operate our business with greater flexibility going forward. The terms of the agreement require us to pay $54 million to be paid over twelve equal quarterly installments beginning on August 1, 2016.  As a result, this is a recognized subsequent event in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), the Company has taken a charge in operating expenses in the quarter ended June 30, 2016 for the full amount of $54 million, instead of the $51 million judgment that was reported in last week’s Earnings Release. This revision has the effect of increasing the U.S. GAAP net loss for the quarter ended June 30, 2016 of $54.9 million, or $0.53 per basic share to $57.9 million, or $0.56 per basic share. It also results in an increase of the U.S. GAAP net loss for the six months ended June 30, 2016 of $60.8 million, or $0.59 per basic share to $63.9 million, or $0.62 per basic share.
The updated financial tables as of June 30, 2016 and for the three and six months ended June 30, 2016 follow:


Financial Tables
Limelight Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
30,885

 
$
44,680

Restricted cash
62,790

 
—

Marketable securities
—

 
28,322

Accounts receivable, net
24,872

 
26,795

Income taxes receivable
135

 
170

Deferred income taxes
80

 
89

Prepaid expenses and other current assets
6,278

 
9,578

Total current assets
125,040

 
109,634

Property and equipment, net
30,647

 
36,143

Marketable securities, less current portion
40

 
40

Deferred income taxes, less current portion
1,284

 
1,252

Goodwill
76,242

 
76,143

Other assets
1,903

 
2,415

Total assets
$
235,156

 
$
225,627

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
7,630

 
$
9,137

Deferred revenue
2,469

 
2,890

Capital lease obligations
1,119

 
466

Income taxes payable
165

 
204

Provision for litigation
18,000

 
—

Other current liabilities
10,391

 
10,857

Total current liabilities
39,774

 
23,554

Long-term debt
12,790

 
—

Capital lease obligations, less current portion
3,008

 
1,436

Deferred income taxes
145

 
137

Deferred revenue, less current portion
52

 
92

Provision for litigation, less current portion
36,000

 
—

Other long-term liabilities
1,963

 
2,311

Total liabilities
93,732

 
27,530

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued
and outstanding
—

 
—

Common stock, $0.001 par value; 300,000 shares authorized; 104,653 and 102,299 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively
104

 
102

Additional paid-in capital
483,903

 
477,202

Accumulated other comprehensive loss
(10,304
)
 
(10,812
)
Accumulated deficit
(332,279
)
 
(268,395
)
Total stockholders’ equity
141,424

 
198,097

Total liabilities and stockholders’ equity
$
235,156

 
$
225,627











Limelight Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
March 31,
 
Percent
 
June 30,
 
Percent
 
June 30,
 
June 30,
 
Percent
 
2016
 
2016
 
Change
 
2015
 
Change
 
2016
 
2015
 
Change
Revenues
$
43,560

 
$
41,422

 
5
 %
 
$
43,795

 
(1
)%
 
$
84,982

 
$
86,124

 
(1
)%
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services (1)
20,271

 
20,110

 
1
 %
 
21,271

 
(5
)%
 
40,380

 
42,928
 
(6
)%
Depreciation — network
4,489

 
4,668

 
(4
)%
 
4,376

 
3
 %
 
9,157

 
8,528
 
7
 %
Total cost of revenue
24,760

 
24,778

 
—
 %
 
25,647

 
(3
)%
 
49,537

 
51,456
 
(4
)%
Gross profit
18,800

 
16,644

 
13
 %
 
18,148

 
4
 %
 
35,445

 
34,668
 
2
 %
Gross profit percentage
43.2
%
 
40.2
%
 
 
 
41.4
%
 
 
 
41.7
%
 
40.3
%
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative (1)
7,241

 
6,808

 
6
 %
 
6,081

 
19
 %
 
14,049

 
12,932
 
9
 %
Sales and marketing (1)
8,117

 
8,903

 
(9
)%
 
10,002

 
(19
)%
 
17,020

 
20,278
 
(16
)%
Research and development (1)
6,289

 
6,325

 
(1
)%
 
7,646

 
(18
)%
 
12,614

 
13,909
 
(9
)%
Depreciation and amortization
626

 
623

 
—
 %
 
635

 
(1
)%
 
1,249

 
1,276
 
(2
)%
Provision for litigation
54,000

 
—

 
NA

 
—

 
NA

 
54,000

 
—
 
NA

Total operating expenses
76,273

 
22,659

 
237
 %
 
24,364

 
213
 %
 
98,932

 
48,395
 
104
 %
Operating loss
(57,473
)
 
(6,015
)
 
855
 %
 
(6,216
)
 
825
 %
 
(63,487
)
 
(13,727)
 
362
 %
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(279
)
 
(179
)
 
56
 %
 
—

 
NA

 
(459
)
 
(4)
 
11,375
 %
Interest income
8

 
6

 
33
 %
 
75

 
(89
)%
 
14

 
149
 
(91
)%
Other, net
(79
)
 
400

 
(120
)%
 
(131
)
 
(40
)%
 
321

 
1,682
 
(81
)%
Total other income (expense)
(350
)
 
227

 
(254
)%
 
(56
)
 
525
 %
 
(124
)
 
1,827
 
(107
)%
Loss before income taxes
(57,823
)
 
(5,788
)
 
899
 %
 
(6,272
)
 
822
 %
 
(63,611
)
 
(11,900)
 
435
 %
Income tax expense
115

 
158

 
(27
)%
 
90

 
28
 %
 
273

 
145
 
88
 %
Net loss
$
(57,938
)
 
$
(5,946
)
 
874
 %
 
$
(6,362
)
 
811
 %
 
(63,884
)
 
(12,045)
 
430
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic and diluted
$
(0.56
)
 
$
(0.06
)
 
 
 
$
(0.06
)
 
 
 
(0.62
)
 
(0.12
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used in per share calculation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted
103,904

 
102,693

 
 
 
99,841

 
 
 
103,299

 
99,239

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes share-based compensation (see supplemental table for figures)
 
 
 
 
 
 














Limelight Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
2016
 
2016
 
2015
 
2016
 
2015
Operating activities
 
 
 
 
 
 
 
 
 
Net loss
$
(57,938
)
 
$
(5,946
)
 
$
(6,362
)
 
$
(63,884
)
 
$
(12,045
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
5,115

 
5,291

 
5,011

 
10,406

 
9,804

Share-based compensation
3,293

 
3,496

 
3,280

 
6,789

 
6,349

Provision for litigation
54,000

 
—

 
—

 
54,000

 
—

Foreign currency remeasurement (gain) loss
467

 
(301
)
 
96

 
166

 
(1,595
)
Deferred income taxes
(68
)
 
82

 
(62
)
 
14

 
(115
)
Gain on sale of property and equipment
(134
)
 
—

 
—

 
(134
)
 
—

Accounts receivable charges (recoveries)
83

 
(116
)
 
224

 
(33
)
 
470

Amortization of premium on marketable securities
—

 
19

 
48

 
19

 
106

Realized loss on marketable securities
—

 
32

 
—

 
32

 
—

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable
2,497

 
(540
)
 
(4,312
)
 
1,957

 
(9,292
)
Prepaid expenses and other current assets
(191
)
 
3,583

 
(1,352
)
 
3,392

 
(202
)
Income taxes receivable
51

 
(13
)
 
13

 
38

 
11

Other assets
166

 
342

 
217

 
508

 
1,009

Accounts payable and other current liabilities
1,566

 
(4,005
)
 
3,389

 
(2,439
)
 
1,666

Deferred revenue
(934
)
 
473

 
520

 
(461
)
 
317

Income taxes payable
72

 
(127
)
 
52

 
(55
)
 
—

Other long term liabilities
(1,237
)
 
900

 
(175
)
 
(337
)
 
(444
)
Net cash provided by (used in) operating activities
6,808

 
3,170

 
587

 
9,978

 
(3,961
)
Investing activities
 
 
 
 
 
 
 
 
 
Purchases of marketable securities
—

 
—

 
(1,965
)
 
—

 
(11,921
)
Sale and maturities of marketable securities
—

 
28,315

 
1,920

 
28,315

 
11,760

Change in restricted cash
—

 
(62,790
)
 
—

 
(62,790
)
 
—

Purchases of property and equipment
(259
)
 
(1,421
)
 
(5,395
)
 
(1,680
)
 
(12,061
)
Net cash (used in) provided by investing activities
(259
)
 
(35,896
)
 
(5,440
)
 
(36,155
)
 
(12,222
)
Financing activities
 
 
 
 
 
 
 
 
 
Principal payments on capital lease obligations
(319
)
 
(159
)
 
—

 
(478
)
 
(358
)
Payment of employee tax withholdings related to restricted stock vesting
(298
)
 
(646
)
 
(837
)
 
(944
)
 
(1,944
)
Cash paid for purchase of common stock
—

 
—

 
—

 
—

 
(957
)
Proceeds from line of credit
—

 
12,790

 
—

 
12,790

 
—

Proceeds from employee stock plans
813

 
43

 
544

 
856

 
2,519

Net cash provided by (used in) financing activities
196

 
12,028

 
(293
)
 
12,224

 
(740
)
Effect of exchange rate changes on cash and cash equivalents
(1
)
 
159

 
140

 
158

 
(342
)
Net increase (decrease) in cash and cash equivalents
6,744

 
(20,539
)
 
(5,006
)
 
(13,795
)
 
(17,265
)
Cash and cash equivalents, beginning of period
24,141

 
44,680

 
45,508

 
44,680

 
57,767

Cash and cash equivalents, end of period
$
30,885

 
$
24,141

 
$
40,502

 
$
30,885

 
$
40,502



















Limelight Networks, Inc.
Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net Income (Loss)
(In thousands)
(Unaudited
 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
March 31, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
 
Amount
 
Per Share
 
Amount
 
Per Share
 
Amount
 
Per Share
 
Amount
 
Per Share
 
Amount
 
Per Share
U.S. GAAP net loss
$
(57,938
)
 
$
(0.56
)
 
$
(5,946
)
 
$
(0.06
)
 
$
(6,362
)
 
$
(0.06
)
 
$
(63,884
)
 
$
(0.62
)
 
$
(12,045
)
 
$
(0.12
)
Provision for litigation
54,000

 
0.52

 
—

 
—

 
—

 
—

 
54,000

 
0.52

 
—

 
—

Share-based compensation
3,293

 
0.03

 
3,496

 
0.03

 
3,280

 
0.03

 
6,789

 
0.07

 
6,349

 
0.06

Litigation expenses
1,271

 
0.01

 
1,178

 
0.01

 
(1,174
)
 
(0.01
)
 
2,449

 
0.02

 
(1,155
)
 
(0.01
)
Amortization of intangible assets
6

 
—

 
6

 
—

 
201

 
—

 
12

 
—

 
399

 
—

Non-GAAP net income (loss)
$
632

 
$
0.01

 
$
(1,266
)
 
$
(0.01
)
 
$
(4,055
)
 
$
(0.04
)
 
$
(634
)
 
$
(0.01
)
 
$
(6,452
)
 
$
(0.07
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares used in per share calculation:
 
 
103,904

 
 
 
102,693

 
 
 
99,841

 
 
 
103,299

 
 
 
99,239


Limelight Networks, Inc.
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA
(In thousands)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
2016
 
2016
 
2015
 
2016
 
2015
U.S. GAAP net loss
$
(57,938
)
 
$
(5,946
)
 
$
(6,362
)
 
$
(63,884
)
 
$
(12,045
)
Depreciation and amortization
5,115

 
5,291

 
5,011

 
10,406

 
9,804

Interest expense
279

 
179

 
—

 
459

 
4

Interest and other (income) expense
71

 
(406
)
 
56

 
(335
)
 
(1,831
)
Income tax expense
115

 
158

 
90

 
273

 
145

EBITDA
$
(52,358
)
 
$
(724
)
 
$
(1,205
)
 
$
(53,081
)
 
$
(3,923
)
Provision for litigation
54,000

 
—

 
—

 
54,000

 
—

Share-based compensation
3,293

 
3,496

 
3,280

 
6,789

 
6,349

Litigation expenses
1,271

 
1,178

 
(1,174
)
 
2,449

 
(1,155
)
Adjusted EBITDA
$
6,206

 
$
3,950

 
$
901

 
$
10,157

 
$
1,271

The information in this Form 8-K/A and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
 
Item 9.01
Financial Statements and Exhibits.
 
(d) Exhibits
 
 
 
 
Exhibit
Number
 
Description
99.1
 
Limelight Networks, Inc. Press Release dated July 27, 2016.*

* Previously furnished as an exhibit to the Original Report.






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.
 
 
 
 
 
 
 
 
 
 
 
 
LIMELIGHT NETWORKS, INC.
 
 
 
 
Dated: August 2, 2016
 
 
 
By:
 
/s/ Michael DiSanto
 
 
 
 
 
 
Michael DiSanto
Chief Administrative and Legal Officer & Secretary






EXHIBIT INDEX
 
 
 
 
Exhibit
Number
 
Description
99.1
 
Limelight Networks, Inc. Press Release dated July 27, 2016.*

* Previously furnished as an exhibit to the Original Report.