Akamai Technologies, Inc.
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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: February 28, 2003
(Date of earliest event reported)

AKAMAI TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Charter)
         
Delaware   0-27275   04-3432319
 
 
(State or Other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)

8 Cambridge Center, Cambridge, Massachusetts 02142
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (617) 444-3000

 

TABLE OF CONTENTS

Item 5. Other Events.
Akamai Technologies, Inc. Condensed Consolidated Balance Sheet
Akamai Technologies, Inc. Condensed Consolidated Statements of Operations
SIGNATURES

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Item 5. Other Events.

     On February 28, 2003, we settled a lawsuit filed against us in June 2001 by a former employee alleging breach of contract. Under the terms of the settlement, we agreed to make a $3.55 million payment, of which $1.75 million will be reimbursed by our insurance carriers. We have recorded the net amount of $1.8 million as general and administrative expenses, increased other current assets by $1.75 million and increased accrued expenses by $3.55 million as of December 31, 2002.

     On January 28, 2003, we issued a press release that included our unaudited condensed consolidated statement of operations for the three and twelve months ended December 31, 2002 and unaudited condensed consolidated balance sheet as of December 31, 2002. On that date, we also held a telephone conference with the investing public to review those financial results during which we announced that we had positive earnings before income taxes, depreciation and amortization, or EBITDA. Subsequent to the date of the press release and the telephone conference, the parties participated in a mediation that resulted in the settlement. Accordingly, we recorded adjustments to our consolidated financial statements as of December 31, 2002. Furthermore, as a result of the adjustments above, our EBITDA was materially reduced by $1.8 million. EBITDA is, however, an unaudited financial metric that could be subject to additional adjustments over time. A revised reconciliation of net loss calculated in accordance with generally accepted accounting principles in the United States of America to normalized net loss and EBITDA, giving effect only to the adjustments related to settlement of this lawsuit, is available on our web site at www.akamai.com. We are not including the information contained on our web site as part of, or incorporating by reference into, this Current Report on Form 8-K.

     Set forth below is a reconciliation from our consolidated financial statements included in our press release on January 28, 2003 to the adjusted consolidated financial statements.

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Akamai Technologies, Inc.
Condensed Consolidated Balance Sheet
(dollar amounts in thousands)
(unaudited)

                                 
            Per Press Release           Adjusted
            December 31, 2002   Adjustment   December 31, 2002
           
 
 
   
Assets
                        
 
Cash and cash equivalents
   $ 111,262     $ —     $ 111,262  
 
Restricted cash and marketable securities
     3,664               3,664  
 
Accounts receivable, net
     17,574               17,574  
 
Prepaid expenses and other current assets
     7,433       1,750       9,183  
 
 
    
     
     
 
     
Current assets:
     139,933       1,750       141,683  
 
Restricted cash
     10,244               10,244  
 
Property and equipment, net
     63,159               63,159  
 
Goodwill and other intangible assets, net
     7,410               7,410  
 
Other assets
     7,367               7,367  
 
 
    
     
     
 
     
Total assets
   $ 228,113     $ 1,750     $ 229,863  
 
 
    
     
     
 
   
Liabilities and stockholders’ (deficit) equity
                        
 
Accounts payable and accrued expenses
   $ 50,359     $ 3,550     $ 53,909  
 
Other current liabilities
     27,455               27,455  
 
 
    
     
     
 
     
Current liabilities:
     77,814       3,550       81,364  
 
Other liabilities
     16,589               16,589  
 
Convertible notes
     300,000               300,000  
 
 
    
     
     
 
     
Total liabilities
     394,403       3,550       397,953  
Stockholders’ (deficit) equity
     (166,290 )     (1,800 )     (168,090 )
 
 
    
     
     
     
 
     
Total liabilities and stockholders’ (deficit) equity
   $ 228,113     $ 1,750     $ 229,863  
 
 
    
     
     
     
 

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Akamai Technologies, Inc.
Condensed Consolidated Statements of Operations
(dollar amounts in thousands, except per share data)
(unaudited)

                                                     
        Three Months Ended   Year Ended
       
 
        Per Press Release           Adjusted   Per Press Release           Adjusted
        December 31,           December 31,   December 31,           December 31,
        2002   Adjustment   2002   2002   Adjustment   2002
       
 
 
 
 
 
Revenue
   $ 35,352     $ —     $ 35,352     $ 144,976     $ —     $ 144,976  
Cost and operating expenses:
                                                
 
Cost of revenue (before network-related depreciation)
     6,603               6,603       38,371               38,371  
 
Research and development
     2,845               2,845       17,158               17,158  
 
Sales and marketing
     11,760               11,760       53,068               53,068  
 
General and administrative
     11,091       1,800       12,891       54,044       1,800       55,844  
 
Amortization of CNN advertising
     1,371               1,371       5,634               5,634  
 
Amortization of goodwill and other intangible assets
     2,231               2,231       11,930               11,930  
 
Depreciation
     17,141               17,141       78,488               78,488  
 
Equity-related compensation
     5,562               5,562       21,195               21,195  
 
Restructuring charge
     26,675               26,675       45,824               45,824  
 
    
     
     
     
     
     
 
   
Total cost and operating expenses
     85,279       1,800       87,079       325,712       1,800       327,512  
 
    
     
     
     
     
     
 
Operating loss
     (49,927 )     (1,800 )     (51,727 )     (180,736 )     (1,800 )     (182,536 )
Interest expense, net
     4,053               4,053       15,310               15,310  
(Gain) loss on investments
     (299 )             (299 )     6,099               6,099  
 
    
     
     
     
     
     
 
Loss before provision for income taxes
     (53,681 )     (1,800 )     (55,481 )     (202,145 )     (1,800 )     (203,945 )
Provision for income taxes
     123               123       492               492  
 
    
     
     
     
     
     
 
Net loss
   $ (53,804 )   $ (1,800 )   $ (55,604 )   $ (202,637 )   $ (1,800 )   $ (204,437 )
 
    
     
     
     
     
     
 
Basic and diluted net loss per share
   $ (0.47 )           $ (0.48 )   $ (1.80 )           $ (1.81 )
Weighted average common shares outstanding
     114,866               114,866       112,766               112,766  

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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.

     
Dated:  March 13, 2003   AKAMAI TECHNOLOGIES, INC.
     
     
              /s/ Kathryn Jorden Meyer
   
    Kathryn Jorden Meyer
Vice President, General Counsel and Secretary

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