3. ACQUISITION

On December 30, 2011, we completed the acquisition of the stock of Voxel Holdings, Inc. (“Voxel”). Voxel is a provider of hosting, scalable network resources, content distribution and cloud computing solutions. We acquired Voxel to advance our position in hosting services. We will integrate Voxel’s operations into our data center services segment.

We acquired Voxel for a total purchase price of $33.3 million for all of its outstanding stock, which includes accrued contingent consideration of $5.0 million, present valued at $4.6 million, to be paid if we receive certain technology deliverables. We include the accrued contingent consideration as a long-term liability on the accompanying balance sheets, as the expected delivery date is on or before December 30, 2013. In addition, we incurred $0.6 million in acquisition-related expenses, which we expensed and included in “General and administrative” on the accompanying consolidated statements of operations. We funded the purchase price and acquisition costs by drawing-down our term loan, as discussed in note 11.

Purchase Price Allocation

We allocated the aggregate purchase price for Voxel to the net tangible and intangible assets based upon their fair values as of December 30, 2011, as set forth below. We recorded the excess of the purchase price over the net tangible and intangible assets as goodwill. We based the allocation of the purchase price upon a valuation for property and equipment and intangible assets and carrying value for the remaining assets and liabilities. Certain of our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). We expect that none of the goodwill will be deductible for tax purposes. Our purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	930
Account receivable and other current assets		1,081
Property and equipment		4,795
Goodwill		20,007
Intangible assets		15,700
Other assets		336
Accounts payable and accrued expenses		(1,636	)
Deferred revenue		(368	)
Capital lease obligations		(1,288	)
Other long-term liabilities		(137	)
Deferred income tax liability		(6,140	)
	$	33,280

The intangible assets acquired are as follows (in thousands):

	Fair Value		Weighted Average Useful Life
Customer relationships	$	7,800	10 years
Internally used software		3,400	5 years
Software for sale		4,300	8 years
Trade names		200	10 years
Total intangible assets	$	15,700

Unaudited Supplemental Financial Information

As the acquisition occurred on December 30, 2011 and was not material to our business, we did not record Voxel’s revenue and expense from the date of acquisition.

Our unaudited pro forma results presented below, including Voxel, for the year ended December 31, 2011 and 2010 are presented as if the acquisition had been completed on January 1, 2010. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2010.

(in thousands)	Year Ended December 31,
	2011			2010
Unaudited pro forma revenue	$	257,999		$	254,409
Unaudited pro forma net loss		(12,241	)		(2,820	)(1)

(1)

The 2010 unaudited pro forma net loss includes a nonrecurring deferred tax benefit recorded as a result of Voxel purchase accounting. The $6.1 million deferred tax liability resulted in a deferred tax benefit once consolidated with our balance sheet, as it lowered our consolidated net deferred tax asset resulting in the release of our valuation allowance.