The overall financial position of Internet2 at the end of 2006 remained very similar to that at the end of 2005.
During 2006 Internet2 began deploying a dedicated nationwide network infrastructure for research and education. As part of the effort, Internet2 entered into a prepaid services agreement with Level 3 Communications, LLC. The agreement provides that Level 3 will provide dedicated services on a national fiber optic footprint for a period of seven years. The contract will be amortized ratably over this period as individual routes are placed in service.
Acquisition of equipment in connection with the network deployment was primarily responsible for the reported increase in property and equipment. Efforts to place these assets in service overlapped with the close of this fiscal year. Additionally, because many of these assets were delivered but not yet paid for by the close of the year, these transactions are also responsible for the reported increase in current liabilities.
During 2006 Internet2's membership in National LambdaRail, Inc. was discontinued. Internet2 considered a portion of its periodic NLR member fees to be an investment, and accounted for these transactions using the equity method as required by generally accepted accounting principals. This investment was written off in 2006 and is the major reason for the reported decline in investment assets.
Operating results for 2006 were largely similar to those reported in 2005, with the only significant difference being the write off of the NLR investment as the primary reason for the decline in other revenues. Reported Abilene fees and operating expenses were essentially unchanged from those reported in 2005, while there was a planned decline in grant income and a relatively small increase in reported membership dues.
