Equinix, Inc. (Nasdaq:EQIX), the leading provider of
network-neutral data centers and Internet exchange services, today
reported quarterly and year-end results for the period ended
December 31, 2007. Revenues were $138.7 million for the fourth
quarter, a 34% increase over the previous quarter, and $419.4
million for the year-ended December 31, 2007, a 46% increase over
2006 revenues. Recurring revenues, consisting primarily of
colocation, interconnection and managed services, were $131.6
million for the fourth quarter, a 33% increase over the previous
quarter, and $399.6 million for the year-ended December 31, 2007, a
46% increase over 2006. Non-recurring revenues were $7.1 million in
the quarter and $19.8 million for the year-ended December 31, 2007.
Cost of revenues were $92.5 million for the fourth quarter and
$263.7 million for the year-ended December 31, 2007, a 40% increase
over cost of revenues for 2006. Cost of revenues, excluding
depreciation, amortization, accretion and stock-based compensation
of $33.0 million for the fourth quarter and $98.3 million for the
year, were $59.5 million for the fourth quarter, a 48% increase
over the previous quarter, and $165.4 million for the year-ended
2007, a 48% increase over 2006. Cash gross margins, defined as
gross profit less depreciation, amortization, accretion and
stock-based compensation, divided by revenues, for the quarter were
57%, down from 61% the previous quarter and 63% the same quarter
last year. The reduction in cash gross margins reflects the first
full quarter�s results from the company�s operations in Europe.
Cash gross margins were 61% for the full year of 2007, the same as
in the prior year. Selling, general and administrative expenses
were $46.8 million for the fourth quarter and $146.5 million for
the year-ended December 31, 2007. Selling, general and
administrative expenses, excluding depreciation, amortization and
stock-based compensation of $14.6 million for the fourth quarter
and $47.9 million for the year, were $32.2 million for the fourth
quarter, a 40% increase over the previous quarter, and $98.6
million for 2007, a 34% increase over 2006. Net loss for the fourth
quarter was $6.1 million, including stock-based compensation
expense of $11.7 million. This represents a basic and diluted net
loss per share of $0.17 based on a weighted average share count of
36.0 million. Net loss for the year-ended December 31, 2007 was
$5.2 million, including stock-based compensation expense of $42.7
million, or a basic and diluted net loss per share of $0.16 based
on a weighted average share count of 32.1 million. EBITDA, defined
as income or loss from operations before depreciation,
amortization, accretion, stock-based compensation expense,
restructuring charges and any gains or losses from asset sales, for
the fourth quarter was $47.1 million, an increase of 16% from the
previous quarter, and $155.4 million for the year-ended 2007, up
52% from 2006. �Equinix delivered exceptional results in 2007,
creating a strong platform for growth in 2008,� said Steve Smith,
CEO of Equinix.��Although we continue to closely monitor our
leading indicators, we continue to see no let up in demand. Strong
day-to-day execution, a fully funded expansion plan, and a
continued focus on customer requirements will accelerate our market
leadership in 2008.� Capital expenditures in the fourth quarter
were $121.0 million, of which $17.9 million was attributed to
ongoing capital expenditures and $103.1 million was attributed to
expansion capital expenditures. Capital expenditures for the
year-ended December 31, 2007, excluding purchases of real estate
and the IXEurope acquisition, were $416.8 million, of which $43.6
million was attributed to ongoing capital expenditures and $373.2
million was attributed to expansion capital expenditures. In
addition, the Company invested $120.5 million to acquire properties
in the Los Angeles and Silicon Valley markets in 2007. The Company
generated cash from operating activities of $14.0 million for the
fourth quarter as compared to $48.7 million in the previous
quarter, as the Company settled outstanding obligations related to
the IXEurope acquisition. Cash generated from operating activities
for the year-ended December 31, 2007 was $121.0 million as compared
to $75.9 million in the previous year. Cash used in investing
activities was $103.4 million in the fourth quarter as compared to
$718.2 million in the previous quarter. Cash used in investing
activities for the year was $1.0 billion as compared to $155.0
million in the previous year. As of December 31, 2007, the
Company�s cash, cash equivalents and investments were $383.9
million, as compared to $156.5 million as of December 31, 2006.
Other Company Developments & Metrics On February 6, 2008,
Equinix acquired Virtu Secure Webservices B.V., a provider of
network-neutral data center services in the Netherlands On a
weighted average basis, excluding approximately 14,100 available
cabinet equivalents attributed to the Europe region at the end of
2007, the number of cabinets billing was approximately�21,400
representing an approximate utilization rate of�76% U.S.
interconnection service revenues were 20% of U.S. revenues for the
quarter and 21% for the year-ended December 31, 2007.
Interconnection services represented approximately 15% of total
worldwide revenues for the quarter and 18% for the year-ended
December 31, 2007 Business Outlook For the first quarter of 2008,
the Company expects revenues to be in the range of $151.0 to $152.0
million. Cash gross margins are expected to be approximately 58%.
Cash selling, general and administrative expenses are expected to
be approximately $34.0 million. EBITDA for the quarter is expected
to be between $53.0 and $54.0 million. Capital expenditures for the
first quarter of 2008 are expected to be $110.0 to $115.0 million,
comprised of approximately $20.0 million of ongoing capital
expenditures and $90.0 to $95.0 million of expansion capital
expenditures. For the full year of 2008, total revenues are
expected to be in the range of $650.0 to $665.0 million, including
approximately $10.0 million attributed to the Virtu acquisition.
Total year cash gross margins are expected to be approximately 60%.
Cash selling, general and administrative expenses are expected to
be approximately $135.0 million. EBITDA for the year is expected to
be between $251.0 and $257.0 million, including approximately $1.0
million attributed to the Virtu acquisition. Capital expenditures
for 2008 are expected to be in the range of $335.0 to $340.0
million, comprised of approximately $50.0 million of ongoing
capital expenditures and $285.0 to $290.0 million of expansion
capital expenditures. Expansion capital expenditures are for the
announced expansions in Amsterdam, Frankfurt, Hong Kong, London,
Los Angeles, Paris, Silicon Valley, Singapore, Sydney, Tokyo and
Washington, D.C. markets. The Company will discuss its results and
guidance on its quarterly conference call on Wednesday, February
13, 2008, at 5:30 p.m. ET (2:30 p.m. PT). To hear the conference
call live, please dial 210-839-8500 (domestic and international)
and reference the passcode (EQIX). A simultaneous live Webcast of
the call will be available over the Internet at www.equinix.com,
under the Investor Relations heading. A replay of the call will be
available beginning on Wednesday, February 13, 2008 at 7:30 p.m.
(ET) through March 12, 2008 by dialing 203-369-1627. In addition,
the Webcast will be available on the company's Web site at
www.equinix.com. No password is required for either method of
replay. About Equinix Equinix is the leading global provider of
network-neutral data center and interconnection services, offering
premium colocation, traffic exchange and outsourced IT
infrastructure solutions. Global enterprises, content companies,
systems integrators and network service providers look to Equinix
Internet Business Exchange (IBX�) centers for world-class
reliability and network diversity. Equinix IBX centers serve as
critical, core hubs for IP networks and Internet operations
worldwide. With 39 IBX centers located in 18 strategic markets
across North America, Europe and Asia-Pacific, Equinix enables
customers to reliably operate their mission-critical infrastructure
on a global basis. This press release contains forward-looking
statements that involve risks and uncertainties. Actual results may
differ materially from expectations discussed in such
forward-looking statements. Factors that might cause such
differences include, but are not limited to, the challenges of
acquiring, operating and constructing IBX centers and developing,
deploying and delivering Equinix services; unanticipated costs or
difficulties relating to the integration of�companies�we have or
will acquire into Equinix; a failure to receive significant revenue
from customers in recently built out or acquired�data centers;
failure to complete any financing arrangements contemplated from
time to time; competition from existing and new competitors; the
ability to generate sufficient cash flow or otherwise obtain funds
to repay new or outstanding indebtedness; the loss or decline in
business from our key customers; the results of any litigation
relating to past stock option grants and practices; and other risks
described from time to time in Equinix's filings with the
Securities and Exchange Commission. In particular, see Equinix's
recent quarterly and annual reports filed with the Securities and
Exchange Commission, copies of which are available upon request
from Equinix. Equinix does not assume any obligation to update the
forward-looking information contained in this press release.
Equinix and IBX are registered trademarks of Equinix, Inc. Internet
Business Exchange is a trademark of Equinix, Inc. Non-GAAP
Financial Measures Equinix continues to provide all information
required in accordance with generally accepted accounting
principles (GAAP), but it believes that evaluating its ongoing
operating results may be difficult if limited to reviewing only
GAAP financial measures. Accordingly, Equinix uses non-GAAP
financial measures, such as non-GAAP revenues, EBITDA, cash cost of
revenues, cash gross margins, cash operating expenses (also known
as cash selling, general and administrative expenses or cash
SG&A), non-GAAP net income (loss), free cash flow and adjusted
free cash flow to evaluate its operations. In presenting these
non-GAAP financial measures, Equinix excludes certain non-cash or
non-recurring items that it believes are not good indicators of the
Company's current or future operating performance. These non-cash
or non-recurring items are a non-recurring revenue adjustment with
respect to 2006 results, depreciation, amortization, accretion,
stock-based compensation, restructuring charges and, with respect
to 2006 results, the gain on Honolulu IBX sale, and with respect to
2007 results, the loss from conversion and extinguishment of debt
and gain on EMS sale. Recent legislative and regulatory changes
encourage use of and emphasis on GAAP financial metrics and require
companies to explain why non-GAAP financial metrics are relevant to
management and investors. Equinix excludes these non-cash or
non-recurring items in order for Equinix's lenders, investors, and
industry analysts who review and report on the Company, to better
evaluate the Company's operating performance and cash spending
levels relative to its industry sector and competitor base. Equinix
excludes depreciation expense as these charges primarily relate to
the initial construction costs of our IBX centers and do not
reflect our current or future cash spending levels to support our
business. Our IBX centers are long-lived assets, and have an
economic life greater than ten years. The construction costs of our
IBX centers do not recur and future capital expenditures remain
minor relative to our initial investment. This is a trend we expect
to continue. In addition, depreciation is also based on the
estimated useful lives of our IBX centers. These estimates could
vary from actual performance of the asset, are based on historic
costs incurred to build out our IBX centers, and are not indicative
of current or expected future capital expenditures. Therefore,
Equinix excludes depreciation from its operating results when
evaluating its operations. In addition, in presenting the non-GAAP
financial measures, Equinix excludes amortization expense related
to certain intangible assets, as it represents a cost that may not
recur and is not a good indicator of the Company's current or
future operating performance. Equinix excludes accretion expense,
both as it relates to its asset retirement obligations as well as
its accrued restructuring charge liabilities, as these expenses
represent costs, which Equinix believes are not meaningful in
evaluating the Company's current operations. Equinix excludes
non-cash stock-based compensation expense as it represents expense
attributed to stock awards that have no current or future cash
obligations. As such, we, and our investors and analysts, exclude
this stock-based compensation expense when assessing the cash
generating performance of our operations. Equinix excludes
restructuring charges from its non-GAAP financial measures. The
restructuring charges relate to the Company's decision to exit
leases for excess space adjacent to several of our IBX centers,
which we do not intend to build out now or in the future. With
respect to its 2006 results, Equinix reports non-GAAP revenues and
excludes the gain on Honolulu IBX sale. Non-GAAP revenues exclude a
revenue adjustment recorded in the fourth quarter of 2006 in
connection with our adoption of Staff Accounting Bulletin No. 108,
which is a one-time adjustment and will not recur. The gain on
Honolulu IBX sale represents a unique transaction for the Company
and future sales of IBX centers are not expected. The Honolulu
market was not considered a core, strategic market for the Company.
With respect to its 2007 results, Equinix excludes the loss from
conversion and extinguishment of debt and the gain from EMS sale.
The loss from conversion and extinguishment of debt represents
activity that is not typical for the company. The gain on EMS sale
represents a unique transaction for the Company and future sales of
other service offerings are not expected. Management believes such
items as restructuring charges, the gain on the sale of an IBX
center and a service offering and the loss from conversion and
extinguishment of debt are unique transactions that are not
expected to recur, and consequently, does not consider these items
as a normal component of expenses or income related to current and
ongoing operations. Our management does not itself, nor does it
suggest that investors should, consider such non-GAAP financial
measures in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. However, we have
presented such non-GAAP financial measures to provide investors
with an additional tool to evaluate our operating results in a
manner that focuses on what management believes to be our core,
ongoing business operations. Management believes that the inclusion
of these non-GAAP financial measures provide consistency and
comparability with past reports and provide a better understanding
of the overall performance of the business and its ability to
perform in subsequent periods. Equinix believes that if it did not
provide such non-GAAP financial information, investors would not
have all the necessary data to analyze Equinix effectively.
Investors should note, however, that the non-GAAP financial
measures used by Equinix may not be the same non-GAAP financial
measures, and may not be calculated in the same manner, as that of
other companies. In addition, whenever Equinix uses such non-GAAP
financial measures, it provides a reconciliation of non-GAAP
financial measures to the most closely applicable GAAP financial
measure. Investors are encouraged to review the related GAAP
financial measures and the reconciliation of these non-GAAP
financial measures to their most directly comparable GAAP financial
measure. Equinix does not provide forward-looking guidance for
certain financial data, such as depreciation, amortization,
accretion, net income (loss) from operations, cash generated from
operating activities and cash used in investing activities, and as
a result, is not able to provide a reconciliation of GAAP to
non-GAAP financial measures for forward-looking data. Equinix
intends to calculate the various non-GAAP financial measures in
future periods consistent with how it was calculated for the three
and twelve months ended December 31, 2007 and 2006, presented
within this press release. EQUINIX, INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS - GAAP PRESENTATION(in thousands, except
per share detail)(unaudited) � � � � � � Three Months Ended Twelve
Months Ended December 31, September 30, December 31, December 31,
December 31, 2007 2007 2006 2007 2006 � Recurring revenues $
131,578 $ 99,288 $ 76,401 $ 399,656 $ 273,160 Non-recurring
revenues 7,136 4,494 3,371 19,786 13,755 Revenues 138,714 103,782
79,772 419,442 286,915 � Cost of revenues 92,480 62,891 50,334
263,745 188,379 Gross profit 46,234 40,891 29,438 155,697 98,536 �
Operating expenses: Sales and marketing 13,117 9,630 9,439 40,719
32,619 General and administrative 33,672 25,182 18,637 105,794
72,123 Restructuring charges - - - 407 1,527 Gains on asset sales
(1,338) - (9,647) (1,338) (9,647) Total operating expenses 45,451
34,812 18,429 145,582 96,622 � Income (loss) from operations 783
6,079 11,009 10,115 1,914 � Interest and other income (expense):
Interest income 5,066 3,309 1,562 15,406 6,627 Interest expense
(12,094) (5,662) (3,810) (27,334) (14,630) Other income (expense)
(121) 3,167 (81) 3,047 (245) Loss on conversion and extinguishment
of debt - (2,554) - (5,949) - Total interest and other, net (7,149)
(1,740) (2,329) (14,830) (8,248) � Net income (loss) before income
taxes and cumulative effect of a change in accounting principle
(6,366) 4,339 8,680 (4,715) (6,334) � Income taxes 293 (215) 431
(473) (439) � � � � � Net income (loss) before cumulative effect of
a change in accounting principle (6,073) 4,124 9,111 (5,188)
(6,773) � Cumulative effect of a change in accounting principle - -
- - 376 � � � � � Net income (loss) $ (6,073) $ 4,124 $ 9,111 $
(5,188) $ (6,397) � Net income (loss) per share: � Basic net income
(loss) per share $ (0.17) $ 0.13 $ 0.31 $ (0.16) $ (0.22) � Diluted
net income (loss) per share $ (0.17) $ 0.12 $ 0.28 $ (0.16) $
(0.22) � Shares used in computing basic net income (loss) per share
36,003 31,683 29,131 32,136 28,551 � Shares used in computing
diluted net income (loss) per share 36,003 33,112 32,700 32,136
28,551 � EQUINIX, INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS - NON-GAAP PRESENTATION(in thousands)(unaudited) � � � �
� � Three Months Ended Twelve Months Ended December 31, September
30, December 31, December 31, December 31, 2007 2007 2006 2007 2006
� Recurring revenues $ 131,578 $ 99,288 $ 76,401 $ 399,656 $
273,160 Non-recurring revenues 7,136 4,494 3,371 19,786 13,755
Revenues (1) 138,714 103,782 79,772 419,442 286,915 Non-GAAP
revenue adjustment (1) - - 1,179 - 1,179 Non-GAAP revenues (2)
138,714 103,782 80,951 419,442 288,094 � Cash cost of revenues (3)
59,501 40,240 30,287 165,411 112,142 Cash gross profit (4) 79,213
63,542 50,664 254,031 175,952 � Cash operating expenses (5): Cash
sales and marketing expenses(6) 9,079 7,283 7,622 29,913 25,110
Cash general and administrative expenses (7) 23,072 15,620 12,770
68,728 48,770 Total cash operating expenses (8) 32,151 22,903
20,392 98,641 73,880 � EBITDA (9) $ 47,062 $ 40,639 $ 30,272 $
155,390 $ 102,072 � � Cash gross margins (10) 57% 61% 63% 61% 61% �
EBITDA flow-through rate (11) 18% 45% 74% 41% 48% � � (1) � This
adjustment represents the impact of the Company's adoption of Staff
Accounting Bulletin No. 108, which was issued in September 2006. �
� � � � (2) The geographic split of our revenues is presented
below: � U.S. revenues $ 90,417 $ 83,685 $ 68,851 $ 324,878 $
247,245 Asia-Pacific revenues 16,261 14,643 12,100 57,074 40,849
Europe revenues 32,036 5,454 - 37,490 - Revenues $ 138,714 $
103,782 $ 80,951 $ 419,442 $ 288,094 � Revenues on a services basis
is presented below: � Colocation $ 104,533 $ 75,282 $ 56,537 $
305,215 $ 201,772 Interconnection 20,514 18,798 15,501 73,685
53,811 Managed infrastructure 6,305 4,830 4,152 19,519 16,197
Rental 226 378 211 1,237 1,380 Recurring revenues 131,578 99,288
76,401 399,656 273,160 Non-recurring revenues 7,136 4,494 4,550
19,786 14,934 Revenues $ 138,714 $ 103,782 $ 80,951 $ 419,442 $
288,094 � (3) We define cash cost of revenues as cost of revenues
less depreciation, amortization, accretion and stock-based
compensation as presented below: � Cost of revenues $ 92,480 $
62,891 $ 50,334 $ 263,745 $ 188,379 Depreciation, amortization and
accretion expense (31,870) (21,773) (19,194) (94,206) (72,999)
Stock-based compensation expense (1,109) (878) (853) (4,128)
(3,238) Cash cost of revenues $ 59,501 $ 40,240 $ 30,287 $ 165,411
$ 112,142 � The geographic split of our cash cost of revenues is
presented below: � U.S. cash cost of revenues $ 32,970 $ 30,677 $
25,019 $ 118,044 $ 93,436 Asia-Pacific cash cost of revenues 7,105
6,536 5,268 24,914 18,706 Europe cash cost of revenues 19,426 3,027
- 22,453 - Cash cost of revenues $ 59,501 $ 40,240 $ 30,287 $
165,411 $ 112,142 � (4) We define cash gross profit as revenues
less cash cost of revenues (as defined above). � (5) We define cash
operating expenses as operating expenses less depreciation,
amortization, stock-based compensation, restructuring charges and
gains on asset sales. We also refer to cash operating expenses as
cash selling, general and administrative expenses or "cash
SG&A". � (6) We define cash sales and marketing expenses as
sales and marketing expenses less depreciation, amortization and
stock-based compensation as presented below: � Sales and marketing
expenses $ 13,117 $ 9,630 $ 9,439 $ 40,719 $ 32,619 Depreciation
and amortization expense (1,553) (298) (15) (1,881) (60)
Stock-based compensation expense (2,485) (2,049) (1,802) (8,925)
(7,449) Cash sales and marketing expenses $ 9,079 $ 7,283 $ 7,622 $
29,913 $ 25,110 � (7) We define cash general and administrative
expenses as general and administrative expenses less depreciation,
amortization and stock-based compensation as presented below: �
General and administrative expenses $ 33,672 $ 25,182 $ 18,637 $
105,794 $ 72,123 Depreciation and amortization expense (2,495)
(2,000) (1,295) (7,388) (3,273) Stock-based compensation expense
(8,105) (7,562) (4,572) (29,678) (20,080) Cash general and
administrative expenses $ 23,072 $ 15,620 $ 12,770 $ 68,728 $
48,770 � (8) Our cash operating expenses, or cash SG&A, as
defined above, is presented below: � Cash sales and marketing
expenses $ 9,079 $ 7,283 $ 7,622 $ 29,913 $ 25,110 Cash general and
administrative expenses 23,072 15,620 12,770 68,728 48,770 Cash
SG&A $ 32,151 $ 22,903 $ 20,392 $ 98,641 $ 73,880 � The
geographic split of our cash operating expenses, or cash SG&A,
is presented below: � U.S. cash SG&A $ 20,508 $ 17,565 $ 16,899
$ 74,472 $ 61,086 Asia-Pacific cash SG&A 4,693 3,953 3,493
15,834 12,794 Europe cash SG&A 6,950 1,385 - 8,335 - Cash
SG&A $ 32,151 $ 22,903 $ 20,392 $ 98,641 $ 73,880 � (9) We
define EBITDA as income (loss) from operations less depreciation,
amortization, accretion, stock-based compensation expense,
restructuring charges and gains on asset sales as presented below:
� Income (loss) from operations $ 783 $ 6,079 $ 11,009 $ 10,115 $
1,914 Depreciation, amortization and accretion expense 35,918
24,071 20,504 103,475 76,332 Stock-based compensation expense
11,699 10,489 7,227 42,731 30,767 Restructuring charges - - - 407
1,527 Gains on asset sales (1,338) - (9,647) (1,338) (9,647) EBITDA
$ 47,062 $ 40,639 $ 30,272 $ 155,390 $ 102,072 � The geographic
split of our EBITDA is presented below: � U.S. income (loss) from
operations $ 3,533 $ 6,386 $ 9,695 $ 11,533 $ 76 U.S. depreciation,
amortization and accretion expense 23,630 20,175 19,448 83,870
72,340 U.S. stock-based compensation expense 9,776 8,882 6,258
36,552 27,248 U.S. restructuring charges - - - 407 1,527 U.S. gain
on asset sale - - (9,647) - (9,647) U.S. EBITDA 36,939 35,443
26,933 132,362 92,723 � Asia-Pacific income (loss) from operations
665 312 1,314 2,616 1,838 Asia-Pacific depreciation, amortization
and accretion expense 3,763 2,584 1,056 9,768 3,992 Asia-Pacific
stock-based compensation expense 1,373 1,258 969 5,280 3,519
Asia-Pacific restructuring charges - - - - - Asia-Pacific gain on
asset sale (1,338) - - (1,338) - Asia-Pacific EBITDA 4,463 4,154
3,339 16,326 9,349 � Europe income (loss) from operations (3,415)
(619) - (4,034) - Europe depreciation, amortization and accretion
expense 8,525 1,312 - 9,837 - Europe stock-based compensation
expense 550 349 - 899 - Europe restructuring charges - - - - -
Europe gain on asset sale - - - - - Europe EBITDA 5,660 1,042 -
6,702 - � EBITDA � $ 47,062 $ 40,639 $ 30,272 $ 155,390 $ 102,072 �
(10) We define cash gross margins as cash gross profit divided by
revenues. � Our cash gross margins by geographic region is
presented below: � U.S. cash gross margins 64% 63% 64% 64% 62% �
Asia-Pacific cash gross margins 56% 55% 56% 56% 54% � Europe cash
gross margins 39% 44% n/a 40% n/a � (11) We define EBITDA
flow-through rate as incremental EBITDA growth divided by
incremental revenue growth as follows: � EBITDA - current period $
47,062 $ 40,639 $ 30,272 $ 155,390 $ 102,072 Less EBITDA - prior
period (40,639) (35,311) (24,927) (102,072) (70,139) EBITDA growth
$ 6,423 $ 5,328 $ 5,345 $ 53,318 $ 31,933 � Revenues - current
period $ 138,714 $ 103,782 $ 80,951 $ 419,442 $ 288,094 Less
Non-GAAP revenues - prior period (103,782) (91,837) (73,726)
(288,094) (221,057) Non-GAAP revenue growth $ 34,932 $ 11,945 $
7,225 $ 131,348 $ 67,037 � EBITDA flow-through rate 18% 45% 74% 41%
48% � EQUINIX, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in
thousands)(unaudited) � � � Assets December 31, December 31, 2007
2006 � Cash, cash equivalents and investments $ 383,900 $ 156,481
Accounts receivable, net 60,089 26,864 Property and equipment, net
1,162,720 546,395 Goodwill and other intangible assets, net 510,133
17,441 Debt issuance costs, net 21,333 3,006 Prepaid expenses
11,070 7,160 Deposits 16,731 3,932 Taxes receivable 3,437 5
Deferred tax assets 6,404 6,910 Other assets 6,051 3,638 Total
assets $ 2,181,868 $ 771,832 � Liabilities and Stockholders' Equity
� Accounts payable $ 14,816 $ 4,515 Accrued expenses 50,280 22,754
Accrued property and equipment 76,504 23,337 Accrued restructuring
charges 12,140 41,572 Capital lease and other financing obligations
97,412 94,699 Mortgage and loan payable 330,496 98,896 Convertible
debt 678,236 86,250 Deferred rent 26,912 20,924 Deferred
installation revenue 26,537 11,694 Deferred recurring revenue 9,556
6,732 Asset retirement obligations 8,759 3,985 Customer deposits
8,844 910 Deferred tax liabilities 25,955 - Other liabilities 989
536 Total liabilities 1,367,436 416,804 � Common stock 37 29
Additional paid-in capital 1,376,915 904,573 Accumulated other
comprehensive income (3,888) 3,870 Accumulated deficit (558,632)
(553,444) Total stockholders' equity 814,432 355,028 � Total
liabilities and stockholders' equity $ 2,181,868 $ 771,832 � � � �
� � Ending headcount by geographic region is as follows: � U.S.
headcount 546 442 Asia-pacific headcount 187 174 Europe headcount
178 - Total headcount 911 616 � EQUINIX, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS - GAAP PRESENTATION(in
thousands)(unaudited) � � � � � � Three Months Ended Twelve Months
Ended December 31, September 30, December 31, December 31, December
31, 2007 2007 2006 2007 2006 � Net cash provided by operating
activities $ 13,881 $ 48,427 $ 25,859 $ 120,020 $ 75,412 Net cash
used in investing activities (103,519) (721,257) (36,792)
(1,054,725) (158,470) Net cash provided by financing activities
38,001 783,240 8,755 1,145,013 46,107 Effect of foreign currency
exchange rates on cash and cash equivalents (1,182) (1,556) 102
(2,238) 247 Net increase (decrease) in cash and cash equivalents
(52,819) 108,854 (2,076) 208,070 (36,704) Cash and cash equivalents
at beginning of period 343,452 234,598 84,639 82,563 119,267 Cash
and cash equivalents at end of period $ 290,633 $ 343,452 $ 82,563
$ 290,633 $ 82,563 � � In addition to the above condensed
consolidated statements of cash flows presented on a GAAP basis,
the Company presents non-GAAP condensed consolidated statements of
cash flows which combine the Company's short-term and long-term
investments with our cash and cash equivalents in an effort to
present our total unrestricted cash and equivalent balances as
presented herein in our condensed consolidated balance sheets. � �
Following is a reconciliation of our cash and cash equivalents to
our cash, cash equivalents and investments, which is the basis of
how our non-GAAP condensed consolidated statements of cash flows
are presented on the following page: � � Cash and cash equivalents
$ 290,633 $ 343,452 $ 82,563 $ 290,633 $ 82,563 Short-term
investments 63,301 64,005 48,831 63,301 48,831 Long-term
investments 29,966 28,905 25,087 29,966 25,087 � � � � � Cash, cash
equivalents and investments as presented on condensed balance sheet
presented herein $ 383,900 $ 436,362 $ 156,481 $ 383,900 $ 156,481
� EQUINIX, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
NON-GAAP PRESENTATION (1)(in thousands)(unaudited) � � � � � �
Three Months Ended Twelve Months Ended December 31, September 30,
December 31, December 31, December 31, 2007 2007 2006 2007 2006 �
Cash flows from operating activities: Net income (loss) $ (6,073) $
4,124 $ 9,111 $ (5,188) $ (6,397) Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion 35,918 24,071 20,504
103,475 76,332 Stock-based compensation 11,699 10,489 7,227 42,731
30,767 Debt issuance costs 1,242 812 237 3,227 880 Gains on asset
sales (1,338) - (9,647) (1,338) (9,647) Restructuring charges - - -
407 1,527 Gain on foreign currency hedge - (1,494) - (1,494) -
Other reconciling items 66 (529) 40 (318) (314) Changes in
operating assets and liabilities: Accounts receivable (10,929)
(5,658) (2,758) (17,997) (9,666) Accounts payable and accrued
expenses (29,761) 17,786 4,286 (6,682) 4,756 Accrued restructuring
charges (3,569) (3,203) (3,591) (13,669) (12,804) Other assets and
liabilities 16,792 2,275 938 17,800 466 Net cash provided by
operating activities 14,047 48,673 26,347 120,954 75,900 Cash flows
from investing activities: Purchase of IXEurope, less cash acquired
(63) (541,729) - (541,792) - Purchase of Los Angeles IBX property -
(19) - (49,059) - Purchase of San Jose IBX property - (64,971) -
(71,471) - Purchase of Chicago IBX property - - - - (9,766)
Purchases of other property and equipment (121,002) (88,921)
(59,387) (416,811) (162,291) Accrued property and equipment 16,035
(23,939) 4,740 39,975 7,554 Proceeds from asset sales 1,657 - 9,530
1,657 9,530 Other investing activities - 1,347 - 877 8 Net cash
used in investing activities (103,373) (718,232) (45,117)
(1,036,624) (154,965) Cash flows from financing activities:
Proceeds from stock options and employee stock purchase plans 8,788
10,406 10,080 36,356 38,836 Proceeds from follow-on common stock
offering (38) 339,946 - 339,908 - Proceeds from convertible
subordinated notes - 395,986 - 645,986 - Proceeds from mortgage and
loans payable 30,852 49,491 40,000 149,606 40,000 Proceeds from
borrowings under credit line - - - - 40,000 Repayment of borrowings
under credit line - - (40,000) - (70,000) Repayment of capital
lease and other financing obligations (961) (500) (376) (2,406)
(1,506) Repayment of mortgage payable (577) (543) (269) (2,150)
(1,104) Debt issuance costs (63) (11,546) (558) (22,287) (811)
Other financing activities - - (122) - 692 Net cash provided by
(used in) financing activities 38,001 783,240 8,755 1,145,013
46,107 Effect of foreign currency exchange rates on cash and cash
equivalents (1,137) (1,285) 150 (1,924) 584 Net increase (decrease)
in cash, cash equivalents and investments (52,462) 112,396 (9,865)
227,419 (32,374) Cash, cash equivalents and investments at
beginning of period 436,362 323,966 166,346 156,481 188,855 Cash,
cash equivalents and investments at end of period $ 383,900 $
436,362 $ 156,481 $ 383,900 $ 156,481 � � Free cash flow (2) $
(89,326) $ (669,559) $ (18,770) $ (915,670) $ (79,065) � Adjusted
free cash flow (3) $ (90,920) $ (62,840) $ (28,300) $ (255,005) $
(78,829) � � (1) � The cash flow statements presented herein
combine our short-term and long-term investments with our cash and
cash equivalents in an effort to present our total unrestricted
cash and equivalent balances. In our quarterly filings with the SEC
on Forms 10-Q and 10-K, the purchases, sales and maturities of our
short-term and long-term investments will be presented as
activities within the investing activities portion of the cash flow
statements. � � � � � (2) We define free cash flow as net cash
provided by operating activities plus net cash used in investing
activities (excluding the purchases, sales and maturities of
short-term and long-term investments) as presented below: � Net
cash provided by operating activities as presented above $ 14,047 $
48,673 $ 26,347 $ 120,954 $ 75,900 Net cash used in investing
activities as presented above (103,373) (718,232) (45,117)
(1,036,624) (154,965) Free cash flow $ (89,326) $ (669,559) $
(18,770) $ (915,670) $ (79,065) � (3) We define adjusted free cash
flow as free cash flow (as defined above) excluding any purchases
or sales of real estate and acquisitions and proceeds from asset
sales as presented below: � Free cash flow (as defined above) $
(89,326) $ (669,559) $ (18,770) $ (915,670) $ (79,065) Less
purchase of IXEurope, less cash acquired 63 541,729 - 541,792 -
Less purchase of Los Angeles IBX property - 19 - 49,059 - Less
purchase of San Jose IBX property - 64,971 - 71,471 - Less purchase
of Chicago IBX property - - - - 9,766 Less proceeds from asset
sales (1,657) - (9,530) (1,657) (9,530) Adjusted free cash flow $
(90,920) $ (62,840) $ (28,300) $ (255,005) $ (78,829)
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