Equinix Reports Fourth Quarter and Year End 2011 Results

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  • Reported 2011 annual revenues of $1,606.8 million, a 32% increase over the previous year
  • Reported 2011 annual adjusted EBITDA of $738.4 million, a 36% increase over the previous year
  • Repurchased 0.9 million shares in the fourth quarter at an average price of $99.57 per share
  • Reiterated 2012 annual guidance of revenues to be greater than $1,870.0 million and adjusted EBITDA to be greater than $850.0 million

REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Equinix, Inc. (Nasdaq:EQIX), a provider of global data center services, today reported quarterly and year-end results for the period ended December 31, 2011.

Revenues were $431.3 million for the fourth quarter, a 3% increase over the previous quarter and a 25% increase over the same quarter last year. Revenues for the year ended December 31, 2011, were $1,606.8 million, a 32% increase over 2010 revenues. This result included $17.3 million in revenues from ALOG for the quarter and $46.9 million in revenues from ALOG for the year ended December 31, 2011. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $410.7 million for the fourth quarter, a 3% increase over the previous quarter and $1,528.5 million for the year ended December 31, 2011, a 32% increase over 2010. Non-recurring revenues were $20.6 million in the quarter and $78.3 million for the year ended December 31, 2011.

“2011 was a pivotal year for Equinix,” said Steve Smith, president and CEO of Equinix. “We continue to extend our competitive advantage through our global platform and the strength of our ecosystems, evidenced by growth in customers expanding their geographic footprint and deploying new infrastructure applications.”

Cost of revenues were $229.3 million for the fourth quarter, a 1% increase from the previous quarter, and $867.6 million for the year ended December 31, 2011, a 29% increase over 2010. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $85.8 million for the fourth quarter and $319.3 million for the year, were $143.5 million for the fourth quarter, a 1% decrease over the previous quarter, and $548.3 million for the year ended December 31, 2011, a 27% increase over 2010. Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter, were 67%, up from 65% for the previous quarter and up from 64% for the same quarter last year. Cash gross margins were 66% for the full year of 2011, up from 65% for the prior year.

Selling, general and administrative expenses were $117.0 million for the fourth quarter, a 7% increase over the previous quarter and $425.0 million for the year ended December 31, 2011, a 28% increase over 2010. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $27.3 million for the fourth quarter and $104.8 million for the year, were $89.7 million for the fourth quarter, a 10% increase over the previous quarter, and $320.2 million for 2011, a 31% increase over 2010.

Restructuring charges were $1.3 million for the fourth quarter and $3.5 million for the year ended December 31, 2011, which were primarily related to an excess space lease in the New York metro area. Acquisition costs were $0.8 million for the fourth quarter and $3.5 million for the year ended December 31, 2011, which were primarily related to the ALOG acquisition.

Interest expense was $55.2 million for the fourth quarter, an 8% increase over the last quarter, and $181.3 million for the year ended December 31, 2011, a 29% increase over 2010. The Company recorded a loss on debt extinguishment of $5.4 million for the fourth quarter of 2010 and a loss on debt extinguishment and interest rate swaps, net, of $10.2 million for the year ended December 31, 2010. The Company had no debt extinguishment activity for the year ended December 31, 2011. The Company recorded an income tax expense of $13.8 million for the fourth quarter as compared to income tax expense of $5.3 million in the prior quarter and income tax expense of $38.4 million for the year ended December 31, 2011 as compared to income tax expense of $13.0 million in the prior year.

Net income attributable to Equinix for the fourth quarter was $17.8 million. This represents a basic net income per share attributable to Equinix of $0.36 and diluted net income per share attributable to Equinix of $0.35 based on a weighted average share count of 47.2 million and 48.1 million, respectively, for the fourth quarter of 2011. Net income attributable to Equinix for the year ended December 31, 2011 was $94.0 million. This represents a basic net income per share attributable to Equinix of $1.76 and diluted net income per share attributable to Equinix of $1.72 based on a weighted share count of 47.0 million and 47.9 million, respectively, for the year ended December 31, 2011.

Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges and acquisition costs, for the fourth quarter was $198.1 million, an increase of 3% over the previous quarter and $738.4 million for the year ended December 31, 2011, a 36% increase over 2010.

“Demand for data center services is strong, supply and demand dynamics are favorable and pricing remains firm. This gives us confidence to continue investing in our business to capitalize on our long term growth opportunity and drive strong future returns for shareholders,” concluded Smith.

Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the fourth quarter were $189.8 million, of which $145.5 million was attributed to expansion capital expenditures and $44.3 million was attributed to ongoing capital expenditures. Capital expenditures for the year ended December 31, 2011 were $685.3 million, of which $557.6 million was attributed to expansion capital expenditures and $127.7 million was attributed to ongoing capital expenditures. In addition, the Company purchased real estate in Paris and Frankfurt for cash in the year ended December 31, 2011 totaling $28.1 million.

The Company repurchased 0.9 million shares of its common stock under the share repurchase program in the fourth quarter for an average price of $99.57 per share for total consideration of $86.7 million.

The Company generated cash from operating activities of $187.3 million for the fourth quarter as compared to $141.9 million in the previous quarter. Cash generated from operating activities for the year ended December 31, 2011 was $587.3 million as compared to $392.9 million in the previous year. Cash used in investing activities was $194.3 million in the fourth quarter as compared to cash used in investing activities of $808.7 million in the previous quarter. Cash used in investing activities for the year ended December 31, 2011 was $1,499.1 million as compared to $601.0 million in the previous year. Cash used in financing activities was $83.4 million for the fourth quarter, which was primarily related to share repurchases that were settled during the quarter, and cash provided by financing activities was $748.7 million for the year ended December 31, 2011.

As of December 31, 2011, the Company’s cash, cash equivalents and investments were $1,076.3 million, as compared to $592.8 million as of December 31, 2010.

Company Metrics and Q4 Results Presentation

  • A presentation to accompany Equinix’s Q4 Results conference call, as well as the Company’s Non-Financial Metrics tracking sheet, will be available on the Investors section of Equinix’s web site at www.equinix.com/investors

Business Outlook

For the first quarter of 2012, the Company expects revenues to be in the range of $443.0 to $446.0 million. Cash gross margins are expected to range between 66% and 67%. Cash selling, general and administrative expenses are expected to range between $90.0 and $95.0 million. Adjusted EBITDA is expected to be between $200.0 and $205.0 million. Capital expenditures are expected to be approximately $180.0 to $200.0 million, comprised of approximately $30.0 million of ongoing capital expenditures and $150.0 to $170.0 million of expansion capital expenditures.

For the full year of 2012, total revenues are expected to be greater than $1,870.0 million. Total year cash gross margins are expected to approximate 66%. Cash selling, general and administrative expenses are expected to range between $370.0 and $400.0 million. Adjusted EBITDA for the year is expected to be greater than $850.0 million. Capital expenditures for 2012 are expected to be in the range of $700.0 and $800.0 million, comprised of approximately $135.0 million of ongoing capital expenditures and $565.0 to $665.0 million for expansion capital expenditures.

The Company will discuss its results and guidance on its quarterly conference call on Wednesday, February 15, 2012, at 5:30 p.m. ET (2:30 p.m. PT). A presentation to accompany the call will be available on the Company’s website at www.equinix.com/investors. To hear the conference call live, please dial 210-234-8004 (domestic and international) and reference the passcode (EQIX). A simultaneous live Webcast of the call will also be available at www.equinix.com/investors.

A replay of the call will be available beginning on Wednesday, February 15, 2012 at 7:30 p.m. (ET) through March 15, 2012 by dialing 402-998-1353 and referencing the passcode (2012). In addition, the webcast will be available on the Company's web site at www.equinix.com/investors. No password is required for the webcast.

About Equinix

Equinix, Inc. (Nasdaq: EQIX) connects businesses with partners and customers around the world through a global platform of high performance data centers, containing dynamic ecosystems and the broadest choice of networks. Platform Equinix connects more than 4,000 enterprises, cloud, digital content and financial companies including more than 690 network service providers to help them grow their businesses, improve application performance and protect their vital digital assets. Equinix operates in 38 strategic markets across the Americas, EMEA and Asia-Pacific and continually invests in expanding its platform to power customer growth. http://www.equinix.com

Non-GAAP Financial Measures

Equinix provides 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 adjusted EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), adjusted EBITDA margins, free cash flow and adjusted free cash flow to evaluate its operations. In presenting these non-GAAP financial measures, Equinix excludes certain items that it believes are not good indicators of the Company's current or future operating performance. These items are depreciation, amortization, accretion of asset retirement obligations and accrued restructuring charges, stock-based compensation, restructuring charges and acquisition costs. Legislative and regulatory requirements 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 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 competitors.

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 10 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 charges, as these expenses represent costs which Equinix believes are not meaningful in evaluating the Company's current operations. Equinix excludes stock-based compensation expense as it primarily represents expense attributed to equity awards that have no current or future cash obligations. As such, we, and many 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 did not intend to build out, or our decision to reverse such restructuring charges or severance charges related to the Switch and Data acquisition. Equinix excludes acquisition costs from its non-GAAP financial measures. The acquisition costs relate to costs the Company incurs in connection with business combinations. Management believes such items as restructuring charges and acquisition costs are non-core transactions; however, these types of costs will or may occur in future periods.

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 provides consistency and comparability with past reports and provides 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, stock-based compensation, 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 they were calculated for the periods presented within this press release.

Forward Looking Statements

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 acquired 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; 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. International Business Exchange is a trademark of Equinix, Inc.

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION
(in thousands, except per share data)
(unaudited)
             
 
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
  2011     2011     2010     2011     2010  
 
Recurring revenues $ 410,734 $ 397,351 $ 326,338 $ 1,528,522 $ 1,160,418
Non-recurring revenues   20,578     20,250     18,906     78,320     59,916  
Revenues 431,312 417,601 345,244 1,606,842 1,220,334
 
Cost of revenues   229,340     228,153     193,559     867,641     674,667  
Gross profit  

201,972

    189,448     151,685     739,201     545,667  
 
Operating expenses:
Sales and marketing 45,322 43,070 31,518 159,091 111,104
General and administrative 71,674 65,976 64,820 265,932 220,781
Restructuring charges 1,295 1,587 491 3,481 6,734
Acquisition costs   805     699     380     3,534     12,337  
Total operating expenses   119,096     111,332     97,209     432,038     350,956  
 
Income from operations   82,876     78,116     54,476     307,163     194,711  
 
Interest and other income (expense):
Interest income 754 679 208 2,280 1,515
Interest expense (55,151 ) (51,114 ) (38,822 ) (181,303 ) (140,475 )
Other-than-temporary impairment recovery on investments - - - - 3,626
Loss on debt extinguishment and interest rate swaps, net - - (5,356 ) - (10,187 )
Other income (expense)   1,383     (1,694 )   497     2,821     690  
Total interest and other, net   (53,014 )   (52,129 )   (43,473 )   (176,202 )   (144,831 )
 
Income before income taxes 29,862 25,987 11,003 130,961 49,880
 
Income tax benefit (expense)   (13,769 )   (5,348 )   2,757     (38,351 )   (12,999 )
 
Net income 16,093 20,639 13,760 92,610 36,881
 
Net loss (income) attributable to redeemable non-controlling interests 1,717 (320 ) - 1,394 -
         
Net income attributable to Equinix $ 17,810   $ 20,319   $ 13,760   $ 94,004   $ 36,881  
 
Net income per share attributable to Equinix:
 
Basic net income per share (1) $ 0.36   $ 0.21   $ 0.30   $ 1.76   $ 0.84  
 
Diluted net income per share (1) $ 0.35   $ 0.20   $ 0.29   $ 1.72   $ 0.82  
 
Shares used in computing basic net income per share   47,235     47,202     46,059     46,956     43,742  
 
Shares used in computing diluted net income per share   48,083     47,943     46,871     47,898     44,810  
       
 
(1)

The net income attributable to Equinix used in the computation of basic and diluted net income per share attributable to Equinix is presented below:

 
Net income $ 16,093 $ 20,639 $ 13,760 $ 92,610 $ 36,881
Adjustments attributable to redeemable non-controlling interests:   880     (10,959 )   -     (10,082 )   -  
Net income attributable to Equinix, basic 16,973 9,680 13,760 82,528 36,881
Interest on convertible debt   -     -     -     -     -  
Net income attributable to Equinix, diluted $ 16,973   $ 9,680   $ 13,760   $ 82,528   $ 36,881  
 

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,
  2011     2011     2010     2011     2010  
 
Recurring revenues $ 410,734 $ 397,351 $ 326,338 $ 1,528,522 $ 1,160,418
Non-recurring revenues   20,578     20,250     18,906     78,320     59,916  
Revenues (1)   431,312     417,601     345,244     1,606,842     1,220,334  
 
Cash cost of revenues (2)   143,504     144,560     125,456     548,253     431,034  
Cash gross profit (3)   287,808     273,041     219,788     1,058,589     789,300  
 
Cash operating expenses (4):
Cash sales and marketing expenses (5) 37,085 34,504 25,523 127,954 87,037
Cash general and administrative expenses (6)   52,592     46,909     45,318     192,272     157,428  
Total cash operating expenses (7)   89,677     81,413     70,841     320,226     244,465  
 
Adjusted EBITDA (8) $ 198,131   $ 191,628   $ 148,947   $ 738,363   $ 544,835  
 
Cash gross margins (9)   67 %   65 %   64 %   66 %   65 %
 
Adjusted EBITDA margins (10)   46 %   46 %   43 %   46 %   45 %
 
Adjusted EBITDA flow-through rate (11)   47 %   45 %   17 %   50 %   40 %
         
 
(1) The geographic split of our revenues on a services basis is presented below:
 
Americas Revenues:
 
Colocation $ 202,840 $ 193,317 $ 166,477 $ 760,193

$

598,631
Interconnection 52,383 49,432 44,443 195,901 145,381
Managed infrastructure 12,476 15,966 779 37,915 2,885
Rental   463     550     642     2,006     1,751  
Recurring revenues 268,162 259,265 212,341 996,015 748,648
Non-recurring revenues   9,341     9,589     8,307     36,758     27,527  
Revenues   277,503     268,854     220,648     1,032,773     776,175  
 
EMEA Revenues:
 
Colocation 80,174 77,709 64,439 300,728 235,749
Interconnection 3,600 3,446 2,607 13,061 8,861
Managed infrastructure 3,401 3,691 3,002 13,771 11,240
Rental   238     262     134     795     720  
Recurring revenues 87,413 85,108 70,182 328,355 256,570
Non-recurring revenues   7,835     7,216     8,569     29,867     25,223  
Revenues   95,248     92,324     78,751     358,222     281,793  
 
Asia-Pacific Revenues:
 
Colocation 43,686 41,874 34,546 161,000 122,056
Interconnection 6,789 6,378 4,948 24,326 16,767
Managed infrastructure   4,684     4,726     4,321     18,826     16,377  
Recurring revenues 55,159 52,978 43,815 204,152 155,200
Non-recurring revenues   3,402     3,445     2,030     11,695     7,166  
Revenues   58,561     56,423     45,845     215,847     162,366  
 
Worldwide Revenues:
 
Colocation 326,700 312,900 265,462 1,221,921 956,436
Interconnection 62,772 59,256 51,998 233,288 171,009
Managed infrastructure 20,561 24,383 8,102 70,512 30,502
Rental   701     812     776     2,801     2,471  
Recurring revenues 410,734 397,351 326,338 1,528,522 1,160,418
Non-recurring revenues   20,578     20,250     18,906     78,320     59,916  
Revenues $ 431,312   $ 417,601   $ 345,244   $ 1,606,842   $ 1,220,334  
 
(2)

We define cash cost of revenues as cost of revenues less depreciation, amortization, accretion and stock-based compensation as presented below:

 
Cost of revenues $ 229,340 $ 228,153 $ 193,559 $ 867,641 $ 674,667
Depreciation, amortization and accretion expense (84,289 ) (82,020 ) (66,978 ) (313,424 ) (237,551 )
Stock-based compensation expense   (1,547 )   (1,573 )   (1,125 )   (5,964 )   (6,082 )
Cash cost of revenues $ 143,504   $ 144,560   $ 125,456   $ 548,253   $ 431,034  
 
The geographic split of our cash cost of revenues is presented below:
 
Americas cash cost of revenues $ 84,664 $ 86,503 $ 72,651 $ 323,263 $ 249,898
EMEA cash cost of revenues 36,677 36,930 34,808 144,315 121,777
Asia-Pacific cash cost of revenues   22,163     21,127     17,997     80,675     59,359  
Cash cost of revenues $ 143,504   $ 144,560   $ 125,456   $ 548,253   $ 431,034  
 
(3) We define cash gross profit as revenues less cash cost of revenues (as defined above).
 
(4)

We define cash operating expenses as operating expenses less depreciation, amortization, stock-based compensation, restructuring charges and acquisition costs. We also refer to cash operating expenses as cash selling, general and administrative expenses or "cash SG&A".

 
(5)

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 $ 45,322 $ 43,070 $ 31,518 $ 159,091 $ 111,104
Depreciation and amortization expense (4,308 ) (4,413 ) (3,645 ) (16,579 ) (11,401 )
Stock-based compensation expense   (3,929 )   (4,153 )   (2,350 )   (14,558 )   (12,666 )
Cash sales and marketing expenses $ 37,085   $ 34,504   $ 25,523   $ 127,954   $ 87,037  
 
(6)

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 $ 71,674 $ 65,976 $ 64,820 $ 265,932 $ 220,781
Depreciation and amortization expense (6,086 ) (5,586 ) (5,508 ) (22,650 ) (14,612 )
Stock-based compensation expense   (12,996 )   (13,481 )   (13,994 )   (51,010 )   (48,741 )
Cash general and administrative expenses $ 52,592   $ 46,909   $ 45,318   $ 192,272   $ 157,428  
 
(7) Our cash operating expenses, or cash SG&A, as defined above, is presented below:
 
Cash sales and marketing expenses $ 37,085 $ 34,504 $ 25,523 $ 127,954 $ 87,037
Cash general and administrative expenses   52,592     46,909     45,318     192,272     157,428  
Cash SG&A $ 89,677   $ 81,413   $ 70,841   $ 320,226   $ 244,465  
 
The geographic split of our cash operating expenses, or cash SG&A, is presented below:
 
Americas cash SG&A $ 59,881 $ 54,838 $ 45,469 $ 213,030 $ 162,554
EMEA cash SG&A 18,853 17,427 16,212 70,761 54,334
Asia-Pacific cash SG&A   10,943     9,148     9,160     36,435     27,577  
Cash SG&A $ 89,677   $ 81,413   $ 70,841   $ 320,226   $ 244,465  
 
(8)

We define adjusted EBITDA as income from operations plus depreciation, amortization, accretion, stock-based compensation expense, restructuring charges and acquisition costs as presented below:

 
Income from operations $ 82,876 $ 78,116 $ 54,476 $ 307,163 $ 194,711
Depreciation, amortization and accretion expense 94,683 92,019 76,131 352,653 263,564
Stock-based compensation expense 18,472 19,207 17,469 71,532 67,489
Restructuring charges 1,295 1,587 491 3,481 6,734
Acquisition costs   805     699     380     3,534     12,337  
Adjusted EBITDA $ 198,131   $ 191,628   $ 148,947   $ 738,363   $ 544,835  
 
The geographic split of our adjusted EBITDA is presented below:
 
Americas income from operations $ 57,145 $ 51,659 $ 37,067 $ 205,195 $ 121,118
Americas depreciation, amortization and accretion expense 59,597 58,414 51,448 228,739 173,811
Americas stock-based compensation expense 14,669 15,176 13,620 56,214 50,966
Americas restructuring charges 1,295 1,587 491 3,481 6,734
Americas acquisition costs   252     677     (98 )   2,851     11,094  
Americas adjusted EBITDA   132,958     127,513     102,528     496,480     363,723  
 
EMEA income from operations 17,466 16,305 8,678 59,420 34,929
EMEA depreciation, amortization and accretion expense 19,776 19,354 16,539 74,486 60,291
EMEA stock-based compensation expense 2,119 2,308 2,214 8,869 9,397
EMEA acquisition costs   357     -     300     371     1,065  
EMEA adjusted EBITDA   39,718     37,967     27,731     143,146     105,682  
 
Asia-Pacific income from operations 8,265 10,152 8,731 42,548 38,664
Asia-Pacific depreciation, amortization and accretion expense 15,310 14,251 8,144 49,428 29,462
Asia-Pacific stock-based compensation expense 1,684 1,723 1,635 6,449 7,126
Asia-Pacific acquisition costs   196     22     178     312     178  
Asia-Pacific adjusted EBITDA   25,455     26,148     18,688     98,737     75,430  
 
Adjusted EBITDA $ 198,131   $ 191,628   $ 148,947   $ 738,363   $ 544,835  
 
(9) We define cash gross margins as cash gross profit divided by revenues.
 
Our cash gross margins by geographic region is presented below:
 
Americas cash gross margins   69 %   68 %   67 %   69 %   68 %
 
EMEA cash gross margins   61 %   60 %   56 %   60 %   57 %
 
Asia-Pacific cash gross margins   62 %   63 %   61 %   63 %   63 %
 
(10) We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
 
Americas adjusted EBITDA margins   48 %   47 %   46 %   48 %   47 %
 
EMEA adjusted EBITDA margins   42 %   41 %   35 %   40 %   38 %
 
Asia-Pacific adjusted EBITDA margins   43 %   46 %   41 %   46 %   46 %
 
(11)

We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by incremental revenue growth as follows:

 
Adjusted EBITDA - current period $ 198,131 $ 191,628 $ 148,947 $ 738,363 $ 544,835
Less adjusted EBITDA - prior period   (191,628 )   (181,328 )   (146,461 )   (544,835 )   (408,608 )
Adjusted EBITDA growth $ 6,503   $ 10,300   $ 2,486   $ 193,528   $ 136,227  
 
Revenues - current period $ 431,312 $ 417,601 $ 345,244 $ 1,606,842 $ 1,220,334
Less revenues - prior period   (417,601 )   (394,900 )   (330,347 )   (1,220,334 )   (882,509 )
Revenue growth $ 13,711   $ 22,701   $ 14,897   $ 386,508   $ 337,825  
 
Adjusted EBITDA flow-through rate   47 %   45 %   17 %   50 %   40 %
 

EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
       
Assets December 31, December 31,
  2011     2010  
 
Cash and cash equivalents $ 278,823 $ 442,841
Short-term investments 635,721 147,192
Accounts receivable, net 139,057 116,358
Other current assets   182,156     71,657  
Total current assets 1,235,757 778,048
Long-term investments 161,801 2,806
Property, plant and equipment, net 3,225,912 2,650,953
Goodwill 866,495 774,365
Intangible assets, net 148,635 150,945
Other assets   146,724     90,892  
Total assets $ 5,785,324   $ 4,448,009  
 
Liabilities and Stockholders' Equity
 
Accounts payable and accrued expenses $ 229,043 $ 145,854
Accrued property and equipment 93,224 91,667
Current portion of capital lease and other financing obligations 11,542 7,988
Current portion of loans payable 87,440 19,978
Current portion of convertible debt 246,315 -
Other current liabilities   57,690     52,628  
Total current liabilities 725,254 318,115
Capital lease and other financing obligations, less current portion 390,269 253,945
Loans payable, less current portion 168,795 100,337
Senior notes 1,500,000 750,000
Convertible debt 694,769 916,337
Other liabilities   286,424     228,760  
Total liabilities   3,765,511     2,567,494  
 
Redeemable non-controlling interests   67,601     -  
 
Common stock 48 46
Additional paid-in capital 2,437,623 2,341,586
Treasury stock (86,666 ) -
Accumulated other comprehensive loss (143,698 ) (112,018 )
Accumulated deficit   (255,095 )   (349,099 )
Total stockholders' equity   1,952,212     1,880,515  
 

Total liabilities, redeemable non-controlling interests and stockholders' equity

$ 5,785,324   $ 4,448,009  
 
           
 
Ending headcount by geographic region is as follows:
 
Americas headcount 1,763 1,156
EMEA headcount 570 482
Asia-Pacific headcount   376     283  
Total headcount   2,709     1,921  
 

EQUINIX, INC.
SUMMARY OF DEBT OUTSTANDING
(in thousands)
(unaudited)
     
December 31, December 31,
2011 2010
 
Capital lease and other financing obligations $ 401,811 $ 261,933
 
Paris IBX financing 52,104 -
ALOG financing 10,288 -
Asia-Pacific financing   193,843   120,315
Total loans payable   256,235   120,315
 
Senior notes   1,500,000   750,000
 
Convertible debt, net of debt discount 941,084 916,337
Plus debt discount   78,652   103,399
Total convertible debt principal   1,019,736   1,019,736
 
Total debt outstanding $ 3,177,782 $ 2,151,984
 

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                 
 
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
  2011     2011     2010     2011     2010  
 
Cash flows from operating activities:
Net income $ 16,093 $ 20,639 $ 13,760 $ 92,610 $ 36,881

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization and accretion 94,683 92,019 76,131 352,653 263,564
Stock-based compensation 18,472 19,207 17,469 71,532 67,489
Debt issuance costs and debt discount 8,356 8,207 8,512 32,172 27,915
Loss on debt extinguishment and interest rate swaps - - 5,356 - 10,187
Restructuring charges 1,295 1,587 491 3,481 6,734
Other reconciling items 4,526 711 1,888 9,874 4,050
Changes in operating assets and liabilities:
Accounts receivable 3,238 (9,989 ) (1,400 ) (23,061 ) (39,886 )
Deferred tax assets, net 2,516 1,760 (1,611 ) 7,409 6,110
Accounts payable and accrued expenses 45,274 32 14,316 35,782 30,363
Other assets and liabilities   (7,175 )   7,697     (12,021 )   4,814     (20,535 )
Net cash provided by operating activities   187,278     141,870     122,891     587,266     392,872  
Cash flows from investing activities:
Purchases, sales and maturities of investments, net 1,400 (677,229 ) 176,172 (647,035 ) 107,916
Purchase of ALOG, less cash acquired - - - (41,954 ) -
Purchase of Switch and Data, less cash acquired - - - - (113,289 )
Purchases of real estate (4,073 ) - (14,861 ) (28,066 ) (14,861 )
Purchases of other property and equipment (189,817 ) (131,525 ) (143,351 ) (685,332 ) (579,397 )
Other investing activities   (1,792 )   61     (422 )   (96,714 )   (1,338 )
Net cash provided by (used in) investing activities   (194,282 )   (808,693 )   17,538     (1,499,101 )   (600,969 )
Cash flows from financing activities:
Purchases of treasury stock (86,666 ) - - (86,666 ) -
Proceeds from employee equity awards 3,189 11,107 3,638 38,893 39,817
Proceeds from loans payable 4,701 12,718 5,770 95,336 121,581
Proceeds from senior notes - 750,000 - 750,000 750,000
Repayment of capital lease and other financing obligations (3,022 ) (3,081 ) (2,019 ) (10,426 ) (16,133 )
Repayment of mortgage and loans payable (1,556 ) (11,171 ) (88,930 ) (22,829 ) (558,007 )
Debt issuance costs (110 ) (15,426 ) - (15,661 ) (23,124 )
Debt extinguishment costs - - (4,448 ) - (4,448 )
Other financing activities   81     -     -     81     -  
Net cash provided by (used in) financing activities   (83,383 )   744,147     (85,989 )   748,728     309,686  
Effect of foreign currency exchange rates on cash and cash equivalents   (1,313 )   (4,673 )   (748 )   (911 )   (4,804 )
Net increase (decrease) in cash and cash equivalents (91,700 ) 72,651 53,692 (164,018 ) 96,785
Cash and cash equivalents at beginning of period   370,523     297,872     389,149     442,841     346,056  
Cash and cash equivalents at end of period $ 278,823   $ 370,523   $ 442,841   $ 278,823   $ 442,841  
 
Supplemental cash flow information:
Cash paid for taxes $ 1,985   $ 347   $ 7,914   $ 9,157   $ 11,043  
Cash paid for interest $ 28,846   $ 39,821   $ 27,171   $ 129,129   $ 97,943  
 
Free cash flow (1) $ (8,404 ) $ 10,406   $ (35,743 ) $ (264,800 ) $ (316,013 )
 
Adjusted free cash flow (2) $ (4,331 ) $ 10,406   $ (20,882 ) $ (194,780 ) $ (187,863 )
           
 
(1)

We define free cash flow as net cash provided by operating activities plus net cash used in investing activities (excluding the net purchases, sales and maturities of investments) as presented below:

 
Net cash provided by operating activities as presented above $ 187,278 $ 141,870 $ 122,891 $ 587,266 $ 392,872
Net cash used in investing activities as presented above (194,282 ) (808,693 ) 17,538 (1,499,101 ) (600,969 )
Purchases, sales and maturities of investments, net   (1,400 )   677,229     (176,172 )   647,035     (107,916 )
Free cash flow (negative free cash flow) $ (8,404 ) $ 10,406   $ (35,743 ) $ (264,800 ) $ (316,013 )
 
(2)

We define adjusted free cash flow as free cash flow (as defined above) excluding any purchases or sales of real estate and acquisitions as presented below:

 
Free cash flow (as defined above) $ (8,404 ) $ 10,406 $ (35,743 ) $ (264,800 ) $ (316,013 )
Less purchase of ALOG, less cash acquired - - - 41,954 -
Less purchase of Switch and Data, less cash acquired - - - - 113,289
Less purchases of real estate   4,073     -     14,861     28,066     14,861  
Adjusted free cash flow (negative adjusted free cash flow) $ (4,331 ) $ 10,406   $ (20,882 ) $ (194,780 ) $ (187,863 )

Equinix Investor Relations:
Equinix, Inc.
Katrina Rymill, 650-598-6583
krymill@equinix.com
Jason Starr, 650-598-6020
jstarr@equinix.com
or
Equinix Media:
LEWIS PR
Scott Blevins, 415-992-4400
equinixlewisus@equinix.com
or
Equinix, Inc.
Melissa Neumann, 650-598-6098
mneumann@equinix.com

Source: Equinix, Inc.

Released February 15, 2012