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Equinix Reports Second Quarter 2011 Results
  • Reported revenues of $394.9 million, a 9% increase over the previous quarter and a 33% increase over the same quarter last year
  • Reported adjusted EBITDA of $181.3 million, an 8% increase over the previous quarter and a 37% increase over the same quarter last year
  • Increased 2011 annual revenue guidance to greater than $1,590.0 million and increased 2011 adjusted EBITDA guidance to greater than $720.0 million

REDWOOD CITY, Calif., Jul 27, 2011 (BUSINESS WIRE) -- Equinix, Inc. (Nasdaq:EQIX), a provider of global data center services, today reported quarterly results for the quarter ended June 30, 2011. This quarter included the results from the acquisition of an indirect, controlling equity interest in ALOG Data Centers do Brasil S.A. from April 25, 2011, which is referred to as the ALOG acquisition.

Revenues were $394.9 million for the second quarter, a 9% increase over the previous quarter and a 33% increase over the same quarter last year. This result included $11.7 million in revenues from ALOG for the quarter. Recurring revenues, consisting primarily of colocation, interconnection and managed services were $376.5 million for the second quarter, a 9% increase over the previous quarter and a 33% increase over the same quarter last year. Non-recurring revenues were $18.4 million in the quarter.

"With outstanding first-half results, Equinix is on target to surpass its original financial objectives for 2011. Solid market fundamentals such as the growth of IP, mobile, video, cloud and electronic trading combined with our global leadership position set us up well for the long term," said Steve Smith, president and CEO of Equinix. "Our investments are paying off and we will continue to carefully allocate capital to support our growth, while generating attractive returns for our shareholders."

Cost of revenues were $215.6 million for the second quarter, an 11% increase over the previous quarter and a 33% increase over the same quarter last year. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $78.0 million, were $137.6 million for the second quarter, a 12% increase from the previous quarter and a 32% increase over the same quarter last year. Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter were 65%, down from 66% for the previous quarter and unchanged from the same quarter last year.

Selling, general and administrative expenses were $102.7 million for the second quarter, a 7% increase over the previous quarter and a 24% increase over the same quarter last year. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $26.7 million, were $76.0 million for the second quarter, a 4% increase over the previous quarter and a 27% increase over the same quarter last year.

Interest expense was $37.7 million for the second quarter, a 1% increase from the previous quarter and essentially flat over the same quarter last year. The Company recorded income tax expense of $8.1 million for the second quarter as compared to an income tax expense of $11.1 million in the prior quarter and income tax expense of $2.4 million in the same quarter last year.

Net income attributable to Equinix for the second quarter was $30.7 million. This represents a basic net income per share attributable to Equinix of $0.65 and diluted net income per share of $0.64 based on a weighted average share count of 46.9 million and 50.7 million, respectively, for the second quarter of 2011.

Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges and acquisition costs for the second quarter, was $181.3 million, an increase of 8% over the previous quarter and a 37% increase over the same quarter last year.

Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the second quarter, were $188.9 million, of which $160.9 million was attributed to expansion capital expenditures and $28.0 million was attributed to ongoing capital expenditures.

The Company generated cash from operating activities of $140.3 million for the second quarter as compared to $117.8 million in the previous quarter and $56.9 million for the same quarter last year. Cash used in investing activities was $209.7 million in the second quarter as compared to cash used in investing activities of $286.4 million in the previous quarter and cash used in investing activities of $327.5 million for the same quarter last year. Cash provided by financing activities was $61.8 million for the second quarter, which was primarily related to the proceeds from employee equity awards and draw downs of certain loans payable.

As of June 30, 2011, the Company's cash, cash equivalents and investments were $423.1 million, as compared to $456.7 million as of March 31, 2011. In July 2011, the Company received net proceeds from the 7.00% senior notes offering of approximately $735.6 million.

Company Metricsand Q2 Results Presentation

  • A presentation to accompany Equinix's Q2 Results conference call, as well as the Company's Non-Financial Metrics tracking sheet, have been posted on the Investors section of Equinix's web site at http://www.equinix.com/investors

Business Outlook

For the third quarter of 2011, the Company expects revenues to be in the range of $412.0 to $417.0 million. Cash gross margins are expected to be approximately 65%. Cash selling, general and administrative expenses are expected to be approximately $86.0 million. Adjusted EBITDA is expected to be between $180.0 and $185.0 million. Capital expenditures are expected to be approximately $160.0 and $180.0 million, comprised of approximately $30.0 million of ongoing capital expenditures and $130.0 to $150.0 million of expansion capital expenditures.

For the full year of 2011, total revenues are expected to be greater than $1,590.0 million. Total year cash gross margins are expected to range between 65% and 66%. Cash selling, general and administrative expenses are expected to approximate $320.0 million. Adjusted EBITDA for the year is expected to be greater than $720.0 million. Capital expenditures for 2011 are expected to be in the range of $645.0 to $665.0 million, comprised of approximately $115.0 million of ongoing capital expenditures and $530.0 to $550.0 million for expansion capital expenditures.

The Company will discuss its results and guidance on its quarterly conference call on Wednesday, July 27, 2011, 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 http://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 http://www.equinix.com/investors.

A replay of the call will be available beginning on Wednesday, July 27, 2011, at 7:30 p.m. (ET) through August 28, 2011, by dialing 203-369-1470. In addition, the webcast will be available on the company's web site at http://www.equinix.com/investors over the same time period. No password is required for the replay or 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 675 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 non-cash stock-based compensation expense as it 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 it was 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 Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2011 2011 2010 2011 2010
Recurring revenues $ 376,528 $ 343,909 $ 282,117 $ 720,437 $ 519,353
Non-recurring revenues 18,372 19,120 13,977 37,492 25,390
Revenues 394,900 363,029 296,094 757,929 544,743
Cost of revenues 215,572 194,576 162,582 410,148 295,632
Gross profit 179,328 168,453 133,512 347,781 249,111
Operating expenses:
Sales and marketing 37,063 33,636 28,913 70,699 48,381
General and administrative 65,681 62,601 54,166 128,282 97,321
Restructuring charges 103 496 4,357 599 4,357
Acquisition costs 1,615 415 5,849 2,030 10,843
Total operating expenses 104,462 97,148 93,285 201,610 160,902
Income from operations 74,866 71,305 40,227 146,171 88,209
Interest and other income (expense):
Interest income 632 215 491 847 997
Interest expense (37,677 ) (37,361 ) (37,615 ) (75,038 ) (63,290 )
Other-than-temporary impairment recovery on investments - - - - 3,420
Loss on debt extinguishment and interest rate swaps, net - - (1,454 ) - (4,831 )
Other income (expense) 1,021 2,111 (1,481 ) 3,132 (1,461 )
Total interest and other, net (36,024 ) (35,035 ) (40,059 ) (71,059 ) (65,165 )
Income before income taxes 38,842 36,270 168 75,112 23,044
Income tax expense (8,109 ) (11,125 ) (2,442 ) (19,234 ) (11,119 )
Net income (loss) 30,733 25,145 (2,274 ) 55,878 11,925
Net (income) loss attributable to redeemable non-controlling interests (3 ) - - (3 ) -
Net income (loss) attributable to Equinix $ 30,730 $ 25,145 $ (2,274 ) $ 55,875 $ 11,925
Net income (loss) per share attributable to Equinix:
Basic net income (loss) per share $ 0.65 $ 0.54 $ (0.05 ) $ 1.20 $ 0.29
Diluted net income (loss) per share $ 0.64 $ 0.53 $ (0.05 ) $ 1.18 $ 0.28

Shares used in computing basic net income (loss) per share

46,924 46,451 43,507 46,688 41,546

Shares used in computing diluted net income (loss) per share

50,664 47,219 43,507 50,454 42,694
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2011 2011 2010 2011 2010
Recurring revenues $ 376,528 $ 343,909 $ 282,117 $ 720,437 $ 519,353
Non-recurring revenues 18,372 19,120 13,977 37,492 25,390
Revenues (1) 394,900 363,029 296,094 757,929 544,743
Cash cost of revenues (2) 137,558 122,631 103,892 260,189 188,976
Cash gross profit (3) 257,342 240,398 192,202 497,740 355,767
Cash operating expenses (4):
Cash sales and marketing expenses (5) 29,261 27,104 22,158 56,365 37,343
Cash general and administrative expenses (6) 46,753 46,018 37,889 92,771 68,997
Total cash operating expenses (7) 76,014 73,122 60,047 149,136 106,340
Adjusted EBITDA (8) $ 181,328 $ 167,276 $ 132,155 $ 348,604 $ 249,427
Cash gross margins (9) 65 % 66 % 65 % 66 % 65 %
Adjusted EBITDA margins (10) 46 % 46 % 45 % 46 % 46 %
Adjusted EBITDA flow-through rate (11) 44 % 103 % 31 % 65 % 43 %
(1) The geographic split of our revenues on a services basis is presented below:
Americas Revenues:
Colocation $ 187,840 $ 176,196 $ 148,569 $ 364,036 267,501
Interconnection 49,886 45,922 35,072 95,808 58,836
Managed infrastructure 6,984 767 746 7,751 1,285
Rental 489 504 407 993 589
Recurring revenues 245,199 223,389 184,794 468,588 328,211
Non-recurring revenues 8,690 9,138 6,852 17,828 11,991
Revenues 253,889 232,527 191,646 486,416 340,202
EMEA Revenues:
Colocation 74,645 68,200 55,898 142,845 110,340
Interconnection 3,203 2,812 2,010 6,015 3,949
Managed infrastructure 3,481 3,198 2,603 6,679 5,504
Rental 177 118 153 295 316
Recurring revenues 81,506 74,328 60,664 155,834 120,109
Non-recurring revenues 7,105 7,711 5,420 14,816 10,139
Revenues 88,611 82,039 66,084 170,650 130,248
Asia-Pacific Revenues:
Colocation 39,101 36,339 28,853 75,440 55,838
Interconnection 5,818 5,341 3,860 11,159 7,389
Managed infrastructure 4,904 4,512 3,946 9,416 7,806
Recurring revenues 49,823 46,192 36,659 96,015 71,033
Non-recurring revenues 2,577 2,271 1,705 4,848 3,260
Revenues 52,400 48,463 38,364 100,863 74,293
Worldwide Revenues:
Colocation 301,586 280,735 233,320 582,321 433,679
Interconnection 58,907 54,075 40,942 112,982 70,174
Managed infrastructure 15,369 8,477 7,295 23,846 14,595
Rental 666 622 560 1,288 905
Recurring revenues 376,528 343,909 282,117 720,437 519,353
Non-recurring revenues 18,372 19,120 13,977 37,492 25,390
Revenues $ 394,900 $ 363,029 $ 296,094 $ 757,929 $ 544,743
(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 $ 215,572 $ 194,576 $ 162,582 $ 410,148 $ 295,632
Depreciation, amortization and accretion expense (76,515 ) (70,600 ) (56,946 ) (147,115 ) (103,318 )
Stock-based compensation expense (1,499 ) (1,345 ) (1,744 ) (2,844 ) (3,338 )
Cash cost of revenues $ 137,558 $ 122,631 $ 103,892 $ 260,189 $ 188,976
The geographic split of our cash cost of revenues is presented below:
Americas cash cost of revenues $ 81,886 $ 70,210 $ 61,220 $ 152,096 $ 105,368
EMEA cash cost of revenues 36,217 34,491 29,060 70,708 57,596
Asia-Pacific cash cost of revenues 19,455 17,930 13,612 37,385 26,012
Cash cost of revenues $ 137,558 $ 122,631 $ 103,892 $ 260,189 $ 188,976
(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 $ 37,063 $ 33,636 $ 28,913 $ 70,699 $ 48,381
Depreciation and amortization expense (4,192 ) (3,666 ) (2,997 ) (7,858 ) (4,349 )
Stock-based compensation expense (3,610 ) (2,866 ) (3,758 ) (6,476 ) (6,689 )
Cash sales and marketing expenses $ 29,261 $ 27,104 $ 22,158 $ 56,365 $ 37,343
(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 $ 65,681 $ 62,601 $ 54,166 $ 128,282 $ 97,321
Depreciation and amortization expense (5,719 ) (5,259 ) (3,683 ) (10,978 ) (5,281 )
Stock-based compensation expense (13,209 ) (11,324 ) (12,594 ) (24,533 ) (23,043 )
Cash general and administrative expenses $ 46,753 $ 46,018 $ 37,889 $ 92,771 $ 68,997
(7) Our cash operating expenses, or cash SG&A, as defined above, is presented below:
Cash sales and marketing expenses $ 29,261 $ 27,104 $ 22,158 $ 56,365 $ 37,343
Cash general and administrative expenses 46,753 46,018 37,889 92,771 68,997
Cash SG&A $ 76,014 $ 73,122 $ 60,047 $ 149,136 $ 106,340
The geographic split of our cash operating expenses, or cash SG&A, is presented below:
Americas cash SG&A $ 49,499 $ 48,812 $ 40,960 $ 98,311 $ 71,586
EMEA cash SG&A 17,545 16,936 13,084 34,481 23,757
Asia-Pacific cash SG&A 8,970 7,374 6,003 16,344 10,997
Cash SG&A $ 76,014 $ 73,122 $ 60,047 $ 149,136 $ 106,340
(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 $ 74,866 $ 71,305 $ 40,227 $ 146,171 $ 88,209
Depreciation, amortization and accretion expense 86,426 79,525 63,626 165,951 112,948
Stock-based compensation expense 18,318 15,535 18,096 33,853 33,070
Restructuring charges 103 496 4,357 599 4,357
Acquisition costs 1,615 415 5,849 2,030 10,843
Adjusted EBITDA $ 181,328 $ 167,276 $ 132,155 $ 348,604 $ 249,427
The geographic split of our adjusted EBITDA is presented below:
Americas income from operations $ 49,072 $ 47,319 $ 22,529 $ 96,391 $ 52,130
Americas depreciation, amortization and accretion expense 57,246 53,482 43,081 110,728 71,255
Americas stock-based compensation expense 14,527 11,842 13,650 26,369 24,663
Americas restructuring charges 103 496 4,357 599 4,357
Americas acquisition costs 1,556 366 5,849 1,922 10,843
Americas adjusted EBITDA 122,504 113,505 89,466 236,009 163,248
EMEA income from operations 14,178 11,471 7,672 25,649 15,993
EMEA depreciation, amortization and accretion expense 18,512 16,844 13,737 35,356 28,221
EMEA stock-based compensation expense 2,147 2,295 2,531 4,442 4,681
EMEA acquisition costs 12 2 - 14 -
EMEA adjusted EBITDA 34,849 30,612 23,940 65,461 48,895
Asia-Pacific income from operations 11,616 12,515 10,026 24,131 20,086
Asia-Pacific depreciation, amortization and accretion expense 10,668 9,199 6,808 19,867 13,472
Asia-Pacific stock-based compensation expense 1,644 1,398 1,915 3,042 3,726
Asia-Pacific acquisition costs 47 47 - 94 -
Asia-Pacific adjusted EBITDA 23,975 23,159 18,749 47,134 37,284
Adjusted EBITDA $ 181,328 $ 167,276 $ 132,155 $ 348,604 $ 249,427
(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 68 % 70 % 68 % 69 % 69 %
EMEA cash gross margins 59 % 58 % 56 % 59 % 56 %
Asia-Pacific cash gross margins 63 % 63 % 65 % 63 % 65 %
(10) We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
Americas adjusted EBITDA margins 48 % 49 % 47 % 49 % 48 %
EMEA adjusted EBITDA margins 39 % 37 % 36 % 38 % 38 %
Asia-Pacific adjusted EBITDA margins 46 % 48 % 49 % 47 % 50 %
(11)

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

Adjusted EBITDA - current period $ 181,328 $ 167,276 $ 132,155 $ 348,604 $ 249,427
Less adjusted EBITDA - prior period (167,276 ) (148,947 ) (117,272 ) (295,408 ) (217,696 )
Adjusted EBITDA growth $ 14,052 $ 18,329 $ 14,883 $ 53,196 $ 31,731
Revenues - current period $ 394,900 $ 363,029 $ 296,094 $ 757,929 $ 544,743
Less revenues - prior period (363,029 ) (345,244 ) (248,649 ) (675,591 ) (470,110 )
Revenue growth $ 31,871 $ 17,785 $ 47,445 $ 82,338 $ 74,633
Adjusted EBITDA flow-through rate 44 % 103 % 31 % 65 % 43 %
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets June 30, December 31,
2011 2010
Cash and cash equivalents $ 297,872 $ 442,841
Short-term investments 94,246 147,192
Accounts receivable, net 140,316 116,358
Other current assets 116,654 71,657
Total current assets 649,088 778,048
Long-term investments 30,960 2,806
Property, plant and equipment, net 3,085,202 2,650,953
Goodwill 897,461 774,365
Intangible assets, net 163,771 150,945
Other assets 142,709 90,892
Total assets $ 4,969,191 $ 4,448,009
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 189,739 $ 145,854
Accrued property and equipment 90,652 91,667
Current portion of capital lease and other financing obligations 9,461 7,988
Current portion of loans payable 31,459 19,978
Current portion of convertible debt 240,134 -
Other current liabilities 59,006 52,628
Total current liabilities 620,451 318,115
Capital lease and other financing obligations, less current portion 337,274 253,945
Loans payable, less current portion 201,233 100,337
Senior notes 750,000 750,000
Convertible debt 688,300 916,337
Other liabilities 238,684 228,760
Total liabilities 2,835,942 2,567,494
Redeemable non-controlling interests 69,050 -
Common stock 47 46
Additional paid-in capital 2,399,055 2,341,586
Accumulated other comprehensive loss (41,679 ) (112,018 )
Accumulated deficit (293,224 ) (349,099 )
Total stockholders' equity 2,064,199 1,880,515

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

$ 4,969,191 $ 4,448,009
Ending headcount by geographic region is as follows:
Americas headcount 1,672 1,156
EMEA headcount 526 482
Asia-Pacific headcount 341 283
Total headcount 2,539 1,921
EQUINIX, INC.
SUMMARY OF DEBT OUTSTANDING
(in thousands)
(unaudited)
June 30, December 31,
2011 2010
Capital lease and other financing obligations $ 346,735 $ 261,933
Paris IBX financing 20,594 -
ALOG financing 19,254 -
New Asia-Pacific financing 192,844 120,315
Total loans payable 232,692 120,315
Senior notes 750,000 750,000
Convertible debt, net of debt discount 928,434 916,337
Plus debt discount 91,302 103,399
Total convertible debt principal 1,019,736 1,019,736
Total debt outstanding $ 2,349,163 $ 2,151,984
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2011 2011 2010 2011 2010
Cash flows from operating activities:
Net income (loss) $ 30,733 $ 25,145 $ (2,274 ) $ 55,878 $ 11,925

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, amortization and accretion 86,426 79,525 63,626 165,951 112,948
Stock-based compensation 18,318 15,535 18,096 33,853 33,070
Debt issuance costs and debt discount 8,325 7,284 6,689 15,609 12,243
Loss on debt extinguishment and interest rate swaps - - 1,454 - 4,831
Restructuring charges 103 496 4,357 599 4,357
Other reconciling items 3,074 1,563 834 4,637 1,268
Changes in operating assets and liabilities:
Accounts receivable (19,409 ) 3,099 (25,671 ) (16,310 ) (31,757 )
Deferred tax assets, net (2,507 ) 5,640 (723 ) 3,133 4,279
Accounts payable and accrued expenses 4,082 (13,606 ) 3,174 (9,524 ) 19,060
Other assets and liabilities 11,203 (6,911 ) (12,656 ) 4,292 (15,506 )
Net cash provided by operating activities 140,348 117,770 56,906 258,118 156,718
Cash flows from investing activities:
Purchases, sales and maturities of investments, net 30,979 (2,185 ) (64,987 ) 28,794 47,298
Purchase of ALOG, less cash acquired (41,954 ) - - (41,954 ) -
Purchase of Switch and Data, less cash acquired - - (113,289 ) - (113,289 )
Purchase of Frankfurt IBX property (9,042 ) - - (9,042 ) -
Purchase of Paris IBX property - (14,951 ) - (14,951 ) -
Purchases of property and equipment (188,875 ) (175,115 ) (148,705 ) (363,990 ) (292,105 )
Other investing activities (845 ) (94,138 ) (474 ) (94,983 ) (916 )
Net cash used in investing activities (209,737 ) (286,389 ) (327,455 ) (496,126 ) (359,012 )
Cash flows from financing activities:
Proceeds from employee equity awards 8,929 15,668 11,270 24,597 22,153
Proceeds from loans payable 55,264 22,653 98,958 77,917 98,958
Proceeds from senior notes - - - - 750,000
Repayment of capital lease and other financing obligations (2,355 ) (1,968 ) (10,847 ) (4,323 ) (12,401 )
Repayment of mortgage and loans payable - (10,102 ) (343,688 ) (10,102 ) (458,028 )
Debt issuance costs - (125 ) (7,926 ) (125 ) (23,119 )
Net cash provided by (used in) financing activities 61,838 26,126 (252,233 ) 87,964 377,563
Effect of foreign currency exchange rates on cash and cash equivalents 957 4,118 (5,178 ) 5,075 (9,983 )
Net increase (decrease) in cash and cash equivalents (6,594 ) (138,375 ) (527,960 ) (144,969 ) 165,286
Cash and cash equivalents at beginning of period 304,466 442,841 1,039,302 442,841 346,056
Cash and cash equivalents at end of period $ 297,872 $ 304,466 $ 511,342 $ 297,872 $ 511,342
Free cash flow (1) $ (100,368 ) $ (166,434 ) $ (205,562 ) $ (266,802 ) $ (249,592 )
Adjusted free cash flow (2) $ (49,372 ) $ (151,483 ) $ (92,273 ) $ (200,855 ) $ (136,303 )
(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 $ 140,348 $ 117,770 $ 56,906 $ 258,118 $ 156,718
Net cash used in investing activities as presented above (209,737 ) (286,389 ) (327,455 ) (496,126 ) (359,012 )
Purchases, sales and maturities of investments, net (30,979 ) 2,185 64,987 (28,794 ) (47,298 )
Free cash flow (negative free cash flow) $ (100,368 ) $ (166,434 ) $ (205,562 ) $ (266,802 ) $ (249,592 )
(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) $ (100,368 ) $ (166,434 ) $ (205,562 ) $ (266,802 ) $ (249,592 )
Less purchase of ALOG, less cash acquired 41,954 - - 41,954 -
Less purchase of Switch and Data, less cash acquired - - 113,289 - 113,289
Less purchase of Frankfurt IBX property 9,042 - - 9,042 -
Less purchase of Paris IBX property - 14,951 - 14,951 -
Adjusted free cash flow (negative adjusted free cash flow) $ (49,372 ) $ (151,483 ) $ (92,273 ) $ (200,855 ) $ (136,303 )

SOURCE: Equinix, Inc.

Equinix Investor Relations:
Equinix, Inc.
Jason Starr, 650-598-6020
jstarr@equinix.com
or
Equinix Media:
LEWIS PR
Scott Blevins, 415-992-4400
equinixlewisus@lewispr.com

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