Exhibit 99.1
Equinix Acquires New Data Center in Tokyo to Accommodate Strong Growth
in Region
Strong Growth at Equinix's Existing Tokyo Center Drives the Need
for a Second Center as Equinix Furthers Its Expansion Plans
FOSTER CITY, Calif.--(BUSINESS WIRE)--Jan. 10, 2007--Equinix, Inc.
(Nasdaq:EQIX), the leading provider of network-neutral data centers
and Internet exchange services, today announced that it has added a
second Internet Business Exchange(TM) (IBX(R)) data center to its
Tokyo presence, resulting from the acquisition of a long-term building
lease and the purchase of assets from VSNL International. Equinix
entered into an agreement to purchase the VSNL International leasehold
improvements for $7.5 million and will lease the building from the
current landlord. In addition, the company will provide colocation
services to VSNL International in this center. This transaction allows
Equinix to expand its capacity in a market where it has operated since
2003 in response to strong customer growth. As a result of this
acquisition, Equinix will incur incremental costs attributed to this
transaction, and given the recent sale of the Honolulu IBX, Equinix
has updated guidance for the year ending December 31, 2007.
The data center, located in the Tokyo Metropolitan area, will add
approximately 740 sellable cabinets and approximately 73,000 square
feet, increasing Equinix's Tokyo footprint to approximately 116,000
square feet. Equinix intends to place new customers in the center
during the fourth quarter of 2007.
Once Equinized, the new center will feature a physical
infrastructure that is consistent with Equinix's industry-leading
standards for high-performance security, environmental control and
power availability. The power infrastructure will support blade
technologies and other high power density deployments. The center will
be interconnected to the existing Tokyo IBX through redundant dark
fiber links managed by Equinix. This interconnection fabric will
enable occupants in each center to have direct access to each other as
if they were in the same location, and will provide immediate access
to the more than 15 networks currently operating within Equinix's
Tokyo IBX.
VSNL International will continue to operate in the center as a
long-term customer of Equinix, providing its standard suite of
communications services to its customers in Tokyo, including
colocation services. Existing VSNL International customers, several of
whom are already operating in other Equinix IBX centers, will remain
in the center as VSNL International customers.
"We have seen robust growth in customer deployments at our
existing Tokyo center, mirroring the increasing demand for Internet
and networked services in Japan," said Peter Van Camp, CEO of Equinix.
"We were very fortunate to have the opportunity to acquire this
high-quality center, as it will enable us to more than double our
original capacity and maintain our momentum, in this important
market."
Equinix intends to invest $25.0 to $30.0 million of capital
expenditures in 2007 to make additional infrastructure enhancements to
this center. The center is expected to generate, at capacity, annual
revenues between $20.0 and $25.0 million. Equinix expects long-term
cash gross margins from this expansion to be in excess of 65%,
consistent with the company's model for previous expansion centers.
As a result of the acquisition of the new Tokyo data center, as
well as the recently sold Honolulu IBX, Equinix has updated its
guidance for the year ending December 31, 2007. Total revenues are
expected to remain unchanged at $352.0 to $362.0 million. EBITDA, a
non-GAAP metric which excludes stock-based compensation expense and
other items as defined at the end of this press release, is now
expected to range between $132.5 and $138.5 million which reflects
$4.5 million in incremental net costs directly attributable to these
two transactions. Capital expenditures are now expected to range
between $255.0 and $275.0 million, which reflects the incremental
expansion capital expenditures attributed to the build-out of the new
Tokyo expansion IBX. Ongoing capital expenditures for 2007 remains
unchanged at $30.0 million.
"We are pleased to have entered into this transaction with Equinix
which is in line with our global efforts to reduce overall operating
costs and, in light of Equinix's plan to invest in expanding this
facility, will ensure continued and enhanced services to VSNL and our
customers in Tokyo, an important market for us," said Vinod Kumar,
President, VSNL International.
About Equinix
Equinix is the leading global provider of network-neutral data
centers and Internet exchange services for enterprises, content
companies, systems integrators and network services providers. Through
the company's Internet Business Exchange(TM) (IBX(R)) centers in 10
markets in the U.S. and Asia, customers can directly interconnect with
every major global network and ISP for their critical peering, transit
and traffic exchange requirements. These interconnection points
facilitate the highest performance and growth of the Internet by
serving as neutral and open marketplaces for Internet infrastructure
services, allowing customers to expand their businesses while reducing
costs.
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; a
failure to receive significant revenue from customers in
recently-acquired data centers; failure to complete any financing
arrangements contemplated from time to time; failure to receive the
proceeds from our loan commitments as expected area campus as
expected; 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 regulatory review of past stock
option grants and practices or any litigation relating to such 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.
Equinix provided selected financial information 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 EBITDA, which the
Company defines as income or loss from operations before depreciation,
amortization, accretion, stock-based compensation expense and
restructuring charges. In presenting this non-GAAP financial measure,
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
depreciation, amortization, accretion, stock-based compensation and
restructuring charges. 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 IBX
expansion projects or acquired 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 measure, Equinix
excludes amortization expense related to certain intangible assets, as
it represents a non-cash 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. 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. Management believes such restructuring
charges were unique costs that are not expected to recur, and
consequently, does not consider these charges as a normal component of
expenses related to current and ongoing operations.
Our management does not itself, nor does it suggest that investors
should, consider a non-GAAP financial measure in isolation from, or as
a substitute for, financial information prepared in accordance with
GAAP. However, we have presented the non-GAAP financial measure to
provide investors with an additional tool to evaluate our operating
results in a manner that focuses on what management believes to be our
ongoing business operations. Management believes that the inclusion of
this non-GAAP financial measure 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
measure used by Equinix may not be the same non-GAAP financial
measure, and may not be calculated in the same manner, as that of
other companies.
Equinix does not provide forward-looking guidance for certain
financial data, such as depreciation, amortization, accretion, net
income (loss) from operations, interest income, 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 prior periods.
CONTACT: Equinix, Inc.
Jason Starr, 650-513-7402 (Investor Relations)
jstarr@equinix.com
or
K/F Communications, Inc.
David Fonkalsrud, 415-255-6506 (Media)
dave@kfcomm.com