Exhibit 99.1 Switch and Data Reports Third Quarter 2007 Financial and Operating Results -- Revenue Increased 26% Over Third Quarter 2006 -- Reports 54% Increase in Adjusted EBITDA, a Non-GAAP Measure, Over Third Quarter 2006 -- Customer Wins; Azoogle, Marchex, and Telmex -- Increases 2007 Guidance -- Revenue of $137.0 million -- Adjusted EBITDA of $42.5 million TAMPA, Fla.--(BUSINESS WIRE)--Nov. 13, 2007--Switch & Data Facilities Company, Inc. (NASDAQ:SDXC), a leading provider of network neutral interconnection and colocation services, today reported strong financial results for the three months ended September 30, 2007. Total revenues for the three months ended September 30, 2007 increased 26% to $35.4 million from $28.2 million in the comparable period in 2006. Recurring revenues, which consist of colocation and interconnection services, were $33.5 million in the third quarter 2007, an increase of 25% over the comparable period in 2006. Non-recurring revenues, representing one time installation fees and services, were $1.9 million compared to $1.3 million in the prior year. Adjusted EBITDA, which is a non-GAAP measure, and which the Company defines as operating income from continuing operations, plus depreciation and amortization, stock-based compensation expense and other non-cash items such as deferred rent and asset impairment, increased 54% to $11.2 million in the third quarter of 2007 as compared to $7.2 million in the comparable period in 2006. Adjusted EBITDA margins increased to 31.5% in the third quarter, from 25.6% in the comparable period in 2006. (A reconciliation between GAAP information and non-GAAP information contained in this press release can be found in the table immediately following the Consolidated Statements of Cash Flow, as well as on the Company's website in the Investor Relations section.) Keith Olsen, CEO and President commented, "I am pleased with our overall results, we had a terrific third quarter." Mr. Olsen added, "Our performance reflects the continued success in executing on our business plan." Expenses and Balance Sheet Cost of revenues, excluding depreciation and amortization, for the three months ended September 30, 2007 was $18.7 million as compared to $15.8 million for the three months ended September 30, 2006. As a percentage of revenues, cost of revenues was lower in the third quarter of 2007 at 53% as compared to 56% in the same period of the prior year. Sales and marketing costs for the third quarter 2007 were $3.8 million as compared to $3.1 million in the comparable quarter in 2006. General and administrative expenses were $3.7 million for the third quarter as compared to $2.8 million for the three months ended September 30, 2006. Total stock based compensation expense was $1.1 million in the third quarter of 2007. The Company had cash and cash equivalents of $45.9 million on September 30, 2007. Bank debt outstanding on September 30, 2007 was $39.1 million, down from $144.1 million as of December 31, 2006. Business Outlook Switch and Data is increasing financial guidance for 2007. The Company expects: -- Total revenues to be $137.0 million -- Adjusted EBITDA to be $42.5 million -- Capital expenditures are expected to be between $37.0 million and $39.0 million Switch and Data is introducing preliminary financial guidance for 2008. The Company expects: -- Total revenues to be $165 million -- Adjusted EBITDA to be $51 million -- Capital expenditures are projected at $155 million to $165 million, of which $125 million will be expended for the Dallas, New Jersey, Sunnyvale and Toronto facilities. Switch and Data does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, 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. The Company intends to calculate the various non-GAAP financial measures in future periods consistent with the calculation method utilized for the three months ended September 30, 2007 as presented within this press release. Conference Call Info The Company will host a conference call to discuss third quarter 2007 results on Tuesday, November 13, 2007 at 4:30 p.m. ET. To listen to the conference call live, please dial 866-383-7989 or 617-597-5328 (international callers) and reference Passcode 72762254. The conference call will be webcast and can be accessed from the Company's website at www.switchanddata.com under the Investor Relations section. A replay of the conference call will be available for one week beginning at 6:30 p.m. ET on Tuesday, November 13, 2007 until August 20, 2007. The replay can be accessed by calling 888-286-8010 or 617-801-6888 (international) and referencing Passcode 24175935. In addition, the webcast will be archived on the Company's website at www.switchanddata.com. About the Company Switch and Data is a leading provider of Internet exchange and colocation services. Based in Tampa, Florida, Switch and Data operates one of the largest footprints of neutral Internet exchange and colocation facilities in North America serving more than 880 customers. Switch and Data's PAIX is recognized worldwide as the premier name in peering and Internet exchange services and is home to one of the largest commercial exchange points in North America. For more information, please visit http://www.switchanddata.com/. Forward-Looking Statements Certain statements herein are "forward-looking statements." Such forward-looking statements are not historical facts but instead reflect Switch and Data's current expectations or beliefs concerning future events and results of operations, many of which, by their nature, are inherently uncertain and outside of Switch and Data's control. It is possible that actual results may differ, possibly materially, from those anticipated in these forward-looking statements. The information set forth under the caption "Business Outlook" are forward-looking statements. Words such as expects, believes, estimates, anticipates and similar language indicate forward-looking statements. Further information concerning Switch and Data and its business, including factors that potentially could materially affect Switch and Data's financial results and conditions, as well as its other achievements, are contained in Switch and Data's filings with the Securities and Exchange Commission. Switch and Data does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. Switch & Data Facilities Company, Inc. Consolidated Statements of Operations (in thousands, except earnings per share) (unaudited) For the three months For the nine months ended September 30, ended September 30, ------------------------ ----------------------- 2006 2007 2006 2007 ------------ ----------- ----------- ---------- Revenues $ 28,193 $ 35,432 $ 81,952 $ 100,033 Costs and operating expenses Cost of revenues, exclusive of depreciation and amortization 15,804 18,709 44,562 52,506 Sales and marketing 3,106 3,841 9,227 11,703 General and administrative 2,835 3,715 7,907 11,397 Depreciation and amortization 5,861 6,412 17,366 18,624 Lease litigation settlement - - - 2,600 Asset impairment - - 1,841 - ------------ ----------- ------------ ---------- Total costs and operating expenses 27,606 32,677 80,903 96,830 ------------ ----------- ------------ ---------- Operating income 587 2,755 1,049 3,203 Interest income 21 534 71 1,229 Interest expense (4,929) (1,702) (10,764) (4,885) Loss on debt extinguishment - - - (2,809) Other income (expense), net 11 (163) (60) (276) ------------ ----------- ------------ ---------- Income (loss) from continuing operations before income taxes (4,310) 1,424 (9,704) (3,538) Benefit (provision) for income taxes 115 (106) 56 (118) ------------ ----------- ------------ ---------- Income (loss) from continuing operations (4,195) 1,318 (9,648) (3,656) Income (loss) from discontinued operations (19) 84 (411) 389 ------------ ----------- ------------ ---------- Net income (loss) (4,214) 1,402 (10,059) (3,267) Preferred stock accretions and dividends (3,476) - (10,054) (227,522) ------------ ----------- ------------ ---------- Net income (loss), attributable to common stockholders $ (7,690) $ 1,402 $ (20,113) $(230,789) ============ =========== ============ ========== Income (loss) per share--basic Continuing operations attributable to common stockholders $ (0.07) $ 0.04 $ (0.19) $ (5.24) Discontinued operations (0.00) 0.00 (0.00) 0.01 ------------ ----------- ------------ ---------- Net income (loss) attributable to common stockholders $ (0.07) $ 0.04 $ (0.19) $ (5.23) ============ =========== ============ ========== Weighted average shares outstanding 107,513 33,893 107,554 44,112 Income (loss) per share--diluted Continuing operations attributable to common stockholders $ (0.07) $ 0.04 $ (0.19) $ (5.24) Discontinued operations (0.00) 0.00 (0.00) 0.01 ------------ ----------- ------------ ---------- Net income (loss) attributable to common stockholders $ (0.07) $ 0.04 $ (0.19) $ (5.23) ============ =========== ============ ========== Weighted average shares outstanding 107,513 34,787 107,554 44,112 Switch & Data Facilities Company, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) December 31, September 30, 2006 2007 ------------ ------------- Assets Cash and cash equivalents $ 3,671 $ 45,862 Current assets 8,735 9,168 Long-term assets 139,650 159,515 ------------ ------------- Total assets $ 152,056 $ 214,545 ============ ============= Liabilities, Preferred Stock and Stockholders' Equity (Deficit) Current liabilities $ 16,261 $ 19,813 Current portion of long-term debt 4,125 3,750 Other long-term liabilities 11,785 13,671 Long-term debt, less current portion 140,031 35,376 Capital lease obligation - 21,995 ------------ ------------- Total liabilities 172,202 94,605 Series C Redeemable Preferred stock 14,376 - Series B Convertible Preferred stock 179,798 - Stockholders' equity (deficit) Common stock (Successor) - 3 Common stock (Predecessor) 4 - Series B common stock 7 - Series D-2 Preferred stock 5 - Unearned stock compensation (137) (38) Additional paid-in capital - 338,060 Accumulated deficit (214,971) (219,972) Accumulated other comprehensive income 772 1,887 ------------ ------------- Total stockholders' equity (deficit) (214,320) 119,940 ------------ ------------- Total liabilities, preferred stock and stockholders' equity (deficit) $ 152,056 $ 214,545 ============ ============= Switch & Data Facilities Company, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) For the nine months ended September 30, ------------------- 2006 2007 -------- --------- Cash flows from operating activities: Net loss $(10,059) $ (3,267) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation 11,379 13,166 Amortization of debt issuance costs 630 331 Amortization of other intangible assets 6,000 5,447 Loss on debt extinguishment - 2,359 Stock compensation expense 202 3,038 Provision for bad debts, net of recoveries 889 (160) Deferred rent 1,376 1,387 Change in fair value of derivative (431) 618 Asset impairment 2,193 - Loss on disposal of fixed assets 181 3 Changes in operating assets and liabilities, net of acquired amounts (Increase) decrease in accounts receivable (1,943) 727 Increase in prepaids and other assets (393) (900) Decrease in other long term assets 12 (7) Increase in accounts payable, accrued expenses, and other liabilities 613 1,794 Increase in unearned revenue 672 1,638 - -------- ---------- Net cash provided by operating activities 11,321 26,174 - -------- ---------- Cash flows from investing activities: Purchase of property and equipment (17,006) (20,168) Proceeds from sale of property and equipment 236 1 - -------- ---------- Net cash used in investing activities (16,770) (20,167) - -------- ---------- Cash flows from financing activities: Principal payments under long-term debt (188) (105,030) Principal payments under capital lease - (123) Proceeds from issuance and sale of Series D Redeemable and Series D-1 Preferred stock, net of issuance costs 3 - Proceeds from exercise of stock options - 1 Public offering costs (636) (1,072) Proceeds from initial public offering, net of commissions - 142,290 Debt issuance and amendment costs (137) (55) - -------- ---------- Net cash provided by (used in) financing activities (958) 36,011 - -------- ---------- Net increase (decrease) in cash and cash equivalents (6,407) 42,018 Effect of exchange rate changes on cash 17 173 Cash and cash equivalents: Beginning of the period 10,417 3,671 - -------- ---------- End of the period $ 4,027 $ 45,862 ========= ========== Additional Company Information - ---------------------------------------------------------------------- For the three months For the nine months ended ($ in thousands) ended September 30, September 30, ------------------------- -------------------------- 2006 2007 2006 2007 ------------ ------------ ------------ ------------- Revenues Colocation $16,553 59% $22,021 62% $47,651 58% $ 61,162 61% Interconnection 10,316 37% 11,483 32% 30,809 38% 33,552 34% ------- ---- ------- ---- ------- ---- -------- ---- Recurring Total 26,869 96% 33,504 94% 78,460 96% 94,714 95% Non-recurring 1,324 4% 1,928 6% 3,492 4% 5,319 5% ------- ---- ------- ---- ------- ---- -------- ---- Total $28,193 100% $35,432 100% $81,952 100% $100,033 100% ======= ==== ======= ==== ======= ==== ======== ==== As of September 30, -------------------------- 2006 2007 ------------ ------------ Number of customers 832 883 Number of cross connects 17,417 19,124 Cabinets equivalents billed 5,526 6,636 Utilization rate 64% 70% For the three months ended September 30, -------------------------- 2006 2007 ------------ ------------ New Sales ($ in thousands) - ------------------------------------------- Recurring Revenues* $ 828 $ 779 Non-recurring Revenues** 1,068 1,439 ------------ ------------ New Sales $ 1,896 $ 2,218 ============ ============ *Recurring revenues represent new service agreements entered into by new and existing customers during the given quarter. Revenues from these agreements will recur monthly over the life of the agreement. **Non-recurring revenues represent the one-time installation fees associated with new service agreements. These one-time fees are billed to customers upon completion of the installation service and such revenues are recognized on a straight-line basis over the life of the agreement. Adjusted EBITDA Reconciliation The following is a reconciliation of the Company's operating income (loss) for the three month periods ended September 30, 2006 and September 30, 2007 to Adjusted EBITDA. Switch and Data uses Adjusted EBITDA: -- As measurements of operating performance because they assist management in comparing the results on a consistent basis as they remove the impact of items not directly resulting from operations; -- For planning purposes, including the preparation of its internal annual operating budget; -- To establish targets for certain management compensation; and -- To evaluate the Company's capacity to incur and service debt, fund capital expenditures and expand the business. Adjusted EBITDA as calculated by the Company is not necessarily comparable to similarly titled measures used by other companies. In addition, Adjusted EBITDA: (a) does not represent net income or cash flows from operating activities as defined by GAAP; (b) is not necessarily indicative of cash available to fund the Company's cash flow needs; and (c) should not be considered as alternatives to net income, operating income, cash flows from operating activities or the Company's other financial information as determined under GAAP. The Company prepares Adjusted EBITDA by adjusting EBITDA to eliminate the impact of a number of items that it does not consider indicative of its core operating performance. Investors are encouraged to evaluate each adjustment and the reasons the Company considers them appropriate. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, investors should be aware that in the future the Company may incur expenses similar to the adjustments in this presentation. Switch and Data's presentation of Adjusted EBITDA should not be construed as an implication that its future results will be unaffected by unusual or non-recurring items. For the three months ended For the nine months ended September 30, September 30, ----------------------------------------------------- 2006 2007 2006 2007 ------------ ------------- ----------- ------------- Operating income$ 587 $ 2,755 $ 1,049 $ 3,203 Depreciation and amortization 5,861 6,412 17,366 18,624 Asset impairment - - 1,841 - Lease litigation settlement accrual - - - 2,600 Deferred rent expense, non- cash (1) 327 794 1,376 1,715 Loss on disposal of fixed assets (2) 178 2 178 48 Stock-based compensation expense (3) 75 1,070 202 3,038 Legal expenses for real estate litigation (4) 194 118 664 617 ------------ ------------- ----------- ------------- Adjusted EBITDA $ 7,222 $ 11,151 $ 22,676 $ 29,845 ============ ============= =========== ============= Footnotes: - ---------------------------------------------------------------------- (1) Rent is accrued as a straight-line expense that incorporates future lease cost escalations. The Deferred rent line item on the Statement of Cash Flows accounts for the difference between cash paid for rent and accrued rent expense for the period. Amounts for 2007 are $327 higher than the Statement of Cash Flows to account for discontinued operations deferred rent. (2) Loss on disposal of fixed assets is a non-cash expense included in the Cost of Revenue and General & Administrative line items on the Statement of Operations (3) Stock compensation expense is a non-cash accrued expense to the company that can be found on the Statement of Cash Flows. (4) The Company has incurred legal expenses for lawsuits brought by certain previous landlords for alleged breach of previous lease agreements. These expenses are included in the General and administrative line item of the Statement of Operations. CONTACT: Investor Relations: Kathleen Heaney, 203-803-3585 ir@switchanddata.com or Media: Brian Ruby, 203-682-8268 pr@switchanddata.com