Switch and Data Facilities Company Reports Fourth Quarter and Full Year 2009 Earnings Results

Switch & Data Facilities Company, a provider of network neutraldata center and Internet exchange services, has reported financialresults for the year ended December 31, and the fourth quarter.

In a release on February 16, Switch & Data Facilities Companysaid total revenues for the fourth quarter ended December 31,increased to $55.4 million from $45.8 million in the comparableperiod in 2008, an increase of 21 percent. Recurring revenues, whichconsist of colocation and interconnection services, were $50.6million in the fourth quarter 2009, an increase of 18 percent overthe same period in the prior year. Non-recurring revenues in thefourth quarter 2009, representing one time installation fees andservices, were $4.8 million compared to $2.8 million in thecomparable period in 2008. Billed cabinets increased from 8,110 inthe third quarter 2009 to 8,588 in the fourth quarter.

Cost of revenues, excluding depreciation and amortization, forthe fourth quarter 2009 was $28.4 million as compared to $24.4million for the fourth quarter 2008. As a percentage of revenues,cost of revenues improved to 51 percent in the fourth quarter of2009 from 53 percent in the same period of the prior year.

Sales and marketing costs for the fourth quarter 2009 were $5.6million as compared to $5.0 million in the comparable quarter in2008. General and administrative expenses were $4.8 million for thefourth quarter as compared to $4.6 million for the fourth quarter2008.

Other expenses were $2.6 million for the fourth quarter 2009 ascompared to $0.1 million in the comparable quarter 2008. Theseexpenses were primarily from the pending acquisition of Switch andData by Equinix.

Operating income increased 183 percent to $5.3 million in thefourth quarter of 2009 as compared to $1.9 million in the comparableperiod in 2008.

Adjusted EBITDA increased to $19.9 million in the fourth quarterof 2009 as compared to $15.8 million in the comparable period in2008, an increase of 26 percent. Adjusted EBITDA margins increasedto 36 percent in the fourth quarter, from 35 percent in thecomparable period in 2008.

Net loss for the for the fourth quarter of 2009 was $2.1 million,including acquisition related expenses of $2.6 million, or $0.06 perbasic and diluted common share as compared to a net loss of $8.5million or $0.25 per basic and diluted common share in thecomparable period in 2008.

For the year ended December 31, total revenues increased to$205.4 million from $171.5 million for the year ended December 31,2008, an increase of 20 percent. Recurring revenues were $191.3million, an increase of 18 percent over 2008. For the year endedDecember 31, non-recurring revenues were $14.2 million, an increaseof 44 percent over the prior year.

For the year ended December 31, cost of revenues, excludingdepreciation and amortization, was $103.1 million, up from $90.1million for the year ended December 31, 2008. As a percentage ofrevenues, cost of revenues was 50 percent in 2009 as compared to 53percent in the same period of the prior year.

For the year ended December 31, sales and marketing costs were$20.7 million as compared to $19.7 million for the same period in2008. For the year ended December 31, general and administrativeexpenses were $19.0 million as compared to $17.7 million for theyear ended December 31, 2008.

Other expenses were $3.1 million for the year ended December 31,as compare to $0.8 million for the year ended December 31, 2008.These expenses were primarily from the pending acquisition of Switchand Data by Equinix.

For the year ended December 31, Adjusted EBITDA increased to$76.3 million from $56.5 million in 2008, an increase of 35 percent.

Net income for the year was $0.4 million, including acquisitionrelated expenses of $2.6 million, or $0.01 per basic and dilutedcommon share as compared to a net loss of $7.0 million or $0.20 perbasic and diluted common share in 2008.

Switch and Data had cash and cash equivalents of $28.5 million onDecember 31. Bank debt outstanding on December 31, was $142.5million. Capital expenditures in the quarter were $8.1 million and$62.5 million for the full year.

On October 21, Switch and Data and Equinix entered into adefinitive agreement for Equinix to acquire Switch and Data in atransaction valued at approximately $689 million in cash and stock,based on Switch and Data's October 20th market closing price. OnJanuary 29, Switch and Data stockholders voted to approve Switch andData's merger with and into Sundance Acquisition, a subsidiary ofEquinix. Completion of the merger remains subject to the expirationor termination of the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and thesatisfaction or waiver of the other closing conditions specified inthe merger agreement between Equinix and Switch and Data. The mergeris expected to close in the second quarter of 2010. There can be noassurances that the proposed merger will be consummated.

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