Equinix

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010

OR

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the transition period from

to

Commission file number 000-31293

EQUINIX, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation)

77-0487526
(IRS Employer Identification No.)

One Lagoon Drive, Fourth Floor, Redwood City, California 94065
(Address of principal executive offices, including ZIP code)

(650) 598-6000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock, $0.001

Name of each exchange on which registered

The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Act. È Yes ‘ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. ‘ Yes È No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. È Yes ‘ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). È Yes ‘ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and

will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. È

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer È

Non-accelerated filer ‘

Accelerated filer ‘

Smaller reporting company ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). ‘ Yes È No

The aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the
price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal
quarter was approximately $3.7 billion. As of January 31, 2011, a total of 46,198,990 shares of the registrant’s common stock were
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III—Portions of the registrant’s definitive proxy statement to be issued in conjunction with the registrant’s 2011 Annual
Meeting of Stockholders, which is expected to be filed not later than 120 days after the registrant’s fiscal year ended December 31,
2010. Except as expressly incorporated by reference, the registrant’s proxy statement shall not be deemed to be a part of this report
on Form 10-K.

EQUINIX, INC.

FORM 10-K

DECEMBER 31, 2010

TABLE OF CONTENTS

PART I

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Removed and reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item

1.
1A.
1B.
2.
3.
4.

PART II

5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

6.
7.
7A.
8.
9.
9A.
9B.

10.
11.
12.

13.
14.

15.

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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ITEM 1. BUSINESS

PART I

The words “Equinix”, “we”, “our”, “ours”, “us” and the “Company” refer to Equinix, Inc. All statements
in this discussion that are not historical are forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, including statements regarding Equinix’s “expectations”,
“beliefs”, “intentions”, “strategies”, “forecasts”, “predictions”, “plans” or the like. Such statements are based
on management’s current expectations and are subject to a number of factors and uncertainties that could cause
actual results to differ materially from those described in the forward-looking statements. Equinix cautions
investors that there can be no assurance that actual results or business conditions will not differ materially from
those projected or suggested in such forward-looking statements as a result of various factors, including, but not
limited to, the risk factors discussed in this Annual Report on Form 10-K. Equinix expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in Equinix’s expectations with regard thereto or any change in events,
conditions, or circumstances on which any such statements are based.

Overview

Equinix connects businesses with partners and customers around the world through a global platform of
high performance data centers, containing dynamic ecosystems and a broad choice of networks. More than 3,275
enterprise, cloud, digital content and financial companies connect to more than 625 network service providers
and rely on Platform Equinix to grow their business, improve application performance and protect their vital
digital assets. Equinix operates in 35 strategic markets across North America, Europe and Asia-Pacific and
continually invests in expanding its platform to power customer growth.

Platform Equinix™ combines state-of-the-art International Business Exchange® (IBX®) data centers, a
global footprint and unique ecosystems. Together these components accelerate business growth for Equinix’s
customers by safeguarding their infrastructure, housing their assets and applications closer to users to improve
performance and enabling them to collaborate with the widest variety of partners and customers.

Equinix’s platform offers these unique value propositions to customers:

• Reliability—Equinix delivered more than 99.9999% of uptime across its footprint in 2010.

•

Scalability—A wide worldwide availability, six million square feet and growing, to ensure customers’
operations can scale.

• Global reach—A broad footprint of 92 data centers across 35 key markets in 4 continents.

• Choice—A great aggregation of 625 networks to ensure performance and offer the power of choice.

• Technology—Over 3,900 potential technology partners to deploy world-class solutions.

•

Proximity—More than 90% of the population of North America and Western Europe is located less
than 10 milliseconds of network latency from an Equinix facility. Equinix also has sites in the key
business centers of Asia Pacific.

Equinix has established a critical mass of customers which continues to drive new and existing customer

growth and bookings. A supply and demand imbalance in the data center market has also contributed to
Equinix’s revenue growth. In addition, as a result of a largely fixed cost model, any growth in revenue would
likely drive incremental margins and increased operating cash flow; however, the costs of a new IBX data center
have a negative effect on earnings until the data center generates sufficient revenues to cover these costs.

Our network-neutral business model contributes to our success in the market. We offer customers direct

interconnection to an aggregation of bandwidth providers, rather than focusing on selling a particular network,

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including the world’s top carriers, Internet Service Providers (ISPs), broadband access networks (DSL / cable)
and international carriers. Neutrality also means our customers can choose to buy from, or partner, with leading
companies across our five targeted verticals. These include:

• Network Providers (AT&T, British Telecom, Comcast, Level 3 Communications, NTT, Qwest,

SingTel, Sprint, Verizon Business)

• Cloud and IT Services (Amazon.com, Carpathia, Microsoft, Citrix, IBM, Salesforce.com, Voxel.net,

WebEx)

• Content Providers (eBay, DIRECTV, Facebook, Google, Hulu, SONY Yahoo!, Zynga)

• Enterprise (Booz Allen Hamilton, Barnes & Noble, Bechtel, Deloitte & Touche, GAP, The McGraw-

Hill Companies, United Stationers Inc, Wellpoint)

•

Financial Companies (ACTIV Financial, Bloomberg, Box.net, CBOE, DirectEdge, JP Morgan Chase,
Quantlab Financial, Thomson Reuters)

Equinix generates revenue by selling colocation, interconnection and managed IT infrastructure services on

a global platform of 92 IBX data centers.

• Colocation services include cabinets, power, operations space and storage space for customers’

colocation needs.

•

Interconnection services include cross connects, as well as switch ports on the Equinix Internet
Exchange and Equinix Carrier Ethernet Exchange services. These services provide scalable and reliable
connectivity that allows customers to exchange traffic directly with the service provider of their choice
or directly with each other, creating a performance optimized business ecosystem for the exchange of
data between strategic partners.

• Managed IT infrastructure services allow customers to leverage Equinix’s significant

telecommunications expertise, maximize the benefits of our IBX data centers and optimize their
infrastructure and resources.

The market for Equinix’s services has historically been served by large telecommunications carriers which
have bundled their telecommunications and managed services with their colocation offerings. In addition, some
Equinix customers, such as Google and Microsoft, build and operate their own data centers for their large
infrastructure deployments, called server farms. However, these customers rely upon Equinix IBX data centers
for many of their critical interconnection relationships.

The need for large, wholesale outsourced data centers is also being addressed by real estate investment
trusts (REITs) that build large data centers to meet customers’ needs for standalone data centers, a different
customer segment than Equinix serves. However, with the increasing cost and complexity of the power and
cooling requirements of today’s data center equipment, there continues to be a supply and demand imbalance in
the market. The supply and demand imbalance in the industry has, to date, created a favorable pricing
environment for Equinix, as well as an opportunity to increase market share. Equinix has gained many customers
that have outgrown their existing data centers or that have realized the benefits of a network-neutral model and
the ability to create their own optimized business ecosystems for the exchange of data. Strategically, we will
continue to look at attractive opportunities to grow market share and selectively expand our footprint and service
offerings. We continue to leverage our global reach and depth to differentiate based upon our ability to support
truly global customer requirements in all our markets.

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Several factors contribute to the growth in demand for data center services, including:

• The continuing growth of consumer Internet traffic from new bandwidth-intensive services, such as
video, VoIP, social media, mobile data, gaming, data-rich media, Ethernet and wireless services.

•

Significant increases in power and cooling requirements for today’s data center equipment. Servers
have increased the overall level of power consumed and heat generation by more than two times since
2000 and many legacy-built data centers are unable to accommodate new power and cooling demands.

• The growth of enterprise applications delivered across communications networks, such as

Software-as-a-Service (SaaS), and disaster recovery, and the adoption of cloud computing technology
services.

• The financial services market is experiencing tremendous growth with the shift to electronic trading

and increased volume of peak messages (transactions per second), requiring optimized data exchange
through business ecosystems.

• The growth of “proximity communities” that rely on immediate physical colocation and

interconnection with their strategic partners and customers, such as financial exchange ecosystems for
electronic trading and settlement.

• The high capital costs associated with building and maintaining “in-sourced” data centers creates an

opportunity for capital savings by leveraging an outsourced colocation model.

Industry Background

The Internet is a collection of numerous independent networks interconnected to form a network of

networks. Users on different networks are able to communicate with each other through interconnection services
between these networks. For example, when a person sends an email to someone that uses a different provider for
his or her connectivity (e.g., Comcast versus Verizon), the email must pass from one network to the other in
order to get to its final destination. Equinix provides a physical point at which that interconnection can occur.

In order to accommodate the rapid growth of Internet traffic, an organized approach for network

interconnection was needed. The exchange of traffic between these networks became known as peering. Peering
is when networks trade traffic at relatively equal amounts and set up agreements to trade traffic often at no
charge to the other party. At first, government and non-profit organizations established places where these
networks could exchange traffic, or peer, with each other—these points were known as network access points, or
NAPs. Over time, many NAPs became a natural extension of carrier services and were run by such companies as
MFS (now a part of Verizon Business), Sprint, Ameritech and Pacific Bell (the last two now parts of AT&T).

Ultimately, these NAPs were unable to scale with the growth of the Internet, and the lack of “neutrality” by

the carrier owners of these NAPs created a conflict of interest with the participants. This created a market need
for network-neutral interconnection points that could accommodate the rapidly growing need to increase
performance for enterprise and consumer users of the Internet, especially with the rise of important content
providers such as AOL, Google, Microsoft, Yahoo! and others. In addition, the providers, as well as a growing
number of enterprises, required a more secure and reliable solution for direct connection to a variety of
telecommunications networks as the importance of their Internet operations continued to grow.

To accommodate Internet traffic growth, the largest of these networks left the NAPs and began trading

traffic by placing private circuits between each other. Peering, which once occurred at the NAP locations, was
moved to these private circuits. Over the years, these circuits became expensive to expand and could not be built
quickly enough to accommodate traffic growth. This led to a need by the large carriers to find a more efficient
way to exchange network traffic or peer. As a result, many customers satisfy their requirements for peering
through data center service providers like Equinix because it permits them to peer with the networks they require
within one location, using simple direct connections. Their ability to peer across the room or data center campus,
instead of across a metro area, has increased the scalability of their operations while decreasing network costs.

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The interconnection model has further evolved over the years to include new services offerings. Starting

with the peering and network communities, interconnection has since been used for new network services
including carrier Ethernet, MPLS, VPN and mobility services, in addition to traditional international private line
and voice services. The industry continues to evolve with a set of new service offerings where interconnection is
often used to solve the network-to-network interconnection challenges.

In addition, the enterprise customer segment is also evolving. In the past, most enterprises opted to keep
their data center requirements in house. However, several recent trends have led more and more enterprise CIOs
to consider and/or choose to outsource some or all of their data center requirements. The combination of
globalization, the proliferation of bandwidth intensive Internet-facing applications and rich media content, the
rise of virtualization and cloud computing, business continuity and disaster recovery needs, and most importantly
the recent economic downturn, have meant that enterprise CIOs must increasingly try to do more with less.
Meanwhile, the biggest challenge for data center and operations managers is being out of data center space and
power. With the typical in-house datacenter ranging in size from 2,000 to 40,000 square feet, and with very
limited optical fiber availability, many CIOs struggle to find the necessary capital, in the current economic
environment, to build out and connect their existing facilities. This is why many industry analysts forecast the
colocation market to grow over the next three years at more than an approximately 20% compounded annual
growth rate. Thus the scope of the industry for colocation has expanded in terms of market opportunity.

Equinix Value Proposition

More than 3,900 companies, including a diversified mix of cloud and IT service providers, content

providers, enterprises, financial companies, and network service providers, currently operate within Equinix IBX
data centers. These companies derive specific value from the following elements of the Equinix service offering:

• Comprehensive global service offering: With 92 IBX data centers in 35 markets in the North America,

Europe and Asia-Pacific, Equinix offers a consistent global service.

• Premium data centers: Equinix IBX data centers feature advanced design, security, power and cooling

elements to provide customers with industry-leading reliability. While others in the market have
business models that include additional offerings, Equinix is focused on data center services and
interconnection as our core competencies.

• Dynamic business ecosystems: Equinix’s network-neutral model has enabled us to attract a critical

mass of networks that, in turn, attracts other businesses seeking to interconnect within a single location.
This ecosystem model, versus connecting to multiple partners in disparate locations, reduces costs and
optimizes the performance of data exchange. As Equinix grows and attracts an even more diversified
base of customers, the value of Equinix’s IBX data center offering increases.

•

Improved economics: Customers seeking to outsource their data center operations rather than build
their own capital-intensive data centers enjoy significant capital cost savings in this credit-challenged
economic environment. Customers also benefit from improved economics on account of the broad
access to networks that Equinix provides. Rather than purchasing costly local loops from multiple
transit providers, customers can connect directly to more than 625 networks inside Equinix’s IBX data
centers.

• Leading insight: With more than 10 years of industry experience, Equinix has a specialized staff of
industry experts who helped build and shape the interconnection infrastructure of the Internet. This
specialization and industry knowledge base offer customers a unique consultative value and a
competitive advantage.

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Our Strategy

Our objective is to expand our global leadership position as the premier network neutral data center operator

for cloud and IT services providers, content providers, financial companies, enterprises and network services
providers. Key components of our strategy include the following:

Improve customer performance through interconnection. We have assembled a critical mass of premier
network providers and content companies and have become one of the core hubs of the information-driven world.
This critical mass is a key selling point for companies that want to connect with a diverse set of networks to
provide the best connectivity to their end-customers and network companies that want to sell bandwidth to
companies and interconnect with other networks in the most efficient manner available. Currently, we service
more than 625 unique networks, including all of the top tier networks, allowing our customers to directly
interconnect with providers that serve more than 90% of global Internet routes. We have a growing mass of key
players in the cloud and IT services, enterprise and financial sectors, such as Bank of America, The GAP,
Gannett Company, Inc., IBM, Salesforce.com, Sony and others. We expect these segments will continue to grow
as they seek to leverage our critical mass of network providers and interconnect directly with each other to
improve performance.

Streamline ease of doing business globally. Data center reliability, power availability and network choice

are the most important attributes considered by our customers when they are choosing a data center provider in a
particular location. We have long been recognized as a leader in these areas and our performance continues to
improve against these criteria. Our power infrastructure delivered 99.9999% uptime globally in 2010.

In 2010, more than half of our revenue came from customers with deployments across two or more of our
global regions, and as globalization continues, seamless global services will become an increasingly important
data center selection criteria. We are currently rolling out global product, pricing and contracts harmonization
initiatives to meet these global demands.

Deepen existing and grow new ecosystems. As networks, cloud and IT services providers, content
providers, financial services providers and enterprises locate in our IBX data centers, it benefits their suppliers
and business partners to do so as well to gain the full economic and performance benefits of direct
interconnection for their business ecosystems. These partners, in turn, pull in their business partners, creating a
“network effect” of customer adoption. Our interconnection services enable scalable, reliable and cost-effective
interconnection and optimized traffic exchange thus lowering overall cost and increasing flexibility. The ability
to directly interconnect with a wide variety of companies is a key differentiator for us in the market. We are
rolling out innovative exchanges to accelerate commercial growth in our sites and accelerate this network effect.

Expand vertical go-to-market plan. We plan to continue to focus our go to market efforts on customer
segments and business applications that value the Equinix value proposition of reliability, global reach and
ecosystem collaboration opportunities. Today we have identified these segments as cloud and IT services,
content and digital media, financial services, enterprises and network service providers. As digital business
evolves, we will continue to identify and focus our go-to-market efforts on industry segments that need our value
proposition.

Accelerate global reach and scale. We continue to evaluate expansion opportunities in select markets based

on customer demand. We expect to open eight new IBX data centers, or IBX data center expansions, in eight
markets in 2011. In April 2010, we successfully completed our acquisition of Switch and Data Facilities
Company, Inc. (“Switch and Data”). This extended our presence into 16 new markets in the U.S. and Canada.

Our strategy is to continue to grow in select existing markets and possibly expand to additional markets

where demand and financial return potential warrant. We recently announced our intention to extend Platform
Equinix to South America by investing with Riverwood Capital to acquire a controlling interest in ALOG Data

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Centers of Brazil S.A. We expect to execute this expansion strategy in a cost-effective and disciplined manner
through a combination of acquiring existing data centers through lease or purchase, acquiring or investing in
local data center operators and building new IBX data centers based on key criteria, such as demand and potential
financial return, in each market.

Our Customers

Our customers include carriers and other bandwidth providers, cloud and IT services providers, content
providers, financial companies and global enterprises. We offer each customer a choice of business partners and
solutions based on their colocation, interconnection and managed IT service needs. As of December 31, 2010, we
had 3,916 customers worldwide.

Typical customers in our five key customer categories include the following:

Cloud and IT Services Content Providers

Enterprise

Financial Companies

Network Services

Amazon.com
Carpathia
Microsoft
Citrix

IBM
Salesforce.com

Voxel.net

eBay
DIRECTV
Facebook
Google

Booz Allen Hamilton
Barnes & Noble
Bechtel
Deloitte & Touche

Hulu
SONY

Yahoo!

GAP
The McGraw-Hill
Companies
United Stationers Inc

ACTIV Financial
Bloomberg
Box. net
CBOE

DirectEdge
JP Morgan Chase

AT&T
BT
Comcast
Level 3
Communications
NTT
Qwest

Quantlab Financial

Verizon Business

Customers typically sign renewable contracts of one or more years in length. No single customer accounted

for 10% or more of our revenues for the years ended December 31, 2010, 2009 or 2008.

Our Services

Equinix provides a choice of data center services primarily comprised of colocation, interconnection and

managed IT infrastructure services.

Colocation Services

Our IBX data centers provide our customers with secure, reliable and fault-tolerant environments that are
necessary for optimum Internet commerce interconnection. Many of our IBX data centers include multiple layers
of physical security, scalable cabinet space availability, on-site trained staff 24 hours per day, 365 days a year,
dedicated areas for customer care and equipment staging, redundant AC/DC power systems and multiple other
redundant and fault-tolerant infrastructure systems. Some specifications or services provided may differ based on
original facility design or market.

Within our IBX data centers, customers can place their equipment and interconnect with a choice of

networks or other business partners. We also provide customized solutions for customers looking to package our
IBX services as part of their complex solutions. Our colocation products and services include:

Cabinets. Our customers have several choices for colocating their networking, server and storage equipment.
They can place the equipment in one of our shared or private cages or customize their space. In Europe, customers
can purchase their own private “suite” which is walled off from the rest of the data center. As customers’ colocation
requirements increase, they can expand within their original cage (or suite) or upgrade into a cage that meets their
expanded requirements. Customers buy the hardware they place in our IBX data centers directly from their chosen
vendors. Cabinets (or suites) are priced with an initial installation fee and an ongoing recurring monthly charge.

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Power. Power is an element of increasing importance in customers’ colocation decisions. We offer both AC

and DC power circuits at various amperages and phases customized to a customer’s individual power
requirements. We also offer metered power in certain markets. Power is priced with an initial installation fee and
an ongoing recurring monthly charge.

IBXflex. IBXflex allows customers to deploy mission-critical operations personnel and equipment on-site at
our IBX data centers. Because of the close proximity to their infrastructure within our IBX data centers, IBXflex
customers can offer a faster response and quicker troubleshooting solution than those available in traditional
colocation facilities. This space can also be used as a secure disaster recovery point for customers’ business and
operations personnel. This service is priced with an initial installation fee and an ongoing recurring monthly
charge.

Interconnection Services

Our interconnection services enable scalable, reliable and cost-effective interconnection and traffic

exchange between Equinix customers. These interconnection services are either on a one-to-one basis with direct
cross connects or one-to-many through one of our Equinix Exchange services. In the peering community, we
provide an important industry leadership role by acting as the relationship broker between parties who would like
to interconnect within our IBX data centers. Our staff holds significant positions in many leading industry
groups, such as the North American Network Operators’ Group, or NANOG, and the Internet Engineering Task
Force, or IETF. Members of our staff have published industry-recognized white papers and strategy documents in
the areas of peering and interconnection, many of which are used by other institutions worldwide in furthering
the education and promotion of this important set of services. We expect to continue to develop additional
services in the area of traffic exchange that will allow our customers to leverage the critical mass of networks
now available in our IBX data centers. Our current exchange services are comprised of the following:

Physical Cross-Connect/Direct Interconnections. Customers needing to directly and privately connect to
another IBX data center customer can do so through single or multi-mode fiber. These cross connections are the
physical link between customers and can be implemented within 24 hours of request. Cross-connect services are
priced with an initial installation fee and an ongoing monthly recurring charge.

Equinix Internet Exchange. Customers may choose to connect to and peer through our Equinix Internet

Exchange via a central switching fabric rather than purchase a direct physical cross connection. With a
connection to this switch, a customer can aggregate multiple interconnects over one physical connection with up
to multiple, linked 10 gigabit ports of capacity instead of purchasing individual physical cross connects. The
service is priced per IBX data center with an initial installation fee and an ongoing monthly recurring charge.
Individual IBX data center prices increase as the number of participants on the exchange service grows.

Equinix IBXLink. Customers who are located in one IBX data center may need to interconnect with
networks or other customers located in an adjacent or nearby IBX data center in the same metro area. IBXLink
allows customers to seamlessly interconnect between IBX data centers at capacities up to an OC-192, or 10
gigabits per second level. IBXLink services are priced with an initial installation fee and an ongoing monthly
recurring charge dependent on the capacity the customer purchases.

Internet Connectivity Services. Customers who are installing equipment in our IBX data centers generally

require IP connectivity or bandwidth services. Although many large customers prefer to contract directly with
carriers, we offer customers the ability to contract for these services through us from any of the major bandwidth
providers in that data center. This service, which is provided in our Asia-Pacific region, is targeted to customers
who require a single bill and a single point of support for their entire services contract through Equinix for their
bandwidth needs. Internet connectivity services are priced with an initial installation fee and an ongoing monthly
recurring charge based on the amount of bandwidth committed.

9

Carrier Ethernet Exchange Services. We have launched a new Carrier Ethernet Exchange service similar to

the Equinix Exchange in 10 initial markets where customers can connect via a central switching fabric to
interconnect between multiple Carrier Ethernet Providers rather than creating individual Network to Network
interfaces (NNIs) between individual carriers. The service builds on the benefits of the Internet community and
extends the ability to interconnect the high growth Ethernet industry. The service is priced per IBX data center
with an initial fee and a monthly recurring charge.

Managed IT Infrastructure Services

With the continued growth in Internet traffic, networks, service providers, enterprises and content providers

are challenged to deliver fast and reliable service, while lowering costs. With more than 625 Internet Service
Providers (ISPs) and carriers located in our IBX data centers, we leverage the value of network choice with our
set of multi-network management and other outsourced IT services, including:

Professional Services. Our IBX data centers are staffed with Internet and telecommunications specialists

who are on-site and/or available 24 hours a day, 365 days a year. These professionals are trained to perform
installations of customer equipment and cabling. Professional services are custom-priced depending on customer
requirements.

Smart Hands Services. Our customers can take advantage of our professional “Smart Hands” service, which

gives customers access to our IBX data center staff for a variety of tasks, when their own staff is not on site.
These tasks may include equipment rebooting and power cycling, card swapping and performing emergency
equipment replacement. Services are available on-demand or by customer contract and are priced on an hourly
basis.

Equinix Direct. Equinix Direct is a managed multi-homing service that allows customers to easily provision

and manage multiple network connections over a single interface. Customers can choose branded networks on a
monthly basis with no minimums or long-term commitments. This service is priced with an initial installation fee
and ongoing monthly recurring charges, depending on the bandwidth used by the customer.

Sales and Marketing

Sales. We use a direct sales force and channel marketing program to market our services to global

enterprises, content providers, financial companies and network service providers. We organize our sales force
by customer type as well as by establishing a sales presence in diverse geographic regions, which enables
efficient servicing of the customer base from a network of regional offices. In addition to our worldwide
headquarters located in Silicon Valley, we have established an Asia-Pacific regional headquarters in Hong Kong,
and a European regional headquarters in London. Our North America sales offices are located in Boston,
Chicago, Los Angeles, New York, Reston, Virginia and Silicon Valley. Our Asia-Pacific sales offices are located
in Hong Kong, Singapore, Sydney and Tokyo. Our European sales offices are located in Amsterdam, Dusseldorf,
Frankfurt, Geneva, London, Munich, Paris and Zurich.

Our sales team works closely with each customer to foster the natural network effect of our IBX model,

resulting in access to a wider potential customer base via our existing customers. As a result of the IBX
interconnection model, IBX data center participants often encourage their customers, suppliers and business
partners to also locate in our IBX data centers. These customers, suppliers and business partners, in turn,
encourage their business partners to locate in our IBX data centers resulting in additional customer growth. This
network effect significantly reduces our new customer acquisition costs. In addition, large network providers or
managed service providers may refer customers to Equinix as a part of their total customer solution. Equinix also
focuses vertical sales specialists selling to support specific industry requirements for network and content
providers, financial services, cloud computing and systems integrators and enterprise customer segments.

10

Marketing. To support our sales effort and to actively promote our brand in the U.S., Asia-Pacific and
Europe, we conduct comprehensive marketing programs. Our marketing strategies include active public relations
and ongoing customer communications programs. Our marketing efforts are focused on major business and trade
publications, online media outlets, industry events and sponsored activities. Our staff holds leadership positions
in key networking organizations, and we participate in a variety of Internet, Carrier Ethernet, computer and
financial industry conferences, placing our officers and employees in keynote speaking engagements at these
conferences. We also regularly measure customer satisfaction levels and host key customer forums to ensure
customer needs are understood and incorporated in product and service planning efforts. From a brand
perspective, we build recognition through sponsoring or leading industry technical forums, participating in
Internet industry standard-setting bodies and through advertising and online campaigns. We continue to develop
and host industry educational forums focused on peering technologies and practices for ISPs and content
providers.

Our Competition

While a large number of enterprises own their own data centers, many others outsource some or all of their

requirements to multi-tenant Internet data center facilities, such as those operated by Equinix. With the current
challenging economic environment, we believe that the outsourcing trend is likely to not only continue but also
to grow in the coming years. It is estimated that Equinix is one of over 650 companies that provide Internet data
center services around the world, ranging in size from firms with a single data center in a single market to firms
in over 20 markets. Equinix competes with these firms, which vary in terms of their data center offerings,
including:

Colocation Providers

Colocation data centers are a type of Internet data center that can also be referred to as ‘retail’ data center
space. Typically, colocation data center space is sold on the basis of individual racks/cabinets or cages ranging
from 500 to 5,000 square feet in size. Typical customers of colocation providers include:

• Large enterprises with significant IT expertise and requirements

•

•

Small and medium businesses looking to outsource data center requirements

Internet application providers

• Major Internet content, entertainment and social networking providers

•

Shared, dedicated and managed hosting providers

• Telecommunications carriers

• Content delivery networks

Full facility maintenance and systems, including fire suppression, security, power backup and HVAC, are

routinely included in managed colocation offerings. A variety of additional services is typically available in
colocation facilities, including remote hands technician services and network monitoring services.

In addition to Equinix, providers that offer colocation services both globally and locally include firms such

as Savvis, Inc., Verizon Business, AT&T, Level 3 Communications, Qwest, NTT and COLT.

Carrier-Neutral Colocation Providers

In addition to data center space and power, colocation providers also offer interconnection services. Certain

of these providers, known as network or carrier-neutral colocation providers, can offer customers the choice of
hundreds of network service providers, or ISPs, to choose from. Typically, customers use interconnection
services to buy Internet connectivity, connect voice over IP (VoIP) telephone networks, perform financial

11

exchange and settlement functions or perform business-to-business e-commerce. Carrier-neutral data centers are
often located in key network hubs around the world like New York; Ashburn, Virginia; London; Amsterdam;
Singapore, and Hong Kong. Two types of data center facilities offering carrier-neutral colocation are used for
many network-to-network interconnections:

• A Meet Me Room (MMR) is typically a smaller space, generally 5,000 square feet or less, located in a

major carrier hotel and often found in a wholesale data center facility.

• A carrier-neutral data center is generally larger than a MMR and may be a stand-alone building

separate from existing carrier hotels.

In addition to Equinix, other providers that we believe could be defined as offering carrier-neutral
colocation include CoreSite, Interxion, Telecity Group, Telx, Global Switch, TELEHOUSE and Terremark.

Wholesale Data Center Providers

Wholesale data center providers lease data center space that is typically sold in cells or pods (i.e., individual
white-space rooms) ranging in size from 10,000 to 20,000 square feet, or larger. Wholesale data center providers
sell to both enterprises and to colocation providers. These data centers primarily provide space and power
without additional services like technicians, remote hands services or network monitoring (although other tenants
might offer such services). Wholesale data center providers are typically classified as REITs (real estate
investment trusts). Their offerings are conceptually similar to a landlord who provides empty space and basic
maintenance services to warehouse tenants.

Sample wholesale data center providers include Digital Realty Trust and Dupont Fabros Technology.

Managed Hosters

Managed hosting services are provided by several firms that also provide data center colocation services.
Typically, managed hosting providers can manage server hardware that is owned by either the hosting provider
or the customer. They can also provide a combination of comprehensive systems administration, database
administration and sometimes application management services. Frequently, this results in managed hosting
providers “running” the customer’s servers, although such administration is frequently shared. The provider may
manage such functions as operating systems, databases, security and patch management, while the customer will
maintain management of the applications riding on top of those systems.

The full list of potential services that can be offered as part of managed hosting is substantial and includes

services such as remote management, custom applications, helpdesk, messaging, databases, disaster recovery,
managed storage, managed virtualization, managed security, managed networks and systems monitoring.
Managed hosting services are typically used for:

• Application hosting by organizations of any size, including large enterprises

• Hosted or managed messaging, including Microsoft Exchange and other complex messaging

applications

• Complex or highly scalable web hosting or e-commerce web sites

• Managed storage solutions (including large drive arrays or backup robots)

•

Server disaster recovery and business continuity, including clustering and global server load balancing

• Database servers, applications and services

Examples of managed hosters include Rackspace, Verizon Business, AT&T, Savvis, Inc., SunGard and

NaviSite.

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Unlike other providers whose core businesses are bandwidth or managed services, we focus on neutral
interconnection hubs for cloud and IT service providers, content providers, financial companies, enterprises and
network service providers. As a result, we are free of the limited choices found commonly at other hosting/
colocation companies. We compete based on the quality of our IBX data centers, our ability to provide a one-stop
global solution in our North American, European and Asia-Pacific locations, the performance and diversity of
our network-neutral strategy, and the economic benefits of the aggregation of top network and business
ecosystems under one roof. We expect to continue to benefit from several industry trends including a supply/
demand imbalance in the colocation market, the need for contracting with multiple networks due to the
uncertainty in the telecommunications market, customers’ increasing power requirements, enterprise customers’
growth in outsourcing, the continued growth of broadband and significant growth in Ethernet as a network
alternative, and mobile applications.

Our Business Segment Financial Information

We currently operate in three reportable segments, comprised of our North America, Europe and Asia-
Pacific geographic regions. Information attributable to each of our reportable segments is set forth in Note 15 of
Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Employees

As of December 31, 2010, we had 1,921 employees. We had 1,156 employees based in the North America,

482 employees based in Europe and 283 employees based in Asia-Pacific. Of those employees, 837 were in
engineering and operations, 320 were in sales and marketing and 764 were in management, finance and
administration.

Available Information

We were incorporated in Delaware in June 1998. We are required to file reports under the Securities
Exchange Act of 1934, as amended, with the Securities and Exchange Commission. You may read and copy our
materials on file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.
You may obtain information regarding the SEC’s Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet website at http://www.sec.gov that contains reports, proxy
and information statements and other information.

You may also obtain copies of our annual report on Form 10-K, our quarterly reports on Form 10-Q and our

current reports on Form 8-K, and any amendments to such reports, free of charge by visiting the Investor
Relations page on our website, www.equinix.com. These reports are available as soon as reasonably practical
after we file them with the SEC. Information contained on our website is not part of this Annual Report on Form
10-K.

ITEM 1A. RISK FACTORS

In addition to the other information contained in this report, the following risk factors should be considered

carefully in evaluating our business and us:

Acquisitions present many risks, and we may not realize the financial or strategic goals that were
contemplated at the time of any transaction.

Over the last several years, we have completed several acquisitions, including that of IXEurope plc in 2007,
Virtu Secure Webservices B.V. in 2008, Upminster GmbH in 2009 and Switch and Data in 2010. We may make
additional acquisitions in the future, which may include acquisitions of businesses, products, services or
technologies that we believe to be complementary, acquisitions of new IBX data centers or real estate for
development of new IBX data centers or through investments in local data center operators. For example, we

13

recently announced our intention to acquire a controlling interest in ALOG Data Centers of Brazil S.A. We may
pay for future acquisitions by using our existing cash resources (which may limit other potential uses of our
cash), incurring additional debt (which may increase our interest expense, leverage and debt service
requirements) and/or issuing shares (which may dilute our existing stockholders and have a negative effect on
our earnings per share). Acquisitions expose us to several potential risks, including:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

the possible disruption of our ongoing business and diversion of management’s attention by
acquisition, transition and integration activities;

our potential inability to successfully pursue or realize some or all of the anticipated revenue
opportunities associated with an acquisition or investment;

the possibility that we may not be able to successfully integrate acquired businesses, or businesses in
which we invest, or achieve anticipated operating efficiencies or cost savings;

the possibility that announced acquisitions may not be completed, due to failure to satisfy the
conditions to closing or for other reasons;

the dilution of our existing stockholders as a result of our issuing stock in transactions, such as our
acquisition of Switch and Data, where 80% of the consideration payable to Switch and Data’s
stockholders consisted of shares of our common stock;

the possibility of customer dissatisfaction if we are unable to achieve levels of quality and stability on
par with past practices;

the possibility that our customers may not accept either the existing equipment infrastructure or the
“look-and-feel” of a new or different IBX data center;

the possibility that additional capital expenditures may be required or that transaction expenses
associated with acquisitions may be higher than anticipated;

the possibility that required financing to fund the requirements of an acquisition may not be available
on acceptable terms or at all;

the possibility that we may be unable to obtain required approvals from governmental authorities under
antitrust and competition laws on a timely basis or at all, which could, among other things, delay or
prevent us from completing an acquisition, limit our ability to realize the expected financial or strategic
benefits of an acquisition or have other adverse effects on our current business and operations;

the possible loss or reduction in value of acquired businesses;

the possibility that carriers may find it cost-prohibitive or impractical to bring fiber and networks into a
new IBX data center;

the possibility of litigation or other claims in connection with or as a result of an acquisition, including
claims from terminated employees, customers, former stockholders or other third parties; and

the possibility of pre-existing undisclosed liabilities, including but not limited to lease or landlord
related liability, environmental or asbestos liability, for which insurance coverage may be insufficient
or unavailable.

The occurrence of any of these risks could have a material adverse effect on our business, results of

operations, financial condition or cash flows.

We cannot assure you that the price for any future acquisitions of IBX data centers will be similar to prior

IBX data center acquisitions. In fact, we expect costs required to build or render new IBX data centers
operational to increase in the future. If our revenue does not keep pace with these potential acquisition and
expansion costs, we may not be able to maintain our current or expected margins as we absorb these additional
expenses. There is no assurance we would successfully overcome these risks or any other problems encountered
with these acquisitions.

14

Our substantial debt could adversely affect our cash flows and limit our flexibility to raise additional
capital.

We have a significant amount of debt and expect to incur additional debt to support our growth. As of
December 31, 2010, our total indebtedness was approximately $2.0 billion, our stockholders’ equity was $1.9
billion and our cash and investments totaled $592.8 million.

Our substantial amount of debt could have important consequences. For example, it could:

•

require us to dedicate a substantial portion of our cash flow from operations to make interest and
principal payments on our debt, reducing the availability of our cash flow to fund future capital
expenditures, working capital, execution of our expansion strategy and other general corporate
requirements;

• make it more difficult for us to satisfy our obligations under our various debt instruments;

•

•

•

increase our vulnerability to general adverse economic and industry conditions and adverse changes in
governmental regulations;

limit our flexibility in planning for, or reacting to, changes in our business and industry, which may
place us at a competitive disadvantage compared with our competitors;

limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity, which
would also limit our ability to further expand our business; and

• make us more vulnerable to increases in interest rates because of the variable interest rates on some of

our borrowings to the extent we have not entirely hedged such variable rate debt.

The occurrence of any of the foregoing factors could have a material adverse effect on our business, results

of operations and financial condition. In addition, the performance of our stock price may trigger events that
would require the write-off of a significant portion of our debt issuance costs related to our convertible debt,
which may have a material adverse effect on our results of operations.

We may also need to refinance a portion of our outstanding debt as it matures, such as our $250.0 million
2.50% convertible subordinated notes due in 2012. There is a risk that we may not be able to refinance existing
debt or that the terms of any refinancing may not be as favorable as the terms of our existing debt. Furthermore,
if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon
refinancing, then the interest expense relating to that refinanced indebtedness would increase. These risks could
materially adversely affect our financial condition, cash flows and results of operations.

The uncertain economic environment may continue to have an impact on our business and financial
condition.

The uncertain economic environment could have an adverse effect on our liquidity. Customer collections are

our primary source of cash. While we believe we have a strong customer base and have continued to experience
strong collections, if the current market conditions were to worsen, some of our customers may have difficulty
paying us and we may experience increased churn in our customer base, including reductions in their
commitments to us. We may also be required to further increase our allowance for doubtful accounts and our
results would be negatively impacted. Our sales cycle could also be further lengthened if customers slow
spending, or delay decision-making, on our products and services, which could adversely affect our revenue
growth. Finally, we could also experience pricing pressure as a result of economic conditions if our competitors
lower prices and attempt to lure away our customers with lower cost solutions.

The uncertain economic environment could also have an impact on our foreign exchange forward contracts

if our counterparties’ credit deteriorates further or they are otherwise unable to perform their obligations.

15

Finally, our ability to access the capital markets may be severely restricted at a time when we would like, or

need, to do so which could have an impact on our flexibility to pursue additional expansion opportunities and
maintain our desired level of revenue growth in the future.

The market price of our stock may continue to be highly volatile, and the value of an investment in our
common stock may decline.

Since January 1, 2010, the closing sale price of our common stock on the NASDAQ Global Select Market
has ranged from $70.34 to $109.56 per share. The market price of the shares of our common stock has been and
may continue to be highly volatile. General economic and market conditions, and market conditions for
telecommunications stocks in general, may affect the market price of our common stock.

Announcements by others or us may also have a significant impact on the market price of our common

stock. These announcements may relate to:

•

•

•

•

•

•

•

•

•

•

our operating results or forecasts;

new issuances of equity, debt or convertible debt by us;

developments in our relationships with corporate customers;

announcements by our customers or competitors;

changes in regulatory policy or interpretation;

governmental investigations;

changes in the ratings of our debt or stock by rating agencies or securities analysts;

our purchase or development of real estate and/or additional IBX data centers;

acquisitions by us of complementary businesses; or

the operational performance of our IBX data centers.

The stock market has from time to time experienced extreme price and volume fluctuations, which have
particularly affected the market prices for emerging telecommunications companies, and which have often been
unrelated to their operating performance. These broad market fluctuations may adversely affect the market price
of our common stock. Furthermore, companies that have experienced volatility in the market price of their stock
have been subject to securities class action litigation. We may be the target of this type of litigation in the future.
Securities litigation against us could result in substantial costs and/or damages, and divert management’s
attention from other business concerns, which could seriously harm our business.

If we are not able to generate sufficient operating cash flows or obtain external financing, our ability to
fund incremental expansion plans may be limited.

Our capital expenditures, together with ongoing operating expenses and obligations to service our debt, will
be a substantial drain on our cash flow and may decrease our cash balances. Additional debt or equity financing
may not be available when needed or, if available, may not be available on satisfactory terms. Our inability to
obtain additional debt and/or equity financing or to generate sufficient cash from operations may require us to
prioritize projects or curtail capital expenditures which could adversely affect our results of operations.

Fluctuations in foreign currency exchange rates in the markets in which we operate internationally could
harm our results of operations.

We may experience gains and losses resulting from fluctuations in foreign currency exchange rates. To date,

the majority of our revenues and costs are denominated in U.S. dollars; however, the majority of revenues and

16

costs in our international operations are denominated in foreign currencies. Where our prices are denominated in
U.S. dollars, our sales could be adversely affected by declines in foreign currencies relative to the U.S. dollar,
thereby making our products and services more expensive in local currencies. We are also exposed to risks
resulting from fluctuations in foreign currency exchange rates in connection with our international expansions.
To the extent we are paying contractors in foreign currencies, our expansions could cost more than anticipated as
a result of declines in the U.S dollar relative to foreign currencies. In addition, fluctuating foreign currency
exchange rates have a direct impact on how our international results of operations translate into U.S. dollars.

Although we have in the past, and may decide in the future, to undertake foreign exchange hedging
transactions to reduce foreign currency transaction exposure, we do not currently intend to eliminate all foreign
currency transaction exposure. For example, while we hedge certain of our foreign currency assets and liabilities
on our consolidated balance sheet, we do not hedge revenue. Therefore, any weakness of the U.S. dollar may
have a positive impact on our consolidated results of operations because the currencies in the foreign countries in
which we operate may translate into more U.S. dollars. However, if the U.S. dollar strengthens relative to the
currencies of the foreign countries in which we operate our consolidated financial position and results of
operations may be negatively impacted as amounts in foreign currencies will generally translate into fewer U.S.
dollars. For additional information on foreign currency risk, refer to our discussion of foreign currency risk in
“Quantitative and Qualitative Disclosures About Market Risk” included in Part II, Item 7A of this Annual
Report.

We are continuing to invest in our expansion efforts but may not have sufficient customer demand in the
future to realize expected returns on these investments.

We are considering the acquisition or lease of additional properties and the construction of new IBX data

centers beyond those expansion projects already announced. We will be required to commit substantial
operational and financial resources to these IBX data centers, generally 12 to 18 months in advance of securing
customer contracts, and we may not have sufficient customer demand in those markets to support these centers
once they are built. In addition, unanticipated technological changes could affect customer requirements for data
centers and we may not have built such requirements into our new IBX data centers. Either of these
contingencies, if they were to occur, could make it difficult for us to realize expected or reasonable returns on
these investments.

Our products and services have a long sales cycle that may harm our revenues and operating results.

A customer’s decision to license cabinet space in one of our IBX data centers and to purchase additional
services typically involves a significant commitment of resources. In addition, some customers will be reluctant
to commit to locating in our IBX data centers until they are confident that the IBX data center has adequate
carrier connections. As a result, we have a long sales cycle. Furthermore, we may expend significant time and
resources in pursuing a particular sale or customer that does not result in revenue. We are also planning
significant hiring in our sales force for 2011. It will take time for these new hires to become fully productive.

The current economic downturn may further impact this long sales cycle by making it extremely difficult for
customers to accurately forecast and plan future business activities. This could cause customers to slow spending,
or delay decision-making, on our products and services, which would delay and lengthen our sales cycle.

Delays due to the length of our sales cycle may materially and adversely affect our revenues and operating

results, which could harm our ability to meet our forecasts for a given quarter and cause volatility in our stock
price.

We have incurred substantial losses in the past and may incur additional losses in the future.

As of December 31, 2010, our accumulated deficit was $349.1 million. Although we have generated net
income for each fiscal year since 2008, which was our first full year of net income since our inception, we are

17

also currently investing heavily in our future growth through the build-out of multiple additional IBX data
centers and IBX data center expansions as well as acquisitions of complementary businesses. As a result, we will
incur higher depreciation and other operating expenses, as well as acquisition costs and interest expense, that
may negatively impact our ability to sustain profitability in future periods unless and until these new IBX data
centers generate enough revenue to exceed their operating costs and cover our additional overhead needed to
scale our business for this anticipated growth. The current global financial crisis may also impact our ability to
sustain profitability if we cannot generate sufficient revenue to offset the increased costs of our recently-opened
IBX data centers or IBX data centers currently under construction. In addition, costs associated with the
acquisition and integration of any acquired companies, as well as the additional interest expense associated with
debt financing we have undertaken to fund our growth initiatives, may also negatively impact our ability to
sustain profitability. Finally, given the competitive and evolving nature of the industry in which we operate, we
may not be able to sustain or increase profitability on a quarterly or annual basis.

Any failure of our physical infrastructure or services could lead to significant costs and disruptions that
could reduce our revenue and harm our business reputation and financial results.

Our business depends on providing customers with highly reliable service. We must protect our customers’

IBX infrastructure and their equipment located in our IBX data centers. While we own certain of our IBX data
centers, others are leased by us, and we rely on the landlord for basic maintenance of the property. If such
landlord has not maintained a leased property sufficiently, we may be forced into an early exit from the center
which could be disruptive to our business. Furthermore, we continue to acquire IBX data centers not built by us.
If we discover that these IBX data centers and their infrastructure assets are not in the condition we expected
when they were acquired, we may be required to incur substantial additional costs to repair or upgrade the
centers.

The services we provide in each of our IBX data centers are subject to failure resulting from numerous

factors, including:

•

•

•

•

•

human error;

equipment failure;

physical, electronic and cybersecurity breaches;

fire, earthquake, hurricane, flood, tornado and other natural disasters;

extreme temperatures;

• water damage;

•

•

•

•

•

fiber cuts;

power loss;

terrorist acts;

sabotage and vandalism; and

failure of business partners who provide our resale products.

Problems at one or more of our IBX data centers, whether or not within our control, could result in service
interruptions or significant equipment damage. We have service level commitment obligations to certain of our
customers, including our significant customers. As a result, service interruptions or significant equipment
damage in our IBX data centers could result in difficulty maintaining service level commitments to these
customers and potential claims related to such failures. Because our IBX data centers are critical to many of our
customers’ businesses, service interruptions or significant equipment damage in our IBX data centers could also
result in lost profits or other indirect or consequential damages to our customers. We cannot guarantee that a
court would enforce any contractual limitations on our liability in the event that one of our customers brings a
lawsuit against us as the result of a problem at one of our IBX data centers.

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We may incur significant liabilities to our customers in connection with a loss of power or our failure to

meet other service level commitment obligations, or if we are held liable for a substantial damage award. In
addition, any loss of service, equipment damage or inability to meet our service level commitment obligations
could reduce the confidence of our customers and could consequently impair our ability to obtain and retain
customers, which would adversely affect both our ability to generate revenues and our operating results.

We may also incur significant liability in the event of an earthquake, particularly in California where

insurance coverage for earthquakes can be extremely expensive. While we purchase minimal levels of earthquake
coverage for certain of our IBX data centers in California, at other California IBX data centers we have elected to
self-insure. In the event of a large earthquake in California, we may find our insurance coverage to be inadequate
to cover our damages, and our business, financial condition and results of operations could be materially and
adversely impacted.

Furthermore, we are dependent upon Internet service providers, telecommunications carriers and other
website operators in the North America region, Asia-Pacific region, Europe and elsewhere, some of which have
experienced significant system failures and electrical outages in the past. Users of our services may in the future
experience difficulties due to system failures unrelated to our systems and services. If for any reason, these
providers fail to provide the required services, our business, financial condition and results of operations could be
materially and adversely impacted.

Our construction of additional new IBX data centers, or IBX data center expansions, could involve
significant risks to our business.

In order to sustain our growth in certain of our existing and new markets, we must either expand an existing
data center or acquire suitable land with or without structures to build new IBX data centers from the ground up.
Expansions or new builds are currently underway, or being contemplated, in many of our markets. A new build
involves substantial planning and lead-time, much longer time to completion than an IBX retrofit of an existing
data center or a data center expansion, and significantly higher costs of construction, equipment and materials,
which could have a negative impact on our returns. Any construction requires us to carefully select and rely on
the experience of one or more general contractors, designers and associated subcontractors during the design and
construction process. Should a general contractor, designer or significant subcontractor experience financial or
other problems during the design or construction process, we could experience significant delays, increased costs
to complete the project and other negative impacts to our expected returns. Site selection is also a critical factor
in our expansion plans, and there may not be suitable properties available in our markets with the necessary
combination of high power capacity and fiber connectivity.

While we may prefer to locate new IBX data centers adjacent to our existing locations, we may be limited
by the inventory and location of suitable properties, as well as by the need for adequate power and fiber to the
site. In the event we decide to build new IBX data centers separate from our existing IBX data centers, we may
provide services to interconnect these two centers. Should these services not provide the necessary reliability to
sustain service, this could result in lower interconnection revenue and lower margins and could have a negative
impact on customer retention over time.

Environmental regulations may impose upon us new or unexpected costs.

We are subject to various federal, state, local and foreign environmental and health and safety laws and

regulations, including those relating to the generation, storage, handling and disposal of hazardous substances
and wastes. Certain of these laws and regulations also impose joint and several liability, without regard to fault,
for investigation and cleanup costs on current and former owners and operators of real property and persons who
have disposed of or released hazardous substances into the environment. Our operations involve the use of
hazardous substances and materials such as petroleum fuel for emergency generators, as well as batteries,
cleaning solutions and other materials. In addition, we lease, own or operate real property at which hazardous
substances and regulated materials have been used in the past. At some of our locations, hazardous substances or

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regulated materials are known to be present in soil or groundwater and there may be additional unknown
hazardous substances or regulated materials present at sites we own, operate or lease. At some of our locations,
there are land use restrictions in place relating to earlier environmental cleanups that do not materially limit our
use of the sites. To the extent any hazardous substances or any other substance or material must be cleaned up or
removed from our property, we may be responsible under applicable laws, regulations or leases for the removal
or cleanup of such substances or materials, the cost of which could be substantial.

In addition, we are subject to environmental, health and safety laws regulating air emissions, storm water
management and other issues arising in our business. While these obligations do not normally impose material
costs upon our operations, unexpected events, equipment malfunctions and human error, among other factors,
can lead to violations of environmental laws, regulations or permits. Furthermore, environmental laws and
regulations change frequently and may require additional investment to maintain compliance. Noncompliance
with existing, or adoption of more stringent, environmental or health and safety laws and regulations or the
discovery of previously unknown contamination could require us to incur costs or become the basis of new or
increased liabilities that could be material.

Fossil fuel combustion creates greenhouse gas emissions that are linked to global climate change.
Regulations to limit greenhouse gas emissions are in force in the European Union in an effort to prevent or
reduce climate change. In the United States, federal legislative proposals have been considered that would, if
adopted, implement some form of regulation or taxation to reduce or mitigate greenhouse gas (“GHG”)
emissions. In addition, the U.S. Environmental Protection Agency (“EPA”) is taking steps towards using its
existing authority under the Clean Air Act to regulate GHG emissions. On June 3, 2010, EPA published a final
rule, known as the Tailoring Rule, setting forth the permitting program for regulating GHG emissions from major
stationary sources. These permitting requirements will include, but are not limited to, meeting the best available
control technologies for GHG emissions, and monitoring, reporting and recordkeeping for GHG emissions. The
first steps of the program became effective January 2, 2011, and apply to large sources of GHGs such as, for
example, fossil-fueled electricity generating facilities, that are already subject to Clean Air Act major source
permits for their emission of non-greenhouse gas air pollutants (such as sulfur dioxide or particulate matter). The
second step of the permitting program is effective July 1, 2011, and applies to the construction a new facility that
will emit 100,000 tons per year or more of carbon dioxide equivalent (“CO2e”, a unit of measurement for GHGs)
or to the modification of an existing facility that results in an increase of GHG emissions by 75,000 tons per year
of CO2e. There is a small-source exception to the Tailoring Rule that we believe applies to our facilities. Under
the exception, no source with emissions below 50,000 tons per year of CO2e or any modification resulting in an
increase of less than 50,000 tons per year of CO2e will be subject to PSD or Title V permitting before at least
April 30, 2016. EPA also announced plans in the final rule to develop permitting requirements for smaller
sources of GHGs after the expiration of the small-source exception, which could potentially affect our facilities.
We are in the process of confirming that the small-source exception applies to our facilities and will continue to
monitor the developments of this regulatory program to evaluate its impact on our facilities and business.

Several states within the United States have adopted laws intended to limit fossil fuel consumption and/or

encourage renewable energy development for the same purpose. For example, California enacted AB-32, the
Global Warming Solutions Act of 2006, prescribing a statewide cap on global warming pollution with a goal of
reaching 1990 GHG emission levels by 2020 and 80% below 1990 levels by 2050 and establishing a mandatory
emissions reporting program. On December 16, 2010, the California Air Resources Board adopted the initial
elements of a cap-and-trade program to implement AB-32, which will establish a minimum price for greenhouse
gas emission allowances required to generate electricity in California or import electricity into California. This
cap-and-trade regulation is intended to take effect January 1, 2012, and will increase our electricity costs by an
amount that cannot yet be determined, but could exceed 5% of our costs of electricity at our California locations.

Federal, regional, state and international regulatory programs are still developing. In their final form, they

may include a tax on carbon, a carbon “cap-and-trade” market, and/or other restrictions on carbon and GHG
emissions. The area of GHG limitations and regulation is rapidly changing and will continue to change as

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additional legislation is considered and adopted, and regulations are finalized that implement existing law. For
example, the United Kingdom recently adopted the mandatory Carbon Reduction Commitment Energy
Efficiency Scheme (“CRC”), which requires certain public and private sector organizations that are consumers of
large amounts of electricity to register with the program, participate in energy-saving activities and reduce their
GHG emissions. The CRC became effective April 1, 2010, and qualifying organizations were required to register
by September 30, 2010, which we have done. Recently the new United Kingdom Government has postponed the
start of the CRC for at least one year to evaluate certain aspects of the CRC, and we are monitoring developments
and continuing to evaluate the extent of our obligations and the implications for our business in the United
Kingdom.

We do not anticipate that climate change-related laws and regulations would directly limit the emissions of

GHG by our operations. We could, however, be directly subject to taxes, fees or costs, or could indirectly be
required to reimburse electricity providers for such costs that would represent the amount of GHG we emit. The
expected controls on GHG emissions are likely to increase the costs of electricity or fossil fuels, and these cost
increases could materially increase our costs of operation or limit the availability of electricity or emergency
generator fuels. The physical impacts of climate change, including extreme weather conditions such as heat
waves, could materially increase our costs of operation due to, for example, an increase in our energy use in
order to maintain the temperature and internal environment of our data centers necessary for our operations. To
the extent any environmental laws enacted or regulations passed by the United States, or any domestic or foreign
jurisdiction we perform business in, impose new or unexpected costs, our business, results of operations or
financial condition may be adversely affected.

We may not be able to compete successfully against current and future competitors.

Our IBX data centers and other products and services must be able to differentiate themselves from those of

other providers of space and services for telecommunications companies, webhosting companies and other
colocation providers. In addition to competing with neutral colocation providers, we must compete with
traditional colocation providers, including telecom companies, carriers, Internet service providers and
webhosting facilities. Similarly, with respect to our other products and services, including managed services,
bandwidth services and security services, we must compete with more established providers of similar services.
Most of these companies have longer operating histories and significantly greater financial, technical, marketing
and other resources than us.

Because of their greater financial resources, some of our competitors have the ability to adopt aggressive
pricing policies, especially if they have been able to restructure their debt or other obligations. As a result, in the
future, we may suffer from pricing pressure that would adversely affect our ability to generate revenues and
adversely affect our operating results. In addition, these competitors could offer colocation on neutral terms, and
may start doing so in the same metropolitan areas in which we have IBX data centers. Some of these competitors
may also provide our target customers with additional benefits, including bundled communication services, and
may do so in a manner that is more attractive to our potential customers than obtaining space in our IBX data
centers. If these competitors were able to adopt aggressive pricing policies together with offering colocation
space, our ability to generate revenues may be materially and adversely affected.

We may also face competition from persons seeking to replicate our IBX data center concept by building

new data centers or converting existing data centers that some of our competitors are in the process of divesting.
We may continue to see increased competition for data center space and customers from large REITS who also
operate in our market. We may experience competition from our landlords, some of which are REITS, in this
regard. Rather than leasing available space in our buildings to large single tenants, they may decide to convert the
space instead to smaller square foot units designed for multi-tenant colocation use. Landlords/REITS may enjoy
a cost effective advantage in providing services similar to those provided by our IBX data centers, and in
addition to the risk of losing customers to these parties, this could also reduce the amount of space available to us
for expansion in the future. Competitors may operate more successfully or form alliances to acquire significant

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market share. Furthermore, enterprises that have already invested substantial resources in outsourcing
arrangements may be reluctant or slow to replace, limit or compete with their existing systems by becoming a
customer. Customers may also decide it is cost-effective for them to build out their own data centers, which
could have a negative impact on our results of operations. In addition, other companies may be able to attract the
same potential customers that we are targeting. Once customers are located in competitors’ facilities, it may be
extremely difficult to convince them to relocate to our IBX data centers.

Our business could be harmed by prolonged electrical power outages or shortages, increased costs of
energy or general lack of availability of electrical resources.

Our IBX data centers are susceptible to regional costs of power, electrical power shortages, planned or

unplanned power outages and limitations, especially internationally, on the availability of adequate power
resources.

Power outages, such as those that occurred in California during 2001, the Northeast in 2003, and from the

tornados on the U.S. east coast in 2004, could harm our customers and our business. We attempt to limit
exposure to system downtime by using backup generators and power supplies; however, we may not be able to
limit our exposure entirely even with these protections in place, as was the case with the power outages we
experienced in our Chicago and Washington, D.C. metro area IBX data centers in 2005, London metro area IBX
data centers in 2007 and Paris metro area IBX data centers in 2009.

In addition, global fluctuations in the price of power can increase the cost of energy, and although

contractual price increase clauses exist in the majority of our customer agreements, we may not always choose to
pass these increased costs on to our customers.

In each of our markets, we rely on third parties to provide a sufficient amount of power for current and
future customers. At the same time, power and cooling requirements are growing on a per unit basis. As a result,
some customers are consuming an increasing amount of power per cabinet. We generally do not control the
amount of electric power our customers draw from their installed circuits. This means that we could face power
limitations in our centers. This could have a negative impact on the effective available capacity of a given center
and limit our ability to grow our business, which could have a negative impact on our financial performance,
operating results and cash flows.

We may also have difficulty obtaining sufficient power capacity for potential expansion sites in new or
existing markets. We may experience significant delays and substantial increased costs demanded by the utilities
to provide the level of electrical service required by our current IBX data center designs.

We are exposed to potential risks from errors in our financial reporting systems and controls, including
the potential for material misstatements in our consolidated financial statements.

Section 404 of the Sarbanes-Oxley Act of 2002 requires companies to evaluate their internal controls over

financial reporting. Although we received an unqualified opinion regarding the effectiveness of our internal
control over financial reporting as of December 31, 2010, in the course of our ongoing evaluation we have
identified certain areas where we would like to improve and we are in the process of evaluating and designing
enhanced processes and controls to address such areas, none of which we believe constitutes a material change.
However, we cannot be certain that our efforts will be effective or sufficient for us, or our independent registered
public accounting firm, to issue unqualified reports in the future, especially as our business continues to grow
and evolve and as we acquire other businesses.

Our ability to manage our operations and growth will require us to improve our operational, financial and
management controls, as well as our internal reporting systems and controls. We may not be able to implement
improvements to our internal reporting systems and controls in an efficient and timely manner and have in the

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past, and may in the future, discover deficiencies in existing systems and controls. In addition, internal reporting
systems and controls are subject to human error. Any such deficiencies could result in material misstatements in
our consolidated financial statements, which might involve restating previously issued financial statements.
Additionally, as we expand, we will need to implement new systems to support our financial reporting systems
and controls. We may not be able to implement these systems such that errors would be identified in a timely
manner, which could result in material misstatements in our consolidated financial statements.

If we cannot effectively manage our international operations, and successfully implement our international
expansion plans, our revenues may not increase and our business and results of operations would be
harmed.

For the years ended December 31, 2010, 2009 and 2008, we recognized 38%, 39% and 37%, respectively,

of our revenues outside the U.S. We currently operate outside of North America in Europe and in the Asia-
Pacific region. We also recently announced our intention to expand into South America through an investment in
ALOG Data Centers of Brazil S.A.

To date, the network neutrality of our IBX data centers and the variety of networks available to our

customers has often been a competitive advantage for us. In certain of our acquired IBX data centers in the Asia-
Pacific region the limited number of carriers available reduces that advantage. As a result, we may need to adapt
our key revenue-generating services and pricing to be competitive in those markets. In addition, we are currently
undergoing expansions or evaluating expansion opportunities in Europe and in the Asia-Pacific region.
Undertaking and managing expansions in foreign jurisdictions may present unanticipated challenges to us.

Our international operations are generally subject to a number of additional risks, including:

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the costs of customizing IBX data centers for foreign countries;

protectionist laws and business practices favoring local competition;

greater difficulty or delay in accounts receivable collection;

difficulties in staffing and managing foreign operations, including negotiating with foreign labor
unions or workers’ councils;

difficulties in managing across cultures and in foreign languages;

political and economic instability;

fluctuations in currency exchange rates;

difficulties in repatriating funds from certain countries;

our ability to obtain, transfer, or maintain licenses required by governmental entities with respect to our
business;

unexpected changes in regulatory, tax and political environments;

our ability to secure and maintain the necessary physical and telecommunications infrastructure;

compliance with the Foreign Corrupt Practices Act; and

compliance with evolving governmental regulation with which we have little experience.

In addition, compliance with international and U.S. laws and regulations that apply to our international
operations increases our cost of doing business in foreign jurisdictions. These laws and regulations include data
privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions,
export requirements, U.S. laws such as the Foreign Corrupt Practices Act, and local laws which also prohibit
corrupt payments to governmental officials. Violations of these laws and regulations could result in fines,
criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business.

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Any such violations could include prohibitions on our ability to offer our services in one or more countries, could
delay or prevent potential acquisitions, and could also materially damage our reputation, our brand, our
international expansion efforts, our ability to attract and retain employees, our business and our operating results.
Our success depends, in part, on our ability to anticipate and address these risks and manage these difficulties.

The increased use of high power density equipment may limit our ability to fully utilize our IBX data
centers.

Customers are increasing their use of high-density electrical power equipment, such as blade servers, in our

IBX data centers which has significantly increased the demand for power on a per cabinet basis. Because many
of our IBX data centers were built a number of years ago, the current demand for electrical power may exceed
the designed electrical capacity in these centers. As electrical power, not space, is a limiting factor in many of our
IBX data centers, our ability to fully utilize those IBX data centers may be limited. The availability of sufficient
power may also pose a risk to the successful operation of our new IBX data centers. The ability to increase the
power capacity of an IBX data center, should we decide to, is dependent on several factors including, but not
limited to, the local utility’s ability to provide additional power; the length of time required to provide such
power; and/or whether it is feasible to upgrade the electrical infrastructure of an IBX data center to deliver
additional power to customers. Although we are currently designing and building to a much higher power
specification, there is a risk that demand will continue to increase and our IBX data centers could become
obsolete sooner than expected.

We expect our operating results to fluctuate.

We have experienced fluctuations in our results of operations on a quarterly and annual basis. The
fluctuations in our operating results may cause the market price of our common stock to be volatile. We may
experience significant fluctuations in our operating results in the foreseeable future due to a variety of factors,
including, but not limited to:

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fluctuations of foreign currencies in the markets in which we operate;

the timing and magnitude of depreciation and interest expense or other expenses related to the
acquisition, purchase or construction of additional IBX data centers or the upgrade of existing IBX data
centers;

demand for space, power and services at our IBX data centers;

changes in general economic conditions, such as the current economic downturn, and specific market
conditions in the telecommunications and Internet industries, both of which may have an impact on our
customer base;

charges to earnings resulting from past acquisitions due to, among other things, impairment of goodwill
or intangible assets, reduction in the useful lives of intangible assets acquired, identification of
additional assumed contingent liabilities or revised estimates to restructure an acquired company’s
operations;

the duration of the sales cycle for our services;

restructuring charges or reversals of existing restructuring charges, which may be necessary due to
revised sublease assumptions, changes in strategy or otherwise;

acquisitions or dispositions we may make;

the financial condition and credit risk of our customers;

the provision of customer discounts and credits;

the mix of current and proposed products and services and the gross margins associated with our
products and services;

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the timing required for new and future centers to open or become fully utilized;

competition in the markets in which we operate;

conditions related to international operations;

increasing repair and maintenance expenses in connection with aging IBX data centers;

lack of available capacity in our existing IBX data centers to generate new revenue or delays in
opening up new or acquired IBX data centers that delay our ability to generate new revenue in markets
which have otherwise reached capacity;

changes in rent expense as we amend our IBX data center leases in connection with extending their
lease terms when their initial lease term expiration dates approach or changes in shared operating costs
in connection with our leases, which are commonly referred to as common area maintenance expenses;

the timing and magnitude of other operating expenses, including taxes, expenses related to the
expansion of sales, marketing, operations and acquisitions, if any, of complementary businesses and
assets;

the cost and availability of adequate public utilities, including power;

changes in employee stock-based compensation;

overall inflation;

increasing interest expense due to any increases in interest rates and/or potential additional debt
financings;

changes in income tax benefit or expense; and

changes in or new generally accepted accounting principles (GAAP) in the U.S. as periodically
released by the Financial Accounting Standards Board (FASB).

Any of the foregoing factors, or other factors discussed elsewhere in this report, could have a material
adverse effect on our business, results of operations and financial condition. Although we have experienced
growth in revenues in recent quarters, this growth rate is not necessarily indicative of future operating results.
Prior to 2008, we had generated net losses every fiscal year since inception. It is possible that we may not be able
to generate net income on a quarterly or annual basis in the future. In addition, a relatively large portion of our
expenses are fixed in the short-term, particularly with respect to lease and personnel expenses, depreciation and
amortization and interest expenses. Therefore, our results of operations are particularly sensitive to fluctuations
in revenues. As such, comparisons to prior reporting periods should not be relied upon as indications of our
future performance. In addition, our operating results in one or more future quarters may fail to meet the
expectations of securities analysts or investors. If this occurs, we could experience an immediate and significant
decline in the trading price of our securities.

The failure to obtain favorable terms when we renew our IBX data center leases could harm our business
and results of operations.

While we own certain of our IBX data centers, others are leased under long-term arrangements with lease

terms expiring at various dates ranging from 2011 to 2035. These leased centers have all been subject to
significant development by us in order to convert them from, in most cases, vacant buildings or warehouses into
IBX data centers. Most of our IBX data center leases have renewal options available to us. However, many of
these renewal options provide for rent set at then-prevailing market rates. To the extent that then-prevailing
market rates are higher than present rates, these higher costs may adversely impact our business and results of
operations.

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We depend on a number of third parties to provide Internet connectivity to our IBX data centers; if
connectivity is interrupted or terminated, our operating results and cash flow could be materially and
adversely affected.

The presence of diverse telecommunications carriers’ fiber networks in our IBX data centers is critical to

our ability to retain and attract new customers. We are not a telecommunications carrier, and as such we rely on
third parties to provide our customers with carrier services. We believe that the availability of carrier capacity
will directly affect our ability to achieve our projected results. We rely primarily on revenue opportunities from
the telecommunications carriers’ customers to encourage them to invest the capital and operating resources
required to connect from their centers to our IBX data centers. Carriers will likely evaluate the revenue
opportunity of an IBX data center based on the assumption that the environment will be highly competitive. We
cannot provide assurance that each and every carrier will elect to offer its services within our IBX data centers or
that once a carrier has decided to provide Internet connectivity to our IBX data centers that it will continue to do
so for any period of time.

Our new IBX data centers require construction and operation of a sophisticated redundant fiber network.

The construction required to connect multiple carrier facilities to our IBX data centers is complex and involves
factors outside of our control, including regulatory processes and the availability of construction resources. Any
hardware or fiber failures on this network may result in significant loss of connectivity to our new IBX data
center expansions. This could affect our ability to attract new customers to these IBX data centers or retain
existing customers.

If the establishment of highly diverse Internet connectivity to our IBX data centers does not occur, is

materially delayed or is discontinued, or is subject to failure, our operating results and cash flow will be
adversely affected.

We may be vulnerable to security breaches which could disrupt our operations and have a material
adverse effect on our financial performance and operating results.

A party who is able to compromise the security measures on our networks or the security of our
infrastructure could misappropriate either our proprietary information or the personal information of our
customers, or cause interruptions or malfunctions in our operations. We may be required to expend significant
capital and resources to protect against such threats or to alleviate problems caused by breaches in security. As
techniques used to breach security change frequently, and are generally not recognized until launched against a
target, we may not be able to implement security measures in a timely manner or, if and when implemented, we
may not be certain whether these measures could be circumvented. Any breaches that may occur could expose us
to increased risk of lawsuits, regulatory penalties, loss of existing or potential customers, harm to our reputation
and increases in our security costs, which could have a material adverse effect on our financial performance and
operating results.

We have government customers, which subjects us to risks including early termination, audits,
investigations, sanctions and penalties.

We derive some revenues from contracts with the U.S. government, state and local governments and their

respective agencies. Some of these customers may terminate all or part of their contracts at any time, without
cause.

There is increased pressure for governments and their agencies, both domestically and internationally, to
reduce spending. Some of our federal government contracts are subject to the approval of appropriations being
made by the U.S. Congress to fund the expenditures under these contracts. Similarly, some of our contracts at the
state and local levels are subject to government funding authorizations.

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Additionally, government contracts are generally subject to audits and investigations which could result in
various civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a
portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from
future government business.

Because we depend on the development and growth of a balanced customer base, including key magnet
customers, failure to attract and retain this base of customers could harm our business and operating
results.

Our ability to maximize revenues depends on our ability to develop and grow a balanced customer base,

consisting of a variety of companies, including enterprises, cloud, digital content and financial companies, and
network service providers. We consider certain of these customers to be key magnets in that they draw in other
customers. The more balanced the customer base within each IBX data center, the better we will be able to
generate significant interconnection revenues, which in turn increases our overall revenues. Our ability to attract
customers to our IBX data centers will depend on a variety of factors, including the presence of multiple carriers,
the mix of products and services offered by us, the overall mix of customers, the presence of key customers
attracting business through vertical market ecosystems, the IBX data center’s operating reliability and security
and our ability to effectively market our services. However, some of our customers may face competitive
pressures and may ultimately not be successful or may be consolidated through merger or acquisition. If these
customers do not continue to use our IBX data centers it may be disruptive to our business. Finally, the uncertain
economic climate may harm our ability to attract and retain customers if customers slow spending, or delay
decision-making, on our products and services, or if customers begin to have difficulty paying us and we
experience increased churn in our customer base. Any of these factors may hinder the development, growth and
retention of a balanced customer base and adversely affect our business, financial condition and results of
operations.

We are subject to securities class action and other litigation, which may harm our business and results of
operations.

We are subject to various legal proceedings as described in Note 13 to Notes to Consolidated Financial
Statements in this Annual Report on Form 10-K. In addition, we may, in the future, be subject to other litigation.
For example, securities class action litigation has often been brought against a company following periods of
volatility in the market price of its securities. Litigation can be lengthy, expensive, and divert management’s
attention and resources. Results cannot be predicted with certainty and an adverse outcome in litigation could
result in monetary damages or injunctive relief that could seriously harm our business, results of operations,
financial condition or cash flows.

We may not be able to protect our intellectual property rights.

We cannot assure that the steps taken by us to protect our intellectual property rights will be adequate to
deter misappropriation of proprietary information or that we will be able to detect unauthorized use and take
appropriate steps to enforce our intellectual property rights. We also are subject to the risk of litigation alleging
infringement of third-party intellectual property rights. Any such claims could require us to spend significant
sums in litigation, pay damages, develop non-infringing intellectual property, or acquire licenses to the
intellectual property that is the subject of the alleged infringement.

Government regulation may adversely affect our business.

Various laws and governmental regulations, both in the U.S. and abroad, governing Internet related services,

related communications services and information technologies remain largely unsettled, even in areas where
there has been some legislative action. For example, the Federal Communications Commission recently issued a
Notice of Inquiry for comments on proposed Internet rules and regulation of broadband that may result in

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material changes in the regulations and contribution regime affecting us and our customers. Likewise, as part of a
review of the current equity market structure, the Securities and Exchange Commission and the Commodity
Futures Trading Commission have both sought comments regarding the regulation of independent data centers,
such as Equinix, which provide colocation services for financial markets and exchanges. Such regulation may
ultimately affect our provision of services.

It also may take years to determine whether and how existing laws, such as those governing intellectual

property, privacy, libel, telecommunications services and taxation, apply to the Internet and to related services
such as ours and substantial resources may be required to comply with regulations or bring any non-compliant
business practices into compliance with such regulations. In addition, the development of the market for online
commerce and the displacement of traditional telephony service by the Internet and related communications
services may prompt an increased call for more stringent consumer protection laws or other regulation both in the
U.S. and abroad that may impose additional burdens on companies conducting business online and their service
providers.

The adoption, or modification of laws or regulations relating to the Internet and our business, or

interpretations of existing laws, could have a material adverse effect on our business, financial condition and
results of operations.

Industry consolidation may have a negative impact on our business model.

The telecommunications industry is currently undergoing consolidation. As customers combine businesses,

they may require less colocation space, and there may be fewer networks available to choose from. Given the
competitive and evolving nature of this industry, further consolidation of our customers and/or our competitors
may present a risk to our network-neutral business model and have a negative impact on our revenues. In
addition, increased utilization levels industry-wide could lead to a reduced amount of attractive expansion
opportunities available to us.

Terrorist activity throughout the world and military action to counter terrorism could adversely impact
our business.

The continued threat of terrorist activity and other acts of war or hostility contribute to a climate of political
and economic uncertainty. Due to existing or developing circumstances, we may need to incur additional costs in
the future to provide enhanced security, including cybersecurity, which would have a material adverse effect on
our business and results of operations. These circumstances may also adversely affect our ability to attract and
retain customers, our ability to raise capital and the operation and maintenance of our IBX data centers. We may
not have adequate property and liability insurance to cover catastrophic events or attacks.

We have various mechanisms in place that may discourage takeover attempts.

Certain provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a third

party from acquiring control of us in a merger, acquisition or similar transaction that a stockholder may consider
favorable. Such provisions include:

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authorization for the issuance of “blank check” preferred stock;

the prohibition of cumulative voting in the election of directors;

a super-majority voting requirement to effect business combinations or certain amendments to our
certificate of incorporation and bylaws;

limits on the persons who may call special meetings of stockholders;

the prohibition of stockholder action by written consent; and

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advance notice requirements for nominations to the Board or for proposing matters that can be acted on
by stockholders at stockholder meetings.

In addition, Section 203 of the Delaware General Corporation Law, which restricts certain business
combinations with interested stockholders in certain situations, may also discourage, delay or prevent someone
from acquiring or merging with us.

ITEM 1B. UNRESOLVED STAFF COMMENTS

There is no disclosure to report pursuant to Item 1B.

ITEM 2. PROPERTIES

Our executive offices are located in Redwood City, California, and we also have sales offices in several

cities throughout the United States. Our Asia-Pacific headquarters office is located in Hong Kong and we also
have office space in Singapore; Tokyo, Japan; and Sydney, Australia, which is operated out of our IBX data
center there. Our European headquarters office is located in London, U.K. and our regional sales offices in
Europe are based in our IBX data centers in Europe. We have entered into leases for certain of our IBX data
centers in Dallas, Texas; Chicago, Illinois; Los Angeles, San Jose, Santa Clara and Sunnyvale, California;
Newark and Secaucus, New Jersey; Hong Kong; Singapore; Sydney, Australia; Tokyo, Japan; London, U.K.;
Paris, France; Frankfurt, Munich and Dusseldorf, Germany; Zurich and Geneva, Switzerland and Enschede and
Zwolle, Netherlands. We own certain of our IBX data centers in Ashburn, Virginia; Chicago, Illinois; Los
Angeles and San Jose, California, Frankfurt, Germany and Amsterdam, the Netherlands. We own campuses in
Ashburn, Virginia and Frankfurt, Germany that house some of our IBX data centers mentioned in the preceding
sentence. We assumed leases from the Switch and Data acquisition for IBX data centers in Phoenix, Arizona; Los
Angeles, Palo Alto, San Jose and Sunnyvale, California; Englewood, Colorado; Miami and Tampa, Florida;
Atlanta, Georgia; Chicago, Illinois; Indianapolis, Indiana; Dallas, Texas; Waltham, Massachusetts; Southfield,
Mississippi; St. Louis, Missouri; North Bergen, New Jersey; Buffalo and New York, New York; Cleveland,
Ohio; Philadelphia and Pittsburgh, Pennsylvania; Nashville, Tennessee; Reston and Vienna, Virginia; Seattle,
Washington and Toronto, Canada.

ITEM 3. LEGAL PROCEEDINGS

IPO Litigation

On July 30, 2001 and August 8, 2001, putative shareholder class action lawsuits were filed against us,
certain of our officers and directors (the “Individual Defendants”), and several investment banks that were
underwriters of our initial public offering (the “Underwriter Defendants”). The cases were filed in the United
States District Court for the Southern District of New York. Similar lawsuits were filed against approximately
300 other issuers and related parties. These lawsuits have been coordinated before a single judge. The purported
class action alleges violations of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b), Rule 10b-5
and 20(a) of the Securities Exchange Act of 1934 against us and the Individual Defendants. The plaintiffs have
since dismissed the Individual Defendants without prejudice. The suits allege that the Underwriter Defendants
agreed to allocate stock in our initial public offering to certain investors in exchange for excessive and
undisclosed commissions and agreements by those investors to make additional purchases in the aftermarket at
pre-determined prices. The plaintiffs allege that the prospectus for our initial public offering was false and
misleading and in violation of the securities laws because it did not disclose these arrangements. The action seeks
damages in an unspecified amount. On February 19, 2003, the court dismissed the Section 10(b) claim against us,
but denied the motion to dismiss the Section 11 claim.

The parties in the approximately 300 coordinated cases, including the parties in the Equinix case, reached a

settlement. It provides for releases of existing claims and claims that could have been asserted relating to the

29

conduct alleged to be wrongful from the class of investors participating in the settlement. The insurers for the
issuer defendants in the coordinated cases will make the settlement payment on behalf of the issuers, including
Equinix. On October 6, 2009, the Court granted final approval to the settlement. Six notices of appeal and one
petition seeking permission to appeal were filed. Objectors to the settlement have filed briefs in support of two
separate appeals. The remaining objectors have withdrawn their appeals with prejudice.

Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of the
matter. We are unable at this time to determine whether the outcome of the litigation would have a material
impact on our results of operations, financial condition or cash flows. We intend to continue to defend the action
vigorously if the settlement does not survive the appeal.

Pihana Litigation

On August 22, 2008, a complaint was filed against Equinix, certain former officers and directors of Pihana

Pacific, Inc. (“Pihana”), certain investors in Pihana, and others. The lawsuit was filed in the First Circuit Court of
the State of Hawaii, and arises out of December 2002 agreements pursuant to which Equinix merged Pihana and
i-STT (a subsidiary of Singapore Technologies Telemedia Pte Ltd) into the Internet exchange services business
of Equinix. Plaintiffs, who were allegedly holders of Pihana common stock, allege that their rights as
shareholders were violated, and the transaction was effectuated improperly, by Pihana’s majority shareholders,
officers and directors, with the alleged assistance of Equinix and others. Among other things, plaintiffs contend
that they effectively had a right to block the transaction, that this supposed right was disregarded, and that they
improperly received no consideration when the deal was completed. The complaint seeks to recover unspecified
punitive damages, equitable relief, fees and costs, and compensatory damages in an amount that plaintiffs
allegedly “believe may be all or a substantial portion of the approximately $725.0 million value of Equinix held
by Defendants” (a group that includes more than 30 individuals and entities). An amended complaint, which adds
new plaintiffs (other alleged holders of Pihana common stock) but is otherwise substantially similar to the
original pleading, was filed on September 29, 2008 (the “Amended Complaint”). On October 13, 2008, a
complaint was filed in a separate action by another purported holder of Pihana common stock, naming the same
defendants and asserting substantially similar allegations as the August 22, 2008 and September 29, 2008
pleadings. On December 12, 2008, the court entered a stipulated order, which consolidated the two actions under
one case number and set January 22, 2009 as the last day for Defendants to move to dismiss or otherwise respond
to the Amended Complaint, the operative complaint in this case. On January 22, 2009, motions to dismiss the
Amended Complaint were filed by Equinix and other Defendants. On April 24, 2009, plaintiffs filed a Second
Amended Complaint (“SAC”) to correct the naming of certain parties. The SAC is otherwise substantively
identical to the Amended Complaint, and all motions to dismiss the Amended Complaint have been treated as
responsive to the SAC. On September 1, 2009, the Court heard Defendants’ motions to dismiss the SAC and
ruled at the hearing that all claims against all Defendants are time-barred. The Court also considered whether
there were further independent grounds for dismissing the claims, and supplemental briefing was submitted with
respect to claims against one defendant and plaintiffs’ renewed request for further leave to amend. On March 23,
2010, the Court entered final Orders granting the motions to dismiss as to all Defendants and issued a minute
Order denying plaintiffs’ renewed request for further leave to amend. On May 21, 2010, plaintiffs filed a Notice
of Appeal, and plaintiffs’ appeal is currently pending before the Hawaii Supreme Court. We believe that
plaintiffs’ claims and alleged damages are without merit and we intend to continue to defend the litigation
vigorously.

Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of the
matter. We are unable at this time to determine whether the outcome of the litigation would have a material
impact on our results of operations, financial condition or cash flows.

529 Bryant Litigation

On September 10, 2010, a lawsuit was filed in the Superior Court of California in Santa Clara County by
529 Bryant Street Partners LLC (“Landlord”) against our wholly-owned subsidiaries Switch & Data CA Nine

30

LLC (“Tenant”) and Switch & Data Facilities Company, Inc. (“Guarantor”). The lawsuit alleged that Tenant
breached certain non-monetary obligations under its lease (the “Lease”) of our data center located at 529 Bryant
Street in Palo Alto, California (the “Premises”) and sought monetary damages, specific performance of those
non-monetary obligations and ejectment of Tenant from the Premises. The lawsuit also alleged that Guarantor
breached its obligations under its guaranty of the Lease.

On November 10, 2010, Tenant and Landlord entered into an agreement pursuant to which Landlord agreed

to dismiss its lawsuit against Tenant, and waive and release all claims against Tenant related thereto. In
connection with the agreement, Tenant agreed to an increase in rent under the Lease and Landlord agreed to
certain improved non-monetary lease terms. Equinix also agreed to guaranty the obligations of Tenant under the
Lease.

The lawsuit was dismissed with prejudice on November 15, 2010.

ITEM 4.

[REMOVED AND RESERVED]

31

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the NASDAQ Global Select Market under the symbol of “EQIX.” Our
common stock began trading in August 2000. The following table sets forth on a per share basis the low and high
closing prices of our common stock as reported by the NASDAQ Global Select Market during the last two years.

Fiscal 2010:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Fiscal Quarter
Third Fiscal Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal 2009:
Fourth Fiscal Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Fiscal Quarter
Second Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Low

High

$70.34
78.57
79.45
91.76

$105.09
103.31
103.29
109.56

$85.32
67.19
57.62
42.26

$108.11
94.43
77.71
62.89

As of January 31, 2011, we had 46,198,990 shares of our common stock outstanding held by approximately

262 registered holders.

We have never declared or paid any cash dividends on our common stock and we do not anticipate paying

cash dividends in the foreseeable future. We currently intend to retain our earnings, if any, for future growth.
Future dividends on our common stock, if any, will be at the discretion of our Board of Directors and will depend
on, among other things, our operations, capital requirements and surplus, general financial condition, contractual
restrictions and such other factors that our Board of Directors may deem relevant. Furthermore, most of our
senior creditors restrict us from paying dividends.

During the year ended December 31, 2010, we did not issue or sell any securities on an unregistered basis.

32

Stock Performance Graph

The graph set forth below compares the cumulative total stockholder return on Equinix’s common stock

between December 31, 2005 and December 31, 2010 with the cumulative total return of (i) The NASDAQ
Composite Index and (ii) The NASDAQ Telecommunications Index. This graph assumes the investment of
$100.00 on December 31, 2005 in Equinix’s common stock, in The NASDAQ Composite Index, and in The
NASDAQ Telecommunications Index, and assumes the reinvestment of dividends, if any.

Equinix cautions that the stock price performance shown in the graph below is not indicative of, nor

intended to forecast, the potential future performance of Equinix’s common stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Equinix, Inc., the NASDAQ Composite Index
and the NASDAQ Telecommunications Index

$300

$250

$200

$150

$100

$50

$0

12/05

3/06

6/06

9/06

12/06

3/07

6/07

9/07

12/07

3/08

6/08

9/08

12/08

3/09

6/09

9/09

12/09

3/10

6/10

9/10

12/10

Equinix, Inc.

NASDAQ Composite

NASDAQ Telecommunications

*$100 invested on 12/31/05 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

Notwithstanding anything to the contrary set forth in any of Equinix’s previous or future filings under the

Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as amended, that might incorporate this
Form 10-K or future filings made by Equinix under those statutes, the stock performance graph shall not be
deemed filed with the Securities and Exchange Commission and shall not be deemed incorporated by reference
into any of those prior filings or into any future filings made by Equinix under those statutes.

33

ITEM 6. SELECTED FINANCIAL DATA

The following consolidated statement of operations data for the five years ended December 31, 2010 and the
consolidated balance sheet data as of December 31, 2010, 2009, 2008, 2007 and 2006 have been derived from our
audited consolidated financial statements and the related notes. Our historical results are not necessarily indicative of
the results to be expected for future periods. The following selected consolidated financial data for the three years
ended December 31, 2010 and as of December 31, 2010 and 2009, should be read in conjunction with our audited
consolidated financial statements and the related notes in Item 8 of this Annual Report on Form 10-K and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Annual
Report on Form 10-K. In addition, in April 2010, we completed our acquisition of Switch & Data Facilities Company,
Inc., which was a significant acquisition. For further information on this acquisition, refer to Note 2 of our Notes to
Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Years ended December 31,

2010

2009

2008

2007

2006

(dollars in thousands, except per share data)

Consolidated Statement of Operations Data:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,220,334 $ 882,509 $ 704,680 $

419,442 $ 286,915

Costs and operating expenses:

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains on asset sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

674,667
111,104
220,781
6,734
12,337
—

483,420
63,584
155,324
(6,053)
5,155
—

414,799
66,913
146,564
3,142
—
—

263,768
40,719
105,794
407
—
(1,338)

188,379
32,619
72,123
1,527
—
(9,647)

Total costs and operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,025,623

701,430

631,418

409,350

285,001

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other-than-temporary impairment recovery (loss) on investments . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense)
Loss on debt extinguishment and conversion and interest rate swaps, net . . . . . . . . . . . .
Income tax benefit (expense)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of a change in accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . .

194,711
1,515
(140,475)
3,626
690
(10,187)
(12,999)
—

181,079
2,384
(74,232)
(2,590)
2,387
—
(39,597)
—

73,262
8,940
(61,677)
(1,527)
1,307
—
87,619
—

10,092
15,406
(32,014)
—
3,047
(5,949)
(473)
—

1,914
6,627
(14,630)
—
(245)
—
(439)
376

Net income (loss)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

36,881 $

69,431 $ 107,924 $

(9,891) $

(6,397)

Earnings (loss) per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

0.84 $

1.80 $

2.91 $

(0.30) $

(0.22)

Weighted average shares—basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43,742

38,488

37,120

32,595

28,796

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

0.82 $

1.75 $

2.79 $

(0.30) $

(0.22)

Weighted average shares—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44,810

39,676

41,582

32,595

28,796

Other Financial Data (1):
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 392,872 $ 355,492 $ 267,558 $
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(558,178)
323,598

(600,969)
309,686

120,020 $ 75,412
(478,040) (1,054,725) (158,470)
46,107
1,145,013
145,106

As of December 31,

2010

2009

2008

2007

2006

(dollars in thousands)

Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term and long-term investments . . . . . . . . . . . . . . . . . . $ 592,839 $ 604,367 $ 307,945 $
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease and other financing obligations, excluding current portion . . . . . . . . . . . . .
Mortgage and loans payable, excluding current portion . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible debt, excluding current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

116,358
2,650,953
4,448,009
253,945
100,337
750,000
916,337
1,880,515

64,767
1,808,115
3,038,150
154,577
371,322
—
893,706
1,182,483

66,029
1,492,830
2,434,736
133,031
386,446
—
608,510
916,661

60,089
1,164,613
2,182,296
93,604
313,915

383,900 $ 156,481
26,864
546,395
771,832
92,722
96,746
—
86,250
355,028

631,104
861,992

—

(1) For a discussion of our primary non-GAAP financial metric, adjusted EBITDA, see our non-GAAP financial measures

discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this
Annual Report on Form 10-K.

34

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following commentary should be read in conjunction with the financial statements and related notes

contained elsewhere in this Annual Report on Form 10-K. The information in this discussion contains forward-
looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that
involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. For example, the words “believes,” “anticipates,” “plans,”
“expects,” “intends” and similar expressions are intended to identify forward-looking statements. Our actual
results and the timing of certain events may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such a discrepancy include, but are not limited to, those discussed in
“Liquidity and Capital Resources” and “Risk Factors” elsewhere in this Annual Report on Form 10-K. All
forward-looking statements in this document are based on information available to us as of the date hereof and
we assume no obligation to update any such forward-looking statements.

Our management’s discussion and analysis of financial condition and results of operations is intended to
assist readers in understanding our financial information from our management’s perspective and is presented as
follows:

• Overview

• Results of Operations

• Non-GAAP Financial Measures

• Liquidity and Capital Resources

• Contractual Obligations and Off-Balance-Sheet Arrangements

• Critical Accounting Policies and Estimates

• Recent Accounting Pronouncements

In February 2010, we issued $750.0 million aggregate principal amount of 8.125% senior notes due

March 1, 2018 which we refer to as the senior notes offering.

On April 30, 2010, as more fully described in Note 2 of Notes to Consolidated Financial Statements in
Item 8 of this Annual Report on Form 10-K, we completed the acquisition of Switch & Data Facilities Company,
Inc., referred to as Switch and Data, a publicly-held company headquartered in Tampa, Florida. We refer to this
transaction as the Switch and Data acquisition. Switch and Data operated 34 data centers in the U.S. and Canada.
The combined company operates under the Equinix name.

Overview

Equinix provides global data center services that protect and connect the world’s most valued information

assets. Global enterprises, financial services companies, and content and network service providers rely upon
Equinix’s leading insight and 92 data centers in 35 markets around the world for the safeguarding of their critical
IT equipment and the ability to directly connect to the networks that enable today’s information-driven economy.
Equinix offers the following data center services: premium data center colocation, interconnection and exchange
services, and outsourced IT infrastructure services. As of December 31, 2010, we operated or had partner IBX
data centers in the Atlanta, Boston, Buffalo, Chicago, Cleveland, Dallas, Denver, Detroit, Indianapolis, Los
Angeles, Miami, Nashville, New York, Philadelphia, Phoenix, Pittsburgh, Seattle, Silicon Valley, St. Louis,
Tampa, Toronto and Washington, D.C. metro areas in North America; France, Germany, the Netherlands,
Switzerland and the United Kingdom in Europe; and Australia, Hong Kong, Japan, Shanghai and Singapore in
Asia-Pacific.

35

We leverage our global data centers in 35 markets around the world as a global service delivery platform
which serves more than 90% of the world’s Internet routes and allows our customers to increase information and
application delivery performance while significantly reducing costs. Based on our global delivery platform and
the quality of our IBX data centers, we believe we have established a critical mass of customers. As more
customers locate in our IBX data centers, it benefits their suppliers and business partners to colocate as well in
order to gain the full economic and performance benefits of our services. These partners, in turn, pull in their
business partners, creating a “marketplace” for their services. Our global delivery platform enables scalable,
reliable and cost-effective colocation, interconnection and traffic exchange thus lowering overall cost and
increasing flexibility. Our focused business model is based on our critical mass of customers and the resulting
“marketplace” effect. This global delivery platform, combined with our strong financial position, continues to
drive new customer growth and bookings as we drive scale into our global business.

Historically, our market has been served by large telecommunications carriers who have bundled their
telecommunications products and services with their colocation offerings. The data center services market
landscape has evolved to include cloud computing/utility providers, application hosting providers and systems
integrators, managed infrastructure hosting providers and colocation providers with over 350 companies
providing data center services in the United States alone. Each of these data center services providers can bundle
various colocation, interconnection and network services, and outsourced IT infrastructure services. We are able
to offer our customers a global platform that supports global reach to 12 countries, proven operational reliability,
improved application performance and network choice, and a highly scalable set of services.

Our customer count increased to 3,916 as of December 31, 2010 versus 2,612 as of December 31, 2009, an

increase of 50%. This increase was due both to the Switch and Data acquisition in April 2010 and organic growth
in our business. Our utilization rate represents the percentage of our cabinet space billing versus net sellable
cabinet space available taking into account power limitations. Excluding the impact of the Switch and Data
acquisition, our utilization rate decreased to 76% as of December 31, 2010 versus approximately 79% as of
December 31, 2009; however, excluding the impact of our IBX data center expansion projects that have opened
during the last 12 months, our utilization rate would have increased to approximately 84% as of December 31,
2010. Including the impact of the Switch and Data acquisition, our utilization rate was 74% as of December 31,
2010. Our utilization rate varies from market to market among our IBX data centers across the North America,
Europe and Asia-Pacific regions. We continue to monitor the available capacity in each of our selected markets.
To the extent we have limited capacity available in a given market it may limit our ability for growth in that
market. We perform demand studies on an ongoing basis to determine if future expansion is warranted in a
market. In addition, power and cooling requirements for most customers are growing on a per unit basis. As a
result, customers are consuming an increasing amount of power per cabinet. Although we generally do not
control the amount of power our customers draw from installed circuits, we have negotiated power consumption
limitations with certain of our high power demand customers. This increased power consumption has driven the
requirement to build out our new IBX data centers to support power and cooling needs twice that of previous
IBX data centers. We could face power limitations in our centers even though we may have additional physical
cabinet capacity available within a specific IBX data center. This could have a negative impact on the available
utilization capacity of a given center, which could have a negative impact on our ability to grow revenues,
affecting our financial performance, operating results and cash flows.

Strategically, we will continue to look at attractive opportunities to grow our market share and selectively

improve our footprint and service offerings. As was the case with our recent expansions and acquisitions, our
expansion criteria will be dependent on a number of factors such as demand from new and existing customers,
quality of the design, power capacity, access to networks, capacity availability in the current market location,
amount of incremental investment required by us in the targeted property, lead-time to break-even and in-place
customers. Like our recent expansions and acquisitions, the right combination of these factors may be attractive
to us. Depending on the circumstances, these transactions may require additional capital expenditures funded by
upfront cash payments or through long-term financing arrangements, in order to bring these properties up to

36

Equinix standards. Property expansion may be in the form of purchases of real property, long-term leasing
arrangements or acquisitions. Future purchases, construction or acquisitions may be completed by us or with
partners or potential customers to minimize the outlay of cash, which can be significant.

Our business is based on a recurring revenue model comprised of colocation, interconnection and managed
infrastructure services. We consider these services recurring as our customers are generally billed on a fixed and
recurring basis each month for the duration of their contract, which is generally one to three years in length. Our
recurring revenues have comprised more than 90% of our total revenues during the past three years. In addition,
during the past three years, in any given quarter, greater than half of our monthly recurring revenue bookings
came from existing customers, contributing to our revenue growth.

Our non-recurring revenues are primarily comprised of installation services related to a customer’s initial

deployment and professional services that we perform. These services are considered to be non-recurring as they
are billed typically once and upon completion of the installation or professional services work performed. The
majority of these non-recurring revenues are typically billed on the first invoice distributed to the customer in
connection with their initial installation. However, revenues from installation services are deferred and
recognized ratably over the longer of the term of the related contract or expected life of the services. As a
percentage of total revenues, we expect non-recurring revenues to represent less than 10% of total revenues for
the foreseeable future.

Our North America revenues are derived primarily from colocation and interconnection services while our

Europe and Asia-Pacific revenues are derived primarily from colocation and managed infrastructure services.

The largest components of our cost of revenues are depreciation, rental payments related to our leased IBX
data centers, utility costs, including electricity and bandwidth, IBX data center employees’ salaries and benefits,
including stock-based compensation, repairs and maintenance, supplies and equipment and security services. A
substantial majority of our cost of revenues is fixed in nature and should not vary significantly from period to
period, unless we expand our existing IBX data centers or open or acquire new IBX data centers. However, there
are certain costs which are considered more variable in nature, including utilities and supplies, that are directly
related to growth in our existing and new customer base. We expect the cost of our utilities, specifically
electricity, will increase in the future on a per-unit or fixed basis in addition to the variable increase related to the
growth in consumption by the customer. In addition, the cost of electricity is generally higher in the summer
months as compared to other times of the year. To the extent we incur increased utility costs; such increased
costs could materially impact our financial condition, results of operations and cash flows. Furthermore, to the
extent we incur increased electricity costs as a result of either climate change policies or the physical effects of
climate change; such increased costs could materially impact our financial condition, results of operations and
cash flows.

Sales and marketing expenses consist primarily of compensation and related costs for sales and marketing

personnel, including stock-based compensation, sales commissions, marketing programs, public relations,
promotional materials and travel, as well as bad debt expense and amortization of customer contract intangible
assets.

General and administrative expenses consist primarily of salaries and related expenses, including stock-
based compensation, accounting, legal and other professional service fees, and other general corporate expenses
such as our corporate regional headquarters office leases and some depreciation expense.

Due to our recurring revenue model, and a cost structure which has a large base that is fixed in nature and
generally does not grow in proportion to revenue growth, we expect our cost of revenues, sales and marketing
expenses and general and administrative expenses to decline as a percentage of revenue over time, although we
expect each of them to grow in absolute dollars in connection with our growth. This is evident in the trends noted
below in our discussion on our results of operations. However, for cost of revenues, this trend may periodically
be impacted when a large expansion project opens or is acquired and before it starts generating any meaningful

37

revenue. Furthermore, in relation to cost of revenues, we note that the North America region has a lower cost of
revenues as a percentage of revenue than either Europe or Asia-Pacific. This is due to both the increased scale
and maturity of the North America region compared to either Europe or Asia-Pacific, as well as a higher cost
structure outside of North America, particularly in Europe. While we expect all three regions to continue to see
lower cost of revenues as a percentage of revenues in future periods, we expect the trend of North America
having the lowest cost of revenues as a percentage of revenue and Europe having the highest to continue. As a
result, to the extent that revenue growth outside North America grows in greater proportion than revenue growth
in North America, our overall cost of revenues as a percentage of revenues may increase in future periods. Sales
and marketing expenses and general and administrative expenses may also periodically increase as a percentage
of revenue as we continue to scale our operations to support our growth.

Results of Operations

Our results of operations for the year ended December 31, 2010 include the operations of Switch and Data

from May 1, 2010. Our results of operations for the year ended December 31, 2009 include the operations of
Upminster from July 22, 2009. Our results of operations for the year ended December 31, 2008 include the
operations of Virtu from February 5, 2008.

Constant Currency Presentation

Our revenues and certain operating expenses (cost of revenues, sales and marketing and general and
administrative expenses) from our international operations have represented and will continue to represent a
significant portion of our total revenues and certain operating expenses. As a result, our revenues and certain
operating expenses have been and will continue to be affected by changes in the U.S. dollar against major
international currencies such as the British pound, Canadian dollar, Euro, Swiss franc, Australian dollar, Hong
Kong dollar, Japanese yen and Singapore dollar. In order to provide a framework for assessing how each of our
business segments performed excluding the impact of foreign currency fluctuations, we present year-over-year
percentage changes in our revenues and certain operating expenses on a constant currency basis in addition to the
historical amounts as reported. Presenting constant currency results of operations is a non-GAAP financial
measure and is not meant to be considered in isolation or as an alternative to GAAP results of operations.
However, we have presented this non-GAAP financial measure to provide investors with an additional tool to
evaluate our operating results. To present this information, our current and comparative prior period revenues
and certain operating expenses from entities reporting in currencies other than the U.S. dollar are converted into
U.S. dollars at constant exchange rates rather than the actual exchange rates in effect during the respective
periods (i.e. average rates in effect for the year ended December 31, 2009 are used as exchange rates for the year
ended December 31, 2010 when comparing the year ended December 31, 2010 with the year ended
December 31, 2009 and average rates in effect for the year ended December 31, 2008 are used as exchange rates
for the year ended December 31, 2009 when comparing the year ended December 31, 2009 with the year ended
December 31, 2008). For the year ended December 31, 2010, our North America operations consisted of the U.S.
operations and Canadian operations which were added through the Switch and Data acquisition.

38

Years Ended December 31, 2010 and 2009

Revenues. Our revenues for the years ended December 31, 2010 and 2009 were generated from the

following revenue classifications and geographic regions (dollars in thousands):

Years ended December 31,

% change

2010

%

2009

%

Actual

Constant
currency

North America:

Recurring revenues . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . .

$ 748,648
27,527

61% $515,780
19,709
3%

Europe:

Recurring revenues . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . .

Asia-Pacific:

Recurring revenues . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . .

776,175

64% 535,489

256,570
25,223

281,793

155,200
7,166

162,366

21% 212,635
15,501
2%

23% 228,136

13% 113,434
5,450
0%

13% 118,884

Total:

Recurring revenues . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . .

1,160,418
59,916

95% 841,849
40,660
5%

59%
2%

61%

24%
2%

26%

12%
1%

13%

95%
5%

$1,220,334

100% $882,509

100%

45%
40%

45%

21%
63%

24%

37%
31%

37%

38%
47%

38%

45%
40%

45%

25%
65%

28%

27%
21%

27%

37%
48%

38%

North America Revenues. The increase in North America revenues was primarily due to the impact of the

Switch and Data acquisition, which resulted in $153.0 million of additional revenue for the year ended
December 31, 2010. The following table presents our North America revenues excluding the impact of the
Switch and Data acquisition (dollars in thousands):

Years ended
December 31,

Change

2010

2009

$

%

North America:

Recurring revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$598,860
24,355

$515,780
19,709

$83,080
4,646

$623,215

$535,489

$87,726

16%
24%

16%

Excluding the impact of the Switch and Data acquisition, the period over period growth in revenues was

primarily the result of an increase in orders from both our existing customers and new customers during the
period as reflected in the growth in our customer count and utilization rate, as discussed above, in both our new
and existing IBX data centers. Additionally, during the year ended December 31, 2010, we recorded $33.0
million of revenue generated from our recently-opened IBX data centers or IBX data center expansions in the
Chicago, Los Angeles, New York, Silicon Valley and Washington, D.C. metro areas.

We expect that our North America revenues, including those of the acquired Switch and Data operations,
will continue to grow in future periods as a result of continued growth in the recently-opened IBX data centers or
IBX data center expansions and additional expansions currently taking place in the Atlanta and Dallas metro
areas, which are expected to open during the first half of 2011. Our estimates of future revenue growth take
account of expected reductions in recurring revenues attributed to customer churn or changes or amendments to
customers’ contracts.

39

Europe Revenues. During the year ended December 31, 2010, our revenues from Germany, the largest
revenue contributor in the Europe region for the period, represented approximately 36% of the regional revenues.
During the year ended December 31, 2009, our revenues from the United Kingdom, the largest revenue
contributor in the Europe region for the period, represented approximately 36% of the regional revenues. Our
Europe revenue growth was due to an increase in orders from both our existing customers and new customers
during the period as reflected in the growth in our customer count and utilization rate, as discussed above, in both
our new and existing IBX data centers. During the year ended December 31, 2010, we recorded approximately
$29.9 million of revenue from our recently-opened IBX data centers or IBX data center expansions in the
Amsterdam, Dusseldorf, Frankfurt, London, Munich, Paris and Zurich metro areas. Our Europe revenue growth
includes a $4.2 million increase in equipment resales for the year ended December 31, 2010. During the year
ended December 31, 2010, the U.S. dollar was generally stronger relative to the British pound, Euro and Swiss
franc than during the year ended December 31, 2009, resulting in approximately $9.6 million of unfavorable
foreign currency impact to our Europe revenues during the year ended December 31, 2010 when compared to
average 2009 exchange rates. We expect that our Europe revenues will continue to grow in future periods as a
result of continued growth in recently-opened IBX data centers or IBX data center expansions and additional
expansions currently taking place in the Amsterdam, Frankfurt, London and Paris metro areas, which are
expected to open during 2011. Our estimates of future revenue growth take account of expected reductions in
recurring revenues attributed to customer churn or changes or amendments to customers’ contracts.

Asia-Pacific Revenues. Our revenues from Singapore, the largest revenue contributor in the Asia-Pacific

region, represented approximately 38% and 36%, respectively, of the regional revenues for the years ended
December 31, 2010 and 2009. Our Asia-Pacific revenue growth was due to an increase in orders from both our
existing customers and new customers during the period as reflected in the growth in our customer count and
utilization rate, as discussed above, in both our new and existing IBX data centers. During the year ended
December 31, 2010, we recorded approximately $5.4 million of revenue generated from our IBX center
expansions in the Hong Kong and Singapore metro areas. During the year ended December 31, 2010, the U.S.
dollar was generally weaker relative to the Australian dollar, Hong Kong dollar, Japanese yen and Singapore
dollar than during the year ended December 31, 2009, resulting in approximately $11.2 million of favorable
foreign currency impact to our Asia-Pacific revenues during the year ended December 31, 2010 when compared
to average 2009 exchange rates. We expect that our Asia-Pacific revenues will continue to grow in future periods
as a result of continued growth in these recently-opened IBX center expansions and additional expansions
currently taking place in the Hong Kong, Singapore, Sydney and Tokyo metro areas which are expected to open
during 2011. Our estimates of future revenue growth take account of expected reductions in recurring revenues
attributed to customer churn or changes or amendments to customers’ contracts.

Cost of Revenues. Our cost of revenues for the years ended December 31, 2010 and 2009 were split among

the following geographic regions (dollars in thousands):

Years ended December 31,

% change

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$408,769
176,937
88,961

61% $269,242
26% 144,875
69,303
13%

56% 52%
30% 22%
14% 28%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$674,667

100% $483,420

100% 40%

2010

%

2009

%

Actual

Constant
currency

52%
26%
20%

39%

Cost of revenues as a percentage of revenues:
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40

Years ended
December 31,

2010

2009

53%
63%
55%
55%

50%
64%
58%
55%

North America Cost of Revenues. The increase in our North America cost of revenues was primarily due to
the impact of the Switch and Data acquisition, which resulted in $109.6 million of additional cost of revenues for
the year ended December 31, 2010. Our North America cost of revenues for the years ended December 31, 2010
and 2009 included $150.4 million and $99.3 million, respectively, of depreciation expense, including $39.6
million of depreciation expense from the impact of the Switch and Data acquisition for the year ended
December 31, 2010.

Excluding the impact of the Switch and Data acquisition, our North America cost of revenues during the
year ended December 31, 2010 was $299.1 million, which represents an increase of 11% from the year ended
December 31, 2009. Growth in depreciation expense was primarily due to our IBX center expansion activity.
During the year ended December 31, 2009, we revised the estimated useful lives of certain of our property, plant
and equipment on a prospective basis effective July 1, 2009 resulting in a $7.1 million decrease in depreciation
expense for the year then ended. Excluding depreciation, the increase was primarily due to overall growth related
to our revenue growth and costs associated with our expansion projects, including (i) an increase of $7.2 million
in rent and facility costs, (ii) an increase of $4.3 million in utility costs as a result of increased customer
installations and (iii) a $3.0 million increase in property tax expense. We expect North America cost of revenues
to increase as we continue to grow our business.

Europe Cost of Revenues. Europe cost of revenues for the years ended December 31, 2010 and 2009
included $53.7 million and $37.1 million, respectively, of depreciation expense. Growth in depreciation expense
was primarily due to our IBX center expansion activity. During the year ended December 31, 2009, we revised
the estimated useful lives of certain of our property, plant and equipment on a prospective basis effective July 1,
2009 resulting in a $523,000 decrease in depreciation expense for the year then ended and we recorded a $4.2
million decrease in depreciation expense for the year then ended as an out-of-period adjustment related to
incorrectly depreciating certain assets. This $4.2 million out-of-period adjustment represents the correction of
errors attributable to the nine months ended September 30, 2009 and the years ended December 31, 2008 and
2007. Excluding depreciation expense, the increase in Europe cost of revenues was primarily the result of costs
associated with our expansion projects and overall growth in costs to support our revenue growth, such as (i) $4.2
million of higher compensation expense, including general salaries, bonuses and headcount growth (253 Europe
employees as of December 31, 2010 versus 184 as of December 31, 2009), (ii) $3.5 million of costs associated
with equipment resales, (iii) an increase of $3.1 million in utility costs arising from increased customer
installations and revenues attributed to customer growth, (iv) $2.1 million of higher repair and maintenance costs,
(v) $1.3 million of higher rent and facility costs and (vi) $1.2 million of higher third-party services such as
security and various consulting services. During the year ended December 31, 2010, the U.S. dollar was
generally stronger relative to the British pound, Euro and Swiss franc than during the year ended December 31,
2009, resulting in approximately $6.0 million of favorable foreign currency impact to our Europe cost of
revenues during the year ended December 31, 2010 when compared to average 2009 exchange rates. We expect
Europe cost of revenues to increase as we continue to grow our business.

Asia-Pacific Cost of Revenues. Asia-Pacific cost of revenues for the years ended December 31, 2010 and
2009 included $28.1 million and $24.4 million, respectively, of depreciation expense. Growth in depreciation
expense was primarily due to our IBX center expansion activity. During the year ended December 31, 2009, we
revised the estimated useful lives of certain of our property, plant and equipment on a prospective basis effective
July 1, 2009 resulting in a $4.4 million decrease in depreciation expense for the year then ended. Excluding
depreciation expense, the increase in Asia-Pacific cost of revenues was primarily the result of costs associated
with our expansion projects and overall growth in costs to support our revenue growth, such as (i) $6.1 million in
higher utility costs, (ii) an increase of $4.6 million of rent and facility costs and (iii) $2.1 million of higher
compensation expense, including general salaries, bonuses, stock-based compensation and headcount growth
(104 Asia-Pacific employees as of December 31, 2010 versus 85 as of December 31, 2009). During the year
ended December 31, 2010, the U.S. dollar was generally weaker relative to the Australian dollar, Hong Kong
dollar, Japanese yen and Singapore dollar than during the year ended December 31, 2009, resulting in

41

approximately $5.7 million of unfavorable foreign currency impact to our Asia-Pacific cost of revenues during
the year ended December 31, 2010 when compared to average 2009 exchange rates. We expect Asia-Pacific cost
of revenues to increase as we continue to grow our business.

Sales and Marketing Expenses. Our sales and marketing expenses for the years ended December 31, 2010

and 2009 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2010

%

2009

%

Actual

Constant
currency

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 72,944
24,071
14,089

65% $35,900
22% 17,755
9,929
13%

56% 103% 103%
40%
36%
28%
35%
42%
16%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$111,104

100% $63,584

100%

75%

75%

Sales and marketing expenses as a percentage of revenues:
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended
December 31,

2010

2009

9%
9%
9%
9%

7%
8%
8%
7%

North America Sales and Marketing Expenses. The increase in our North America sales and marketing
expenses was primarily due to the impact of the Switch and Data acquisition, which resulted in $16.0 million of
additional sales and marketing expenses, including $6.0 million of amortization expense for customer contracts,
for the year ended December 31, 2010.

Excluding the impact of the Switch and Data acquisition, our North America sales and marketing expenses

during the year ended December 31, 2010 were $56.9 million, which represents an increase of 59% from the year
ended December 31, 2009. This increase was primarily due to (i) $14.3 million of higher compensation costs,
including sales compensation, general salaries, bonuses, stock-based compensation expense and headcount
growth (147 North America sales and marketing employees as of December 31, 2010 versus 112 as of
December 31, 2009), (ii) $3.3 million of higher costs related to travel and marketing programs and (iii) $1.1
million of higher bad debt expense.

We have been investing in our North America sales and marketing initiatives to further increase our revenue

and we anticipate this increased investment will continue over the next several years, including anticipated
headcount growth and new product innovation efforts and, as a result, our North America sales and marketing
expenses as a percentage of revenues have increased and are expected to continue to increase. In the long-term,
we generally expect North America sales and marketing expenses to increase as we continue to grow our
business and invest further in various branding initiatives; however, as a percentage of revenues, we generally
expect them to decrease.

Europe Sales and Marketing Expenses. The increase in our Europe sales and marketing expenses was
primarily due to $3.7 million of higher compensation costs, including sales compensation, general salaries,
bonuses, stock-based compensation expense and headcount growth (80 Europe sales and marketing employees as
of December 31, 2010 versus 55 as of December 31, 2009) and $1.1 million of higher costs related to travel and
marketing programs. For the year ended December 31, 2010, the impact of foreign currency fluctuations to our
Europe sales and marketing expenses was not significant when compared to average 2009 exchange rates. We
intend to invest further in our Europe sales and marketing initiatives over the next several years, including

42

anticipated headcount growth and new product innovation efforts and, as a result, we expect our Europe sales and
marketing expenses as a percentage of revenues to increase accordingly. In the long-term, we generally expect
Europe sales and marketing expenses to increase as we continue to grow our business and invest further in
various branding initiatives; however, as a percentage of revenues, we generally expect them to decrease.

Asia-Pacific Sales and Marketing Expenses. The increase in our Asia-Pacific sales and marketing expenses
was primarily due to $2.7 million of higher compensation costs, including sales compensation, general salaries,
bonuses and headcount growth (51 Asia-Pacific sales and marketing employees as of December 31, 2010 versus
44 as of December 31, 2009); however, our Asia-Pacific sales and marketing expenses for the year ended
December 31, 2010 included the benefit of a $680,000 accrual reversal associated with adjusting the estimated
costs of an annual sales recognition program which is an out-of-period adjustment. This $680,000 out-of-period
adjustment represents the correction of errors attributable to the year ended December 31, 2009, which we have
concluded was not material to any previously-reported historical annual or quarterly period for the year ended
December 31, 2009. For the year ended December 31, 2010, the impact of foreign currency fluctuations to our
Asia-Pacific sales and marketing expenses was not significant when compared to average 2009 exchange rates.
We intend to invest further in our Asia-Pacific sales and marketing initiatives over the next several years,
including anticipated headcount growth and new product innovation efforts and, as a result, we expect our Asia-
Pacific sales and marketing expenses as a percentage of revenues to increase accordingly. In the long-term, we
generally expect Asia-Pacific sales and marketing expenses to increase as we continue to grow our business and
invest further in various branding initiatives; however, as a percentage of revenues, we generally expect them to
decrease.

General and Administrative Expenses. Our general and administrative expenses for the years ended

December 31, 2010 and 2009 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$155,516
44,791
20,474

71% $104,141
33,240
20%
17,943
9%

67% 49%
21% 35%
12% 14%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$220,781

100% $155,324

100% 42%

2010

%

2009

%

Actual

Constant
currency

49%
37%
8%

42%

General and administrative expenses as a percentage of revenues:
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended
December 31,

2010

2009

20%
16%
13%
18%

19%
15%
15%
18%

North America General and Administrative Expenses. The increase in our North America general and
administrative expenses was primarily due to the impact of the Switch and Data acquisition, which resulted in
$21.3 million of additional general and administrative expenses for the year ended December 31, 2010.

Excluding the impact of the Switch and Data acquisition, our North America general and administrative

expenses during the year ended December 31, 2010 were $134.2 million, which represents an increase of 29%
from the year ended December 31, 2009. This increase in our North America general and administrative
expenses was primarily due to (i) $20.8 million of higher compensation costs, including general salaries,
bonuses, stock-based compensation and headcount growth (396 North America general and administrative
employees as of December 31, 2010 versus 298 as of December 31, 2009), (ii) $2.2 million of higher

43

depreciation expense as a result of our ongoing efforts to support our growth, such as investment in systems,
(iii) an increase of $2.1 million in professional services related to various consulting projects and (iv) $1.9
million of higher costs related to our headquarters expansion to facilitate our growth.

During 2010, we have been investing in our North America general and administrative functions, which has

included taking on additional office space to accommodate the headcount growth, as a result of our ongoing
efforts to scale this region effectively for growth. Going forward, although we are carefully monitoring our
spending given the current economic environment, we expect North America general and administrative
expenses to increase as we continue to scale our operations to support our growth; however, as a percentage of
revenues, we generally expect them to decrease.

Europe General and Administrative Expenses. The increase in our Europe general and administrative
expenses was primarily due to $5.9 million of higher compensation costs, including general salaries, bonuses,
stock-based compensation and headcount growth (149 Europe general and administrative employees as of
December 31, 2010 versus 109 as of December 31, 2009) and $2.9 million of higher professional services related
to various consulting projects to support our growth. During the year ended December 31, 2010, the U.S. dollar
was generally stronger relative to the British pound, Euro and Swiss franc than during the year ended
December 31, 2009, resulting in approximately $865,000 of favorable foreign currency impact to our Europe
general and administrative expenses during the year ended December 31, 2010 when compared to average 2009
exchange rates. During 2010, we have been investing in our Europe general and administrative functions, which
has included taking on additional office space to accommodate the headcount growth, as a result of our ongoing
efforts to scale this region effectively for growth. Going forward, although we are carefully monitoring our
spending given the current economic environment, we expect our Europe general and administrative expenses to
increase in future periods as we continue to scale our operations to support our growth; however, as a percentage
of revenues, we generally expect them to decrease.

Asia-Pacific General and Administrative Expenses. The increase in our Asia-Pacific general and
administrative expenses was primarily due to $1.9 million of higher compensation costs, including general
salaries, bonuses, stock-based compensation and headcount growth (128 Asia-Pacific general and administrative
employees as of December 31, 2010 versus 105 as of December 31, 2009). During the year ended December 31,
2010, the U.S. dollar was generally weaker relative to the Australian dollar, Hong Kong dollar, Japanese yen and
Singapore dollar than during the year ended December 31, 2009, resulting in approximately $1.1 million of
unfavorable foreign currency impact to our Asia-Pacific general and administrative expenses during the year
ended December 31, 2010 when compared to average 2009 exchange rates. Going forward, although we are
carefully monitoring our spending given the current economic environment, we expect Asia-Pacific general and
administrative expenses to increase as we continue to scale our operations to support our growth; however, as a
percentage of revenues, we generally expect them to decrease.

Restructuring Charges. During the year ended December 31, 2010, we recorded restructuring charges
totaling $6.7 million comprised of $5.3 million related to one-time termination benefits attributed to certain
Switch and Data employees and $1.4 million related to revised sublease assumptions on our excess leased space
in the New York metro area. For additional information, see “Restructuring Charges” in Note 16 of Notes to
Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. We anticipate that we will
incur additional restructuring charges in connection with the Switch and Data acquisition related to one-time
termination benefits during 2011. During the year ended December 31, 2009, we recorded reductions of
restructuring charges totaling $6.1 million, primarily due to a reversal of a restructuring charge accrual of $5.8
million for our excess space in the Los Angeles metro area as a result of our decision to utilize this space to
expand our original Los Angeles IBX data center. Our excess space lease in the New York metro area remains
abandoned and continues to carry a restructuring charge. Our restructuring charges all relate to our North
America geographic region.

44

Acquisition Costs. During the year ended December 31, 2010, we recorded acquisition costs totaling $12.3

million primarily related to the Switch and Data acquisition. During the year ended December 31, 2009, we
recorded acquisition costs totaling $5.2 million, primarily related to the Upminster acquisition and the Switch
and Data acquisition.

Interest Income. Interest income decreased to $1.5 million for the year ended December 31, 2010 from $2.4

million for the year ended December 31, 2009. Interest income decreased primarily due to lower yields on
invested balances. The average yield for the year ended December 31, 2010 was 0.18% versus 0.58% for the year
ended December 31, 2009. We expect our interest income to remain at these low levels for the foreseeable future
due to the impact of a lower interest rate environment, a portfolio more weighted towards short-term U.S.
treasuries and from the utilization of cash to finance our expansion activities.

Interest Expense. Interest expense increased to $140.5 million for the year ended December 30, 2010 from

$74.2 million for the year ended December 31, 2009. This increase in interest expense was primarily due to
additional financings entered into during 2009 and 2010 consisting of (i) our $750.0 million 8.125% senior notes
offering in February 2010, (ii) our $373.8 million 4.75% convertible subordinated notes offering in June 2009
and (iii) our new Asia-Pacific financing in April 2010, of which $120.3 million was outstanding as of
December 31, 2010 with an approximate interest rate of 4.86% per annum, which replaced both our previously-
existing Asia-Pacific and Singapore financings. This increase was partially offset by our repayment of the
Chicago IBX financing in March 2010, the European financing in April 2010 and the Netherlands financing in
June 2010. During the years ended December 31, 2010 and 2009, we capitalized $10.3 million and $12.9 million,
respectively, of interest expense to construction in progress. Going forward, we expect to incur higher interest
expense as we recognize the full impact of our $750.0 million 8.125% senior notes and our new Asia-Pacific
financing, although this has been partially offset by repayment of debt, such as the European financing and
mortgage payable. We may also incur additional indebtedness to support our growth, resulting in further interest
expense.

Other-Than-Temporary Impairment Recovery (Loss) On Investments. During the year ended

December 31, 2010, we recorded a $3.6 million other-than-temporary impairment recovery on investments due to
additional distributions from one of our money market accounts as more fully described in Note 4 of Notes to
Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. For the year ended
December 31, 2009, we recorded $2.6 million of other-than-temporary impairment losses on this same money
market account.

Other Income (Expense). For the years ended December 31, 2010 and 2009, we recorded $690,000 and
$2.4 million of other income, respectively, primarily due to foreign currency exchange gains during the years.

Loss on debt extinguishment and interest rate swaps, net. During the year ended December 31, 2010, we

recorded a $10.2 million loss on debt extinguishment and interest rate swaps, net. See “Loss on Debt
Extinguishment and Interest Rate Swaps, Net” in Note 7 of Notes to Consolidated Financial Statements in Item 8
of this Annual Report on Form 10-K. We did not record any loss on debt extinguishment and interest rate swaps,
net, during the year ended December 31, 2009.

Income Taxes. During the year ended December 31, 2010, we recorded $13.0 million of income tax
expense. The tax expense recorded during the year ended December 31, 2010 was primarily a result of applying
the effective statutory tax rates to our operating income adjusted for permanent tax adjustments for the period,
partially offset by income tax benefits due to the release of valuation allowances of $5.2 million and $2.1 million
associated with certain of our operating entities in Germany and Singapore, respectively. During the year ended
December 31, 2009, we recorded $39.6 million of income tax expense. The tax expense recorded during the year
ended December 31, 2009 was primarily a result of applying the effective statutory tax rates to our operating
income adjusted for permanent tax adjustments for the period, partially offset by income tax benefits due to the
release of valuation allowances of $3.1 million and $5.2 million associated with certain of our Hong Kong and
U.K. operations, respectively.

45

Years Ended December 31, 2009 and 2008

Revenues. Our revenues for the years ended December 31, 2009 and 2008 were generated from the

following revenue classifications and geographic regions (dollars in thousands):

Years ended December 31,

% change

2009

%

2008

%

Actual

Constant
currency

North America:

Recurring revenues . . . . . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . . . . .

$515,780
19,709

59% $423,940
18,863
2%

535,489

61% 442,803

Europe:

Recurring revenues . . . . . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . . . . .

Asia-Pacific:

Recurring revenues . . . . . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . . . . .

212,635
15,501

228,136

113,434
5,450

118,884

Total:

60%
3%

63%

24%
1%

25%

22% N/A
4% N/A

21% N/A

28%
31%

29%

41%
36%

41%

24% 165,669
11,833
2%

26% 177,502

12%
1%

13%

77,554
6,821

84,375

11%
46%
1% (20%)

46%
(20%)

12%

41%

41%

Recurring revenues . . . . . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . . . . .

841,849
40,660

95% 667,163
37,517
5%

95%
5%

$882,509

100% $704,680

100%

26%
8%

25%

29%
10%

28%

North America Revenues. The period over period growth in recurring revenues was primarily the result of an

increase in orders from both our existing customers and new customers during the period as reflected in the
growth in our customer count and utilization rate, as discussed above, in both our new and existing IBX data
centers, as well as selective price increases in each of our IBX markets. During the year ended December 31,
2009, we recorded $67.7 million of revenue generated from our recently-opened IBX data centers or IBX data
center expansions in the Chicago, Los Angeles and New York metro areas.

Europe Revenues. Our revenues from the United Kingdom, the largest revenue contributor in the Europe
region for the period, represented approximately 36% and 38%, respectively, of the regional revenues for the
years ended December 31, 2009 and 2008. As in the U.S., Europe revenue growth was due to an increase in
orders from both our existing customers and new customers during the period as reflected in the growth in our
customer count and utilization rate, as discussed above, in both our new and existing IBX data centers. During
the year ended December 31, 2009, we recorded approximately $49.4 million of revenue from our recently-
opened IBX data centers or IBX data center expansions in the Amsterdam, Frankfurt, London and Paris metro
areas. During the year ended December 31, 2009, the U.S. dollar was generally stronger relative to the British
pound, Euro and Swiss franc than during the year ended December 31, 2008, resulting in approximately $22.1
million of unfavorable foreign currency impact to our Europe revenues during the year ended December 31, 2009
when compared to average 2008 exchange rates.

Asia-Pacific Revenues. Our revenues from Singapore, the largest revenue contributor in the Asia-Pacific

region, represented approximately 36% and 38%, respectively, of the regional revenues for the years ended
December 31, 2009 and 2008. As in the U.S., Asia-Pacific revenue growth was due to an increase in orders from
both our existing customers and new customers during the period as reflected in the growth in our customer
count and utilization rate, as discussed above, in both our new and existing IBX data centers, as well as selective
price increases in each of our IBX markets. During the year ended December 31, 2009, we recorded

46

approximately $25.7 million of revenue generated from our IBX data centers or IBX data center expansions in
the Hong Kong, Singapore and Sydney metro areas. The decrease in Asia-Pacific non-recurring revenue was
primarily due to higher revenue from equipment resales in 2008. For the year ended December 31, 2009, the
impact of foreign currency fluctuations to our Asia-Pacific revenues was not significant when compared to
average 2008 exchange rates.

Cost of Revenues. Our cost of revenues for the years ended December 31, 2009 and 2008 were split among

the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2009

%

2008

%

Actual

Constant
currency

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$269,242
144,875
69,303

56% $238,583
30% 122,658
53,558
14%

57% 13% N/A
30% 18%
13% 29%

28%
28%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$483,420

100% $414,799

100% 17%

19%

Cost of revenues as a percentage of revenues:
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended
December 31,

2009

2008

50%
64%
58%
55%

54%
69%
63%
59%

North America Cost of Revenues. North America cost of revenues for the years ended December 31, 2009
and 2008 included $99.3 million and $91.9 million, respectively, of depreciation expense. Growth in depreciation
expense of $14.5 million was due to our IBX data center expansion activity; however, this growth was partially
offset by a $7.1 million decrease in depreciation expense as we revised the estimated useful lives of certain of our
property, plant and equipment during the year ended December 31, 2009. Excluding depreciation, the increase in
North America cost of revenues was primarily due to overall growth related to our revenue growth and costs
associated with our expansion projects, including (i) an increase of $9.8 million in rent and facility costs, (ii) an
increase of $7.9 million in utility costs as a result of increased customer installations and (iii) $5.7 million in
higher compensation costs, including general salaries, bonuses and headcount growth (308 North America
employees as of December 31, 2009 versus 289 as of December 31, 2008).

Europe Cost of Revenues. Europe cost of revenues for the years ended December 31, 2009 and 2008
included $37.1 million and $33.5 million, respectively, of depreciation expense. Growth in depreciation expense
of $4.1 million was primarily due to our IBX center expansion activity; however, this growth was partially offset
by a $523,000 decrease in depreciation expense as we revised the estimated useful lives of certain of our
property, plant and equipment during the year ended December 31, 2009. In the fourth quarter of 2009, we
recorded a $4.2 million decrease in depreciation expense as an out-of-period adjustment related to incorrectly
depreciating certain assets. This $4.2 million out-of-period adjustment represents the correction of errors
attributable to the nine months ended September 30, 2009 and the years ended December 31, 2008 and 2007,
which we have concluded were not material to any previously-reported historical quarterly periods or results of
operations for the nine months ended September 30, 2009 and to any previously-reported historical annual or
quarterly periods for the years ended December 31, 2008 or 2007. Excluding depreciation expense, the increase
in Europe cost of revenues was primarily the result of costs associated with our expansion projects and overall
growth in costs to support our revenue growth, such as (i) an increase of $11.0 million of utility costs arising
from increased customer installations and revenues attributed to customer growth and (ii) $3.4 million of higher
rent and facility costs. During the year ended December 31, 2009, the U.S. dollar was generally stronger relative

47

to the British pound, Euro and Swiss franc than during the year ended December 31, 2008, resulting in
approximately $12.1 million of favorable foreign currency impact to our Europe cost of revenues during the year
ended December 31, 2009 when compared to average 2008 exchange rates.

Asia-Pacific Cost of Revenues. Asia-Pacific cost of revenues for the years ended December 31, 2009 and
2008 included $24.4 million and $17.6 million, respectively, of depreciation expense. Growth in depreciation
expense of $11.2 million was primarily due to our IBX data center expansion activity; however, this growth was
partially offset by a $4.4 million decrease in depreciation expense as we revised the estimated useful lives of
certain of our property, plant and equipment during the year ended December 31, 2009. Excluding depreciation
expense, the increase in Asia-Pacific cost of revenues was primarily the result of costs associated with our
expansion projects and overall growth in costs to support our revenue growth, including (i) $3.9 million of higher
utility costs as a result of increased customer installations and (ii) $2.2 million of higher rent and facility costs.
For the year ended December 31, 2009, the impact of foreign currency fluctuations to our Asia-Pacific cost of
revenues was not significant when compared to average 2008 exchange rates.

Sales and Marketing Expenses. Our sales and marketing expenses for the years ended December 31, 2009

and 2008 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2009

%

2008

%

Actual

Constant
currency

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$35,900
17,755
9,929

56% $38,219
28% 19,331
9,363
16%

57%
29%
14%

(6%) N/A
(8%)
6%

4%
6%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$63,584

100% $66,913

100%

(5%)

(1%)

Sales and marketing expenses as a percentage of revenues:
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended
December 31,

2009

2008

7%
8%
8%
7%

9%
11%
11%
9%

North America Sales and Marketing Expenses. The decrease in our North America sales and marketing
expenses was primarily due to $1.6 million of higher expenditures related to our branding initiatives in 2008.

Europe Sales and Marketing Expenses. The decrease in our Europe sales and marketing expenses was

primarily due to $1.5 million of lower bad debt expense. During the year ended December 31, 2009, the U.S.
dollar was generally stronger relative to the British pound, Euro and Swiss franc than during the year ended
December 31, 2008, resulting in approximately $2.4 million of favorable foreign currency impact to our Europe
sales and marketing expenses during the year ended December 31, 2009 when compared to average 2008
exchange rates.

Asia-Pacific Sales and Marketing Expenses. The increase in our Asia-Pacific sales and marketing expenses

was primarily due to higher compensation costs, including general salaries, bonuses and stock-based
compensation expense. For the year ended December 31, 2009, the impact of foreign currency fluctuations to our
Asia-Pacific sales and marketing expenses was not significant when compared to average 2008 exchange rates.

48

General and Administrative Expenses. Our general and administrative expenses for the years ended

December 31, 2009 and 2008 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2009

%

2008

%

Actual

Constant
currency

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$104,141
33,240
17,943

67% $ 96,657
34,071
21%
15,836
12%

8% N/A
66%
23%
(2%)
11% 13%

10%
15%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$155,324

100% $146,564

100%

6%

9%

General and administrative expenses as a percentage of revenues:
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended
December 31,

2009

2008

19%
15%
15%
18%

22%
19%
19%
21%

North America General and Administrative Expenses. The increase in our North America general and
administrative expenses was primarily due to $8.5 million of higher compensation costs, including general
salaries, bonuses and headcount growth (298 North America general and administrative employees as of
December 31, 2009 versus 259 as of December 31, 2008).

Europe General and Administrative Expenses. The decrease in our Europe general and administrative

expenses was primarily due to a $3.1 million one-time stock-based compensation charge due to equity award
modifications related to the resignation of two senior officers in Europe during the year ended December 31,
2008, partially offset by $2.0 million of higher compensation costs, including general salaries, bonuses and
headcount growth (109 Europe general and administrative employees as of December 31, 2009 versus 80 as of
December 31, 2008). During the year ended December 31, 2009, the U.S. dollar was generally stronger relative
to the British pound, Euro and Swiss franc than during the year ended December 31, 2008, resulting in
approximately $4.1 million of favorable foreign currency impact to our Europe general and administrative
expenses during the year ended December 31, 2009 when compared to average 2008 exchange rates.

Asia-Pacific General and Administrative Expenses. The increase in our Asia-Pacific general and

administrative expenses was primarily due to $1.2 million of higher professional fees including legal fees. For
the year ended December 31, 2009, the impact of foreign currency fluctuations to our Asia-Pacific general and
administrative expenses was not significant when compared to average 2008 exchange rates.

Acquisition Costs. During the year ended December 31, 2009, we recorded acquisition costs totaling $5.2

million, primarily related to the Upminster acquisition and the agreement to acquire Switch and Data. During the
year ended December 31, 2008, we did not expense direct acquisition costs pursuant to the accounting standard
applicable to that period.

Restructuring Charges. During the year ended December 31, 2009, we recorded reductions of restructuring
charges totaling $6.1 million, primarily due to a reversal of a restructuring charge accrual of $5.8 million for our
excess space in the Los Angeles metro area as a result of our decision to utilize this space to expand our original
Los Angeles IBX data center. Our excess space lease in the New York metro area remains abandoned and
continues to carry a restructuring charge. During the year ended December 31, 2008, we recorded a restructuring
charge adjustment of $3.1 million from revised sublease assumptions on the two excess space leases in the Los
Angeles and New York metro areas as a result of new information becoming available. We are contractually
committed to the lease of excess space in the New York metro area through 2015.

49

Interest Income. Interest income decreased to $2.4 million for the year ended December 31, 2009 from $8.9

million for the year ended December 31, 2008. Interest income decreased primarily due to lower yields on
invested balances. The average yield for the year ended December 31, 2009 was 0.58% versus 2.77% for the year
ended December 31, 2008.

Interest Expense. Interest expense was $74.2 million and $61.7 million, respectively, for the years ended
December 31, 2009 and 2008. The increase in interest expense was primarily due to higher loan balances as a
result of loan drawdowns and new financings entered into during 2008 and 2009 consisting of (i) our $373.8
million 4.75% convertible subordinated notes offering in June 2009, (ii) our Netherlands financing, of which $9.3
million was outstanding as of December 31, 2009 with an approximate interest rate of 4.31% per annum as
compared to $6.5 million outstanding as of December 31, 2008 with an approximate interest rate of 4.18% per
annum and (iii) our Singapore financing, which we obtained in September 2009, of which $24.6 million was
outstanding as of December 31, 2009 with an approximate interest rate of 4.20% per annum. The increase was
partially offset by higher capitalized interest expense, repayment of some loans and the partial conversions of
certain of our convertible subordinated debentures in November 2008 and June 2009. During the years ended
December 31, 2009 and 2008, we capitalized $12.9 million and $7.9 million, respectively, of interest expense to
construction in progress.

Other-Than-Temporary Impairment Loss On Investments. For the years ended December 31, 2009 and
2008, we recorded $2.6 million and $1.5 million, respectively, of other-than-temporary impairment losses on one
of our money market accounts as more fully described in Note 4 of Notes to Consolidated Financial Statements
in Item 8 of this Annual Report.

Other Income (Expense). For the years ended December 31, 2009 and 2008, we recorded $2.4 million and
$1.3 million of other income, respectively, primarily attributable to foreign currency exchange gains during the
periods.

Income Taxes. For the year ended December 31, 2009, we recorded $39.6 million of income tax expense.
The tax expense recorded in the year ended December 31, 2009 was primarily a result of applying the effective
statutory tax rates to the operating income adjusted for permanent tax adjustments for the period, partially offset
by income tax benefits due to the release of valuation allowances of $3.1 million and $5.2 million associated with
our Hong Kong and U.K. operations, respectively. For the year ended December 31, 2008, we recorded $87.6
million of income tax benefits primarily due to recognition of deferred tax assets of $85.1 million and $6.1
million associated with our North America and Australian operations, respectively, partially offset by tax
provisions from other jurisdictions.

As of December 31, 2009, we had total net deferred tax assets of $25.2 million consisting primarily of
favorable temporary differences and net operating loss carryforwards, the majority of which are attributable to
our North America operations. For further information on our income taxes, refer to Note 12 of Notes to
Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Non-GAAP Financial Measures

We provide all information required in accordance with generally accepted accounting principles (GAAP),
but we believe that evaluating our ongoing operating results may be difficult if limited to reviewing only GAAP
financial measures. Accordingly, we use non-GAAP financial measures, primarily adjusted EBITDA, to evaluate
our operations. We also use adjusted EBITDA as a metric in the determination of employees’ annual bonuses and
vesting of restricted stock units that have both a service and performance condition. In presenting adjusted
EBITDA, we exclude certain items that we believe are not good indicators of our 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 the use of and emphasis on GAAP financial metrics and require companies to

50

explain why non-GAAP financial metrics are relevant to management and investors. We exclude these items in
order for our lenders, investors, and industry analysts, who review and report on us, to better evaluate our
operating performance and cash spending levels relative to our industry sector and competitors.

For example, we exclude depreciation expense as these charges primarily relate to the initial construction
costs of our IBX data centers and do not reflect our current or future cash spending levels to support our business.
Our IBX data centers are long-lived assets, and have an economic life greater than 10 years. The construction
costs of our IBX data 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 data centers. These estimates could vary from actual performance of the asset, are based on
historical costs incurred to build out our IBX data centers, and are not indicative of current or expected future
capital expenditures. Therefore, we exclude depreciation from our operating results when evaluating our
operations.

In addition, in presenting the non-GAAP financial measures, we exclude amortization expense related to
certain intangible assets, as it represents a cost that may not recur and is not a good indicator of our current or
future operating performance. We exclude accretion expense, both as it relates to asset retirement obligations as
well as accrued restructuring charge liabilities, as these expenses represent costs which we believe are not
meaningful in evaluating our current operations. We exclude 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. We also exclude restructuring charges from our non-GAAP financial measures.
The restructuring charges relate to our decisions to exit leases for excess space adjacent to several of our IBX
data 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. Finally, we also exclude acquisition costs from our
non-GAAP financial measures. The acquisition costs relate to costs we incur 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. We believe 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. We believe that if we 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 us 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 we use non-GAAP financial measures, we provide a reconciliation of the non-GAAP
financial measure 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.

51

We define adjusted EBITDA as income or loss from operations plus depreciation, amortization, accretion,

stock-based compensation expense, restructuring charges and acquisition costs as presented below (dollars in
thousands):

Years ended December 31,

2010

2009

2008

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion expense . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$194,711
263,564
67,489
12,337
6,734

$181,079
175,371
53,056
5,155
(6,053)

$ 73,262
160,987
55,085
—
3,142

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$544,835

$408,608

$292,476

The geographic split of our adjusted EBITDA is presented below (dollars in thousands):

Years ended December 31,

2010

2009

2008

North America:

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion expense . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$121,118
173,811
50,966
11,094
6,734

$128,168
106,207
40,082
4,091
(6,053)

$ 66,202
101,414
40,993
—
3,142

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$363,723

$272,495

$211,751

Europe:

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion expense . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 34,929
60,291
9,397
1,065

$ 31,202
43,744
5,843
1,064

$

1,442
41,208
8,473
—

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$105,682

$ 81,853

$ 51,123

Asia-Pacific:

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion expense . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 38,664
29,462
7,126
178

$ 21,709
25,420
7,131
—

$

5,618
18,365
5,619
—

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 75,430

$ 54,260

$ 29,602

Our adjusted EBITDA results have improved each year and in each region due to the improved operating
results discussed earlier in “Results of Operations”, as well as the nature of our business model consisting of a
recurring revenue stream and a cost structure which has a large base that is fixed in nature that is also discussed
earlier in “Overview”. We believe that our adjusted EBITDA results will continue to improve in future periods as
we continue to grow our business.

Liquidity and Capital Resources

As of December 31, 2010, our total indebtedness was comprised of (i) convertible debt principal totaling

$1.0 billion from our 2.50% convertible subordinated notes (gross of discount), our 3.00% convertible
subordinated notes, and our 4.75% convertible subordinated notes (gross of discount) and (ii) non-convertible

52

debt and financing obligations totaling $1.1 billion consisting of (a) $750.0 million of principal from our senior
notes, (b) $120.3 million of principal from our loans payable and (c) $261.9 million from our capital lease and
other financing obligations.

We believe we have sufficient cash, coupled with anticipated cash generated from operating activities, to
meet our operating requirements, including repayment of our current portion of debt due, and to complete our
publicly-announced expansion projects. As of December 31, 2010, we had $592.8 million of cash, cash
equivalents and short-term and long-term investments. Besides our investment portfolio and any financing
activities we may pursue, customer collections are our primary source of cash. While we believe we have a
strong customer base and have continued to experience relatively strong collections, if the current market
conditions were to deteriorate, some of our customers may have difficulty paying us and we may experience
increased churn in our customer base, including reductions in their commitments to us, all of which could have a
material adverse effect on our liquidity.

As of December 31, 2010, we had a total of approximately $99.1 million of additional liquidity available to
us, consisting of (i) approximately $92.4 million under the new Asia-Pacific financing and (ii) $6.7 million under
the $25.0 million Bank of America revolving credit line. While we believe we have sufficient liquidity and
capital resources to meet our current operating requirements and to complete our publicly-announced IBX
expansion plans, we may pursue additional expansion opportunities, primarily the build-out of new IBX data
centers, in certain of our existing markets which are at or near capacity within the next year, as well as potential
acquisitions. While we will be able to fund these expansion plans with our existing resources, additional
financing, either debt or equity, may be required to pursue certain of these additional expansion plans. However,
if current market conditions were to deteriorate, we may be unable to secure additional financing or any such
additional financing may only be available to us on unfavorable terms. An inability to pursue additional
expansion opportunities will have a material adverse effect on our ability to maintain our desired level of revenue
growth in future periods.

Sources and Uses of Cash

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 392,872
(600,969)
309,686

(in thousands)
$ 355,492
(558,178)
323,598

$ 267,558
(478,040)
145,106

Years ended December 31,

2010

2009

2008

Operating Activities

The increase in net cash provided by operating activities during 2010 compared to 2009 and 2008 was
primarily due to improved operating results as discussed above, partially offset by growth in accounts receivable,
higher interest paid in cash, payments related to the termination of several interest rate swaps totaling $17.3
million and restructuring charges and acquisition costs paid in connection with the Switch and Data acquisition.
We expect that we will continue to generate cash from our operating activities throughout 2011 and beyond.

Investing Activities

The increase in net cash used in investing activities during 2010 compared to 2009 and 2008 was primarily

due to higher capital expenditures as a result of expansion activity, the Switch and Data acquisition and the
purchase of the Amsterdam IBX property. During the years ended December 31, 2010, 2009 and 2008, these
capital expenditures were $579.4 million, $369.5 million and $447.0 million, respectively. During 2011, we
expect that our IBX expansion construction activity will be similar to our 2010 spending levels. However, if the

53

opportunity to expand is greater than planned and we have sufficient funding to increase the expansion
opportunities available to us, we may increase the level of capital expenditures to support this growth as well as
pursue additional acquisitions or joint ventures.

Financing Activities

The net cash provided by financing activities for the year ended December 31, 2010 was primarily due to

our $750.0 million 8.125% senior notes offering in February 2010 and approximately $63.4 million of
incremental net proceeds from the new Asia-Pacific financing, which replaced our previously existing Asia-
Pacific financing and Singapore financing, partially offset by repayment of our debt facilities, including the
Chicago IBX financing, the European financing, the Singapore financing, the Netherlands financing and
mortgage payable. Net cash provided by financing activities during the year ended December 31, 2009 was
primarily the result of $373.8 million in gross proceeds from our 4.75% convertible notes offering, partially
offset by payment of the associated capped call transaction. Going forward, we expect that our financing
activities will consist primarily of drawdowns of our new Asia-Pacific financing offset by repayment of our debt
for the foreseeable future. Depending on market conditions, we may pursue additional financings in the future.

Debt Obligations—Convertible Debt

4.75% Convertible Subordinated Notes. In June 2009, we issued $373.8 million aggregate principal amount

of 4.75% convertible subordinated notes due June 15, 2016. Interest is payable semi-annually on June 15 and
December 15 of each year, beginning December 15, 2009. The initial conversion rate is 11.8599 shares of
common stock per $1,000 principal amount of 4.75% convertible subordinated notes, subject to adjustment. This
represents an initial conversion price of approximately $84.32 per share of common stock. Upon conversion,
holders will receive, at our election, cash, shares of our common stock or a combination of cash and shares of our
common stock. As of December 31, 2010, the 4.75% convertible subordinated notes were convertible into
4.4 million shares of our common stock.

Holders of the 4.75% convertible subordinated notes may convert their notes under certain defined

circumstances, including during any fiscal quarter (and only during that fiscal quarter) ending after December 31,
2009, if the sale price of our common stock, for at least 20 trading days during the period of 30 consecutive
trading days ending on the last trading day of the previous fiscal quarter, is greater than 130% of the conversion
price per share of common stock, which was $109.62 per share, on such last trading day or at any time on or after
March 15, 2016.

Upon conversion, if we elected to pay a sufficiently large portion of the conversion obligation in cash,
additional consideration beyond the $373.8 million of gross proceeds received would be required. However, to
minimize the impact of potential dilution upon conversion of the 4.75% convertible subordinated notes, we
entered into capped call transactions, which are referred to as the capped call, separate from the issuance of the
4.75% convertible subordinated notes, for which we paid a premium of $49.7 million. The capped call covers a
total of approximately 4.4 million shares of our common stock, subject to adjustment. Under the capped call, we
effectively raised the conversion price of the 4.75% convertible subordinated notes from $84.32 to $114.82.
Depending upon our stock price at the time the 4.75% convertible subordinated notes are converted, the capped
call will return up to 1.2 million shares of our common stock to us; however, we will receive no benefit from the
capped call if our stock price is $84.32 or lower at the time of conversion and will receive less shares for share
prices in excess of $114.82 at the time of conversion than we would have received at a share price of $114.82
(our benefit from the capped call is capped at $114.82 and no additional benefit is received beyond this price).

We do not have the right to redeem the 4.75% convertible subordinated notes at our option.

We separately accounted for the liability and equity components of our 4.75% convertible subordinated
notes in accordance with a FASB standard for convertible debt instruments that may be settled in cash upon

54

conversion (including partial cash settlement). See “4.75% Convertible Subordinated Notes” in Note 7 of Notes
to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

3.00% Convertible Subordinated Notes. In September 2007, we issued $396.0 million aggregate principal
amount of 3.00% Convertible Subordinated Notes due October 15, 2014. Interest is payable semi-annually on
April 15 and October 15 of each year, and commenced in April 2008.

Holders of the 3.00% convertible subordinated notes may convert their notes at their option on any day up to

and including the business day immediately preceding the maturity date into shares of our common stock. The
base conversion rate is 7.436 shares of common stock per $1,000 principal amount of 3.00% convertible
subordinated notes, subject to adjustment. This represents a base conversion price of approximately $134.48 per
share of common stock. If, at the time of conversion, the applicable stock price of our common stock exceeds the
base conversion price, the conversion rate will be determined pursuant to a formula resulting in the receipt of up
to 4.4616 additional shares of common stock per $1,000 principal amount of the 3.00% convertible subordinated
notes, subject to adjustment. However, in no event would the total number of shares issuable upon conversion of
the 3.00% convertible subordinated notes exceed 11.8976 per $1,000 principal amount of 3.00% convertible
subordinated notes, subject to anti-dilution adjustments, or the equivalent of $84.05 per share of our common
stock or a total of 4.7 million shares of our common stock. As of December 31, 2010, the 3.00% convertible
subordinated notes were convertible into 2.9 million shares of our common stock.

We do not have the right to redeem the 3.00% convertible subordinated notes at our option.

2.50% Convertible Subordinated Notes. In March 2007, we issued $250.0 million in aggregate principal

amount of 2.50% convertible subordinated notes due April 2012. The interest on the 2.50% convertible
subordinated notes is payable semi-annually every April 15th and October 15th, and commenced in October 2007.
The initial conversion rate is 8.9259 shares of common stock per $1,000 principal amount of convertible
subordinated notes, subject to adjustment. This represents an initial conversion price of approximately $112.03
per share of common stock or 2.2 million shares of our common stock. Upon conversion, holders will receive, at
our election, cash, shares of our common stock or a combination of cash and shares of our common stock. We
intend to repay the 2.50% convertible subordinated notes in cash, through our existing cash balances, refinancing,
or a combination thereof.

Holders of the 2.50% convertible subordinated notes may convert their notes under certain defined
circumstances, including during any fiscal quarter (and only during that fiscal quarter) ending after June 30,
2007, if the sale price of our common stock, for at least 20 trading days during the period of 30 consecutive
trading days ending on the last trading day of the previous fiscal quarter, is greater than 130% of the conversion
price per share of common stock on such last trading day, which was $145.64 per share, or at any time on or after
March 15, 2012.

We may only redeem all or a portion of the 2.50% convertible subordinated notes at any time after April 16,
2010 for cash but only if the closing sale price of our common stock for at least 20 of the 30 consecutive trading
days immediately prior to the day we give notice of redemption is greater than 130% of the applicable conversion
price per share of common stock on the date of the notice, which was $145.64 per share as of December 31,
2010. The redemption price will equal 100% of the principal amount of the convertible subordinated notes, plus
accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Upon conversion, due to the conversion formulas associated with the 2.50% convertible subordinated notes,

if our stock is trading at levels exceeding 130% of the conversion price per share of common stock, and if we
elect to pay any portion of the consideration in cash, additional consideration beyond the $250.0 million of gross
proceeds received would be required. However, in no event would the total number of shares issuable upon
conversion of the 2.50% convertible subordinated notes exceed 11.6036 per $1,000 principal amount of
convertible subordinated notes, subject to anti-dilution adjustments, or the equivalent of $86.18 per share of

55

common stock or a total of 2.9 million shares of our common stock. As of December 31, 2010, the 2.50%
convertible subordinated notes were convertible into 2.2 million shares of our common stock.

We separately accounted for the liability and equity components of our 2.50% convertible subordinated
notes in accordance with a FASB standard for convertible debt instruments that may be settled in cash upon
conversion (including partial cash settlement). See “2.50% Convertible Subordinated Notes” in Note 7 of Notes
to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Debt Obligations—Non-Convertible Debt

Senior Notes

In February 2010, we issued $750.0 million aggregate principal amount of 8.125% senior notes due

March 1, 2018, which are referred to as the senior notes. Interest is payable semi-annually on March 1 and
September 1 of each year, commencing on September 1, 2010.

The senior notes are unsecured and rank equal in right of payment to our existing or future senior debt and

senior in right of payment to our existing and future subordinated debt. The senior notes will be effectively junior
to any of our existing and future secured indebtedness and any indebtedness of our subsidiaries.

The senior notes are governed by an indenture which contains covenants that limit our ability and the ability

of our subsidiaries to, among other things:

•

•

•

incur additional debt;

pay dividends or make other restricted payments;

purchase, redeem or retire capital stock or subordinated debt;

• make asset sales;

•

•

•

•

enter into transactions with affiliates;

incur liens;

enter into sale-leaseback transactions;

provide subsidiary guarantees;

• make investments; and

• merge or consolidate with any other person.

At any time prior to March 1, 2013, we may on any one or more occasions redeem up to 35% of the

aggregate principal amount of the senior notes outstanding at a redemption price equal to 108.125% of the
principal amount of the senior notes to be redeemed, plus accrued and unpaid interest to, but not including, the
redemption date, with the net cash proceeds of one or more equity offerings, provided that (i) at least 65% of the
aggregate principal amount of the senior notes remains outstanding immediately after the occurrence of such
redemption and (ii) the redemption must occur within 90 days of the date of the closing of such equity offerings.
On or after March 1, 2014, we may redeem all or a part of the 8.125% senior notes, on any one or more
occasions, at the redemption prices set forth below plus accrued and unpaid interest thereon, if any, to, but not
including, the applicable redemption date, if redeemed during the one-year period beginning on March 1 of the
years indicated below:

2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104.0625%
102.0313%
100.0000%

Redemption price of the
senior notes

56

In addition, at any time prior to March 1, 2014, we may also redeem all or a part of the senior notes at a

redemption price equal to 100% of the principal amount of the senior notes redeemed plus applicable premium
plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

Upon a change in control, we will be required to make an offer to purchase each holder’s senior notes at a

purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of
purchase.

Capital Lease and Other Financing Obligations

We have numerous capital lease and other financing obligations with maturity dates ranging from 2011 to
2030 under which a total principal balance of $261.9 million remained outstanding as of December 31, 2010 with
a weighted average effective interest rate of 8.03%. For further information on our capital leases and other
financing obligations, see “Capital Leases and Other Financing Obligations” in Note 8 of Notes to Consolidated
Financial Statements in Item 8 of this Annual Report on Form 10-K.

Loans Payable

New Asia-Pacific Financing. In May 2010, our five wholly-owned subsidiaries, located in Australia, Hong
Kong, Japan and Singapore, completed a new multi-currency credit facility agreement for approximately $223.6
million, which is referred to as the new Asia-Pacific financing, comprising 79.2 million Australian dollars,
370.4 million Hong Kong dollars, 99.4 million Singapore dollars and 1.5 billion Japanese yen. The new Asia-
Pacific financing replaced our previously existing Asia-Pacific financing and Singapore financing. The new
Asia-Pacific financing has a five-year term with semi-annual principal payments and quarterly debt service and
consists of two tranches: (i) Tranche A totaling approximately $90.8 million was available for immediate
drawing upon satisfaction of certain conditions precedent and was used to refinance the existing Asia-Pacific
financing and Singapore financing and (ii) Tranche B totaling approximately $132.8 million is available for
drawing in Australian, Hong Kong and Singapore dollars only for up to 24 months following the effective date of
the new Asia-Pacific financing. The new Asia Pacific financing bears an interest rate of 3.50% above the local
borrowing rates for the first 12 months and interest rates between 2.50%-3.50% above the local borrowing rates
thereafter, depending on the leverage ratio within our five subsidiaries. The new Asia-Pacific financing contains
four financial covenants, which we must comply with quarterly, consisting of two leverage ratios, an interest
coverage ratio and a debt service ratio. The new Asia-Pacific financing is guaranteed by us and is secured by
most of our five subsidiaries’ assets and share pledges. During the year ended December 31, 2010, our five
subsidiaries used part of the proceeds from the partially-drawn down Tranche A and Tranche B under the New
Asia-Pacific Financing for the prepayment and termination of the existing Asia-Pacific financing and the
Singapore financing. As of December 31, 2010, our five subsidiaries had fully utilized Tranche A and utilized
approximately $40.4 million of Tranche B under the new Asia-Pacific financing. The loans payable under the
new Asia-Pacific financing have a final maturity date of March 2015. As of December 31, 2010, we were in
compliance with all financial covenants in connection with the new Asia- Pacific financing. As of December 31,
2010, approximately $120.3 million was outstanding under the new Asia-Pacific financing at an approximate
blended interest rate of 4.86% per annum, leaving approximately $92.4 million available for future borrowings
under the new Asia-Pacific financing.

$25.0 Million Bank of America Revolving Credit Line. In February 2009, we entered into a $25.0 million

revolving credit facility with Bank of America, which is referred to as the $25.0 million Bank of America
revolving credit line. In February 2011, we amended the $25.0 million Bank of America revolving credit line and
extended the maturity date to February 2012. The $25.0 million Bank of America revolving credit line is used
primarily as a letter of credit issuing facility and to fund our working capital if so needed. The effect of
issuing letters of credit under the $25.0 million Bank of America revolving credit line reduces the amount
available for borrowing under the $25.0 million Bank of America revolving credit line. We may borrow, repay
and reborrow under the $25.0 million Bank of America revolving credit line at either the prime rate or at a
borrowing margin of 2.75% over one, three or six month LIBOR, subject to a minimum borrowing cost of

57

3.00%. The $25.0 million Bank of America revolving credit line contains three financial covenants, which we
must comply with quarterly, consisting of a tangible net worth ratio, a debt service ratio and a senior leverage
ratio and is unsecured. As of December 31, 2010, we were in compliance with all financial covenants in
connection with the $25.0 million Bank of America revolving credit line. The $25.0 million Bank of America
revolving credit line has a one-year term and is renewed annually subject to mutual agreement by both parties.
As of December 31, 2010, we had issued 13 irrevocable letters of credit totaling $18.3 million under the $25.0
million Bank of America revolving credit line. As a result, the amount available to borrow was $6.7 million as of
December 31, 2010.

Contractual Obligations and Off-Balance-Sheet Arrangements

We lease a majority of our IBX data centers and certain equipment under non-cancelable lease agreements

expiring through 2035. The following represents our contractual obligations as of December 31, 2010 (in
thousands):

2011

2012

2013

2014

2015

2016 and
thereafter

Total

Convertible debt (1) . . . . . . . . . . . . . . . $ — $250,000 $
—
Senior notes (1) . . . . . . . . . . . . . . . . . .
New Asia-Pacific financing (1) . . . . . .
19,978
Interest (2) . . . . . . . . . . . . . . . . . . . . . . 101,557
Capital lease and other financing

—
24,827
97,376

—
31,493
92,940

$395,986 $ — $ 373,750 $1,019,736
750,000
120,315
621,258

750,000
—
161,390

—
15,043
78,791

—
28,974
89,204

obligations (3) . . . . . . . . . . . . . . . . .

27,959

28,435

28,948

29,660

30,431

237,711

383,144

Operating leases under accrued

restructuring charges (4) . . . . . . . . .

2,459
Operating leases (5) . . . . . . . . . . . . . . . 112,126 116,749 117,158 112,112
83
Other contractual commitments (6) . . . 240,040
1,394
445
Asset retirement obligations (7) . . . . . .

75,391
—

2,044
962

2,463

2,429

2,444

1,444
94,493
—
5,437

—

11,239
538,357 1,090,995
317,558
46,767

—
38,529

$504,568 $595,207 $275,989 $659,872 $225,639 $2,099,737 $4,361,012

(1) Represents principal only.
(2) Represents interest on convertible debt, senior notes and new Asia-Pacific financing based on their

approximate interest rates as of December 31, 2010.

(3) Represents principal and interest.
(4) Excludes any subrental income.
(5) Represents minimum operating lease payments, excluding potential lease renewals.
(6) Represents off-balance sheet arrangements. Other contractual commitments are described below.
(7) Represents liability, net of future accretion expense.

We entered into 13 irrevocable letters of credit totaling $18.3 million with Bank of America. These letters of

credit were provided in lieu of cash deposits under the $25.0 million Bank of America revolving credit line and
automatically renew in successive one-year periods until the final lease expiration date or termination of a utility
agreement. If the landlords for these IBX leases or utility provider decides to draw down on these letters of credit
triggered by an event of default under the agreement, we will be required to fund these letters of credit either
through cash collateral or borrowing under the $25.0 million Bank of America revolving credit line. These
contingent commitments are not reflected in the table above.

Primarily as a result of our various IBX expansion projects, as of December 31, 2010, we were contractually

committed for $199.4 million of unaccrued capital expenditures, primarily for IBX equipment not yet delivered
and labor not yet provided in connection with the work necessary to complete construction and open these IBX
data centers prior to making them available to customers for installation. This amount, which is expected to be
paid during 2011 and thereafter, is reflected in the table above as “other contractual commitments.”

58

We had other non-capital purchase commitments in place as of December 31, 2010, such as commitments to

purchase power in select locations and other open purchase orders, which contractually bind us for goods or
services to be delivered or provided during 2011 and beyond. Such other purchase commitments as of
December 31, 2010, which total $118.2 million, are also reflected in the table above as “other contractual
commitments.”

In addition, although we are not contractually obligated to do so, we expect to incur additional capital
expenditures of approximately $200.0 million to $250.0 million, in addition to the $199.4 million in contractual
commitments discussed above as of December 31, 2010, in our various IBX expansion projects during 2011 and
thereafter in order to complete the work needed to open these IBX data centers. These non-contractual capital
expenditures are not reflected in the table above. If we so choose, whether due to economic factors or other
considerations, we could delay these non-contractual capital expenditure commitments to preserve liquidity.

Other Off-Balance-Sheet Arrangements

We have various guarantor arrangements with both our directors and officers and third parties, including
customers, vendors and business partners (see “Guarantor Arrangements” in Note 13 of Notes to Consolidated
Financial Statements in Item 8 of this Annual Report on Form 10-K). As of December 31, 2010, there were no
significant liabilities recorded for these arrangements.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”). The preparation of our financial statements requires management to
make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. On an ongoing basis, management evaluates the
accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements
are presented fairly and in accordance with GAAP. Management bases its assumptions, estimates and judgments
on historical experience, current trends and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. However, because future events and their effects
cannot be determined with certainty, actual results may differ from these assumptions and estimates, and such
differences could be material.

Our significant accounting policies are discussed in Note 1 of Notes to Consolidated Financial Statements in
Item 8 of this Annual Report on Form 10-K. Management believes that the following critical accounting policies
and estimates, among others, are the most critical to aid in fully understanding and evaluating our consolidated
financial statements, and they require significant judgments, resulting from the need to make estimates about the
effect of matters that are inherently uncertain:

• Accounting for income taxes;

• Accounting for business combinations;

• Accounting for impairment of goodwill; and

• Accounting for property, plant and equipment.

59

Description

Judgments and Uncertainties

Effect if Actual Results Differ From
Assumptions

Accounting for Income Taxes.
Deferred tax assets and liabilities
are recognized based on the future
tax consequences attributable to
temporary differences that exist
between the financial statement
carrying value of assets and
liabilities and their respective tax
bases, and operating loss and tax
credit carryforwards on a taxing
jurisdiction basis. We measure
deferred tax assets and liabilities
using enacted tax rates that will
apply in the years in which we
expect the temporary differences to
be recovered or paid.

The accounting standard for
income taxes requires a reduction
of the carrying amounts of
deferred tax assets by recording a
valuation allowance if, based on
the available evidence, it is more
likely than not (defined by the
accounting standard as a likelihood
of more than 50 percent) such
assets will not be realized.

The valuation of deferred tax
assets requires judgment in
assessing the likely future tax
consequences of events that have
been recognized in our financial
statements or tax returns. Our
accounting for deferred tax
consequences represents our best
estimate of those future events.

In assessing the need for a
valuation allowance, we consider
both positive and negative
evidence related to the likelihood
of realization of the deferred tax
assets. If, based on the weight of
available evidence, it is more
likely than not the deferred tax
assets will not be realized, we
record a valuation allowance. The
weight given to the positive and
negative evidence is
commensurate with the extent to
which the evidence may be
objectively verified.

This assessment, which is
completed on a taxing jurisdiction
basis, takes into account a number
of types of evidence, including the
following: 1) the nature, frequency
and severity of current and
cumulative financial reporting
losses, 2) sources of future taxable
income and 3) tax planning
strategies.

As of December 31, 2010 and 2009,
we had total net deferred tax
liabilities of $49.1 million and net
deferred tax assets of $25.2 million,
respectively. As of December 31,
2010 and 2009, we had a total
valuation allowance of $42.0
million and $34.4 million,
respectively. During the year ended
December 31, 2010, we decided to
release our valuation allowance
associated with one entity each in
Germany and Singapore, which
resulted in an income tax benefit of
$5.2 million and $2.1 million,
respectively, in our results of
operations. During the year ended
December 31, 2009, we decided to
release our valuation allowance
associated with our Hong Kong
operations and one entity in U.K.
operations, which resulted in an
income tax benefit of $3.1 million
and $5.2 million, respectively, in
our results of operations.

Our decisions to release our
valuation allowances were based
on our belief that the operations of
these regions had achieved a
sufficient level of profitability and
will sustain a sufficient level of
profitability in the future to
support the release of these
valuation allowances based on
relevant facts and circumstances.
However, if our assumptions on
the future performance of these
jurisdictions prove not to be
correct and these jurisdictions are
not able to sustain a sufficient level
of profitability to support the
associated deferred tax assets on
our consolidated balance sheet, we
will have to impair our deferred
tax assets through an additional
valuation allowance, which would
impact our financial position and
results of operations in the period
such a determination is made.

60

Description

Judgments and Uncertainties

Effect if Actual Results Differ From
Assumptions

Our remaining valuation
allowances as of December 31,
2010, totaling $42.0 million,
primarily relates to certain of our
subsidiaries outside of North
America. If and when we release
our remaining valuation
allowances, it will have an impact
to our financial position and results
of operations in the periods such
determinations are made. We will
continue to assess the need for our
valuation allowances, by country
or location, in the future.

Accounting for Business
Combinations

In accordance with the accounting
guidance for business
combinations, we allocate the
purchase price of an acquired
business to its identifiable assets
and liabilities based on estimated
fair values. The excess of the
purchase price over the fair value
of the assets acquired and
liabilities assumed, if any, is
recorded as goodwill.

We use all available information to
estimate fair values. We typically
engage outside appraisal firms to
assist in the fair value
determination of identifiable
intangible assets such as customer
contracts, leases and any other
significant assets or liabilities. We
adjust the preliminary purchase
price allocation, as necessary, up
to one year after the acquisition
closing date if we obtain more
information regarding asset
valuations and liabilities assumed.

Our purchase price allocation
methodology contains
uncertainties because it requires
assumptions and management’s
judgment to estimate the fair value
of assets acquired and liabilities
assumed at the acquisition date.
Management estimates the fair
value of assets and liabilities based
upon quoted market prices, the
carrying value of the acquired
assets and widely accepted
valuation techniques, including
discounted cash flows and market
multiple analyses. Our estimates
are inherently uncertain and
subject to refinement.
Unanticipated events or
circumstances may occur which
could affect the accuracy of our
fair value estimates, including
assumptions regarding industry
economic factors and business
strategies.

During the last three years, we have
completed several business
combinations, the most significant of
which was the Switch and Data
acquisition for a purchase price of
$700.0 million in April 2010.
Subsequent to the acquisition, we
adjusted the purchase price
allocation due to changes in
estimates and assumptions; however,
in the aggregate, these adjustments
had an insignificant impact to our
financial statements as of and for the
eight months ended December 31,
2010.

As fully described in Note 2 of
Notes to Consolidated Financial
Statements in Item 8 of this
Annual Report on Form 10-K, the
purchase price allocation for the
Switch and Data acquisition was
completed in the fourth quarter of
2010.

61

Description

Judgments and Uncertainties

Accounting for Impairment of
Goodwill
In accordance with the accounting
standard for goodwill and other
intangible assets, we perform
goodwill impairment reviews
annually, or whenever events or
changes in circumstances indicate
that the carrying value of an asset
may not be recoverable.

During the year ended
December 31, 2010, we completed
annual goodwill impairment
reviews of the North America
reporting unit, the Europe
reporting unit and the Asia-Pacific
reporting unit and concluded that
there was no impairment as the fair
value of these reporting units
exceeded their carrying value.

We use both the income and
market approach in step one of our
goodwill impairment reviews and
weight the results of both equally.
Under the income approach, we
develop a five-year cash flow
forecast and use our weighted-
average cost of capital applicable
to our reporting units as discount
rates. This requires assumptions
and estimates derived from a
review of our actual and forecasted
operating results, approved
business plans, future economic
conditions and other market data.

These assumptions require
significant management judgment
and are inherently subject to
uncertainties.

Effect if Actual Results Differ From
Assumptions

We do not believe there is a
reasonable likelihood that there
will be a material change in the
estimates or assumptions we used
to complete the purchase price
allocation and the fair value of
assets acquired and liabilities
assumed. However, if actual
results are not consistent with our
estimates or assumptions, we may
be exposed to losses or gains that
could be material, which would be
recorded in our statements of
operations commencing in 2011.

Future events, changing market
conditions and any changes in key
assumptions may result in an
impairment charge. While we have
never recorded an impairment
charge against our goodwill to
date, the development of adverse
business conditions in our North
America, European or Asia-Pacific
reporting units, such as higher than
anticipated customer churn
or significantly increased operating
costs, or significant deterioration
of our market comparables that we
use in the market approach, could
result in an impairment charge in
future periods.

As of December 31, 2010,
goodwill attributable to the North
America reporting unit, the Europe
reporting unit and the Asia-Pacific
reporting unit was $408.7 million,
$345.5 million and $20.1 million,
respectively. Any potential
impairment charge against our
goodwill would not exceed the
amounts recorded on our
consolidated balance sheets.

62

Description

Judgments and Uncertainties

Effect if Actual Results Differ From
Assumptions

Accounting for Property, Plant
and Equipment

We have a substantial amount of
property, plant and equipment
recorded on our consolidated
balance sheet. The vast majority of
our property, plant and equipment
represent the costs incurred to
build out or acquire our IBX data
centers around the world. Our IBX
data centers are long-lived assets.
The majority of our IBX data
centers are in properties that are
leased. We depreciate our
property, plant and equipment
using the straight-line method over
the estimated useful lives of the
respective assets (subject to the
term of the lease in the case of
leased assets or leasehold
improvements).

Accounting for property, plant and
equipment involves a number of
accounting issues including
determining the appropriate period
in which to depreciate such assets,
making assessments for leased
properties to determine whether
they are capital or operating leases,
capitalizing interest during periods
of construction and assessing the
asset retirement obligations
required for certain leased
properties that require us to return
the leased properties back to their
original condition at the time we
decide to exit a leased property.

While there are numerous
judgments and uncertainties
involved in accounting for
property, plant and equipment that
are significant, arriving at the
estimated useful life of an asset
requires the most critical judgment
for us and changes to these
estimates would have the most
significant impact to our financial
position and results of operations.
When we lease a property for our
IBX data centers, we generally
enter into long-term arrangements
with initial lease terms of at least
8-10 years and with renewal
options generally available to us.
During the next several years, a
number of leases for our IBX data
centers will come up for renewal.
As we start approaching the ends
of these initial lease terms, we will
need to reassess the estimated
useful lives of our property, plant
and equipment. In addition, we
may find that our estimates for the
useful lives of non-leased assets
may also need to be revised
periodically. In many cases, we
arrived at these estimates during
1999 when we opened our first
three IBX data centers. We
reassessed the estimated useful
lives of certain of our property,
plant and equipment during the
third quarter of 2009 and we
expect we will continue to
periodically review such estimates
and further changes in the future
are possible.

During the third quarter of 2009, we
revised the estimated useful lives of
certain of our property, plant and
equipment. As a result, we recorded
$12.0 million of lower depreciation
expense for the year ended
December 31, 2009 due to extending
the estimated useful lives of certain
of our property, plant and
equipment. We undertook this
review due to our determination that
we were generally using certain of
our existing assets longer than
originally anticipated and, therefore,
the estimated useful lives of certain
of our property, plant and equipment
has been lengthened. This change
was accounted for as a change in
accounting estimate on a prospective
basis effective July 1, 2009 under the
accounting standard for change in
accounting estimates.

In addition, in the fourth quarter of
2009, we recorded a $4.2 million
decrease in depreciation expense
as an out-of-period adjustment
related to incorrectly depreciating
certain assets. This $4.2 million
out-of-period adjustment
represents the correction of errors
attributable to the nine months
ended September 30, 2009 and the
years ended December 31, 2008
and 2007, which we have
concluded were not material to any
previously-reported historical
quarterly periods or results of
operations for the nine months
ended September 30, 2009 and to
any previously-reported historical
annual or quarterly periods for the
years ended December 31, 2008 or
2007.

63

Description

Effect if Actual Results Differ From
Assumptions

As of December 31, 2010 and
2009, we had property, plant and
equipment of $2.7 billion and $1.8
billion, respectively, and for the
years ended December 31, 2010,
2009 and 2008, we recorded
depreciation expense of $246.5
million, $168.0 million and $152.4
million, respectively. Further
changes in our estimated useful
lives of our property, plant and
equipment could have a significant
impact to our results of operations.

Judgments and Uncertainties
Another area of judgment for us in
connection with our property, plant
and equipment is related to lease
accounting. Most of our IBX data
centers are leased. Each time we
enter into a new lease or lease
amendment for one of our IBX
data centers, we analyze each lease
or lease amendment for the proper
accounting. This requires certain
judgments on our part such as
establishing the initial lease term
to include in a lease test,
establishing the remaining
estimated useful life of the
underlying property or equipment
and estimating the fair value of the
underlying property or equipment.
All of these judgments are
inherently uncertain. Different
assumptions or estimates could
result in a different accounting
treatment for a lease.

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 1 of Notes to Consolidated Financial Statements in

Item 8 of this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The following discussion about market risk involves forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements. We may be exposed to market risks related to
impairments of our investment portfolio, changes in interest rates and foreign currency exchange rates and
fluctuations in the prices of certain commodities, primarily electricity.

We currently employ foreign currency forward exchange contracts for the purpose of hedging certain
specifically-identified exposures. The use of these financial instruments is intended to mitigate some of the risks
associated with fluctuations in currency exchange rates, but does not eliminate such risks. We do not use
financial instruments for trading or speculative purposes.

Investment Portfolio Risk

All of our marketable securities are designated as available-for-sale and are therefore recorded at fair value
on our consolidated balance sheets with the unrealized gains or losses reported as a separate component of other
comprehensive income or loss. We consider various factors in determining whether we should recognize an
impairment charge for our securities, including the length of time and extent to which the fair value has been less
than our cost basis and our intent and ability to hold the investment for a period of time sufficient to allow for

64

any anticipated recovery. As more fully described in Note 4 of Notes to Consolidated Financial Statements in
Item 8 of this Annual Report on Form 10-K, during the years ended December 31, 2009 and 2008, we incurred
an other-than-temporary impairment loss of $2.6 million and $1.5 million, respectively, from our investment
portfolio (consisting of a single money market account), of which $3.6 million was recovered during the year
ended December 31, 2010. If market conditions continue to deteriorate and liquidity constraints become even
more pronounced, we could sustain more losses from our investment portfolio. As our securities mature, we have
been increasing our holdings in U.S. government securities, such as Treasury bills and Treasury notes of a short-
term duration and lower yield. As a result, we expect our interest income to remain low in the forseeable future.

As of December 31, 2010, our investment portfolio of cash equivalents and marketable securities consisted

of money market fund investments, corporate bonds, asset backed securities and U.S government and agency
obligations. Excluding the U.S. government holdings which carry a lower risk and lower return in comparison to
other securities in the portfolio, the remaining amount in our investment portfolio that could be more susceptible
to market risk totaled $200.9 million.

Interest Rate Risk

Our exposure to market risk resulting from changes in interest rates relates primarily to our investment
portfolio and a variable-rate financing in the Asia-Pacific region. The fair value of our marketable securities
could be adversely impacted due to a rise in interest rates, but we do not believe such impact would be material.
Securities with longer maturities are subject to a greater interest rate risk than those with shorter maturities and as
of December 31, 2010 the average duration of our portfolio was less than three months. If current interest rates
were to increase or decrease by 10% from their position as of December 31, 2010, the fair value of our
investment portfolio could increase or decrease by approximately $14,000.

An immediate 10% increase or decrease in current interest rates from their position as of December 31,
2010 would not have a material impact on our debt obligations due to the fixed nature of the majority of our debt
obligations. However, the interest expense associated with our new Asia-Pacific financing, which bears interest
at variable rates tied to local cost of funds, could be affected. For every 100 basis point change in interest rates,
our annual interest expense could increase or decrease by a total of approximately $1.0 million based on the total
balance of our borrowings under the new Asia-Pacific financing as of December 31, 2010. As of December 31,
2010, we had no outstanding interest rate swaps.

65

The fair value of our long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair
value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. These interest
rate changes may affect the fair value of the fixed interest rate debt but do not impact our earnings or cash flows.
The fair value of the Company’s convertible debt, which is traded in the market, is based on quoted market
prices. The fair value of the Company’s mortgage and loans payable, which are not traded in the market, is
estimated by considering the Company’s credit rating, current rates available to the Company for debt of the
same remaining maturities and the terms of the debt. The following represents the estimated fair value of our
mortgage and loans payable, senior notes and convertible debt and as of (in thousands):

December 31, 2010

December 31, 2009

Carrying
Value

Fair Value

Carrying
Value

Fair Value

Mortgage and Loans Payable:

New Asia-Pacific financing . . . . . . . . . . . . . . . . . . . . . . . . . .
European financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chicago IBX financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netherlands financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$120,315
—
—
—
—
—
—

$126,958
—
—
—
—
—
—

$ — $ —
111,375
130,058
109,700
109,991
83,406
91,756
60,827
64,559
21,739
24,559
7,941
9,311

$120,315

$126,958

$430,234

$394,988

Senior Notes:

Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$750,000

$816,270

$ — $ —

Convertible Debt:

2.50% convertible subordinated notes (1) . . . . . . . . . . . . . . . .
3.00% convertible subordinated notes . . . . . . . . . . . . . . . . . .
4.75% convertible subordinated notes (2) . . . . . . . . . . . . . . . .

$234,185
395,986
286,166

$246,280
399,946
348,786

$222,943
395,986
274,777

$228,935
461,324
307,248

$916,337

$995,012

$893,706

$997,507

(1) Total debt principal is $250.0 million, which is subject to a FASB standard for convertible debt instruments
that may be settled in cash upon conversion (including partial cash settlement). See Note 7 of Notes to
Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

(2) Total debt principal is $373.8 million, which is subject to a FASB standard for convertible debt instruments
that may be settled in cash upon conversion (including partial cash settlement). See Note 7 of Notes to
Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

We may enter into interest rate hedging agreements in the future to mitigate our exposure to interest rate risk.

Foreign Currency Risk

The majority of our revenue is denominated in U.S. dollars, generated mostly from customers in the U.S.
However, approximately 38% of both our revenues and operating costs are attributable to Canada and the Europe
and Asia-Pacific regions and a large portion of those revenues and costs are denominated in a currency other than
the U.S. dollar, primarily the British pound, Canadian dollar, Euro, Swiss franc, Singapore dollar, Japanese yen,
Hong Kong dollar and Australian dollar. As a result, our operating results and cash flows are impacted by
currency fluctuations relative to the U.S. dollar. To protect against certain reductions in value caused by changes
in currency exchange rates, we have established a risk management program to offset some of the risk of
carrying assets and liabilities denominated in foreign currencies. As a result, we enter into foreign currency
forward contracts to manage the risk associated with certain foreign currency-denominated assets and liabilities.
Our risk management program reduces, but does not entirely eliminate, the impact of currency exchange rate
movements and its impact on the consolidated statements of operations. As of December 31, 2010, the
outstanding foreign currency forward contracts had maturities of less than one year.

66

For the foreseeable future, we anticipate that approximately 35-45% of our revenues and operating costs

will continue to be generated and incurred outside of the U.S. in currencies other than the U.S. dollar. While we
hedge certain of our balance sheet foreign currency assets and liabilities, we do not hedge revenue. During the
second half of 2008 and through the first quarter of 2009, the U.S. dollar strengthened relative to certain of the
currencies of the foreign countries in which we operate. This significantly impacted our consolidated financial
position and results of operations as amounts in foreign currencies translated into less U.S. dollars. However,
during the second half of 2009 and fiscal 2010, the U.S. dollar has been generally weaker relative to certain of
the currencies of the foreign countries in which we operate. This overall weakness of the U.S. dollar had a
positive impact on our consolidated results of operations because the foreign denominations translated into more
U.S. dollars. In future periods, the volatility of the U.S. dollar as compared to the other currencies in which we do
business could have a significant impact on our consolidated financial position and results of operations
including the amount of revenue that we report in future periods.

We may enter into additional hedging activities in the future to mitigate our exposure to foreign currency

risk as our exposure to foreign currency risk continues to increase due to our growing foreign operations;
however, we do not currently intend to eliminate all foreign currency transaction exposure.

Commodity Price Risk

Certain operating costs incurred by us are subject to price fluctuations caused by the volatility of underlying

commodity prices. The commodities most likely to have an impact on our results of operations in the event of
price changes are electricity, supplies and equipment used in our IBX data centers. We closely monitor the cost
of electricity at all of our locations. We have entered into several power contracts to purchase power at fixed
prices during 2011 and beyond in certain locations in the U.S., Australia, France, Germany, Japan, Netherlands,
Singapore and the United Kingdom.

In addition, as we are building new, or expanding existing, IBX data centers, we are subject to commodity

price risk for building materials related to the construction of these IBX data centers, such as steel and copper. In
addition, the lead-time to procure certain pieces of equipment, such as generators, is substantial. Any delays in
procuring the necessary pieces of equipment for the construction of our IBX data centers could delay the
anticipated openings of these new IBX data centers and, as a result, increase the cost of these projects.

We do not currently employ forward contracts or other financial instruments to address commodity price

risk other than the power contracts discussed above.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data required by this Item 8 are listed in Item 15(a)(1) and

begin at page F-1 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

There is no disclosure to report pursuant to Item 9.

ITEM 9A. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer

and our Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such
term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of the end of the period covered by this
Annual Report on Form 10-K.

67

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer

and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission.

Based on our evaluation under the framework in Internal Control—Integrated Framework, our management

concluded that our internal control over financial reporting was effective as of December 31, 2010. There were
no significant changes in internal control over financial reporting during the quarter ended December 31, 2010
that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.

The effectiveness of our internal control over financial reporting as of December 31, 2010 has been audited

by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report
which is included herein on page F-1 of this Annual Report on Form 10-K.

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our
disclosure controls and procedures and internal control over financial reporting are designed and operated to be
effective at the reasonable assurance level. However, our management does not expect that our disclosure
controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A
control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities
that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or
mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two
or more people or by management override of the controls. The design of any system of controls also is based in
part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with policies or procedures may
deteriorate. Because of the inherent limitations in a cost effective control system, misstatements due to error or
fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal controls over financial reporting during the fourth quarter of fiscal 2010

that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

There is no disclosure to report pursuant to Item 9B.

68

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this item is incorporated by reference to the Equinix proxy statement for the 2011

Annual Meeting of Stockholders.

We have adopted a Code of Ethics applicable for the Chief Executive Officer and Senior Financial Officers

and a Code of Business Conduct. This information is incorporated by reference to the Equinix proxy statement
for the 2011 Annual Meeting of Stockholders and is also available on our website, www.equinix.com.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item is incorporated by reference to the Equinix proxy statement for the 2011

Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

Information required by this item is incorporated by reference to the Equinix proxy statement for the 2011

Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

Information required by this item is incorporated by reference to the Equinix proxy statement for the 2011

Annual Meeting of Stockholders.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by this item is incorporated by reference to the Equinix proxy statement for the 2011

Annual Meeting of Stockholders.

69

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements:

PART IV

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity and Other Comprehensive Income (Loss) . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements.

F-1
F-2
F-3
F-4
F-5
F-6

(a)(2) All schedules have been omitted because they are not applicable or the required information is shown

in the financial statements or notes thereto.

(a)(3) Exhibits:

Exhibit
Number Exhibit Description

2.1

2.2

2.3

Combination Agreement, dated as of October 2,
2002, by and among Equinix, Inc., Eagle
Panther Acquisition Corp., Eagle Jaguar
Acquisition Corp., i-STT Pte Ltd, STT
Communications Ltd., Pihana Pacific, Inc. and
Jane Dietze, as representative of the
stockholders of Pihana Pacific, Inc.

Agreement and Plan of Merger dated October 21,
2009, by and among Equinix, Inc., Switch &
Data Facilities Company, Inc. and Sundance
Acquisition Corporation.

First Amendment to the Agreement and Plan of
Merger dated March 20, 2010, by and among
Equinix, Inc., Switch & Data Facilities
Company, Inc. and Sundance Acquisition
Corporation.

Incorporated by Reference

Form

Filing Date/
Period End
Date

Exhibit

Filed
Herewith

Def. Proxy 14A

12/12/02

8-K

10/22/09

2.1

8-K

3/22/10

2.1

3.1

Amended and Restated Certificate of Incorporation

10-K/A

12/31/02

of the Registrant, as amended to date.

3.2

Certificate of Designation of Series A and Series

10-K/A

12/31/02

A-1 Convertible Preferred Stock.

Amended and Restated Bylaws of the Registrant.

8-K

12/22/08

Reference is made to Exhibits 3.1, 3.2 and 3.3.

3.1

3.3

3.2

Indenture dated March 30, 2007 by and between

8-K

3/30/07

4.4

3.3

4.1

4.2

Equinix, Inc. and U.S. Bank National
Association, as trustee.

4.3

Form of 2.50% Convertible Subordinated Note

Due 2012 (see Exhibit 4.2).

70

Exhibit
Number Exhibit Description

Incorporated by Reference

Form

Filing Date/
Period End
Date

Exhibit

Filed
Herewith

4.4

Indenture dated September 26, 2007 by and

8-K

9/26/07

4.4

between Equinix, Inc. and U.S. Bank National
Association, as trustee.

4.5

Form of 3.00% Convertible Subordinated Note

Due 2014 (see Exhibit 4.4).

4.6

Indenture dated June 12, 2009 by and between

8-K

6/12/09

4.1

Equinix, Inc. and U.S. Bank National
Association, as trustee.

4.7

Form of 4.75% Convertible Subordinated Note

Due 2016 (see Exhibit 4.6).

4.8

Indenture dated March 3, 2010 by and between

10-Q

3/31/10

4.8

Equinix, Inc. and U.S. Bank National
Association, as trustee.

4.9

Form of 8.125% Senior Note Due 2018 (see

Exhibit 4.8).

10.1

Form of Indemnification Agreement between the

Registrant and each of its officers and directors.

S-4 (File
No. 333-93749)

12/29/99

10.5

10.2

10.3

10.4

10.5

10.6

2000 Equity Incentive Plan, as amended.

2000 Director Option Plan, as amended.

2001 Supplemental Stock Plan, as amended.

10-K

10-K

10-K

Equinix, Inc. 2004 Employee Stock Purchase Plan,

as amended.

S-8 (File
No. 333-165033)

12/31/07

12/31/07

12/31/07

2/23/10

10.3

10.4

10.5

99.3

Form of Restricted Stock Agreements for Stephen
M. Smith under the Equinix, Inc. 2000 Equity
Incentive Plan.

10-Q

3/31/07

10.45

10.7

Letter Agreement, dated April 22, 2008, by and

10-Q

6/30/08

10.34

10.8

10.9

between Eric Schwartz and Equinix Operating
Co., Inc.

Severance Agreement by and between Stephen
Smith and Equinix, Inc. dated December 18,
2008.

Severance Agreement by and between Peter Van
Camp and Equinix, Inc. dated December 10,
2008.

10-K

12/31/08

10.31

10-K

12/31/08

10.32

10.10

Severance Agreement by and between Keith

10-K

12/31/08

10.33

Taylor and Equinix, Inc. dated December 19,
2008.

10.11

Severance Agreement by and between Peter Ferris
and Equinix, Inc. dated December 17, 2008.

10-K

12/31/08

10.34

71

Exhibit
Number Exhibit Description

10.12

Change in Control Severance Agreement by and
between Eric Schwartz and Equinix, Inc. dated
December 19, 2008.

Incorporated by Reference

Form

Filing Date/
Period End
Date

Exhibit

Filed
Herewith

10-K

12/31/08

10.35

10.13

Change in Control Severance Agreement by and

10-K

12/31/08

10.36

between Jarrett Appleby and Equinix, Inc. dated
December 11, 2008.

10.14

Offer Letter from Equinix, Inc. to Jarrett Appleby

10-K

12/31/08

10.37

dated November 6, 2008.

10.15

Restricted Stock Unit Agreement for Jarrett

10-K

12/31/08

10.38

Appleby under the Equinix, Inc. 2000 Equity
Incentive Plan.

10.16

Form of Restricted Stock Unit Agreement for CEO

10-Q

3/31/09

10.39

and CFO.

10.17

Form of Restricted Stock Unit Agreement for all

10-Q

3/31/09

10.40

other executive officers.

10.18

Confirmation for Base Capped Call Transaction
dated as of June 9, 2009 between Equinix, Inc.
and Deutsche Bank AG, London Branch.

10.19

Confirmation for Additional Capped Call

8-K

8-K

Transaction dated as of June 9, 2009 between
Equinix, Inc. and Deutsche Bank AG, London
Branch.

6/12/09

10.1

6/12/09

10.2

10.20 Master Terms and Conditions for Capped Call

8-K

6/12/09

10.3

Transactions dated as of June 9, 2009 between
Equinix, Inc. and Deutsche Bank AG, London
Branch.

10.21

Confirmation for Base Capped Call Transaction
dated as of June 9, 2009 between Equinix, Inc.
and JPMorgan Chase Bank, National
Association, London Branch.

8-K

6/12/09

10.4

10.22

Confirmation for Additional Capped Call

8-K

6/12/09

10.5

Transaction dated as of June 9, 2009 between
Equinix, Inc. and JPMorgan Chase Bank,
National Association, London Branch.

10.23 Master Terms and Conditions for Capped Call

8-K

6/12/09

10.6

Transactions dated as of June 9, 2009 between
Equinix, Inc. and JPMorgan Chase Bank,
National Association, London Branch.

10.24

Confirmation for Base Capped Call Transaction
dated as of June 9, 2009 between Equinix, Inc.
and Goldman, Sachs & Co.

72

8-K

6/12/09

10.7

Exhibit
Number Exhibit Description

Incorporated by Reference

Form

Filing Date/
Period End
Date

Exhibit

Filed
Herewith

10.25

Confirmation for Additional Capped Call

8-K

6/12/09

10.8

Transaction dated as of June 9, 2009 between
Equinix, Inc. and Goldman, Sachs & Co.

10.26 Master Terms and Conditions for Capped Call

8-K

6/12/09

10.9

Transactions dated as of June 9, 2009 between
Equinix, Inc. and Goldman, Sachs & Co.

10.27

Addendum to international assignment letter

10-Q

3/31/10

10.42

agreement by and between Eric Schwartz and
Equinix Operating Co., Inc., dated February 17,
2010.

10.28

Switch & Data 2007 Stock Incentive Plan.

2/5/07

10.9

S-1/A (File
No. 333-137607)
filed by Switch
& Data
Facilities
Company, Inc.

10.29

Amendment and Restatement of Facility

10-Q

6/30/10

10.39

Agreement, by and among Equinix Australia Pty
Ltd., Equinix Hong Kong Limited, Equinix
Singapore Pte. Ltd., Equinix Pacific Pte. Ltd and
Equinix Japan K.K., as borrowers, the Joint
Mandated Lead Arrangers, the Joint Mandated
Bookrunners, the Lead Arrangers and the
Closing Date Lenders, as defined therein, and
The Royal Bank of Scotland N.V., as Facility
Agent, dated May 10, 2010.

10.30

Offer Letter from Equinix, Inc. to Charles Meyers

10-Q

dated September 28, 2010.

10.31

Restricted Stock Unit Agreement for Charles

10-Q

9/30/10

9/30/10

Meyers under the Equinix, Inc. 2000 Equity
Incentive Plan.

10.32

Change in Control Severance Agreement by and

10-Q

9/30/10

between Charles Meyers and Equinix, Inc. dated
September 30. 2010.

10.33

Form of amendment to existing severance

agreement between the Registrant and each of
Messrs. Appleby, Ferris, Meyers, Smith, Taylor
and Van Camp.

10.34

Letter amendment, dated December 14, 2010, to

Change in Control Severance Agreement, dated
December 18, 2008, and letter agreement
relating to expatriate benefits, dated April 22,
2008, as amended, by and between the
Registrant and Eric Schwartz.

73

X

X

Exhibit
Number Exhibit Description

Incorporated by Reference

Form

Filing Date/
Period End
Date

Exhibit

Filed
Herewith

18.1

Preferable Accounting Principles Letter from

10-Q

6/30/10

18.1

X

X

X

X

X

X

X

Pricewaterhouse Coopers LLP, Independent
Registered Public Accounting Firm, dated
July 26, 2010.

21.1

23.1

Subsidiaries of Equinix, Inc.

Consent of PricewaterhouseCoopers LLP,

Independent Registered Public Accounting
Firm.

31.1

Chief Executive Officer Certification pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Chief Financial Officer Certification pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Chief Executive Officer Certification pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Chief Financial Officer Certification pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002.

101

Interactive Data Files Pursuant to Rule 405 of

Regulation S-T: (i) Consolidated Balance Sheets
as of December 31, 2010 and December 31,
2009, (ii) Consolidated Statements of
Operations for the years ended December 31,
2010, 2009 and 2008, (iii) Consolidated
Statements of Stockholders’ Equity and Other
Comprehensive Income (Loss) for the years
ended December 31, 2010, 2009 and 2008 (iv)
Consolidated Statements of Cash Flows for the
years ended December 31, 2010, 2009 and 2008
and (iv) Notes to Consolidated Financial
Statements, tagged as blocks of text.

(b) Exhibits.

See (a) (3) above.

(c) Financial Statement Schedule.

See (a) (2) above.

74

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.

EQUINIX, INC.
(Registrant)

February 25, 2011

By

/S/ STEPHEN M. SMITH

Stephen M. Smith
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Stephen M. Smith or Keith D. Taylor, or either of them, each with the power of
substitution, their attorney-in-fact, to sign any amendments to this Annual Report on Form 10-K (including
post-effective amendments), and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/S/ STEPHEN M. SMITH

Stephen M. Smith

/S/ KEITH D. TAYLOR

Keith D. Taylor

President and Chief Executive
Officer (Principal Executive
Officer)

February 25, 2011

Chief Financial Officer (Principal

February 25, 2011

Financial and Accounting
Officer)

/S/ PETER F. VAN CAMP

Executive Chair

February 25, 2011

Peter F. Van Camp

/S/ STEVEN T. CLONTZ

Director

February 25, 2011

Steven T. Clontz

/S/ GARY F. HROMADKO

Director

February 25, 2011

Gary F. Hromadko

/S/ SCOTT G. KRIENS

Scott G. Kriens

/S/ WILLIAM LUBY

William Luby

/S/

IRVING F. LYONS, III
Irving F. Lyons, III

Director

Director

Director

February 25, 2011

February 25, 2011

February 25, 2011

/S/ CHRISTOPHER B. PAISLEY

Director

February 25, 2011

Christopher B. Paisley

75

Exhibit
Number Description of Document

INDEX TO EXHIBITS

10.33 Form of amendment to existing severance agreement between the Registrant and each of Messrs.

Appleby, Ferris, Meyers, Smith, Taylor and Van Camp.

10.34 Letter amendment, dated December 14, 2010, to Change in Control Severance Agreement, dated
December 18, 2008, and letter agreement relating to expatriate benefits, dated April 22, 2008, as
amended, by and between the Registrant and Eric Schwartz.

21.1

23.1

31.1

31.2

32.1

32.2

Subsidiaries of Equinix, Inc.

Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.

Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

Interactive Data Files Pursuant to Rule 405 of Regulation S-T:

(i) Consolidated Balance Sheets as of December 31, 2010 and December 31, 2009, (ii) Consolidated
Statements of Operations for the years ended December 31, 2010, 2009 and 2008, (iii) Consolidated
Statements of Stockholders’ Equity and Other Comprehensive Income (Loss) for the years ended
December 31, 2010, 2009 and 2008 (iv) Consolidated Statements of Cash Flows for the years ended
December 31, 2010, 2009 and 2008 and (iv) Notes to Consolidated Financial Statements, tagged as
blocks of text.

76

Report of Independent Registered Public Accounting Firm

To the Board of Directors and
Stockholders of Equinix, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of
operations, of stockholders’ equity and other comprehensive income (loss), and of cash flows present fairly, in all
material respects, the financial position of Equinix, Inc. (the “Company”) and its subsidiaries at December 31,
2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2010 based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Company’s management is responsible for these financial statements, for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.
Our responsibility is to express opinions on these financial statements and on the Company’s internal control
over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

San Jose, CA
February 25, 2011

F-1

EQUINIX, INC.

Consolidated Balance Sheets
(in thousands, except share and per share data)

December 31,

2010

2009

Current assets:

Assets

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net of allowance for doubtful accounts of $3,808 and

$1,720 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of deferred tax assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 442,841
147,192

$ 346,056
248,508

116,358
38,696
32,961

778,048
2,806
2,650,953
774,365
150,945
16,955
73,937

64,767
46,822
21,734

727,887
9,803
1,808,115
381,050
51,015
5,171
55,109

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,448,009

$3,038,150

Current liabilities:

Liabilities and Stockholders’ Equity

Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued property, plant and equipment
Current portion of capital lease and other financing obligations . . . . . . . . . . . . . .
Current portion of mortgage and loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 145,854
91,667
7,988
19,978
52,628

$

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease and other financing obligations, less current portion . . . . . . . . . . . . . . . .
Mortgage and loans payable, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

318,115
253,945
100,337
916,337
750,000
103,717
125,043

99,053
109,876
6,452
58,912
41,166

315,459
154,577
371,322
893,706
—
25,937
94,666

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,567,494

1,855,667

Commitments and contingencies (Note 13)

Stockholders’ equity:

Preferred stock, $0.001 par value per share; 100,000,000 shares authorized in

2010 and 2009; zero shares issued and outstanding in 2010 and 2009 . . . . . . . .

—

—

Common stock, $0.001 par value per share; 300,000,000 shares authorized in

2010 and 2009; 46,166,689 and 39,315,250 shares issued and outstanding in
2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit

46
2,341,586
(112,018)
(349,099)

39
1,665,662
(97,238)
(385,980)

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,880,515

1,182,483

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,448,009

$3,038,150

See accompanying notes to consolidated financial statements.

F-2

EQUINIX, INC.

Consolidated Statements of Operations
(in thousands, except per share data)

Years ended December 31,

2010

2009

2008

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,220,334

$882,509

$704,680

Costs and operating expenses:

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

674,667
111,104
220,781
6,734
12,337

483,420
63,584
155,324
(6,053)
5,155

414,799
66,913
146,564
3,142
—

Total costs and operating expenses . . . . . . . . . . . . . . . . . . . . . . . . .

1,025,623

701,430

631,418

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other-than-temporary impairment recovery (loss) on investments . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . .
Loss on debt extinguishment and interest rate swaps, net

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax benefit (expense)

194,711
1,515
(140,475)
3,626
690
(10,187)

49,880
(12,999)

181,079
2,384
(74,232)
(2,590)
2,387
—

109,028
(39,597)

73,262
8,940
(61,677)
(1,527)
1,307
—

20,305
87,619

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

36,881

$ 69,431

$107,924

Earnings per share:

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.84

$

1.80

$

2.91

Weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43,742

38,488

37,120

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.82

$

1.75

$

2.79

Weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44,810

39,676

41,582

See accompanying notes to consolidated financial statements.

F-3

EQUINIX, INC.

Consolidated Statements of Stockholders’ Equity and Other Comprehensive Income (Loss)
For the Three Years Ended December 31, 2010
(in thousands, except share data)

Common stock

Shares

Amount

F
-
4

Balances as of December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,561,238
733,130
Issuance of common stock upon exercise of common stock options and vesting of restricted stock . . . . . . . .
119,354
Issuance of common stock under employee stock purchase plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
331,644
Issuance of common stock upon conversion of convertible subordinated debentures . . . . . . . . . . . . . . . . . . .
—
Tax benefit from employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation, net of estimated forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Comprehensive income (loss):

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation loss, net of tax of $0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on interest rate swaps, net of tax of $4,660 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on investments, net of tax of $169 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—
—

—

Balances as of December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,745,366
933,212
Issuance of common stock upon exercise of common stock options and vesting of restricted stock . . . . . . . .
151,863
Issuance of common stock under employee stock purchase plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
484,809
Issuance of common stock upon conversion of convertible subordinated debentures . . . . . . . . . . . . . . . . . . .
—
Tax benefit from employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Issuance of 4.75% convertible subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Issuance of capped call
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation, net of estimated forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Comprehensive income:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation gain, net of tax of $1,485 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on interest rate swaps, net of tax of $1,191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on investments, net of tax of $373 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—
—

—

Balances as of December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,315,250
1,185,814
Issuance of common stock upon exercise of common stock options and vesting of restricted stock . . . . . . . .
207,212
Issuance of common stock under employee stock purchase plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,458,413
Issuance of common stock for the Switch and Data acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Stock-based compensation assumed in the Switch and Data acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation, net of estimated forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Comprehensive income:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation loss, net of tax of $1,333 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement of interest rate swaps, net of tax of $3,469 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on investments, net of tax of $146 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—
—
—

$ 37
1

—
—
—
—

—
—
—
—

—

38
1

—
—
—
—
—
—

—
—
—
—

—

39
1

—

6

—
—

—
—
—
—
—

Additional
paid-in
capital

$1,429,178
19,914
6,315
13,072
696
55,659

—
—
—
—

—

1,524,834
30,388
6,617
19,150
514
80,010
(49,654)
53,803

—
—
—
—

—

1,665,662
30,120
9,697
549,383
16,508
70,216

—
—
—
—
—

Accumulated
other
comprehensive
income (loss)

$

(3,888)
—
—
—
—
—

—

(142,140)
(6,350)
(422)

(148,912)

(152,800)

—
—
—
—
—
—
—

—
53,624
1,418
520

55,562

(97,238)
—
—
—
—
—

—
(19,502)
4,933
(211)
(14,780)

Accumulated
deficit

$(563,335)

—
—
—
—
—

107,924
—
—
—

107,924

(455,411)

—
—
—
—
—
—
—

69,431
—
—
—

69,431

(385,980)

—
—
—
—
—

36,881
—
—
—
36,881

Total
stockholders’
equity

$ 861,992
19,915
6,315
13,072
696
55,659

107,924
(142,140)
(6,350)
(422)

(40,988)

916,661
30,389
6,617
19,150
514
80,010
(49,654)
53,803

69,431
53,624
1,418
520

124,993

1,182,483
30,121
9,697
549,389
16,508
70,216

36,881
(19,502)
4,933
(211)
22,101

Balances as of December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,166,689

$ 46

$2,341,586

$(112,018)

$(349,099)

$1,880,515

See accompanying notes to consolidated financial statements.

EQUINIX, INC.

Consolidated Statements of Cash Flows
(in thousands)

Years ended December 31,

2010

2009

2008

Cash flows from operating activities:

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

$ 36,881

$ 69,431

$ 107,924

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of asset retirement obligation and accrued restructuring charges . . . . . . . . . . . . . .
Amortization of debt issuance costs and debt discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized net (gains) losses on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment and interest rate swaps, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Changes in operating assets and liabilities:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

246,544
67,489
6,734
13,632
3,128
27,915
2,056
(11)
10,187
2,265

(39,886)
6,110
(11,865)
30,363
(4,426)
(4,244)

167,975
53,056
(6,053)
5,555
1,581
18,791
(15)
2,579
—
1,149

2,277
27,981
(10,371)
22,762
(1,771)
565

152,437
55,085
3,142
6,610
1,682
11,523
1,582
(498)
—
1,466

(9,152)
(94,229)
(7,137)
9,937
(2,763)
29,949

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

392,872

355,492

267,558

Cash flows from investing activities:

Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturities of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of Switch and Data, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of Upminster, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of Virtu, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of Amsterdam IBX property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of other property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(744,798)
25,174
827,540
(113,289)

—
—
(14,861)
(579,397)
(1,582)
244
—

(379,644)
27,420
179,566
—
(28,176)
—
—

(369,542)
(896)
13,015
79

(240,556)
131,631
114,361
—
—
(23,241)
—

(447,032)
(14,234)
1,031
—

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(600,969)

(558,178)

(478,040)

Cash flows from financing activities:

Proceeds from employee equity awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from convertible debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of capital lease and other financing obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of mortgage and loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capped call costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt extinguishment costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financing obligations, net

39,817
750,000
—

121,581
(16,133)
(558,007)

—
(23,124)
(4,448)
—

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

309,686

Effect of foreign currency exchange rates on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4,804)
96,785
346,056

37,006
—
373,750
29,474
(5,279)
(51,118)
(49,664)
(8,220)
—
(2,351)

323,598

4,937
125,849
220,207

26,230
—
—

142,373
(3,832)
(19,296)
—
(948)
—
579

145,106

(5,050)
(70,426)
290,633

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 442,841

$ 346,056

$ 220,207

Supplemental cash flow information:

Cash paid for taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 11,043

$

9,290

$

98

Cash paid for interest

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 97,943

$ 63,281

$ 53,373

See accompanying notes to consolidated financial statements.

F-5

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Equinix, Inc. (“Equinix” or the “Company”) was incorporated in Delaware on June 22, 1998. Equinix

provides global data center services. Global enterprises, content providers, financial companies and network
service providers rely upon Equinix’s insight and expertise to protect and connect their most valued information
assets. The Company operates 92 International Business Exchange (“IBX”) data centers, or IBX data centers,
across 35 markets in North America, Europe and Asia-Pacific where customers directly interconnect with a
network ecosystem of partners and customers. More than 360 network service providers offer access to more
than 90% of the world’s Internet routes inside the Company’s IBX data centers. This access to Internet routes
provides Equinix customers improved reliability and streamlined connectivity while significantly reducing costs
by reaching a critical mass of networks within a centralized physical location.

On April 30, 2010, the Company completed its acquisition of Switch & Data Facilities Company, Inc.

(“Switch and Data”), a publicly-held company headquartered in Tampa, Florida (the “Switch and Data
Acquisition”) (see Note 2).

Basis of Presentation, Consolidation and Foreign Currency

The accompanying consolidated financial statements include the accounts of Equinix and its subsidiaries,
including the operations of Switch and Data from May 1, 2010, Upminster GmbH (“Upminster”) from July 22,
2009 and Virtu Secure Webservices B.V. (“Virtu”) from February 5, 2008 (see Note 2). All significant
intercompany accounts and transactions have been eliminated in consolidation. Foreign exchange gains or losses
resulting from foreign currency transactions, including intercompany foreign currency transactions, that are
anticipated to be repaid within the foreseeable future, are reported within other income (expense) on the
Company’s accompanying consolidated statements of operations. For additional information on the impact of
foreign currencies to the Company’s consolidated financial statements, see “Comprehensive Income (Loss)”
below.

Reclassifications

Certain amounts in the accompanying consolidated financial statements have been reclassified to conform to

the consolidated financial statement presentation as of and for the year ended December 31, 2010.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from these estimates.

Cash, Cash Equivalents and Short-Term and Long-Term Investments

The Company considers all highly liquid instruments with an original maturity from the date of purchase of

three months or less to be cash equivalents. Cash equivalents consist of money market mutual funds and highly
liquid debt securities of agencies of the U.S. government and the U.S. government with maturities up to 90 days.
Short-term investments generally consist of securities with original maturities of between 90 days and one year

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

and are highly liquid debt securities of corporations, agencies of the U.S. government and the U.S. government
and asset-backed securities. Long-term investments generally consist of debt securities of corporations, agencies
of the U.S. government and the U.S. government and asset-backed securities with maturities greater than 360
days. The Company’s fixed income securities are classified as “available-for-sale” and are carried at fair value
with unrealized gains and losses reported in stockholders’ equity as a component of other comprehensive income.
The cost of securities sold is based on the specific identification method. The Company reviews its investment
portfolio quarterly to determine if any securities may be other-than-temporarily impaired due to increased credit
risk, changes in industry or sector of a certain instrument or ratings downgrades.

Financial Instruments and Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash,

cash equivalents and short-term and long-term investments, to the extent outstanding balances exceed federal
insurance limits, and accounts receivable. Risks associated with cash, cash equivalents and short-term and long-
term investments are mitigated by the Company’s investment policy, which limits the Company’s investing to
only those marketable securities rated at least A-1/P-1 and A-/A3, as determined by independent credit rating
agencies.

A significant portion of the Company’s customer base is comprised of businesses throughout North
America. However, a portion of the Company’s revenues are derived from the Company’s Europe and Asia-
Pacific operations. The following table sets forth percentages of the Company’s revenues by geographic regions
for the years ended December 31:

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64% 61% 63%
23% 26% 25%
13% 13% 12%

2010

2009

2008

No single customer accounted for greater than 10% of accounts receivable or revenues as of or for the years

ended December 31, 2010, 2009 and 2008.

Property, Plant and Equipment

Property, plant and equipment are stated at the Company’s original cost or relative fair value for acquired
property, plant and equipment. Depreciation is computed using the straight-line method over the estimated useful
lives of the respective assets. Leasehold improvements and assets acquired under capital leases are amortized
over the shorter of the lease term or the estimated useful life of the asset or improvement, unless they are
considered integral equipment, in which case they are amortized over the lease term. Leasehold improvements
acquired in a business combination are amortized over the shorter of the useful life of the assets or a term that
includes required lease periods and renewals that are deemed to be reasonably assured at the date of acquisition
and leasehold improvements that are placed into service significantly after and not contemplated at or near the
beginning of the lease term are amortized over the shorter of the useful life of the assets or a term that includes
required lease periods and renewals that are deemed to be reasonably assured at the date the leasehold
improvements are purchased.

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

During the year ended December 31, 2009, the Company reassessed the estimated useful lives of certain of
its property, plant and equipment as part of a review of the related assumptions. As a result, the estimated useful
lives of certain of the Company’s property, plant and equipment within the below table were affected.

Estimated Useful Life

Original

Revised

IBX plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Site improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IBX equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2-13
10-20
10-15
40-50
2-13
2-5
2-5

2-25
10-20
10-15
30-50
2-15
2-5
2-10

The Company undertook this review due to its determination that it was generally using certain of its

existing assets longer than originally anticipated and, therefore, certain estimated useful lives have been
lengthened. The change in the estimated useful lives of certain of the Company’s property, plant and equipment
was accounted for as a change in accounting estimate on a prospective basis effective July 1, 2009.

The change in estimated useful lives of certain of the Company’s property, plant and equipment, which has

resulted in less depreciation expense than would have otherwise been recorded, resulted in the following
increases for the year ended December 31, 2009 (in thousands, except per share amounts):

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share:

$12,020
6,934

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.18
0.17

During the preparation of the Company’s financial statements for the year ended December 31, 2009, in
conjunction with its reassessment of the estimated useful lives of certain of its property, plant and equipment
described above, the Company identified errors in its financial statements for the years ended December 31, 2008
and 2007 and the Company’s financial statements as of and for the nine month period ended September 30, 2009.
These errors related to an overstatement of depreciation expense in connection with the Company’s European
operating segment totaling $1,810,000, $2,028,000 and $375,000 for the nine months ended September 30, 2009
and for the years ended December 31, 2008 and 2007, respectively, for a total error correction of $4,213,000. The
Company corrected these errors in its financial statements for the quarter ended December 31, 2009, which
reduced depreciation expense for the three months ended December 31, 2009 by $4,213,000. The Company did
not believe that these adjustments were material to the consolidated financial statements for the year ended
December 31, 2009 or to any annual or quarterly periods’ consolidated financial statements for the years ended
December 31, 2008 and 2007 and the nine months ended September 30, 2009. As a result, the Company did not
restate any prior period amounts.

Construction in Progress

Construction in progress includes direct and indirect expenditures for the construction and expansion of IBX

data centers and is stated at original cost. The Company has contracted out substantially all of the construction
and expansion efforts of its IBX data centers to independent contractors under construction contracts.
Construction in progress includes certain costs incurred under a construction contract including project
management services, engineering and schematic design services, design development, construction services and

F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

other construction-related fees and services. In addition, the Company has capitalized certain interest costs during
the construction phase. Once an IBX data center or expansion project becomes operational, these capitalized
costs are allocated to certain property, plant and equipment categories and are depreciated over the estimated
useful life of the underlying assets.

The following table sets forth total interest costs expensed and total interest costs capitalized for the years

ended December 31 (in thousands):

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$140,475
10,349

$74,232
12,853

$61,677
7,946

Interest charges incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$150,824

$87,085

$69,623

2010

2009

2008

Asset Retirement Costs

The fair value of a liability for an asset retirement obligation is recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The associated retirement costs are capitalized and
included as part of the carrying value of the long-lived asset and amortized over the useful life of the asset.
Subsequent to the initial measurement, the Company accretes the liability in relation to the asset retirement
obligations over time and the accretion expense is recorded as a cost of revenue. The Company’s asset retirement
obligations are primarily related to its IBX data centers, of which the majority are leased under long-term
arrangements, and, in certain cases, are required to be returned to the landlords in their original condition. All of
the Company’s IBX data center leases have been subject to significant development by the Company in order to
convert them from, in most cases, vacant buildings or warehouses into IBX data centers. The majority of the
Company’s IBX data centers’ initial lease terms expire at various dates ranging from 2011 to 2035 and most of
them enable the Company to extend the lease terms.

The following table summarizes the activity of the Company’s asset retirement obligation liability (in

thousands):

Asset retirement obligations as of December 31, 2007 . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Asset retirement obligations as of December 31, 2008 . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Asset retirement obligations as of December 31, 2009 . . . . . . . . . . . . . . . . . . . . . .
Additions (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,759
2,865
—
890
(250)

12,264
4,331
(75)
1,149
41

17,710
27,046
(1,010)
2,825
196

Asset retirement obligations as of December 31, 2010 . . . . . . . . . . . . . . . . . . . . . .

$46,767

(1)

Includes $20,262 assumed in connection with the Switch and Data Acquisition.

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Goodwill and Other Intangible Assets

The Company has three reportable segments comprised of the 1) North America, 2) Europe and 3) Asia-
Pacific geographic regions, which the Company also determined are its reporting units. As of December 31, 2010,
the Company had goodwill attributable to its North America reporting unit, Europe reporting unit and Asia-Pacific
reporting unit. Prior to 2010, the Company tested the goodwill attributable to the Europe and Asia-Pacific
reporting units annually as of August 31st and December 31st, respectively. In the second quarter of 2010, the
Company completed the Switch and Data Acquisition (see Note 2), which created goodwill in its North America
reporting unit, and changed its method of applying the accounting principle related to annual goodwill impairment
testing by conforming the testing of goodwill for all three reporting units to November 30th of each year
commencing on November 30, 2010. As of December 31, 2010, the Company concluded that its goodwill
attributed to the Company’s North America, Europe and Asia-Pacific reporting units was not impaired as the fair
value of its North America, Europe and Asia-Pacific reporting units exceeded the carrying value of the reporting
unit, including goodwill. In order to determine the fair value of the Company’s reporting units, the Company
utilizes the discounted cash flow and market methods. The Company has consistently utilized both methods in its
goodwill impairment tests and weights both results equally. The Company uses both methods in its goodwill
impairment tests as it believes both methods, in conjunction with each other, provide a reasonable estimate of the
determination of fair value of the reporting unit – the discounted cash flow method being specific to anticipated
future results of the reporting unit and the market method, which is based on the Company’s market sector
including its competitors. The assumptions supporting the discounted cash flow method, including the discount
rate, which was assumed to be 10.0% for the North America and Europe reporting units and 13.0% for the Asia-
Pacific reporting unit, were determined using the Company’s best estimates as of the date of the impairment
review. The Company has performed various sensitivity analyses on certain of the assumptions used in the
discounted cash flow method, such as forecasted revenues and discount rate, and notes that no reasonably possible
changes would reduce the fair value of the reporting unit to such a level that would cause an impairment charge.

Impairment assessments inherently involve judgment as to assumptions about expected future cash flows
and the impact of market conditions on those assumptions. Future events and changing market conditions may
impact the Company’s assumptions as to prices, costs, growth rates or other factors that may result in changes in
the Company’s estimates of future cash flows. Although the Company believes the assumptions it used in testing
for impairment are reasonable, significant changes in any one of the Company’s assumptions could produce a
significantly different result. Indicators of potential impairment that might lead the Company to perform interim
goodwill impairment assessments include significant and unforeseen customer losses, a significant adverse
change in legal factors or in the business climate, a significant adverse action or assessment by a regulator, a
significant stock price decline or unanticipated competition.

For further information on goodwill and other intangible assets, see Note 4 below.

Derivatives and Hedging Activities

The Company recognizes all derivatives on the consolidated balance sheet at fair value. The accounting for

changes in the value of a derivative depends on whether the contract is for trading purposes or has been
designated and qualifies for hedge accounting. In order to qualify for hedge accounting, a derivative must be
considered highly effective at reducing the risk associated with the exposure being hedged. In order for a
derivative to be designated as a hedge, there must be documentation of the risk management objective and
strategy, including identification of the hedging instrument, the hedged item and the risk exposure, and how
effectiveness is to be assessed prospectively and retrospectively.

To assess effectiveness, the Company uses a regression analysis. The extent to which a hedging instrument
has been and is expected to continue to be effective at achieving offsetting changes in cash flows is assessed and

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

documented at least quarterly. Any ineffectiveness is reported in current-period earnings. If it is determined that a
derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued. For
qualifying cash flow hedges, the effective portion of the change in the fair value of the derivative is recorded in
other comprehensive income (loss) and recognized in the consolidated statements of operations when the hedged
cash flows affect earnings. The ineffective portions of cash flow hedges are immediately recognized in earnings.
If the hedge relationship is terminated, then the change in fair value of the derivative recorded in other
comprehensive income (loss) is recognized in earnings when the cash flows that were hedged occur, consistent
with the original hedge strategy. For hedge relationships discontinued because the forecasted transaction is not
expected to occur according to the original strategy, any related derivative amounts recorded in other
comprehensive income (loss) are immediately recognized in earnings. The Company does not use derivatives for
speculative or trading purposes.

For further information on derivatives and hedging activities, see Note 5 below.

Fair Value of Financial Instruments

The carrying value of the Company’s cash and cash equivalents, short-term and long-term investments
represent their fair value, while the Company’s accounts receivable, accounts payable and accrued expenses and
accrued property, plant and equipment approximate their fair value due primarily to the short-term maturity of
the related instruments. The fair value of the Company’s convertible debt, which is traded in the market, is based
on quoted market prices. The fair value of the Company’s mortgage and loans payable, which are not traded in
the market, is estimated by considering the Company’s credit rating, current rates available to the Company for
debt of the same remaining maturities and the terms of the debt.

The following table sets forth the estimated fair values of the Company’s mortgage and loans payable,

senior notes and convertible debt as of (in thousands):

December 31, 2010

December 31, 2009

Carrying
Value

Fair Value

Carrying
Value

Fair Value

Mortgage and Loans Payable:

New Asia-Pacific financing . . . . . . . . . . . . . . . . . . . . . . . . . .
European financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chicago IBX financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netherlands financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$120,315
—
—
—
—
—
—

$126,958
—
—
—
—
—
—

$ — $ —
111,375
130,058
109,700
109,991
83,406
91,756
60,827
64,559
21,739
24,559
7,941
9,311

$120,315

$126,958

$430,234

$394,988

Senior Notes:

Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$750,000

$816,270

$ — $ —

Convertible Debt:

2.50% convertible subordinated notes . . . . . . . . . . . . . . . . . .
3.00% convertible subordinated notes . . . . . . . . . . . . . . . . . .
4.75% convertible subordinated notes . . . . . . . . . . . . . . . . . .

$234,185
395,986
286,166

$246,280
399,946
348,786

$222,943
395,986
274,777

$228,935
461,324
307,248

$916,337

$995,012

$893,706

$997,507

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Fair Value Measurements

The Company measures and reports certain financial assets and liabilities at fair value on a recurring basis,

including its investments in money market funds and available-for-sale debt investments in other public
companies, governmental units and other agencies and derivatives.

The Company also follows the accounting standard for the measurement of fair value for nonfinancial assets

and liabilities on a nonrecurring basis. These include:

• Nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business

combination or other new basis event, but not measured at fair value in subsequent reporting periods;

• Reporting units and nonfinancial assets and nonfinancial liabilities measured at fair value for goodwill

impairment test;

•

Indefinite-lived intangible assets measured at fair value for impairment assessment;

• Nonfinancial long-lived assets or asset groups measured at fair value for impairment assessment or

disposal;

• Asset retirement obligations initially measured at fair value but not subsequently measured at fair

value; and

• Nonfinancial liabilities associated with exit or disposal activities initially measured at fair value but not

subsequently measured at fair value.

During the three months ended March 31, 2010, the Company adopted an accounting standard update
(“ASU”) which requires new disclosures for transfers in and out of Level 1 and Level 2 fair value measurements,
and its adoption did not have any significant impact on the Company’s consolidated financial statements.

For further information on fair value measurements, see Note 6 below.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances

indicate that the carrying amount of an asset may not be recoverable such as a significant decrease in market
price of a long-lived asset, a significant adverse change in legal factors or business climate that could affect the
value of a long-lived asset or a continuous deterioration of the Company’s financial condition. Recoverability of
assets to be held and used is measured by comparing the carrying amount of an asset to estimated undiscounted
future net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its
estimated discounted future cash flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset.

Revenue Recognition

Equinix derives more than 90% of its revenues from recurring revenue streams, consisting primarily of

(1) colocation services, such as the licensing of cabinet space and power; (2) interconnection services, such as
cross connects and Equinix Exchange ports; (3) managed infrastructure services, such as Equinix Direct and
(4) other services consisting of rental income from tenants or subtenants. The remainder of the Company’s
revenues are from non-recurring revenue streams, such as from the recognized portion of deferred installation
revenues, professional services, contract settlements and equipment sales. Revenues from recurring revenue
streams are generally billed monthly and recognized ratably over the term of the contract, generally one to three
years for IBX data center space customers. Non-recurring installation fees, although generally paid in a lump

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

sum upon installation, are deferred and recognized ratably over the expected life of the installation. Professional
service fees are recognized in the period in which the services were provided and represent the culmination of a
separate earnings process as long as they meet the criteria for separate recognition under the accounting standard
related to revenue arrangements with multiple deliverables. Revenue from bandwidth and equipment sales is
recognized on a gross basis in accordance with the accounting standard related to reporting revenue gross as a
principal versus net as an agent, primarily because the Company acts as the principal in the transaction, takes title
to products and services and bears inventory and credit risk. To the extent the Company does not meet the criteria
for recognizing bandwidth and equipment services as gross revenue, the Company records the revenue on a net
basis. Revenue from contract settlements, when a customer wishes to terminate their contract early, is generally
recognized on a cash basis, when no remaining performance obligations exist, to the extent that the revenue has
not previously been recognized.

The Company occasionally guarantees certain service levels, such as uptime, as outlined in individual
customer contracts. To the extent that these service levels are not achieved, the Company reduces revenue for any
credits given to the customer as a result. The Company generally has the ability to determine such service level
credits prior to the associated revenue being recognized, and historically, these credits have generally not been
significant. There were no significant service level credits issued during the years ended December 31, 2010,
2009 and 2008.

Revenue is recognized only when the service has been provided and when there is persuasive evidence of an

arrangement, the fee is fixed or determinable and collection of the receivable is reasonably assured. It is the
Company’s customary business practice to obtain a signed master sales agreement and sales order prior to
recognizing revenue in an arrangement. Taxes collected from customers and remitted to governmental authorities
are reported on a net basis and are excluded from revenue.

The Company assesses collectibility based on a number of factors, including past transaction history with

the customer and the credit-worthiness of the customer. The Company generally does not request collateral from
its customers although in certain cases the Company obtains a security interest in a customer’s equipment placed
in its IBX data centers or obtains a deposit. If the Company determines that collection of a fee is not reasonably
assured, the fee is deferred and revenue is recognized at the time collection becomes reasonably assured, which is
generally upon receipt of cash. In addition, the Company also maintains an allowance for doubtful accounts for
estimated losses resulting from the inability of its customers to make required payments for which the Company
had expected to collect the revenues. If the financial condition of the Company’s customers were to deteriorate or
if they became insolvent, resulting in an impairment of their ability to make payments, greater allowances for
doubtful accounts may be required. Management specifically analyzes accounts receivable and current economic
news and trends, historical bad debts, customer concentrations, customer credit-worthiness and changes in
customer payment terms when evaluating revenue recognition and the adequacy of the Company’s reserves. A
specific bad debt reserve of up to the full amount of a particular invoice value is provided for certain problematic
customer balances. An additional reserve is established for all other accounts based on the age of the invoices
and an analysis of historical credits issued. Delinquent account balances are written-off after management has
determined that the likelihood of collection is not probable.

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets

and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are
expected more likely than not to be realized in the future.

As a result of the adoption of an accounting standard update for business combinations on January 1, 2009,

the Company’s tax provision would be reduced in future periods to the extent that the Company had not
recognized the deferred tax assets associated with any subsidiaries acquired in previous business combinations
for which goodwill exists. The recognition of such deferred tax assets in the periods subsequent to the adoption
of the accounting standard update will benefit the Company’s consolidated statements of operations at the time
such recognition occurs. Prior to the accounting standard update, such releases were recorded against goodwill.

The Company recognizes interest and penalties related to unrecognized tax benefits, which is included

within income tax benefit (expense) in the consolidated statements of operations.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date for all stock-based awards made to employees
and directors based on the fair value of the award and is recognized as expense over the requisite service period,
which is generally the vesting period.

To the extent that the Company grants stock options to its employees, it uses the Black-Scholes

option-pricing model to determine the fair value of stock options. The determination of the fair value of stock
options is affected by assumptions regarding a number of complex and subjective variables including the
Company’s expected stock price volatility over the term of the awards and actual and projected employee stock
option exercise behaviors. The Company estimated the expected volatility by using the average historical
volatility of its common stock that it believed was the best representative of future volatility. The risk-free
interest rate used was based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected
term of the equity awards. The Company does not anticipate paying any cash dividends in the foreseeable future
and, therefore, the expected dividend rate used was zero. The expected term of options used was calculated by
taking the average of the vesting term and the contractual term of the option.

Certain of the Company’s employee equity awards had vesting criteria based upon the achievement of
certain pre-determined Company stock price targets, which the Company refers to as market price conditions.
The Company used a Monte Carlo simulation option-pricing model to determine the fair value of restricted stock
or restricted stock unit grants that have both a service and market price condition. However, commencing in
February 2008, the Company ceased granting equity awards with market price conditions.

The Company grants restricted stock units to its employees and these equity awards have only either a

service condition or a service and performance condition. Any performance conditions contained in an equity
award are tied to the financial performance of the Company or a specific region of the Company. The Company
assesses the probability of meeting these performance conditions on a quarterly basis. The majority of the
Company’s equity awards vest over four years, although certain of the equity awards for executives vest over a
range of two to four years. The valuation of restricted stock units with only a service condition or a service and
performance condition requires no significant assumptions as the fair value for these types of equity awards is
based solely on the fair value of the Company’s stock price on the date of grant.

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The accounting standard for stock compensation does not allow the recognition of unrealized tax benefits
associated with the tax deductions in excess of the compensation recorded (excess tax benefit) until the excess
tax benefit is realized (i.e., reduces taxes payable). The Company will recognize a benefit from stock-based
compensation in equity if the excess tax benefit is realized by following the “with-and-without” approach. The
Company recorded the excess tax benefit of approximately $514,000 and $696,000, respectively, during the
years ended December 31, 2009 and 2008. The Company did not record any excess tax benefit during the year
ended December 31, 2010.

For further information on stock-based compensation, see Note 11 below.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a company during a period from

transactions and other events and circumstances excluding transactions resulting from investments by owners and
distributions to owners. The primary difference between net income (loss) and comprehensive income (loss) for
Equinix results from foreign currency translation adjustments and unrealized gains and losses on
available-for-sale securities and cash flow hedges (interest rate swaps).

The financial position of foreign subsidiaries is translated using the exchange rates in effect at the end of the

period, while income and expense items are translated at average rates of exchange during the period. Gains or
losses from translation of foreign operations where the local currency is the functional currency are included as
other comprehensive income (loss). The net gains and losses resulting from foreign currency transactions are
recorded in net income (loss) in the period incurred and reported within other income and expense. Certain inter-
company balances are designated as long-term. Accordingly, exchange gains and losses associated with these
long-term inter-company balances are recorded as a component of other comprehensive income (loss), along
with translation adjustments. How the U.S. dollar performs against certain of the currencies of the foreign
countries in which the Company operates can have a significant impact to the Company. Strengthening and
weakening of the U.S. dollar against theses currencies has significantly impacted the Company’s consolidated
balance sheets (as evidenced in the Company’s foreign currency translation loss), as well as its consolidated
statements of operations as amounts denominated in foreign currencies can increase or decrease the Company’s
revenues and expenses. To the extent that the U.S. dollar strengthens or weakens further, this will continue to
impact the Company’s consolidated balance sheets and consolidated statements of operations including the
amount of revenue that the Company reports in future periods.

For further information on derivatives and hedging instruments, see Note 5 below.

Earnings Per Share

Basic earnings per share is computed using net income (loss) and the weighted-average number of common

shares outstanding. Diluted earnings per share is computed using net income, adjusted for interest expense as a
result of the assumed conversion of the Company’s Convertible Subordinated Debentures, 2.50% Convertible
Subordinated Notes, 3.00% Convertible Subordinated Notes and 4.75% Convertible Subordinated Notes, if
dilutive, and the weighted-average number of common shares outstanding plus any dilutive potential common
shares outstanding. Dilutive potential common shares include the assumed exercise, vesting and issuance activity
of employee equity awards using the treasury stock method, as well as warrants and shares issuable upon the
conversion of the Convertible Subordinated Debentures, 2.50% Convertible Subordinated Notes, 3.00%
Convertible Subordinated Notes and 4.75% Convertible Subordinated Notes.

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The following table sets forth the computation of basic and diluted earnings per share for the years ended

December 31 (in thousands, except per share amounts):

2010

2009

2008

Numerator:

Numerator for basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of assumed conversion of convertible subordinated debentures and notes:
Interest expense, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$36,881

$69,431

$107,924

—

23

8,059

Numerator for diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . .

$36,881

$69,454

$115,983

Denominator:

Denominator for basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . .

43,742

38,488

37,120

Effect of dilutive securities:

Convertible subordinated debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.00% convertible subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total dilutive potential shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
1,068

1,068

211
—
977

1,188

772
2,945
745

4,462

Denominator for diluted earnings per share . . . . . . . . . . . . . . . . . . . . . .

44,810

39,676

41,582

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

0.84

0.82

$

$

1.80

1.75

$

$

2.91

2.79

The following table sets forth potential shares of common stock that are not included in the diluted earnings

per share calculation above because to do so would be anti-dilutive for the years ended December 31 (in
thousands):

Shares reserved for conversion of convertible 2.50% convertible subordinated notes . . .
Shares reserved for conversion of convertible 3.00% convertible subordinated notes . . .
Shares reserved for conversion of convertible 4.75% convertible subordinated notes . . .
Common stock warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock related to employee equity awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

2008

2,232
2,945
4,433
—
843

2,232
2,232
2,945 —
2,453 —
1
1,835

1
1,045

10,453

8,676

4,068

Recent Accounting Pronouncements

In October 2009, the FASB issued an accounting standards update (“ASU”), which addresses the accounting

for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables)
separately rather than as a combined unit. This ASU is effective prospectively for revenue arrangements entered
into or materially modified beginning in fiscal years on or after June 15, 2010. Early adoption is permitted. The
Company is currently evaluating the impact that the adoption of this standard will have on its condensed
consolidated financial statements, if any.

In January 2010, the FASB issued an ASU, which amends the use of fair value measures and the related
disclosures. This ASU requires disclosure of activity in Level 3 fair value measurements on a gross basis, which
is effective for fiscal years beginning after December 15, 2010. The Company adopted this ASU during the three

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

months ended March 31, 2010 with respect to the new disclosures for transfers in and out of Level 1 and Level 2
fair value measurements, and its adoption did not have any significant impact on the Company’s consolidated
financial statements. The Company is currently evaluating the impact that the disclosure of activity in Level 3
fair value measurements will have on its consolidated financial statements, if any.

2. Acquisitions

Switch and Data Acquisition

On April 30, 2010 (the “Acquisition Date”), the Company acquired 100% of the issued and outstanding
share capital of Switch and Data, a publicly-held company headquartered in Tampa, Florida. Switch and Data
operated 34 data centers in the U.S. and Canada. The combined company operates under the Equinix name.
There were no historical transactions between Equinix and Switch and Data.

The Company included Switch and Data’s results of operations from May 1, 2010 and estimated the fair
value of assets acquired and liabilities assumed in its consolidated balance sheets beginning April 30, 2010. The
Company incurred acquisition costs of $11,094,000 and $4,091,000, respectively, for the years ended
December 31, 2010 and 2009 related to the Switch and Data Acquisition which were included in the consolidated
statements of operations.

Additionally, as a result of the Switch and Data Acquisition, the Company incurred a restructuring charge of

$5,360,000 during the year ended December 31, 2010 (see Note 16).

Fair Value of Consideration Transferred

Under the final terms of the Switch and Data Acquisition, each stock-electing share received 0.19409 shares

of Equinix common stock, each cash-electing share received $19.06 in cash, and each non-electing share
received 0.11321688 shares of Equinix common stock and $7.94189104 in cash, in each case subject to the terms
of the merger agreement. Additionally, the Company assumed Switch and Data’s outstanding employee equity
awards. The following table presents the fair value of consideration transferred to acquire Switch and Data at the
Acquisition Date (dollars in thousands):

Cash (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switch and Data employee equity awards (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$134,007
549,389
16,508

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$699,904

(1) Represents payment for approximately 20% of Switch and Data’s total common stock outstanding

as of the Acquisition Date.

(2) Fair value of 5,458,413 shares of the Company’s common stock issued in exchange for

approximately 80% of Switch and Data’s total common stock outstanding as of the Acquisition
Date. The value of the Company’s common stock issued was determined based on the Company’s
closing share price on the Acquisition Date, or $100.65 per share.

(3) Represents fair value attributed to vested shares of Switch and Data employee equity awards

which the Company assumed. The Company issued 476,943 options to purchase the Company’s
common stock and 98,509 restricted stock units of the Company’s common stock to Switch and
Data employees with an aggregate fair value of $35,395 in exchange for their options to purchase
shares of and restricted stock units of Switch and Data (see Note 11).

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Purchase Price Allocation

The Switch and Data Acquisition was accounted for using the acquisition method of accounting. Under the

acquisition method of accounting, the total purchase price was allocated to Switch and Data’s net tangible and
intangible assets based upon their fair value as of the Acquisition Date. During the quarter ended December 31,
2010, the Company finalized its purchase accounting after adjustments were made to the preliminary purchase
price to reflect the finalization of liabilities acquired, deferred taxes and fair value of property, plant and
equipment acquired and residual goodwill. The adjustments to the preliminary purchase allocation, in aggregate,
had an insignificant impact to the Company’s financial statements as of and for the eight months ended
December 31, 2010. Based upon the purchase price and the valuation of Switch and Data, the purchase price
allocation was as follows (in thousands):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible asset—customer contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible asset—favorable leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible asset—other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of loan payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital leases, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unfavorable leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

20,718
12,763
2,125
460,474
408,730
98,920
13,680
3,370
1,472

1,022,252
(21,656)
(10,363)
(10,402)
(138,938)
(12,157)
(38,998)
(2,580)
(66,460)
(20,794)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 699,904

The following table presents certain information on the acquired identifiable intangible assets (dollars in

thousands):

Intangible assets

Customer contracts . . . . . . . . . . . . . . . . . . . . . . .
Favorable leases . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unfavorable leases . . . . . . . . . . . . . . . . . . . . . . . .

Fair value

$98,920
13,680
3,370
(2,580)

Estimated
useful lives
(years)

Weighted-average
estimated useful
lives (years)

11
3 – 16
0 – 10
3 – 15

11
8.6
4.9
8.3

The fair value of customer contracts was estimated by applying an income approach. The fair value was
determined by calculating the present value of estimated future operating cash flows generated from exisiting
customers less costs to realize the revenue. The Company applied a discount rate of approximately 14%, which
reflects the nature of the asset, to the estimated future operating cash flows. Other significant assumptions used to
estimate the fair value of the customer contracts include projected revenue growth, customer attrition rates, sales

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

and marketing expenses and operating margins. The fair values of favorable and unfavorable leases were
estimated by applying an income approach. The fair value was determined by calculating the difference between
the discounted cash flows over the remaining term of each lease using contractual lease rates and market lease
rates. The Company applied a discount rate ranging from 8.25% to 11.5% depending on the type, location and
duration of each lease. Another significant assumption used in estimating the fair values of the favorable and
unfavorable leases was the market lease rates. The fair value of the other acquired identifiable intangible assets
were estimated by applying an income or cost approach as appropriate. The fair value measurements were based
on significant inputs that are not observable in the market and thus represent Level 3 measurements as defined in
the accounting standard for fair value measurements.

The Company determined the fair value of the term loan and revolving credit facility assumed in the Switch

and Data Acquisition by estimating Switch and Data’s debt rating and reviewed market data with a similar debt
rating and other characteristics of the debt, including the maturity date and security type. The Company
determined that the book value of $138,938,000 approximated the fair value as of the Acquisition Date.

The Company determined the fair value of the two property capital lease liabilities assumed in the Switch
and Data Acquisition of $40,425,000 by calculating the present value of future cash flows using a discount rate
of approximately 8.6%, which was equal to the average yield of industrial bonds with similar remaining terms as
the leases. The Company determined that the fair value of the equipment capital lease liability assumed in the
Switch and Data Acquisition was equal to the fair value of the underlying assets of $9,155,000 as of the
Acquisition Date because the lease contained a bargain purchase option and the title of the leased property is
expected to be transferred to the Company at the end of the lease term. A total of $408,730,000 has been
allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible
and intangible assets acquired. Goodwill is attributable to the workforce of Switch and Data and the significant
synergies expected to arise after the Switch and Data Acquisition. Goodwill is not expected to be deductible for
tax purposes. Goodwill will not be amortized and will be tested for impairment at least annually. Goodwill
recorded as a result of the Switch and Data Acquisition is attributable to the Company’s North America
reportable segment (see Note 15) and reporting unit (see Note 4).

For additional information on the Switch and Data debt assumed, refer to Note 7.

Unaudited Pro Forma Combined Consolidated Statements of Operations

The consolidated financial statements of the Company include the operations of Switch and Data from
May 1, 2010 for the year ended December 31, 2010. Switch and Data recognized revenues of $152,961,000 and
incurred a net loss of $1,147,000 for the period from May 1, 2010 through December 31, 2010, which were
included in the Company’s consolidated financial statements.

The following unaudited pro forma combined consolidated financial information has been prepared to give

effect to the Switch and Data Acquisition by the Company using the acquisition method of accounting and the
Company’s repayment of Switch and Data’s outstanding debt and equipment capital lease (Note 7). The
unaudited pro forma combined consolidated financial information reflect certain adjustments related to the
Switch and Data Acquisition, such as additional depreciation and amortization expense on assets acquired from
Switch and Data. These pro forma statements were prepared as if the Switch and Data Acquistion and the
repayment of Switch and Data’s outstanding debt and equipment capital lease had been completed as of the
beginning of each period presented.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The unaudited pro forma combined consolidated financial information is presented for illustrative purposes
only and is not necessarily indicative of the results of operations that would have actually been reported had the
acquisition occurred on January 1, 2010 and 2009, nor is it necessarily indicative of the future results of
operations of the combined company.

The following table sets forth the unaudited pro forma consolidated combined results of operations for the

years ended December 31 (in thousands, except per share data):

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share:

2010

2009

$1,296,289
45,271

$1,087,947
60,222

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.99
0.97

1.37
1.33

Upminster Acquisition

On July 22, 2009, a wholly-owned subsidiary of the Company acquired all of the issued and outstanding

share capital of Upminster GmbH, a company which owned a data center and the real estate on which it is
situated in Frankfurt, Germany, for a cash payment of $28,208,000, excluding acquisition costs (the “Upminster
Acquisition”). The combined company operates under the Equinix name. The Upminster Acquisition was
accounted for using the acquisition method. The results of operations for Upminster are not significant to the
Company; therefore, the Company does not present its purchase price allocation or pro forma combined results
of operations.

Virtu Acquisition

On February 5, 2008, a wholly-owned subsidiary of the Company acquired all of the issued and outstanding

share capital of Virtu, a provider of network-neutral data center services in the Netherlands, for a cash payment
of $23,345,000, including closing costs (the “Virtu Acquisition”). Under the terms of the Virtu Acquisition, the
Company may also pay additional future contingent consideration, which will be payable in the form of up to
20,000 shares of the Company’s common stock and cash of up to 1,500,000 Euros, contingent upon meeting
certain pre-determined future annual operating targets from 2008 to 2011 (the 2008, 2009 and 2010 targets were
not met and, therefore, no accrual was recognized). Such contingent consideration, if paid, will be recorded as
additional goodwill. Virtu, a similar business to that of the Company, operated data centers in the Netherlands,
and supplements the Company’s existing European operations. The combined company predominantly operates
under the Equinix name. The results of operations for Virtu are not significant to the Company; therefore, the
Company does not present its purchase price allocation or pro forma combined results of operations.

3. IBX Data Center Acquisitions and Expansions

Although the Company owns certain of its IBX data centers through property acquisitions, the Company

leases a majority of its IBX data centers under non-cancellable operating lease agreements. For further
information on the Company’s operating lease commitments, see “Operating Lease Commitments” in Note 13
below. For those significant IBX acquisition and expansion projects not subject to operating lease arrangements,
the Company presents the following information for the years ended December 31, 2010 and 2009:

Amsterdam IBX Property Acquisition

In December 2010, the Company purchased property, comprised of two buildings and prepaid ground
leases, located in Amsterdam, Netherlands, for $21,737,000, including closing costs, which the Company paid in

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

full in a cash transaction in December 2010. The Company allocated $14,861,000 towards property, plant and
equipment and $6,876,000 towards the prepaid ground leases, which is reflected as prepaid rent (reported within
other current assets and other assets) on the accompanying consolidated balance sheet. The current terms for the
prepaid ground leases extend through 2032 and 2033 and can be extended in 50-year increments in perpetuity.
The Company had leased the two buildings prior to purchasing the property. Prior to April 2010, the leases were
accounted for as operating leases; however, in April 2010, due to certain construction activity, the Company
recorded building assets and a corresponding financing obligation liability for the building element of the
leases. Just prior to the property purchase in December 2010, the building asset and financing obligation liability
totaled $9,351,000 and $11,102,000, respectively, and the net difference totaling $1,751,000 was allocated to the
purchased building assets.

Sydney 3 IBX Expansion Project

In June 2010, the Company entered into a lease for a building that the Company and the landlord will both
jointly develop to meet the Company’s needs and which the Company will ultimately convert into its third IBX
data center in Sydney, Australia (the “Sydney 3 IBX Expansion Project” and the “Sydney 3 Lease”). The Sydney
3 Lease has a term of 15 years and a total cumulative rent obligation of approximately $29,669,000 commencing
September 2010. Monthly payments under the Sydney 3 Lease will commence in March 2012 and will be made
through January 2030 at an effective interest rate of 2.86% The landlord began modifying the building structure
to the Company’s specifications in June 2010. Pursuant to the accounting standard for lessee’s involvement in
asset construction and for leasing transactions involving special-purpose entities, the Company is now considered
the owner of the building during the construction phase due to the structural building work that the landlord is
now undertaking on the Company’s behalf. As a result, the Company will be recording a building asset during
the construction period and a related financing liability (the “Sydney 3 IBX Building Financing”), while the
underlying land will be considered an operating lease. The building is expected to be completed during the first
half of 2011. In connection with the Sydney 3 IBX Building Financing, the Company recorded a building asset
and a corresponding financing obligation liability totaling approximately $11,053,000, representing the fair value
of the existing building structure and the estimated percentage-of-completion of the building as of December 31,
2010.

Paris 3 IBX Expansion Project

In September 2008, the Company entered into a capital lease for a space within a warehouse building in the
Paris, France metro area adjacent to one of its existing Paris IBX data centers, which will become the Company’s
third IBX data center in the Paris metro area (the “Paris 3 IBX Lease”). The Company took possession of this
property in the fourth quarter of 2008, and as a result, recorded a property, plant and equipment asset, as well as a
capital lease obligation, totaling 28,137,000 Euros or approximately $39,311,000. In April 2010, the Company
amended the Paris 3 IBX Lease to take on additional space effective July 2010 (the “Paris 3 IBX Lease
Amendment”), which the Company will use to expand its Paris 3 IBX data center. The Paris 3 IBX Lease
Amendment has the same lease end date as the Paris 3 IBX Lease and a total cumulative rent obligation of
approximately $67,315,000. Monthly payments under the Paris 3 IBX Lease Amendment commenced in October
2010 and will be made through September 2020 at an effective interest rate of 8.46%. The Paris 3 IBX Lease was
accounted for as a capital lease; however, due to structural work that was made to the property related to the new
space, which the Company obtained in July 2010, pursuant to the accounting standards for lessee’s involvement
in asset construction and for leasing transactions involving special-purpose entities, the Company is now
considered the owner of the property. As a result, the Company removed both the capital lease asset, which had a
net book value totaling approximately $35,149,000, and capital lease obligation totaling approximately
$37,706,000 in July 2010 and replaced them with a building asset totaling approximately $56,370,000 and a
related financing obligation liability (the “Paris 3 IBX Building Financing”) totaling approximately $58,927,000.

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Zurich IBX Expansion Project

In June 2009, the Company entered into a lease for building space within a multi-floor, multi-tenant

building that the Company will convert into its fourth IBX data center in Zurich, Switzerland (the “Zurich Lease”
and the “Zurich IBX Expansion Project”). The Zurich Lease has a fixed term of 10 years, with options to extend
for up to an additional 10 years, in five-year increments. Cumulative minimum payments under the Zurich Lease
total approximately $8,729,000 over the Zurich Lease term, which does not include any rent obligation for the
extension periods. Monthly payments under the Zurich Lease commenced in July 2009 and will be made through
April 2019 at an effective interest rate of 4.68%. Pursuant to the accounting standard for lessee’s involvement in
asset construction and for leasing transactions involving special-purpose entities, the Company is considered the
owner of the leased building space during the construction phase due to some specific provisions contained in the
Zurich Lease. As a result, during the year ended December 31, 2009, the Company recorded a building asset and
a related financing liability (the “Zurich IBX Building Financing”) totaling approximately $11,470,000.

4. Balance Sheet Components

Cash, Cash Equivalents and Short-Term and Long-Term Investments

Cash, cash equivalents and short-term and long-term investments consisted of the following as of (in

thousands):

December 31, 2010

U.S. government and agency obligations . . . . . . . . . . . . . . . . . . .
Cash and money markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total available-for-sale securities . . . . . . . . . . . . . . . . . . . . .

Less amounts classified as cash and cash

Amortized
Cost
$ 391,945
195,860
2,632
2,266
592,703

Gross
Unrealized
Gains
$ 12
—
13
112
137

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total securities classified as investments . . . . . . . . . . . . . . .
Less amounts classified as short-term investments . . .
Total long-term investments . . . . . . . . . . . . . . . . . . . . . . . . .

(442,833)
149,870
(147,176)
2,694

$

(8)
129
(16)
$ 113

Gross
Unrealized
Losses
$—
—
—

(1)
(1)

—

(1)

—
$ (1)

December 31, 2009

U.S. government and agency obligations . . . . . . . . . . . . . . . . . . .
Cash and money markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total available-for-sale securities . . . . . . . . . . . . . . . . . . . . .

Less amounts classified as cash and cash

Amortized
Cost
$ 437,764
147,059
12,400
5,543
1,108
603,874

Gross
Unrealized
Gains
$ 162
—
203
134
1
500

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total securities classified as investments . . . . . . . . . . . . . . .
Less amounts classified as short-term investments . . .
Total long-term investments . . . . . . . . . . . . . . . . . . . . . . . . .

(346,059)
257,815
(248,300)
9,515

$

—
500
(208)
$ 292

Gross
Unrealized
Losses
$ (3)
—
—

(4)

—

(7)

3
(4)

—
$ (4)

Fair Value
$ 391,957
195,860
2,645
2,377
592,839

(442,841)
149,998
(147,192)
2,806

$

Fair Value
$ 437,923
147,059
12,603
5,673
1,109
604,367

(346,056)
258,311
(248,508)
9,803

$

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

As of December 31, 2010 and December 31, 2009, cash equivalents included investments which were

readily convertible to cash and had original maturity dates of 90 days or less. The maturities of securities
classified as short-term investments were one year or less as of December 31, 2010 and December 31, 2009. The
maturities of securities classified as long-term investments were greater than one year and less than three years as
of December 31, 2010 and December 31, 2009.

During the year ended December 31, 2008, the Company’s investments in a money market fund, the
Reserve Primary Fund (the “Reserve”), suffered a decline in its Net Asset Value (“NAV”) below $1 per share
when the Reserve valued its exposure to investments held in Lehman Brothers Holdings, Inc. (“Lehman
Brothers”) at zero. The Reserve held investments in commercial paper and short term-notes issued by Lehman
Brothers, which filed for Chapter 11 bankruptcy protection in September 2008. As a result of this decline, the
Company reclassified its investments in the Reserve from Level 1 of the fair value hierarchy to Level 3 of the fair
value hierarchy (see Note 6, “Fair Value Measurement”) during the year ended December 31, 2008. The
following table summarizes the activities of the Company’s investments in the Reserve which were measured at
fair value (in thousands):

Balance at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other-than-temporary impairment losses (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Cash settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 50,940
(1,527)
(40,163)

Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other-than-temporary impairment losses (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Cash settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,250
(2,590)
(6,660)

Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ —

(1)

Included in the consolidated statements of operations.

In January 2010 and July 2010, the Company received additional distributions totaling $3,626,000 from its

investment in the Reserve. As a result, during the year ended December 31, 2010, the Company recorded a
recovery of other-than-temporary impairment loss, which is included in the Company’s accompanying
consolidated statement of operations.

The other-than-temporary impairment losses that the Company recorded during the years ended
December 31, 2008 and 2009 as described above were entirely credit losses with nothing required to be
reclassified from earnings to accumulated other comprehensive income (loss) for non-credit portions in either
period.

As of December 31, 2010, the Company’s net unrealized gains (losses) on its available-for-sale securities

were comprised of the following (in thousands):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized
gains

Unrealized
losses

Net unrealized
gain (losses)

$

8
16
113

$137

$—
—

(1)

$ (1)

$

8
16
112

$136

None of the securities held at December 31, 2010 were other-than-temporarily impaired.

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

While certain marketable securities carry unrealized losses, the Company expects that it will receive both
principal and interest according to the stated terms of each of the securities and that the increase or decline in
market value is primarily due to changes in the interest rate environment from the time the securities were
purchased as compared to interest rates at December 31, 2010.

The following table summarizes the fair value and gross unrealized losses related to one available-for-sale

security with an aggregate cost basis of $393,000, aggregated by type of investment and length of time that
individual securities have been in continuous unrealized loss position, at December 31, 2010 (in thousands):

Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . .

Securities in a loss
position for less than
12 months

Securities in a loss
position for 12 months
or more

Fair value

$—

$—

Gross
unrealized
losses

$—

$—

Fair value

$392

$392

Gross
unrealized
losses

$(1)

$(1)

While the Company does not believe it holds investments that are other-than-temporarily impaired and

believes that the Company’s investments will mature at par, as of December 31, 2010, the Company’s
investments are subject to the currently adverse market conditions. If market conditions were to deteriorate, the
Company could sustain other-than-temporary impairments to its investment portfolio which could result in
additional realized losses being recorded in interest income, net or securities markets could become inactive
which could affect the liquidity of the Company’s investments. As securities mature, the Company has reinvested
the proceeds in U.S. government securities, such as Treasury bills and Treasury notes, of a short-term duration
and lower yield in order to meet its capital expenditure requirements. As a result, the Company expects to
recognize lower interest income in future periods.

As of December 31, 2009, the Company’s net unrealized gains (losses) on its available-for-sale securities

were comprised of the following (in thousands):

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized
gains

Unrealized
losses

Net unrealized
gain (losses)

$—
208
292

$500

$ (3)
—

(4)

$ (7)

$ (3)
208
288

$493

None of the securities held at December 31, 2009 were other-than-temporarily impaired.

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The following table summarizes the fair value and gross unrealized losses related to six available-for-sale
securities with an aggregate cost basis of $189,644,000, aggregated by type of investment and length of time that
individual securities have been in continuous unrealized loss position, at December 31, 2009 (in thousands):

U.S. government and agency obligations . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . .

Securities in a loss
position for less than
12 months

Securities in a loss
position for 12 months
or more

Fair value

$188,999
—

$188,999

Gross
unrealized
losses

$ (3)
—

$ (3)

Fair value

$—
638

$638

Gross
unrealized
losses

$—

(4)

$ (4)

Accounts Receivable

Accounts receivable, net, consisted of the following as of December 31 (in thousands):

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$210,919
(90,753)
(3,808)

$126,122
(59,635)
(1,720)

2010

2009

$116,358

$ 64,767

Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest. The

Company generally invoices its customers at the end of a calendar month for services to be provided the
following month. Accordingly, unearned revenue consists of pre-billing for services that have not yet been
provided, but which have been billed to customers in advance in accordance with the terms of their contract.

The following table summarizes the activity of the Company’s allowance for doubtful accounts (in

thousands):

Balance as of December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bad debt expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries (write-offs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 446
1,582
3
6

Balance as of December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bad debt expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries (write-offs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bad debt expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries (write-offs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,037
(15)
(346)
44

1,720
2,056
28
4

Balance as of December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,808

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Other Current Assets

Other current assets consisted of the following as of December 31 (in thousands):

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contract receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$17,810
6,857
4,779
—
3,515

$10,277
7,081
2,083
498
1,795

2010

2009

$32,961

$21,734

Property, Plant and Equipment

Property, plant and equipment consisted of the following as of December 31 (in thousands):

2010

2009

IBX plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Site improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IBX equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,522,561
884,654
339,636
307,933
263,995
114,263
89,312
15,602
128,535

$ 925,360
552,548
277,247
231,437
175,030
85,472
84,681
11,428
243,129

Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,666,491
(1,015,538)

2,586,332
(778,217)

$ 2,650,953

$1,808,115

Leasehold improvements, IBX plant and machinery, computer equipment and software and buildings
recorded under capital leases aggregated $117,289,000 and $87,138,000 at December 31, 2010 and 2009,
respectively. Amortization on the assets recorded under capital leases is included in depreciation expense and
accumulated depreciation on such assets totaled $29,235,000 and $22,381,000 as of December 31, 2010 and
2009, respectively.

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Goodwill and Other Intangibles

Goodwill and other intangible assets, net, consisted of the following as of December 31 (in thousands):

Goodwill:

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$408,730
345,486
20,149

$ —
362,569
18,481

2010

2009

Other intangibles:

Intangible asset—customer contracts . . . . . . . . . . . . . . . . . . . .
Intangible asset—favorable leases . . . . . . . . . . . . . . . . . . . . . .
Intangible asset—others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . .

774,365

381,050

156,621
18,285
3,483

178,389
(27,444)

150,945

60,499
4,690
111

65,301
(14,286)

51,015

$925,310

$432,065

Changes in the carrying amount of goodwill by geographic regions are as follows (in thousands):

Balance at December 31, 2008 . . . . . . . . . . . . . . .
Virtu acquisition (see Note 2) . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . .

Balance at December 31, 2009 . . . . . . . . . . . . . . .
Switch and Data acquisition (see Note 2) . . .
Impact of foreign currency exchange . . . . . .

North
America

$ —
—
—

—

408,730

—

Europe

Asia-Pacific

Total

$324,674
4,232
33,663

362,569
—
(17,083)

$18,155

—
326

18,481
—
1,668

$342,829
4,232
33,989

381,050
408,730
(15,415)

Balance at December 31, 2010 . . . . . . . . . . . . . . .

$408,730

$345,486

$20,149

$774,365

The Company’s goodwill and intangible assets in Europe, denominated in British pounds and Euros,

goodwill in Asia-Pacific, denominated in Singapore dollars, and certain intangible assets in North America,
denominated in Canadian dollars, are subject to foreign currency fluctuations. The Company’s foreign currency
translation gains and losses, including goodwill and other intangibles, are a component of other comprehensive
income and loss.

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Changes in the gross book value of intangible assets by geographic regions are as follows (in thousands):

Intangible assets, gross at December 31, 2008 . . . .
Other intangibles . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . .

Intangible assets, gross at December 31, 2009 . . . .
Switch and Data acquisition (see Note 2) . . . .
Impact of foreign currency exchange . . . . . . .

North
America

$

1,428
865
—

2,293
115,970
176

Europe

Asia-Pacific

Total

$57,390
—
5,618

63,008
—
(3,058)

$—
—
—

—
—
—

$ 58,818
865
5,618

65,301
115,970
(2,882)

Intangible assets, gross at December 31, 2010 . . . .

$118,439

$59,950

$—

$178,389

For the years ended December 31, 2010, 2009 and 2008, the Company recorded amortization expense of

$13,632,000, $5,555,000 and $6,868,000, respectively, associated with its other intangible assets. Estimated
future amortization expense related to these intangibles is as follows (in thousands):

Year ending:

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 16,683
16,537
16,489
16,236
15,826
69,174

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$150,945

Other Assets

Other assets consisted of the following as of December 31 (in thousands):

Debt issuance costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

$34,066
24,604
9,597
4,309
1,361

$19,762
28,032
3,247
3,021
1,047

$73,937

$55,109

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of December 31 (in thousands):

2010

2009

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued utilities and security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 12,585
53,259
25,456
18,346
15,707
3,786
2,894
13,821

$14,874
35,809
6,235
13,526
14,508
4,657
2,713
6,731

$145,854

$99,053

Other Current Liabilities

Other current liabilities consisted of the following as of December 31 (in thousands):

2010

2009

Deferred installation revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred recurring revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$31,149
12,624
3,089
2,349
993
585
445
1,394

$26,319
8,406
2,043
2,689
814
403
—
492

Other Liabilities

Other liabilities consisted of the following as of December 31 (in thousands):

$52,628

$41,166

2010

2009

Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred installation revenue, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred recurring revenue, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits, non-current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swap payable, non-current
Accrued restructuring charges, non-current
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 46,322
43,705
19,488
4,897
4,206
—
3,952
2,473

$17,710
34,288
18,228
5,160
5,813
8,496
3,876
1,095

$125,043

$94,666

The Company currently leases the majority of its IBX data centers and certain equipment under
non-cancelable operating lease agreements expiring through 2035. The IBX data center lease agreements

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

typically provide for base rental rates that increase at defined intervals during the term of the lease. In addition,
the Company has negotiated some rent expense abatement periods for certain leases to better match the phased
build-out of its centers. The Company accounts for such abatements and increasing base rentals using the
straight-line method over the life of the lease. The difference between the straight-line expense and the cash
payment is recorded as deferred rent.

5. Derivative and Hedging Instruments

The Company employed interest rate swaps to partially offset its exposure to variability in interest payments

due to fluctuations in interest rates for certain of its variable-rate debt. As of December 31, 2010, the Company
had no outstanding interest rate swaps. The Company employs foreign currency forward contracts to partially
offset its business exposure to foreign exchange risk for certain existing foreign currency-denominated assets and
liabilities.

Cash Flow Hedges—Interest Rate Swaps

During the year ended December 31, 2010, the Company prepaid and terminated the Chicago IBX

Financing and the European Financing (see Note 7) and the associated interest rate swaps.

As of December 31, 2009, the Company had a total of four outstanding interest rate swap instruments with

expiration dates ranging from February 2011 to May 2011 as follows (in thousands):

Notional
Amount

Fair
Value (1)

Accumulated
Loss (2)

Liabilities:

European Financing interest rate swaps . . . . . . .
Chicago IBX Financing interest rate swap . . . . .

$ 89,065
105,000

$(5,117)
(3,379)

$(5,023)
(3,379)

$194,065

$(8,496)

$(8,402)

(1)
(2)

Included in the consolidated balance sheets within other liabilities.
Included in the consolidated balance sheets within accumulated other comprehensive income
(loss).

As of December 31, 2009, the Company designated its interest rate swaps as highly effective hedge

relationships at achieving offsetting changes in cash flows with an insignificant amount of ineffectiveness
recorded in interest expense on the accompanying consolidated statements of operations.

Other Derivatives–Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts to manage the foreign exchange risk associated with
certain foreign currency-denominated assets and liabilities. As a result of foreign currency fluctuations, the U.S.
dollar equivalent values of the foreign currency-denominated assets and liabilities change. Foreign currency
forward contracts represent agreements to exchange the currency of one country for the currency of another
country at an agreed-upon price on an agreed-upon settlement date.

The Company has not designated the foreign currency forward contracts as hedging instruments under the
accounting standard for derivatives and hedging. Gains and losses on these contracts are included in other income
(expense), net, along with those foreign currency gains and losses of the related foreign currency-denominated
assets and liabilities associated with these foreign currency forward contracts. The Company entered into various

F-30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

foreign currency forward contracts during the years ended December 31, 2010 and 2009. As of December 31,
2010, the Company had gross assets totaling $138,000 and gross liabilities totaling $196,000 representing the fair
values of these foreign currency forward contracts. As of December 31, 2010, the Company’s foreign currency
forward contracts, net, by counter party, were included within other current liabilities. As of December 31, 2009,
the Company had gross assets totaling $504,000 and gross liabilities totaling $6,000 representing the fair values
of these foreign currency forward contracts. As of December 31, 2009, the Company’s foreign currency forward
contracts, net, by counter party, were included within other current assets.

The following table sets forth the Company’s net gain (loss), which is reflected in other income (expense)

on the accompanying consolidated statement of operations, in connection with its foreign currency forward
contracts for the years ended December 31 (in thousands):

Net gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(69)

$365

$7,835

2010

2009

2008

6. Fair Value Measurements

The Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31,

2010 were as follows (in thousands):

Fair value at
December 31,
2010

Fair value measurement using

Level 1

Level 2

Level 3

Assets:

U.S. government and agency obligations . . . . . . . . . . . . . . . . .
Cash and money markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts (1) . . . . . . . . . . . . . . . . . .

$391,957
195,860
2,645
2,377
138

$ — $391,957
195,860
—
—
—
—

$—
—
2,645 —
2,377 —
138 —

Liabilities:

Foreign currency forward contracts (1) . . . . . . . . . . . . . . . . . .

$592,977

$195,860

$397,117

$—

$

$

196

196

$ — $

$ — $

196

196

$—

$—

(1) Represents gross fair value. Total fair value, net is included within other current liabilities in the Company’s

accompanying consolidated balance sheets.

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31,

2009 were as follows (in thousands):

Assets:

U.S. government and agency obligations . . . . . . . . . . . . . . . . .
Cash and money markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts (1) . . . . . . . . . . . . . . . . . .

Fair value at
December 31,
2009

Fair value measurement using

Level 1

Level 2

Level 3

$437,923
147,059
12,603
5,543
1,109
504

$ — $437,923
147,059
—
—
—
—
—

$—
—
12,603 —
5,543 —
1,109 —
504 —

$604,741

$147,059

$457,682

$—

Liabilities:

Foreign currency forward contracts (1) . . . . . . . . . . . . . . . . . .
Interest rate swaps (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(6)
(8,496)

$ — $
—

(6) $—
(8,496) —

$ (8,502)

$ — $ (8,502) $—

(1) Represents gross fair value. Total fair value, net is included within other current assets in the Company’s

accompanying consolidated balance sheets.
Included in the consolidated balance sheets within other liabilities.

(2)

The fair value of the Company’s investments in available-for-sale money market funds approximates their
face value. Such instruments are included in cash equivalents. These instruments include available-for-sale debt
investments related to the Company’s investments in the securities of other public companies, governmental
units and other agencies. The fair value of these investments is based on the quoted market price of the
underlying shares.

The Company did not have any Level 3 financial assets during the year ended December 31, 2010.

During the year ended December 31, 2010, the Company did not have any nonfinancial assets or liabilities

measured at fair value on a recurring basis.

During the year ended December 31, 2010, there were no impairment charges recorded in the Company’s

statement of operations in connection with the Company’s goodwill and long-lived assets.

Valuation Methods

Fair value estimates are made as of a specific point in time based on estimates using present value or other

valuation techniques. These techniques involve uncertainties and are affected by the assumptions used and the
judgments made regarding risk characteristics of various financial instruments, discount rates, estimates of future
cash flows, future expected loss experience and other factors.

The Company’s money market funds are classified within Level 1 of the fair value hierarchy because they

are valued using quoted prices for identical instruments in active markets. However, the Company’s investments
in the Reserve experienced a decline in its fair value as a result of its exposure to investments held in Lehman
Brothers which filed for Chapter 11 bankruptcy protection in September 2008. The Company recorded

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

other-than-temporary impairment losses on its investments in the Reserve and each of the individual securities
which comprise the holdings in the Reserve was further evaluated. During the year ended December 31, 2008,
the Company re-designated its investment in the Reserve from cash and cash equivalents to short-term
investments. This re-designation was included in purchases of investments in investing activities in the
Company’s accompanying consolidated statements of cash flows. The Company conducted its fair value
assessment of the Reserve using Level 2 and Level 3 inputs. Management reviewed the Reserve’s underlying
securities portfolio which is substantially comprised of discount notes, certificates of deposit and commercial
paper issued by highly-rated institutions. Management evaluated the fair value of its unit interest in the Reserve
itself, considering risk of collection, timing and other factors. These assumptions were inherently subjective and
involved significant management judgment. As a result, the Company classified its holdings in the Reserve
within Level 3 of the fair value hierarchy during the year ended December 31, 2009 (see Note 4, “Cash, Cash
Equivalent and Short-Term and Long-Term Investments”).

The Company considers each category of investments held to be an asset group. The asset groups held at
December 31, 2010 and 2009 were primarily U.S. government and agency securities, cash and money market
funds, corporate bonds and asset-backed securities. The Company’s fair value assessment includes an evaluation
by each of these securities held for sale, all of which continue to be classified within Level 2 of the fair value
hierarchy.

The types of instruments valued based on other observable inputs include available-for-sale debt

investments in other public companies, governmental units and other agencies. Such instruments are generally
classified within Level 2 of the fair value hierarchy.

Short-Term and Long-Term Investments. The Company uses the specific identification method in computing

realized gains or losses. Short-term and long-term investments are classified as “available-for-sale” and are
carried at fair value based on quoted market prices with unrealized gains and losses reported in stockholders’
equity as a component of other comprehensive income or loss, net of any related tax effect. The Company
reviews its investment portfolio quarterly to determine if any securities may be other-than-temporarily impaired
due to increased credit risk, changes in industry or sector of a certain instrument or ratings downgrades over an
extended period of time. The Company determined that these quoted market prices qualify as Level 1 and
Level 2.

Derivative Assets and Liabilities. In determining the fair value of the Company’s interest rate swap

derivatives, the Company used the present value of expected cash flows based on observable market interest rate
curves and volatilities commensurate with the term of each instrument and the credit valuation adjustments to
appropriately reflect both the Company’s own nonperformance risk and the counterparty’s nonperformance risk.
For foreign currency derivatives, the Company’s approach is to use forward contract and option valuation models
employing market observable inputs, such as spot currency rates, time value and option volatilities and adjust for
the credit default swap market. The Company determined that the significant inputs used to value its derivatives
fall within Level 2 of the fair value hierarchy.

7. Debt Facilities

Senior Notes

In February 2010, the Company issued $750,000,000 aggregate principal amount of 8.125% Senior Notes
due March 1, 2018 (the “Senior Notes”). Interest is payable semi-annually on March 1 and September 1 of each
year, commencing on September 1, 2010.

F-33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The Senior Notes are governed by an Indenture dated March 3, 2010 between the Company, as issuer, and
U.S. Bank National Association, as trustee (the “Senior Notes Indenture”). The Senior Notes Indenture contains
covenants that limit the Company’s ability and the ability of its subsidiaries to, among other things:

•

•

•

incur additional debt;

pay dividends or make other restricted payments;

purchase, redeem or retire capital stock or subordinated debt;

• make asset sales;

•

•

•

•

enter into transactions with affiliates;

incur liens;

enter into sale-leaseback transactions;

provide subsidiary guarantees;

• make investments; and

• merge or consolidate with any other person.

Each of these restrictions has a number of important qualifications and exceptions. The Senior Notes are
unsecured and rank equal in right of payment to the Company’s existing or future senior debt and senior in right
of payment to the Company’s existing and future subordinated debt. The Senior Notes will be effectively junior
to any of the Company’s existing and future secured indebtedness and any indebtedness of its subsidiaries.

At any time prior to March 1, 2013, the Company may on any one or more occasions redeem up to 35% of

the aggregate principal amount of the Senior Notes outstanding under the Senior Notes Indenture, at a
redemption price equal to 108.125% of the principal amount of the Senior Notes to be redeemed, plus accrued
and unpaid interest to, but not including, the redemption date, with the net cash proceeds of one or more equity
offerings, provided that (i) at least 65% of the aggregate principal amount of the Senior Notes issued under the
Senior Notes Indenture remains outstanding immediately after the occurrence of such redemption and (ii) the
redemption must occur within 90 days of the date of the closing of such equity offerings. On or after March 1,
2014, the Company may redeem all or a part of the Senior Notes, on any one or more occasions, at the
redemption prices set forth below plus accrued and unpaid interest thereon, if any, up to, but not including, the
applicable redemption date, if redeemed during the one-year period beginning on March 1 of the years indicated
below:

2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104.0625%
102.0313%
100.0000%

Redemption price of the Senior Notes

In addition, at any time prior to March 1, 2014, the Company may also redeem all or a part of the Senior
Notes at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed plus applicable
premium (the “Applicable Premium”) and accrued and unpaid interest, if any, to, but not including, the date of
redemption (the “Redemption Date”). The Applicable Premium means the greater of:

•

•

1.0% of the principal amount of the Senior Notes; and

the excess of: (a) the present value at such redemption date of (i) the redemption price of the Senior
Notes at March 1, 2014 as shown in the above table, plus (ii) all required interest payments due on the

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Senior Notes through March 1, 2014 (excluding accrued but unpaid interest, if any, to, but not
including the redemption date), computed using a discount rate equal to the yield to maturity of the
United States Treasury securities with a constant maturity most nearly equal to the period from the
redemption date to March 1, 2014, plus 0.50%; over (b) the principal amount of the Senior Notes.

Upon a change in control, the Company will be required to make an offer to purchase each holder’s Senior
Notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the
date of purchase.

Debt issuance costs related to the Senior Notes, net of amortization, were $13,045,000 as of December 31,

2010.

Convertible Debt

The Company’s convertible debt consisted of the following as of December 31 (in thousands):

2.50% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . .
3.00% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . .
4.75% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . .

$ 250,000
395,986
373,750

$ 250,000
395,986
373,750

2010

2009

Less amount representing debt discount . . . . . . . . . . . . . . . . . . .

Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,019,736
(103,399)

1,019,736
(126,030)

916,337
—

893,706
—

$ 916,337

$ 893,706

2.50% Convertible Subordinated Notes

In March 2007, the Company issued $250,000,000 aggregate principal amount of 2.50% Convertible
Subordinated Notes due April 15, 2012 (the “2.50% Convertible Subordinated Notes”). Interest is payable semi-
annually on April 15 and October 15 of each year, and commenced October 15, 2007.

The 2.50% Convertible Subordinated Notes are governed by an Indenture dated as of March 30, 2007,

between the Company, as issuer, and U.S. Bank National Association, as trustee (the “2.50% Convertible
Subordinated Notes Indenture”). The 2.50% Convertible Subordinated Notes Indenture does not contain any
financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other
indebtedness, or the issuance or repurchase of securities by the Company. The 2.50% Convertible Subordinated
Notes are unsecured and rank junior in right of payment to the Company’s existing or future senior debt and
equal in right of payment to the Company’s existing and future subordinated debt.

Upon conversion, holders will receive, at the Company’s election, cash, shares of the Company’s common
stock or a combination of cash and shares of the Company’s common stock. However, the Company may at any
time irrevocably elect for the remaining term of the 2.50% Convertible Subordinated Notes to satisfy its
obligation in cash up to 100% of the principal amount of the 2.50% Convertible Subordinated Notes converted,
with any remaining amount to be satisfied, at the Company’s election, in shares of its common stock or a
combination of cash and shares of its common stock.

The initial conversion rate is 8.9259 shares of common stock per $1,000 principal amount of 2.50%

Convertible Subordinated Notes, subject to adjustment. This represents an initial conversion price of

F-35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

approximately $112.03 per share of common stock. Holders of the 2.50% Convertible Subordinated Notes may
convert their notes at any time prior to the close of business on the business day immediately preceding the
maturity date under the following circumstances:

•

•

•

•

during any fiscal quarter (and only during that fiscal quarter) ending after June 30, 2007, if the sale
price of the Company’s common stock, for at least 20 trading days during the period of 30 consecutive
trading days ending on the last trading day of the previous fiscal quarter, is greater than 130% of the
conversion price per share of common stock on such last trading day, which was $145.64 per share as
of December 31, 2010 (the “Stock Price Condition Conversion Clause”);

subject to certain exceptions, during the five business day period following any ten consecutive trading
day period in which the trading price of the 2.50% Convertible Subordinated Notes for each day of
such period was less than 98% of the product of the sale price of the Company’s common stock and the
conversion rate (the “2.50% Convertible Subordinated Notes Parity Provision Clause”);

if such Convertible Subordinated Notes have been called for redemption;

upon the occurrence of specified corporate transactions described in the 2.50% Convertible
Subordinated Notes Indenture, such as a consolidation, merger or binding share exchange in which the
Company’s common stock would be converted into cash or property other than securities (the
“Corporate Action Provision Clause”); or

•

at any time on or after March 15, 2012.

Upon conversion, due to the conversion formulas associated with the 2.50% Convertible Subordinated
Notes, if the Company’s stock is trading at levels exceeding 130% of the conversion price per share of common
stock, and if the Company elects to pay any portion of the consideration in cash, additional consideration beyond
the $250,000,000 of gross proceeds received would be required. However, in no event would the total number of
shares issuable upon conversion of the 2.50% Convertible Subordinated Notes exceed 11.6036 per $1,000
principal amount of Convertible Subordinated Notes, subject to anti-dilution adjustments, or the equivalent of
$86.18 per share of common stock or a total of 2,900,900 shares of the Company’s common stock. As of
December 31, 2010, the 2.50% Convertible Subordinated Notes were convertible into 2,231,475 shares of the
Company’s common stock.

The conversion rates may be adjusted upon the occurrence of certain events, including for any cash
dividend, but they will not be adjusted for accrued and unpaid interest. Holders of the 2.50% Convertible
Subordinated Notes will not receive any cash payment representing accrued and unpaid interest upon conversion
of a note. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than cancelled,
extinguished or forfeited. The 2.50% Convertible Subordinated Notes called for redemption may be surrendered
for conversion prior to the close of business on the business day immediately preceding the redemption date.

The Company may only redeem all or a portion of the 2.50% Convertible Subordinated Notes at any time

after April 16, 2010 for cash but only if the closing sale price of the Company’s common stock for at least 20 of
the 30 consecutive trading days immediately prior to the day the Company gives notice of redemption is greater
than 130% of the applicable conversion price per share of common stock on the date of the notice, which was
$145.64 per share as of December 31, 2010. The redemption price will equal 100% of the principal amount of the
2.50% Convertible Subordinated Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of
redemption.

Holders of the 2.50% Convertible Subordinated Notes have the right to require the Company to purchase
with cash all or a portion of the 2.50% Convertible Subordinated Notes upon the occurrence of a fundamental
change such as change of control at a purchase price equal to 100% of the principal amount of the 2.50%

F-36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Convertible Subordinated Notes plus accrued and unpaid interest, if any, to, but excluding, the date of
repurchase. Following certain corporate transactions that constitute a change of control, the Company will
increase the conversion rate for a holder who elects to convert the 2.50% Convertible Subordinated Notes in
connection with such change of control in certain circumstances.

The Company’s 2.50% Convertible Subordinated Notes fall within the scope of the accounting standard for
convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) due
to the Company’s ability to elect to repay the 2.50% Convertible Subordinated Notes in cash. The Company
separately accounts for the liability and equity component in a manner that will reflect the entity’s nonconvertible
debt borrowing rate when interest cost is recognized in subsequent periods as prescribed in the FASB standard
for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement).

The Company has determined that the embedded conversion option in the 2.50% Convertible Subordinated
Notes is not required to be separately accounted for as a derivative under the accounting standard for derivatives
and hedging. Under the accounting standard for convertible debt instruments that may be settled in cash upon
conversion (including partial cash settlement), the Company separated the 2.50% Convertible Subordinated
Notes into a liability component and an equity component. The carrying amount of the liability component was
calculated by measuring the fair value of a similar liability (including any embedded features other than the
conversion option) that does not have an associated equity component. The carrying amount of the equity
component representing the embedded conversion option was determined by deducting the fair value of the
liability component from the initial proceeds ascribed to the 2.50% Convertible Subordinated Notes as a whole.
The excess of the principal amount of the liability component over its carrying amount is amortized to interest
expense over the expected life of a similar liability that does not have an associated equity component using the
effective interest method. The equity component is not remeasured as long as it continues to meet the conditions
for equity classification as prescribed in the accounting standard for derivative financial instruments indexed to,
and potentially settled in, an entity’s own common stock and the accounting standard for determining whether an
instrument (or embedded feature) is indexed to an entity’s own stock.

Issuance and transaction costs incurred at the time of the issuance of the 2.50% Convertible Subordinated

Notes with third parties are allocated to the liability and equity components in proportion to the allocation of
proceeds and accounted for as debt issuance costs and equity issuance costs, respectively. The 2.50% Convertible
Subordinated Notes consisted of the following as of December 31 (in thousands):

Equity component (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 52,263

$ 52,263

Liability component :

Principal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: debt discount, net (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$250,000
(15,815)

$250,000
(27,057)

Net carrying amount

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$234,185

$222,943

2010

2009

(1)
(2)

Included in the consolidated balance sheets within additional paid-in capital.
Included in the consolidated balance sheets within convertible debt and is amortized over the remaining
life of the 2.50% Convertible Subordinated Notes.

As of December 31, 2010, the remaining life of the 2.50% Convertible Subordinated Notes was 1.29 years.

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The following table sets forth total interest expense recognized related to the 2.50% Convertible

Subordinated Notes during the year ended December 31 (in thousands):

Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,250
1,236
11,242

$ 6,250
1,244
10,418

Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$18,728

$17,912

Effective interest rate of the liability component

. . . . . . . . . . . . . . . . . . . . . . . . .

8.37%

8.37%

2010

2009

3.00% Convertible Subordinated Notes

In September 2007, the Company issued $395,986,000 aggregate principal amount of 3.00% Convertible
Subordinated Notes due October 15, 2014 (the “3.00% Convertible Subordinated Notes”). Interest is payable
semi-annually on April 15 and October 15 of each year, and commenced April 15, 2008.

The 3.00% Convertible Subordinated Notes are governed by an Indenture dated as of September 26, 2007,

between the Company, as issuer, and U.S. Bank National Association, as trustee (the “3.00% Convertible
Subordinated Notes Indenture”). The 3.00% Convertible Subordinated Notes Indenture does not contain any
financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other
indebtedness, or the issuance or repurchase of securities by the Company. The 3.00% Convertible Subordinated
Notes are unsecured and rank junior in right of payment to the Company’s existing or future senior debt and
equal in right of payment to the Company’s existing and future subordinated debt.

Holders of the 3.00% Convertible Subordinated Notes may convert their notes at their option on any day up
to and including the business day immediately preceding the maturity date into shares of the Company’s common
stock. The base conversion rate is 7.436 shares of common stock per $1,000 principal amount of 3.00%
Convertible Subordinated Notes, subject to adjustment. This represents a base conversion price of approximately
$134.48 per share of common stock. If, at the time of conversion, the applicable stock price of the Company’s
common stock exceeds the base conversion price, the conversion rate will be determined pursuant to a formula
resulting in the receipt of up to 4.4616 additional shares of common stock per $1,000 principal amount of the
3.00% Convertible Subordinated Notes, subject to adjustment. However, in no event would the total number of
shares issuable upon conversion of the 3.00% Convertible Subordinated Notes exceed 11.8976 per $1,000
principal amount of 3.00% Convertible Subordinated Notes, subject to anti-dilution adjustments, or the
equivalent of $84.05 per share of the Company’s common stock or a total of 4,711,283 shares of the Company’s
common stock. As of December 31, 2010, the 3.00% Convertible Subordinated Notes were convertible into
2,944,551 shares of the Company’s common stock.

The conversion rates may be adjusted upon the occurrence of certain events, including for any cash
dividend, but they will not be adjusted for accrued and unpaid interest. Holders of the 3.00% Convertible
Subordinated Notes will not receive any cash payment representing accrued and unpaid interest upon conversion
of a note. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than cancelled,
extinguished or forfeited. The Company may not redeem the 3.00% Convertible Subordinated Notes at its option.

Holders of the 3.00% Convertible Subordinated Notes have the right to require the Company to purchase
with cash all or a portion of the Convertible Subordinated Notes upon the occurrence of a fundamental change
such as change of control at a purchase price equal to 100% of the principal amount of the 3.00% Convertible
Subordinated Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. Following

F-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

certain corporate transactions that constitute a change of control, the Company will increase the conversion rate
for a holder who elects to convert the 3.00% Convertible Subordinated Notes in connection with such change of
control in certain circumstances.

The Company has considered the accounting standard for debt with conversion and other options and for

derivatives and hedging and has determined that the 3.00% Convertible Subordinated Notes do not contain a
beneficial conversion feature as the fair value of the Company’s common stock on the date of issuance was less
than the initial conversion price outlined in the agreement.

4.75% Convertible Subordinated Notes

In June 2009, the Company issued $373,750,000 aggregate principal amount of 4.75% Convertible

Subordinated Notes due June 15, 2016 (the “4.75% Convertible Subordinated Notes”). Interest is payable semi-
annually on June 15 and December 15 of each year, beginning December 15, 2009.

The 4.75% Convertible Subordinated Notes are governed by an Indenture dated as of June 12, 2009,
between the Company, as issuer, and U.S. Bank National Association, as trustee (the “4.75% Convertible
Subordinated Notes Indenture”). The 4.75% Convertible Subordinated Notes Indenture does not contain any
financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other
indebtedness, or the issuance or repurchase of securities by the Company. The 4.75% Convertible Subordinated
Notes are unsecured and rank junior in right of payment to the Company’s existing or future senior debt and
equal in right of payment to the Company’s existing and future subordinated debt.

Upon conversion, holders will receive, at the Company’s election, cash, shares of the Company’s common
stock or a combination of cash and shares of the Company’s common stock. However, the Company may at any
time irrevocably elect for the remaining term of the 4.75% Convertible Subordinated Notes to satisfy its
obligation in cash up to 100% of the principal amount of the 4.75% Convertible Subordinated Notes, with any
remaining amount to be satisfied, at the Company’s election, in shares of its common stock or a combination of
cash and shares of its common stock.

The initial conversion rate is 11.8599 shares of common stock per $1,000 principal amount of 4.75%

Convertible Subordinated Notes, subject to adjustment. This represents an initial conversion price of
approximately $84.32 per share of common stock. Holders of the 4.75% Convertible Subordinated Notes may
convert their notes at any time prior to the close of business on the business day immediately preceding the
maturity date under the following circumstances:

•

•

•

during any fiscal quarter (and only during that fiscal quarter) ending after December 31, 2009, if the
sale price of the Company’s common stock, for at least 20 trading days during the period of 30
consecutive trading days ending on the last trading day of the previous fiscal quarter, is greater than
130% of the conversion price per share of common stock on such last trading day, which was $109.62
per share (the “Stock Price Condition Conversion Clause”);

subject to certain exceptions, during the five business day period following any 10 consecutive trading
day period in which the trading price of the 4.75% Convertible Subordinated Notes for each day of
such period was less than 98% of the product of the sale price of the Company’s common stock and the
conversion rate (the “4.75% Convertible Subordinated Notes Parity Provision Clause”);

upon the occurrence of specified corporate transactions described in the 4.75% Convertible
Subordinated Notes Indenture, such as a consolidation, merger or binding share exchange in which the
Company’s common stock would be converted into cash or property other than securities (the
“Corporate Action Provision Clause”); or

•

at any time on or after March 15, 2016.

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Upon conversion, if the Company elected to pay a sufficiently large portion of the conversion obligation in

cash, additional consideration beyond the $373,750,000 of gross proceeds received would be required. As of
December 31, 2010, the 4.75% Convertible Subordinated Notes were convertible into 4,432,638 shares of the
Company’s common stock.

The conversion rates may be adjusted upon the occurrence of certain events, including for any cash
dividend, but they will not be adjusted for accrued and unpaid interest. Holders of the 4.75% Convertible
Subordinated Notes will not receive any cash payment representing accrued and unpaid interest upon conversion
of a note. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than cancelled,
extinguished or forfeited.

The Company does not have the right to redeem the 4.75% Convertible Subordinated Notes at its option.
Holders of the 4.75% Convertible Subordinated Notes have the right to require the Company to purchase with
cash all or a portion of the 4.75% Convertible Subordinated Notes upon the occurrence of a fundamental change,
such as a change of control at a purchase price equal to 100% of the principal amount of the 4.75% Convertible
Subordinated Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. Following
certain corporate transactions that constitute a change of control, the Company will increase the conversion rate
for a holder who elects to convert the 4.75% Convertible Subordinated Notes in connection with such change of
control in certain circumstances.

Under an accounting standard for convertible debt instruments that may be settled in cash upon conversion

(including partial cash settlement), the Company separated the 4.75% Convertible Subordinated Notes into a
liability component and an equity component. The carrying amount of the liability component was calculated by
measuring the fair value of a similar liability (including any embedded features other than the conversion option)
that does not have an associated equity component. The carrying amount of the equity component representing
the embedded conversion option was determined by deducting the fair value of the liability component from the
initial proceeds ascribed to the 4.75% Convertible Subordinated Notes as a whole. The excess of the principal
amount of the liability component over its carrying amount is amortized to interest expense over the expected life
of a similar liability that does not have an associated equity component using the effective interest method. The
equity component is not remeasured as long as it continues to meet the conditions for equity classification as
prescribed in the accounting standard for derivative financial instruments indexed to, and potentially settled in,
an entity’s own common stock and the accounting standard for determining whether an instrument (or embedded
feature) is indexed to an entity’s own stock.

Issuance and transaction costs incurred at the time of the issuance of the 4.75% Convertible Subordinated
Notes with third parties are allocated to the liability and equity components and accounted for as debt issuance
costs and equity issuance costs, respectively. The 4.75% Convertible Subordinated Notes consisted of the
following as of December 31 (in thousands):

Equity component (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$104,794

$104,794

Liability component :

Principal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: debt discount, net (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$373,750
(87,584)

$373,750
(98,973)

Net carrying amount

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$286,166

$274,777

2010

2009

(1)

Included in the consolidated balance sheets within additional paid-in capital.

(2)

Included in the consolidated balance sheets within convertible debt and is amortized over the remaining
life of the 4.75% Convertible Subordinated Notes.

F-40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

As of December 31, 2010, the remaining life of the 4.75% Convertible Subordinated Notes was 5.46 years.

The following table sets forth total interest expense recognized related to the 4.75% Convertible

Subordinated Notes for the year ended December 31 (in thousands):

Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$17,753
1,033
11,390

$ 9,814
573
5,820

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$30,176

$16,207

Effective interest rate of the liability component

. . . . . . . . . . . . . . . . . . . . . . . . .

10.88%

10.88%

2010

2009

To minimize the impact of potential dilution upon conversion of the 4.75% Convertible Subordinated Notes,

the Company entered into capped call transactions (“the Capped Call”) separate from the issuance of the 4.75%
Convertible Subordinated Notes and paid a premium of $49,664,000 for the Capped Call. The Capped Call covers a
total of approximately 4,432,638 shares of the Company’s common stock, subject to adjustment. Under the Capped
Call, the Company effectively raised the conversion price of the 4.75% Convertible Subordinated Notes from
$84.32 to $114.82. Depending upon the Company’s stock price at the time the 4.75% Convertible Subordinated
Notes are redeemed, the Capped Call will return up to 1,177,456 shares of the Company’s common stock to the
Company; however, the Company will receive no benefit from the Capped Call if the Company’s stock price is
$84.32 or lower at the time of conversion and will receive less shares than the 1,177,456 share maximum as
described above for share prices in excess of $114.82 at the time of conversion than it would have received at a
share price of $114.82 (the Company’s benefit from the Capped Call is capped at $114.82 and the benefit received
begins to decrease above this price). In connection with the Capped Call, the Company recorded a $19,000
derivative loss in its consolidated statement of operations for the year ended December 31, 2009, and the remaining
$49,645,000 was recorded in additional paid-in capital pursuant to the accounting standard for derivative financial
instruments indexed to, and potentially settled in, an entity’s own common stock and the accounting standard for
determining whether an instrument (or embedded feature) is indexed to an entity’s own stock.

Mortgage and Loans Payable

The Company’s non-convertible debt consisted of the following as of December 31 (in thousands):

2010

2009

New Asia-Pacific financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chicago IBX financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netherlands financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank of America revolving credit line . . . . . . . . . . . . . . . . . . . . . . .

$120,315
—
—
—
—
—
—
—

$ —
130,058
109,991
91,756
64,559
24,559
9,311
—

Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

120,315
(19,978)

430,234
(58,912)

$100,337

$371,322

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

New Asia-Pacific Financing

In May 2010, five wholly-owned subsidiaries of the Company, located in Australia, Hong Kong, Japan and
Singapore, completed a new multi-currency credit facility agreement for approximately $223,636,000 (the “New
Asia-Pacific Financing”), comprising 79,153,000 Australian dollars, 370,433,000 Hong Kong dollars, 99,434,000
Singapore dollars and 1,513,400,000 Japanese yen. The New Asia-Pacific Financing replaced the Company’s
previously existing Asia-Pacific Financing and Singapore Financing. The New Asia-Pacific Financing has a five-
year term with semi-annual principal payments and quarterly debt service and consists of two tranches:
(i) Tranche A totaling approximately $90,810,000 was available for immediate drawing upon satisfaction of
certain conditions precedent and was used to refinance the existing Asia-Pacific Financing and Singapore
Financing and (ii) Tranche B totaling approximately $132,826,000 is available for drawing in Australian, Hong
Kong and Singapore dollars only for up to 24 months following the effective date of the New Asia-Pacific
Financing. The New Asia Pacific Financing bears an interest rate of 3.50% above the local borrowing rates for
the first 12 months and interest rates between 2.50%-3.50% above the local borrowing rates thereafter, depending
on the leverage ratio within these five subsidiaries of the Company. The New Asia-Pacific Financing contains
four financial covenants, which the Company and its five subsidiaries must comply with quarterly, consisting of
two leverage ratios, an interest coverage ratio and a debt service ratio. The New Asia-Pacific Financing is
guaranteed by the parent, Equinix, Inc., and is secured by most of the Company’s five subsidiaries’ assets and
share pledges. During the year ended December 31, 2010, the Company’s five subsidiaries used part of the
proceeds from Tranche A and Tranche B under the New Asia-Pacific Financing for the prepayment and
termination of the existing Asia-Pacific Financing and the Singapore Financing. As of December 31, 2010, the
Company’s five subsidiaries had fully utilized Tranche A and utilized approximately $40,402,000 of Tranche B
under the New Asia-Pacific Financing. The loans payable under the New Asia-Pacific Financing have a final
maturity date of March 2015. As of December 31, 2010, the Company and its five subsidiaries were in
compliance with all financial covenants in connection with the New Asia-Pacific Financing. As of December 31,
2010, $120,315,000 was outstanding under the New Asia-Pacific Financing at an approximate blended interest
rate of 4.86% per annum.

Debt issuance costs associated with the New Asia-Pacific Financing, net of amortization, were $8,027,000

as of December 31, 2010. Debt issuance costs associated with the previously-existing Asia-Pacific Financing and
the Singapore Financing were written-off and recorded as losses on debt extinguishment (refer to “Loss on Debt
Extinguishment and Interest Rate Swaps, Net” below).

European Financing

In September 2007, as a result of the IXEurope Acquisition (see Note 2), a wholly-owned subsidiary of the

Company acquired a senior facilities agreement totaling approximately 82,000,000 British pounds, or
approximately $132,600,000 (the “European Financing”). The European Financing was comprised of three
facilities: (i) Facility A, which was available to draw upon through March 2008, provided for a term loan of up to
approximately 40,000,000 British pounds and bore a floating interest rate per annum of between 0.875% and
2.25% above LIBOR or EURIBOR; (ii) Facility B, which was available to draw upon through June 2010,
provided for a term loan of up to approximately 40,000,000 British pounds and bore a floating interest rate per
annum of between 0.875% and 2.25% above LIBOR or EURIBOR and (iii) Facility C, which was available to
draw upon through May 2014, provided for a revolving credit facility of up to approximately 2,000,000 British
pounds and bore a floating interest rate per annum of between 0.875% and 2.125% above LIBOR or EURIBOR
(collectively, the “Loans Payable”). The European Financing had a final maturity date of June 30, 2014 and
interest was payable in periods of one, two, three or six months at the election of the Company. Facility A was
repaid in 13 semi-annual installments which commenced June 30, 2008. Facility B was repaid in nine semi-
annual installments which commenced June 30, 2010. Facility C was repaid at the final maturity date. The

F-42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

European Financing was available to fund the Company’s operations in Europe, including capital expenditures,
for certain subsidiaries in Europe and amounts could be drawn in British pounds, Euros or Swiss francs. Loans
payable under the European Financing were available to fund certain of the Company’s expansion projects in
France, Germany, Switzerland and the United Kingdom. Under the European Financing, the use of cash available
in these certain European subsidiaries was limited to the general working capital needs of these subsidiaries or
repaying the European Financing. The European Financing was collateralized by certain of the Company’s assets
in Europe and contained several financial covenants specific to the Company’s European operations.

The European Financing required the Company to hedge the floating interest rates inherent in the European

Financing (on just a portion of the total amounts outstanding). In May 2008, the Company entered into three
interest rate swap agreements to hedge the interest payments on the equivalent principal of $89,065,000 of the
European Financing, which would mature in May 2011. Under the terms of the interest rate swap transactions,
the Company received interest payments based on rolling one-month EURIBOR and LIBOR terms and paid
fixed interest rates ranging from 5.59% to 7.03% (swap rates ranging from 4.46% to 5.91% plus borrowing
margin).

In April 2010, the Company prepaid and terminated the European Financing at par for a total payment of

approximately $121,748,000 plus accrued and unpaid interest. On the same date, the Company terminated three
interest rate swaps associated with the European Financing and paid a total of $4,272,000 to terminate these
interest rate swaps. For additional information, refer to “Loss on Debt Extinguishment and Interest Rate Swaps,
Net” below.

Chicago IBX Financing

In February 2007, the Company obtained a loan of up to $110,000,000 to finance up to 60% of the

development and construction costs of an expansion project in the Chicago metro area (the “Chicago IBX
Financing”). The Company periodically received advances of funds in conjunction with costs incurred for
construction of its expansion project in the Chicago metro area (collectively, the “Loan Payable”). The Loan
Payable had an initial maturity date of January 31, 2010, with options to extend for up to an additional two years,
in one-year increments, upon satisfaction of certain extension conditions. In January 2010, the Company utilized
one of the options to extend the Loan Payable under the Chicago IBX Financing for one year, which now was set
to expire on January 31, 2011. The Loan Payable bore interest at a floating rate (one, three or six month LIBOR
plus 2.75%) with interest payable monthly, which commenced in March 2007. The Chicago IBX Financing had
no specific financial covenants and contained a limited parent company guaranty.

In May 2008, the Company entered into an interest rate swap agreement with one counterparty to hedge the
interest payments on principal of $105,000,000 of the Chicago IBX Financing, which would mature in February
2011. Under the terms of the interest rate swap transaction, we received interest payments based on rolling
one-month LIBOR terms and pay fixed interest rate of 6.34% (swap rate of 3.59% plus borrowing margin of
2.75%) (see Note 6).

In March 2010, the Company prepaid and terminated the Chicago IBX Financing, of which principal of
$109,991,000 was outstanding. The Chicago IBX Financing was prepaid to the lender for an amount equal to
95.909% of the then outstanding principal balance, plus accrued and unpaid interest, resulting in a gain of
$4,460,000. On the same date, the Company paid and terminated the interest rate swap associated with the
Chicago IBX Financing totaling $3,160,000. For additional information, refer to “Loss on Debt Extinguishment
and Interest Rate Swaps, Net” below.

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Mortgage Payable

In December 2005, the Company financed the Ashburn Campus Property Acquisition with a $60,000,000,

8% mortgage to be amortized over 20 years (the “Mortgage Payable”). Payments for the Mortgage Payable were
payable monthly, commencing February 2006, and would be payable through January 2026. The Mortgage
Payable was collateralized by the Ashburn Campus property and related assets. Pursuant to the terms of the
Mortgage Payable, the Company agreed to invest at least $40,000,000 in capital improvements to the Ashburn
Campus by December 31, 2007. In December 2006, the Company obtained additional financing of $40,000,000,
which increased the total amount financed by the Mortgage Payable from $60,000,000 to $100,000,000, on the
same terms as the initial Mortgage Payable. The Company used this additional funding to finance expansion
projects in the Washington, D.C. metro area. The Mortgage Payable had numerous covenants; however, there
were no specific financial ratios or minimum operating performance covenants. In December 2010, the Company
prepaid and terminated the Mortgage Payable, of which principal of $88,930,000 was outstanding. The Mortgage
Payable was prepaid to the lender for an amount equal to 105.0% of then outstanding principal balance, plus
accrued and unpaid interest, resulting in a loss of $4,448,000. For additional information, refer to “Loss on Debt
Extinguishment and Interest Rate Swaps, Net” below.

Asia-Pacific Financing

In August 2007, two wholly-owned subsidiaries of the Company, located in Singapore and Tokyo, Japan,

entered into an approximately $47,900,000 multi-currency credit facility agreement (the “Asia-Pacific
Financing”), which is comprised of 23,000,000 Singapore dollars and 2,932,500,000 Japanese yen, respectively.
During the year ended December 31, 2008, the Asia-Pacific Financing was amended to also enable our
subsidiaries in Australia and Hong Kong to borrow up to 32,000,000 Australian dollars and 156,000,000 Hong
Kong dollars, respectively, under the same general terms, amending the Asia-Pacific Financing into an
approximately $96,700,000 multi-currency credit facility agreement. The Asia-Pacific Financing had a four-year
term that allows these four subsidiaries to borrow up to their credit limits during the first 12-month period with
repayment to occur over the remaining three years in twelve 12 quarterly installments (collectively, the “Loans
Payable”). The Asia-Pacific Financing bore interest at a floating rate (the relevant three-month local cost of
funds), as applicable, plus 1.85%-2.50% depending on the ratio of the Company’s senior indebtedness to its
earnings before interest, taxes, depreciation and amortization, or EBITDA, with interest payable quarterly. Loans
Payable under the Asia-Pacific Financing had a final maturity date of March 2012. The Asia-Pacific Financing
might be used by these four subsidiaries to fund capital expenditures on leasehold improvements, equipment, and
other installation costs related to expansion plans in Singapore, Tokyo, Sydney and Hong Kong. The Asia-Pacific
Financing was guaranteed by the parent, Equinix, Inc., was secured by the assets of these four subsidiaries,
including a pledge of their shares, and had several financial covenants specific to the Company’s Asia-Pacific
operations. In May 2010, the Asia-Pacific Financing was terminated and replaced by the New Asia-Pacific
Financing (see the above “New Asia-Pacific Financing”).

Singapore Financing

In September 2009, the Company’s wholly-owned subsidiary in Singapore entered into a 37,000,000

Singapore dollar, or approximately $26,338,000, credit facility agreement (the “Singapore Financing”). The
Singapore Financing was comprised of two tranches: (i) Facility A, which was available for drawing upon
through March 18, 2010, provided a term loan of up to 34,500,000 Singapore dollars and (ii) Facility B, which
was available for drawing upon through September 12, 2010, provided a term loan of up to 2,500,000 Singapore
dollars. Facility A would be repaid in nine semi-annual installments beginning August 2010 and Facility B would
be repaid in eight semi-annual installments beginning February 2011 (collectively, the “Loan Payable”). The
Loan Payable under the Singapore Financing bore interest at a floating rate (Swap offer rate plus 3.65% per

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

annum). The Singapore Financing had a final maturity date of August 31, 2014 and interest was payable in
periods of one, three or six months at the election of the Company’s Singaporean subsidiary. The Singapore
Financing was guaranteed by the parent, Equinix, and was secured by the assets of the Company’s second IBX
data center in Singapore. The Singapore Financing had several financial covenants specific to the Company’s
operations in Singapore. In May 2010, the Singapore Financing was terminated and replaced by the New Asia-
Pacific Financing (see the above “New Asia-Pacific Financing”).

Netherlands Financing

In February 2008, as a result of the Virtu Acquisition, a wholly-owned subsidiary of the Company assumed

senior credit facilities totaling approximately 5,500,000 Euros (the “Netherlands Financing”), which were
callable by the lender and bore interest at a floating rate (three month EURIBOR plus 1.25%). In June 2009, the
Company’s wholly-owned subsidiary in the Netherlands amended the Netherlands Financing by entering into a
7,000,000 Euro term loan to replace the previously outstanding senior credit facilities. The Netherlands
Financing contained several financial covenants, was guaranteed by the Company and was collateralized by
substantially all of the Company’s operations in the Netherlands (collectively, the “Loan Payable”). The
Netherlands Financing had a final maturity date of June 30, 2016 with repayment to occur over the remaining
seven years in 28 equal quarterly installments, which commenced in September 2009. The Loan Payable under
the Netherlands Financing bore interest at a floating rate (three month EURIBOR plus 3.60% per annum). In
June 2010, the Company prepaid and terminated the Netherlands Financing at par for a total payment of
approximately $7,965,000 plus accrued and unpaid interest.

Bank of America Revolving Credit Line

In February 2009, the Company and one of its wholly-owned subsidiaries, as co-borrower, entered into a

$25,000,000 one-year revolving credit facility with Bank of America (the “Bank of America
Revolving Credit Line”). In February 2011, the Company amended the Bank of America Revolving Credit Line
and extended the maturity date to February 2012. The Bank of America Revolving Credit Line is used primarily
as a letter of credit issuing facility and to fund the Company’s working capital if so needed. The effect of
issuing letters of credit under the Bank of America Revolving Credit Line reduces the amount available
for borrowing under the Bank of America Revolving Credit Line. The Company may borrow, repay and
reborrow under the Bank of America Revolving Credit Line at either the prime rate or at a borrowing margin of
2.75% over one, three or six month LIBOR, subject to a minimum borrowing cost of 3.00%. The Bank of
America Revolving Credit Line contains three financial covenants, which the Company must comply with
quarterly, consisting of a tangible net worth ratio, a debt service ratio and a senior leverage ratio and is
unsecured. As of December 31, 2010, the Company was in compliance with all financial covenants in connection
with the Bank of America Revolving Credit Line. The Bank of America Revolving Credit Line is available for
renewal subject to mutual agreement by both parties. As of December 31, 2010, the Company had issued 13
irrevocable letters of credit totaling $18,330,000 under the Bank of America Revolving Credit Line. As a result,
the amount available to borrow was $6,670,000 as of December 31, 2010.

Switch and Data Debt

In May 2010, the Company prepaid and terminated at par a term loan and revolving credit facility assumed
in connection with the Switch and Data Acquisition for a total payment of $138,938,000 plus accrued and unpaid
interest. On the same date, the Company terminated the associated interest rate swap acquired related to this
credit facility for a total payment of $9,789,000. For additional information, refer to “Loss on Debt
Extinguishment and Interest Rate Swaps, Net” below.

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

In May 2010, the Company prepaid and terminated an equipment capital lease assumed in connection with
the Switch and Data Acquisition for a total payment of $9,191,000, resulting in a loss of $36,000. For additional
information, refer to “Loss on Debt Extinguishment and Interest Rate Swaps, Net” below.

Loss on Debt Extinguishment and Interest Rate Swaps, Net

Loss on debt extinguishment and interest rate swaps, net for the year ended December 31, 2010 consisted of

the following (in thousands):

Principal discount on the Chicago IBX financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal premium on the mortgage payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal premium on the Switch and Data equipment capital lease . . . . . . . . . . . . . . . . . . .
Write-off of unamortized debt issuance costs:

$ 4,460
(4,448)
(36)

Chicago IBX financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(474)
(720)
(502)
(908)

Subtotal – loss on debt extinguishment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,628)

Termination of interest rate swaps:

Chicago IBX financing interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European financing interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switch and Data interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swap termination fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Subtotal – loss on interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3,160)
(4,272)
(83)
(44)

(7,559)

Loss on debt extinguishment and interest rate swaps, net

. . . . . . . . . . . . . . .

$(10,187)

8. Capital Lease and Other Financing Obligations

Capital lease and other financing obligations consisted of the following as of December 31 (in thousands):

Paris 3 IBX capital lease (see Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Los Angeles IBX financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Washington, D.C. metro area IBX capital lease . . . . . . . . . . . . . . . . . . . . . . . .
U.S. headquarters capital lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey capital lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
London IBX financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sunnyvale capital lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
San Jose IBX equipment & fiber financing . . . . . . . . . . . . . . . . . . . . . . . . . . .
Zurich IBX financing (see Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sydney 3 IBX financing (see Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other capital lease and financing obligations . . . . . . . . . . . . . . . . . . . . . . . . . .

Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

$ 58,296
36,914
28,497
25,197
24,161
15,917
15,268
13,176
12,574
11,053
20,880

$ 40,597
37,363
30,119
—
—
14,003
—
13,723
11,470
—
13,754

261,933
(7,988)

161,029
(6,452)

$253,945

$154,577

F-46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Los Angeles IBX Financing

In December 2005, the Company recorded the Los Angeles IBX Financing. Monthly payments under the

Los Angeles IBX Financing commenced in January 2006 and will be made through December 2025 at an
effective interest rate of 7.75% per annum.

Washington, D.C. Metro Area IBX Capital Lease

In November 2004, the Company recorded the Washington, D.C. Metro Area IBX Capital Lease. Monthly

payments under the Washington, D.C. Metro Area IBX Capital Lease commenced in November 2004 and will be
made through October 2019 at an effective interest rate of 8.50% per annum.

U.S. Headquarters Capital Lease

In May 2010, the Company entered into a lease for a building for the Company’s new headquarters, which

is located at One Lagoon Drive, Redwood City, California (the “U.S. Headquarters Capital Lease”). The
Company took possession of this property in July 2010. Monthly payments under the U.S. Headquarters Capital
Lease commenced in October 2010 and will be made through September 2030 at an effective interest rate of
7.61%.

New Jersey Capital Lease

In April 2010, the Company assumed a New Jersey capital lease in connection with the Switch and Data
Acquisition related to a property in North Bergen, New Jersey (the “New Jersey Capital Lease”). The New Jersey
Capital Lease is payable monthly and will be made through July 2023 at an effective interest rate of 8.6% per
annum.

London IBX Financing

In October 2008, the Company recorded the London IBX Financing. Monthly payments under the London
IBX Financing commenced in January 2011 and will be made through January 2030 at an effective interest rate
of 11.96% per annum.

Sunnyvale Capital Lease

In April 2010, the Company assumed a Sunnyvale capital lease in connection with the Switch and Data

Acquisition related to a property in Sunnyvale, California (the “Sunnyvale Capital Lease”). The Sunnyvale
Capital Lease is payable monthly and will be made through July 2022 at an effective interest rate of 8.6% per
annum.

San Jose IBX Equipment & Fiber Financing

In February 2005, the Company recorded the San Jose IBX Equipment & Fiber Financing. Monthly

payments under the San Jose IBX Equipment & Fiber Financing commenced in February 2005 and will be made
through May 2020 at an effective interest rate of 8.50% per annum.

Other Capital Lease and Financing Obligations

The Company has numerous other capital lease and financing obligations with maturity dates ranging from

2011 to 2022 with a weighted-average effective interest rate of 7.63%.

F-47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

9. Debt Maturities

Combined aggregate maturities for the Company’s various debt facilities and other financing obligations as

of December 31, 2010 were as follows (in thousands) (unaudited):

Convertible
debt (1)

Senior
notes (1)

Mortgage
and loans
payable (1)

Capital lease
and other
financing
obligations (2)

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
2016 and thereafter

$

— $ — $ 19,978
24,827
—
31,493
—
28,974
—
15,043
—
—
750,000

250,000
—
395,986
—
373,750

$ 27,959
28,435
28,948
29,660
30,431
237,711

Total

$

47,937
303,262
60,441
454,620
45,474
1,361,461

Less amount representing interest . . . . . . . . . . .
Less amount representing debt discount . . . . . .
Plus amount representing residual property

1,019,736
—

(103,399)

value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

750,000

120,315

—
—

—

—
—

—

Less current portion of principal . . . . . . . . . . . .

916,337
—

750,000
—

120,315
(19,978)

383,144
(200,905)

—

2,273,195
(200,905)
(103,399)

79,694

261,933
(7,988)

79,694

2,048,585
(27,966)

$ 916,337

$750,000

$100,337

$ 253,945

$2,020,619

(1) Represents principal only.
(2) Represents principal and interest in accordance with minimum lease payments.

10. Stockholders’ Equity

The Company’s authorized share capital is 300,000,000 shares of common stock and 100,000,000 shares of

preferred stock, of which 25,000,000 is designated Series A, 25,000,000 is designated as Series A-1 and
50,000,000 is undesignated. As of December 31, 2010 and 2009, the Company had no preferred stock issued and
outstanding.

Common Stock

As of December 31, 2010, the Company has reserved the following shares of authorized but unissued shares

of common stock for future issuance:

Conversion of 2.50% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of 3.00% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of 4.75% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock options and restricted stock units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock employee purchase plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,900,900
4,711,283
4,432,638
10,628,279
2,561,368

25,234,468

F-48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Other Comprehensive Income (Loss)

The components of the Company’s accumulated other comprehensive loss consisted of the following as of

December 31 (in thousands):

Foreign currency translation loss, net of tax of $151 and $1,485 . . . . . . . . . .
Unrealized loss on interest rate swaps, net of tax of $0 and $3,469 . . . . . . . . .
Unrealized gain on available for sale securities, net of tax of $58 and

$203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

$(112,096)

—

78

$(92,594)
(4,933)

289

$(112,018)

$(97,238)

11. Stock-Based Compensation

Switch and Data Acquisition

In April 2010, as a result of the Switch and Data Acquisition, the Company issued 476,943 options to
purchase the Company’s common shares and 98,509 restricted stock units of the Company’s common shares to
Switch and Data employees in exchange for their outstanding options to purchase shares of and restricted stock
units of Switch and Data (see Note 2, “Switch and Data Acquisition”). An aggregate fair value of approximately
$35,395,000 was attributed to these equity awards, of which $16,508,000 was included as part of the
consideration of the Switch and Data Acquisition and the remaining $18,887,000 is expected to be amortized to
stock-based compensation expense over a weighted-average period of 2.14 years.

Equity Compensation Plans

In May 2000, the Company’s stockholders approved the adoption of the 2000 Equity Incentive Plan as the

successor plan to the 1998 Stock Plan. Beginning in August 2000, the Company no longer issued additional
grants under the 1998 Stock Plan, and unexercised options under the 1998 Stock Plan that cancel due to an
optionee’s termination may be reissued under the successor 2000 Equity Incentive Plan. Under the 2000 Equity
Incentive Plan, nonstatutory stock options, restricted shares, restricted stock units, and stock appreciation rights
may be granted to employees, outside directors and consultants at not less than 85% of the fair value on the date
of grant, and incentive stock options may be granted to employees at not less than 100% of the fair value on the
date of grant. Options granted prior to October 1, 2005 generally expire 10 years from the grant date, and equity
awards granted to employees and consultants on or after October 1, 2005 will generally expire seven years from
the grant date, subject to continuous service of the optionee. Equity awards granted under the 2000 Equity
Incentive Plan generally vest over four years. As of December 31, 2010, the Company had reserved a total of
16,807,926 shares for issuance under the 2000 Equity Incentive Plan of which 6,926,444 were still available for
grant. The plan reserve was increased on January 1 each year through January 1, 2010 by the lesser of 6% of the
common stock then outstanding or 6,000,000 shares. The 2000 Equity Incentive Plan is administered by the
Compensation Committee of the Board of Directors (the “Compensation Committee”), and the Compensation
Committee may terminate or amend the plan, with approval of the stockholders as may be required by applicable
law, at any time.

In May 2000, the Company’s stockholders approved the adoption of the 2000 Director Option Plan, which
was amended and restated effective January 1, 2003. Under the 2000 Director Option Plan, each non-employee
board member who was not previously an employee of the Company will receive an automatic initial
nonstatutory stock option grant, which vests in four annual installments. In addition, each non-employee board
member will receive an annual non-statutory stock option grant on the date of the Company’s regular Annual

F-49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Meeting of Stockholders, provided the board member will continue to serve as a director thereafter. Such annual
option grants shall vest in full on the earlier of a) the first anniversary of the grant, or b) the date of the regular
Annual Meeting of Stockholders held in the year following the grant date. A new director who receives an initial
option will not receive an annual option in the same calendar year. Options granted under the 2000 Director
Option Plan will have an option price not less than 100% of the fair value on the date of grant and will have a
10-year contractual term, subject to continuous service of the board member. On December 18, 2008, the
Company’s Board of Directors passed resolutions eliminating all automatic stock option grant mechanisms under
the 2000 Director Plan, and replaced them with an automatic restricted stock unit grant mechanism under the
2000 Equity Incentive Plan. As of December 31, 2010, the Company had reserved 593,440 shares subject to
options for issuance under the 2000 Director Option Plan of which 505,938 were still available for grant. An
additional 50,000 shares was added to the reserve on January 1 each year through January 1, 2010. The 2000
Director Option Plan is administered by the Compensation Committee and the Compensation Committee may
terminate or amend the plan, with approval of the stockholders as may be required by applicable law, at any time.

In September 2001, the Company adopted the 2001 Supplemental Stock Plan, under which non-statutory
stock options and restricted shares/restricted stock units may be granted to consultants and employees who are
not executive officers or board members, at not less than 85% of the fair value on the date of grant. Options
granted prior to October 1, 2005 generally expire 10 years from the grant date, and options granted on or after
October 1, 2005 will generally expire seven years from the grant date, subject to continuous service of the
optionee. Current stock options granted under the 2001 Supplemental Stock Plan generally vest over four years.
As of December 31, 2010, the Company had reserved a total of 1,493,961 shares for issuance under the 2001
Supplemental Stock Plan, of which 260,189 were still available for grant. The 2001 Supplemental Stock Plan is
administered by the Compensation Committee, and the plan will continue in effect indefinitely unless the
Compensation Committee decides to terminate it earlier.

On April 30, 2010, in connection with the Company’s merger with Switch and Data Facilities Co., Inc., the

Company assumed the outstanding equity awards under the Switch and Data 2007 Stock Incentive Plan,
consisting of 476,943 stock options and 98,509 restricted stock units.

The 1998 Stock Plan, 2000 Equity Incentive Plan, 2000 Director Option Plan, 2001 Supplemental Stock

Plan and `Switch and Data 2007 Stock Incentive Plan are collectively referred to as the “Equity Compensation
Plans.”

F-50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Stock Options

Stock option activity under the Equity Compensation Plans is summarized as follows:

Stock options outstanding at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . .
Stock options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock options outstanding at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . .
Stock options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock options outstanding at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . .
Stock options granted (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
shares
outstanding

3,130,918
88,600
(519,987)
(142,078)

2,557,453

—

(621,628)
(64,854)

1,870,971
476,943
(610,896)
(267,652)

Stock options outstanding at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . .

1,469,366

Weighted-
average
exercise
price per
share

$ 59.06
81.60
38.30
74.89

63.18
—
48.89
97.58

66.74
55.98
49.31
109.18

62.77

(1) Stock options issued in connection with the Switch and Data Acquistion (see “Switch and Data

Acquisition” above).

The following table summarizes information about outstanding stock options as of December 31, 2010:

Range of exercise prices

$0.06 to $30.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$30.24 to $41.93 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$41.94 to $49.67 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$50.67 to $52.85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$53.09 to $74.91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$75.38 to $75.38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$78.12 to $88.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$88.39 to $98.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$99.67 to $194.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding

Weighted-
average
remaining
contractual
life

2.47
4.72
3.38
2.01
4.27
2.96
4.42
4.53
2.15

3.44

Exercisable

Weighted-
average
exercise
price

$ 20.86
36.26
45.17
52.80
62.09
75.38
85.84
95.09
110.82

Number of
shares

164,528
109,618
151,139
218,600
111,660
192,615
158,762
127,416
69,632

Weighted-
average
exercise
price

$ 20.86
38.57
45.17
52.80
61.81
75.38
85.57
95.01
111.30

62.77

1,303,970

62.04

Number of
shares

164,528
151,639
151,622
218,600
153,558
200,379
194,427
153,842
80,771

1,469,366

The weighted-average exercise price of options outstanding at December 31, 2010, 2009 and 2008 was

$62.77, $66.74 and $63.18, respectively. The weighted-average exercise price of options exercisable at
December 31, 2010, 2009 and 2008 was $62.04, $63.87 and $58.66, respectively.

F-51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The Company provides the following additional disclosures for stock options as of December 31 (dollars in

thousands):

Total fair value of stock options vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total aggregate intrinsic value of stock options exercised (1) . . . . . . . . . . . . . . . . .
Total aggregate intrinsic value of stock options outstanding (2) . . . . . . . . . . . . . . .
Total aggregate intrinsic value of stock options exercisable (2) . . . . . . . . . . . . . . .
Weighted-average remaining contractual life of stock options outstanding

(in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted-average remaining contractual life of stock options exercisable

(in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

2008

$15,456
29,379
32,620
29,638

$19,066
23,701
80,104
71,783

$27,076
24,335
17,683
16,506

3.44

3.14

3.96

3.87

4.90

4.69

(1) The intrinsic value is calculated as the difference between the market value of the stock on the date of

exercise and the exercise price of the option.

(2) The intrinsic value is calculated as the difference between the market value of the stock as of December 31,

2010 and the exercise price of the option.

In July 2008, the Company began granting restricted stock units exclusively in lieu of stock options.

Fair Value Calculations – Stock Options

The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options with

the following weighted average assumptions for the years ended December 31:

2010 (1)

2009

2008

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0% —
37% —

0%
52%
1.11% — 3.12%
2.24 —

4.9

(1) Valuation of stock options granted in connection with the Switch and Data Acquistion (see “Switch and

Data Acquisition” above).

The weighted-average fair value of stock options per share on the date of grant was $53.42 and $39.22,

respectively, for the years ended December 31, 2010 and 2008.

F-52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Restricted Shares and Restricted Stock Units

Restricted Shares

Prior to 2008, the Company granted two types of restricted shares to its executive officers:

1. Unissued restricted shares at grant (2005 grant).

These shares became issued and outstanding shares when they vested. The activity of these restricted
shares is summarized as follows:

Restricted shares outstanding, December 31, 2007 . . . . . . . . . . . . . . . . .
Restricted shares issued, vested . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restricted shares outstanding , December 31, 2008 . . . . . . . . . . . . . . . . .
Restricted shares issued, vested . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
shares
outstanding

96,000
(64,000)

32,000
(32,000)

Restricted shares outstanding , December 31, 2009 . . . . . . . . . . . . . . . . .

—

Weighted-
average
grant date
fair value
per share

43.76
43.76

43.76
43.76

—

2.

Issued and outstanding restricted shares at grant (2006 and 2007 grants).
At the date of the grant, the Company issued these shares into restricted book-entry escrow accounts
under the names of each of the executive officers. These shares have voting rights and are considered
issued and outstanding. They are released from the escrow account as they vest. However, they are
subject to forfeiture (and, therefore, canceled) if the individual officers do not meet the vesting
requirements. The activity of these restricted shares is as follows:

Restricted shares outstanding, December 31, 2007 . . . . . . . . . . . . . . . . .
Restricted shares granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares released, vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restricted shares outstanding, December 31, 2008 . . . . . . . . . . . . . . . . .
Restricted shares granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares released, vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restricted shares outstanding, December 31, 2009 . . . . . . . . . . . . . . . . .
Restricted shares granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares released, vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
shares
outstanding

457,245
—

(153,169)
(21,166)

282,910
—

(137,535)
(28,875)

116,500
—
(85,166)
—

Restricted shares outstanding, December 31, 2010 . . . . . . . . . . . . .

31,334

Weighted-
average
grant date
fair value
per share

$62.09
—
63.09
77.11

60.42
—
55.40
61.49

66.09
—
65.54
—

72.30

F-53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Restricted Stock Units

During the past several years, the Company primarily grants restricted stock units to its employees,
including executives and non-employee directors, in lieu of stock options. The Company grants restricted stock
units that have a service condition only or have both a service and performance condition. Each unit is not
considered issued and outstanding and does not have voting rights until it is converted into one share of the
Company’s common stock upon vesting. Restricted stock unit activity is summarized as follows:

Restricted stock units outstanding at December 31, 2007 . . . . . . . . . . . . . . . .
Restricted stock units granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units released, vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restricted stock units outstanding at December 31, 2008 . . . . . . . . . . . . . . . .
Restricted stock units granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units released, vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restricted stock units outstanding at December 31, 2009 . . . . . . . . . . . . . . . .
Restricted stock units granted (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units released, vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
shares
outstanding

316,402
606,737
(170,309)
(53,875)

698,955
884,318
(308,459)
(51,262)

1,223,552
948,442
(574,918)
(130,734)

Restricted stock units outstanding at December 31, 2010 . . . . . . . . . . . . . . . .

1,466,342

Weighted-
average
grant date
fair value
per share

$77.79
76.37
80.38
84.14

75.46
55.96
72.85
71.83

62.18
98.24
68.70
87.67

80.68

(1)

Includes 98,509 restricted stock units issued in connection with the Switch and Data Acquisition (see
“Switch and Data Acquisition” above).

The Company provides the following additional disclosures for restricted shares and restricted stock units as

of December 31 (dollars in thousands):

Total aggregate intrinsic value of restricted stock units

outstanding (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$119,155

$129,880

$37,177

Weighted average remaining contractual life of restricted stock

units exercisable (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.25

1.30

1.42

2010

2009

2008

(1) The intrinsic value is calculated as the market value of the stock as of December 31, 2010.

F-54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Fair Value Calculations – Restricted Shares and Restricted Stock Units

The Company used a Monte Carlo simulation option-pricing model to determine the fair value of restricted
shares and restricted stock units that have both a service and market price condition with the following weighted
average assumptions for the years ended December 31:

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2008

0%
61%
3.74%

Commencing February 2008, the Company ceased granting restricted shares and restricted stock units with a
market price condition. The Company uses fair value of its common stock traded in the market on the date of the
grant to determine the fair value of restricted shares and restricted stock units that have a service condition only
or have both a service and performance condition.

Employee Stock Purchase Plan

In June 2004, the Company’s stockholders approved the adoption of the 2004 Employee Stock Purchase
Plan (the “2004 Purchase Plan”) as a successor plan to a previous plan that ceased activity in 2005. A total of
500,000 shares have been reserved for issuance under the 2004 Purchase Plan, and the number of shares available
for issuance under the 2004 Purchase Plan automatically increases on January 1 each year, beginning in 2005, by
the lesser of 2% of the shares of common stock then outstanding or 500,000 shares. As of December 31, 2010, a
total of 2,561,368 shares remained available for purchase under the 2004 Purchase Plan. The 2004 Purchase Plan
permits eligible employees to purchase common stock on favorable terms via payroll deductions of up to 15% of
the employee’s cash compensation, subject to certain share and statutory dollar limits. Two overlapping offering
periods commence during each calendar year, on each February 15 and August 15 or such other periods or dates
as determined by the Compensation Committee from time to time, and the offering periods last up to 24 months
with a purchase date every six months. The price of each share purchased is 85% of the lower of a) the fair value
per share of common stock on the last trading day before the commencement of the applicable offering period or
b) the fair value per share of common stock on the purchase date. The 2004 Purchase Plan is administered by the
Compensation Committee of the Board of Directors, and such plan will terminate automatically in June 2014
unless a) the 2004 Purchase Plan is extended by the Board of Directors and b) the extension is approved within
12 months by the Company’s stockholders.

For the years ended December 31, 2010, 2009 and 2008, 207,212, 151,863 and 119,354 shares, respectively,

were issued under the 2004 Purchase Plans at a weighted average purchase price of $46.80, $43.57 and $52.92
per share, respectively.

Fair Value Calculations—Employee Stock Purchase Plans

The Company uses the Black-Scholes option-pricing model to determine the fair value of shares purchased

under the 2004 Purchase Plan with the following weighted average assumptions for the years ended
December 31:

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (in years)

2010

2009

2008

0%
0%
0%
51% 48% 59%
1.48% 2.70% 3.57%
1.25
1.25

1.25

F-55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The weighted-average fair value per share of shares purchased on the date of purchase was $28.97, $29.17

and $26.34, respectively, for the years ended December 31, 2010, 2009 and 2008.

Stock-Based Compensation Recognized in the Consolidated Statement of Operations

The Company generally recognizes stock-based compensation expense on a straight-line basis over the
requisite service period of the awards. However, for awards with market condition or performance condition,
stock-based compensation expense is recognized on a straight-line basis over the requisite service period for each
vesting tranche of the award.

As of December 31, 2010, the total stock-based compensation cost related to unvested equity awards not yet

recognized, net of estimated forfeitures, totaled $86,259,000, which is expected to be recognized over a
weighted-average period of 2.09 years.

The following table presents, by operating expense, the Company’s stock-based compensation expense

recognized in the Company’s consolidated statement of operations for the three years ended December 31 (in
thousands):

Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges (1) . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,082
12,666
48,740
1,488

$ 5,908
10,329
36,819
—

$ 4,641
10,637
39,807
—

2010

2009

2008

$68,976

$53,056

$55,085

(1) See note 16, “Switch and Data Restructuring Charge”.

The Company’s stock-based compensation recognized in the consolidated statement of operations was

comprised of the following types of equity awards for the years ended December 31 (in thousands):

Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted shares and restricted stock units . . . . . . . . . . . .
Employee stock purchase plans . . . . . . . . . . . . . . . . . . . . .

$12,604
50,830
5,542

$16,008
30,479
6,569

$19,873
31,899
3,313

2010

2009

2008

$68,976

$53,056

$55,085

During the year ended December 31, 2008, the Company entered into agreements with its two senior
officers in Europe in connection with their resignations and modified their outstanding stock awards. As a result,
the Company recorded an incremental stock-based compensation charge of $3,098,000, which is included in
general and administrative expenses in the Company’s accompanying consolidated statements of operations for
the year ended December 31, 2008.

During the years ended December 31, 2010, 2009 and 2008, the Company capitalized $1,240,000, $747,000

and $574,000, respectively, of stock-based compensation expense as construction in progress in property, plant
and equipment.

F-56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

12. Income Taxes

Income or loss before income taxes is attributable to the following geographic locations for the years ended

December 31 (in thousands):

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (1,942)
51,822

$ 69,343
39,685

$23,309
(3,004)

Income before income taxes . . . . . . . . . . . . . . . . . . .

$49,880

$109,028

$20,305

2010

2009

2008

The provision for income tax consisted of the following components for the years ended December 31 (in

thousands).

Current:

2010

2009

2008

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ —

$

(169)
(6,197)

(152)
(3,010)
(8,957)

Subtotal

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6,366)

(12,119)

Deferred:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3,162)
(1,017)
(2,454)

(30,288)
(1,957)
4,767

Subtotal

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6,633)

(27,478)

$ —

(517)
(1,302)

(1,819)

73,944
11,134
4,360

89,438

Benefit (provision) for income taxes . . . . . . . . . . . .

$(12,999)

$(39,597)

$87,619

State and foreign taxes not based on income are included in general and administrative expenses and the

aggregated amount is insignificant for the fiscal years ended December 31, 2010, 2009 and 2008.

The fiscal 2010, 2009 and 2008 income tax benefit (expense) differed from the amounts computed by
applying the U.S. federal income tax rate of 35% to pre-tax income as a result of the following for the years
ended December 31 (in thousands):

Federal tax at statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets generated in current year not benefited . . . . .
Disallowed acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock option deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disallowed executives’ compensation . . . . . . . . . . . . . . . . . . . . .
Foreign financing benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of tax settlement and rate change . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions reserve . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

2008

$(17,459)
(1,186)
(7,088)
(3,105)
(560)
7,697
(869)
7,238
—
(641)
5,098
(2,124)

$(38,160)
(4,967)
(6,028)
—
(2,758)
8,830
(493)
—
—
(15)
4,830
(836)

$ (7,107)
(702)
(5,036)
—
(672)
101,563
(1,032)
—
(526)
(286)
1,518
(101)

Total tax benefit (expense)

. . . . . . . . . . . . . . . . . . . . . . . . . .

$(12,999)

$(39,597)

$ 87,619

F-57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The Company has not provided for U.S. federal income and foreign withholding taxes on the undistributed

earnings from non-U.S. operations as of December 31, 2010 because the Company intends to reinvest the
earnings outside the U.S. for an indefinite period of time. If the Company were to distribute these earnings to the
U.S. in the form of dividends or otherwise, the Company could be subject to both U.S. income taxes and foreign
withholding taxes. Determination of the amount of unrecognized deferred tax liability related to these earnings is
not practicable.

The types of temporary differences that give rise to significant portions of the Company’s deferred tax

assets and liabilities are set out below as of December 31 (in thousands):

2010

2009

Deferred tax assets:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized currency loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses and credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

—
31,884
141
20,493
3
25
164,192

$ 15,474
32,820
73
17,147
3,549
870
54,540

Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

216,738
(42,040)

124,473
(34,364)

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

174,698

90,109

Deferred tax liabilities:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets fair value step-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(81,198)
(26,154)
(59,642)
(56,763)

—
(32,526)
(16,765)
(15,576)

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(223,757)

(64,867)

Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (49,059)

$ 25,242

The $49,059,000 of deferred tax liabilities as of December 31, 2010 are attributable to the Company’s
operations in the United States, Canada and certain entities in Europe. The $25,242,000 of deferred tax assets as
of December 31, 2009 are attributable to the Company’s operations in the United States, Australia, Hong Kong,
Singapore and certain entities in Europe.

As a result of the Switch and Data Acquisition, the Company recognized deferred tax liabilities in the U.S.

and Canada for $66,493,000 attributable to identifiable intangibles and fixed assets’ fair value step-ups related to
the purchase. In addition, as a result of the Upminster Acquisiton and Virtu Acquisition, the Company recognized
deferred tax liabilities in a number of European jurisdictions attributable to the identifiable intangibles and fixed
assets’ fair value step-ups related to the purchases. The Company’s deferred tax assets and liabilities are included
in other current assets, other current liabilities, other assets and other liabilities on the accompanying
consolidated balance sheets as of December 31, 2010 and 2009.

The Company’s accounting for deferred taxes involves weighing positive and negative evidence concerning
the realizability of the Company’s deferred tax assets in each tax jurisdiction. After considering such evidence as
the nature, frequency and severity of current and cumulative financial reporting losses, and the sources of future

F-58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

taxable income and tax planning strategies, management concluded that a 100% valuation allowance was
required in certain foreign jurisdictions. A valuation allowance is provided for the deferred tax assets, net of
deferred tax liabilities, associated with the Company’s operations in certain jurisdictions located in the
Company’s Asia-Pacific and European regions. The operations in these jurisdictions still have significant losses
as of the end of 2010. As such, management does not believe these operations have established a sustained
history of profitability and that a valuation allowance is therefore necessary.

During the year ended December 31, 2010, the Company released the valuation allowances of $5,200,000

and $2,100,000, respectively, against the deferred tax assets with one of its German entities and one of its
Singaporean entities, as the German entity has sustained the consecutive two years profitability and is expected
to be profitable in future years while the Singapore entity is merging into another profitable entity in the same
jurisdiction while preserving all of its tax attributes. Upon evaluating the positive and negative evidence,
management concluded it is more likely than not that the deferred tax assets of both entities will be fully
realizable in the foreseeable future.

During the year ended December 31, 2009, the Company released the valuation allowances of $3,119,000
and $5,196,000, respectively, against the deferred tax assets in Hong Kong and one of its U.K. entities as both
entities have been profitable. Upon evaluating the positive and negative evidence, management concluded it was
more likely than not that the deferred tax assets will be fully realizable in its operations in both entities.

The Company released the valuation allowance against the deferred tax assets in the U.S. at the end of the

fiscal year 2008. In reaching this decision, the Company assessed both the positive and negative evidence, which
included the following:

Positive Evidence:

•

In the fourth quarter of 2008, the U.S. business achieved three year cumulative profitability. The U.S.
profit before tax (“PBT”), as adjusted for permanent tax differences, was positive in 2007 and 2008. In
the fourth quarter of 2008, the trailing 12 quarters of U.S. PBT, as adjusted for permanent tax
differences, moved from a loss to a profit. Prior to the fourth quarter of 2008 the Company would have
had a three year cumulative loss.

• The U.S. business has transitioned from losses to profit as a result of the Company’s recurring revenue
model and a cost structure which has a large base that is fixed in nature and generally does not grow in
proportion to revenue growth. Once the U.S. business achieved a size sufficient to cover the fixed cost
base, incremental revenue will principally contribute to the U.S. PBT. The U.S. business was profitable
for every quarter in 2008.

•

In 2008, the U.S. business began utilizing its deferred tax assets because of its PBT, as adjusted for
permanent items. Additionally, the net operating losses can be carried forward for 20 years and the first
year that the federal NOL’s begin to expire is 2019. The Company expected that in 2009 and thereafter
that the U.S. business would be profitable, even after considering the effects of the financial crisis and
credit crunch.

Negative Evidence:

• The U.S. business had no history of annual profitability prior to 2008 since inception. The cumulative

losses since inception are significant and the net operating loss carry forwards as of December 31, 2008
for federal purposes were approximately $148,000,000.

F-59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

• The Company does not see opportunities in its U.S. business that will allow the Company to implement
any tax strategies to accelerate the recognition of taxable income and utilization of the net operating
loss carryforwards.

When conducting the quantitative and qualitative analysis of all the positive and negative evidence listed
above, the Company gave significant weight to the achievement of three years of cumulative profitability that
was achieved in the fourth quarter of 2008, the improving trends for profitability from 2006 to 2008, the nature
of the Company’s business, and the utilization of the U.S. deferred tax assets in 2008. Therefore the Company
concluded that the positive evidence out weighted the negative evidence and that it was more likely than not that
the deferred tax assets will be realized.

The Company also released the valuation allowance against the deferred tax assets in Australia at the end of

fiscal year 2008, as such operations had been profitable every quarter in the three-year period. Upon evaluating
the positive and negative evidence, management concluded it was more likely than not that the deferred tax
assets will be fully realizable in its operations in Australia. The operations in Australia, Hong Kong, U.K. and the
U.S. generated profit during the year ended December 31, 2010.

Federal and state tax laws, including California tax laws, impose substantial restrictions on the utilization of
net operating loss and credit carryforwards in the event of an “ownership change” for tax purposes, as defined in
Section 382 of the Internal Revenue Code. In 2003, the Company conducted an analysis to determine whether an
ownership change had occurred due to significant stock transactions in each of the reporting years disclosed at
that time. The analysis indicated that an ownership change occurred during the fiscal year 2002, which resulted in
an annual limitation of approximately $819,000 for net operating loss carryforwards generated prior to 2003.
Therefore, the Company substantially reduced its federal and state net operating loss carryforwards for the
periods prior to 2003 to approximately $16,400,000. In addition, an ownership change under Section 382 of the
Internal Revenue Code was triggered in September 2007 by the issuance of 4,211,939 shares of the Company’s
common stock. However, the annual limitation associated with this ownership change is not meaningful due to
the substantial market capitalization of the Company at the time of the ownership change. The Company
determined that no Section 382 ownership change occurred in 2010. In addition, the net operating loss acquired
in the Switch and Data Acquisition is subject to the Section 382 limitation; however, the Company has
determined that none of the acquired net operating loss will expire unused as a result of the limitation.

The Company expects to pay an insignificant amount of cash tax for fiscal year 2011. The tax costs will be
primarily limited to foreign income tax for the Company’s operations in Australia and Europe, and state income
taxes.

The Company did not pay a significant amount of tax for fiscal year 2010. The tax costs are primarily

limited to foreign income tax for the Company’s operations in Europe.

F-60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The Company had net operating loss carryforwards of approximately $517,988,000 and $209,776,000,

respectively, for federal and state income tax purposes as of December 31, 2010. The net operating loss
carryforwards expire, if not utilized, at various intervals from the years 2011 through 2030 as outlined below (in
thousands):

Expiration Date

2011 to 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 to 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 to 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 to 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 to 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 to 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029 & thereafter

Net Operating Loss Carry
Forwards

Federal

States

$ —
—
10,950
103,886
67,905
145,043
190,204

$

7,194
9,012
69,408
53,637
23,644
31,416
15,465

$517,988

$209,776

Approximately $132,000,000 of the total net operating loss carryforwards is attributable to excess employee

stock option deductions, the benefit from which will be credited to additional paid-in capital when subsequently
utilized in future years. In addition, the Company’s foreign operations had approximately $135,675,000 of net
operating loss carryforwards for local income tax purposes, of which approximately $36,912,000 expires, if not
utilized, at various intervals from the years 2011 through 2019 while the rest of the foreign operating losses can
be carried forward indefinitely.

The beginning and ending balances of the Company’s unrecognized tax benefits are reconciled below (in

thousands):

Unrecognized tax benefits as of December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . .
Gross increase related to current year tax positions . . . . . . . . . . . . . . . . . . . . .
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,166
84
310
(1,373)

Unrecognized tax benefits as of December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . .
Gross increase related to current year tax positions . . . . . . . . . . . . . . . . . . . . .
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrecognized tax benefits as of December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . .
Gross increase related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . .
Gross increase related to current year tax positions . . . . . . . . . . . . . . . . . . . . .
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,187
112
260
—

1,559
14,742
315
—

Unrecognized tax benefits as of December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . .

$16,616

The unrecognized tax benefits of $16,616,000 as of December 31, 2010, if subsequently recognized, will affect

the Company’s effective tax rate favorably at the time when such a benefit is recognized. As a result of the Switch
and Data Acquisition, the Company increased the unrecognized tax benefits by $13,893,000 related to the uncertain
tax positions relating to prior years. During fiscal year 2008, the Company reached a final agreement with a state in
which it once operated to close an appeal filed by the Company in that state’s tax court. The Company filed the
appeal in 2006 to contest the decision made by the state auditor disallowing the refundable research and capital
goods credits. As a result of the settlement, the total unrecognized tax benefit decreased by $1,373,000 for the year.

F-61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Due to various tax years open for examination, it is reasonably possible that the balance of unrecognized tax

benefits could significantly increase or decrease over the next twelve months as the Company may be subject to
either examination by tax authorities or a lapse in statute limitations. The Company is currently unable to
estimate the range of possible adjustments to the balance of unrecognized tax benefits.

The Company’s income tax returns for all tax years remain open to examination by federal and state taxing
authorities due to the Company’s net operating loss carryforwards. In addition, the Company’s tax years of 2003
through 2009 remain open and subject to examination by local tax authorities in certain foreign jurisdictions in
which the Company has major operations. There were two income tax audits in the Company’s foreign
jurisdictions during the year ended December 31, 2010. The Company received a preliminary assessment for one
of the audits and has filed the request to appeal the assessment. The Company believed that it has a sufficient
reserve for the assessment and the final outcome of the appeal will not significantly impact the Company’s
financial position. The Company does not expect a significant adjustment will result from another audit, which is
at the late stage of field examination.

13. Commitments and Contingencies

Operating Lease Commitments

The Company currently leases the majority of its IBX data centers and certain equipment under
noncancelable operating lease agreements. The majority of the Company’s operating leases for its IBX data
centers expire at various dates from 2011 through 2035 with renewal options available to the Company. The
lease agreements typically provide for base rental rates that increase at defined intervals during the term of the
lease. In addition, the Company has negotiated some rent expense abatement periods for certain leases to better
match the phased build-out of its IBX data centers. The Company accounts for such abatements and increasing
base rentals using the straight-line method over the life of the lease. The difference between the straight-line
expense and the cash payment is recorded as deferred rent (see Note 4, “Other Current Liabilities” and “Other
Liabilities”).

Minimum future operating lease payments, excluding operating leases covered under restructuring charges

(see Note 16), as of December 31, 2010 are summarized as follows (in thousands):

Year ending:

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 112,126
116,749
117,158
112,112
94,493
538,357

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,090,995

Total rent expense was approximately $103,101,000, $61,359,000 and $50,366,000 for the years ended

December 31, 2010, 2009 and 2008, respectively.

Other Purchase Commitments

Primarily as a result of the Company’s various IBX expansion projects, as of December 31, 2010, the
Company was contractually committed for $199,422,000 of unaccrued capital expenditures, primarily for IBX

F-62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

equipment not yet delivered and labor not yet provided, in connection with the work necessary to open these IBX
data centers and make them available to customers for installation. In addition, the Company had numerous
other, non-capital purchase commitments in place as of December 31, 2010, such as commitments to purchase
power in select locations, primarily in select locations through 2011 and thereafter, and other open purchase
orders for goods or services to be delivered or provided during 2011 and thereafter. Such other miscellaneous
purchase commitments totaled $118,136,000 as of December 31, 2010.

Legal Matters

IPO Litigation

On July 30, 2001 and August 8, 2001, putative shareholder class action lawsuits were filed against the
Company, certain of its officers and directors (the “Individual Defendants”), and several investment banks that
were underwriters of the Company’s initial public offering (the “Underwriter Defendants”). The cases were filed
in the United States District Court for the Southern District of New York. Similar lawsuits were filed against
approximately 300 other issuers and related parties. These lawsuits have been coordinated before a single judge.
The purported class action alleges violations of Sections 11 and 15 of the Securities Act of 1933 and Sections
10(b), Rule 10b-5 and 20(a) of the Securities Exchange Act of 1934 against the Company and the Individual
Defendants. The plaintiffs have since dismissed the Individual Defendants without prejudice. The suits allege
that the Underwriter Defendants agreed to allocate stock in the Company’s initial public offering to certain
investors in exchange for excessive and undisclosed commissions and agreements by those investors to make
additional purchases in the aftermarket at pre-determined prices. The plaintiffs allege that the prospectus for the
Company’s initial public offering was false and misleading and in violation of the securities laws because it did
not disclose these arrangements. The action seeks damages in an unspecified amount. On February 19, 2003, the
court dismissed the Section 10(b) claim against the Company, but denied the motion to dismiss the Section 11
claim.

The parties in the approximately 300 coordinated cases, including the parties in the Equinix case, reached a

settlement. It provides for releases of existing claims and claims that could have been asserted relating to the
conduct alleged to be wrongful from the class of investors participating in the settlement. The insurers for the
issuer defendants in the coordinated cases will make the settlement payment on behalf of the issuers, including
Equinix. On October 6, 2009, the Court granted final approval to the settlement. Six notices of appeal and one
petition seeking permission to appeal were filed. Objectors to the settlement have filed briefs in support of two
separate appeals. The remaining objectors have withdrawn their appeals with prejudice.

Due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome
of the matter. The Company is unable at this time to determine whether the outcome of the litigation would have
a material impact on its results of operations, financial condition or cash flows.

Pihana Litigation

On August 22, 2008, a complaint was filed against Equinix, certain former officers and directors of Pihana

Pacific, Inc. (“Pihana”), certain investors in Pihana, and others. The lawsuit was filed in the First Circuit Court of
the State of Hawaii, and arises out of December 2002 agreements pursuant to which Equinix merged Pihana and
i-STT (a subsidiary of Singapore Technologies Telemedia Pte Ltd) into the Internet exchange services business
of Equinix. Plaintiffs, who were allegedly holders of Pihana common stock, allege that their rights as
shareholders were violated, and the transaction was effectuated improperly, by Pihana’s majority shareholders,
officers and directors, with the alleged assistance of Equinix and others. Among other things, plaintiffs contend
that they effectively had a right to block the transaction, that this supposed right was disregarded, and that they

F-63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

improperly received no consideration when the deal was completed. The complaint seeks to recover unspecified
punitive damages, equitable relief, fees and costs, and compensatory damages in an amount that plaintiffs
allegedly “believe may be all or a substantial portion of the approximately $725,000,000 value of Equinix held
by Defendants” (a group that includes more than 30 individuals and entities). An amended complaint, which adds
new plaintiffs (other alleged holders of Pihana common stock) but is otherwise substantially similar to the
original pleading, was filed on September 29, 2008 (the “Amended Complaint”). On October 13, 2008, a
complaint was filed in a separate action by another purported holder of Pihana common stock, naming the same
defendants and asserting substantially similar allegations as the August 22, 2008 and September 29, 2008
pleadings. On December 12, 2008, the court entered a stipulated order, which consolidated the two actions under
one case number and set January 22, 2009 as the last day for Defendants to move to dismiss or otherwise respond
to the Amended Complaint, the operative complaint in this case. On January 22, 2009, motions to dismiss the
Amended Complaint were filed by Equinix and other Defendants. On April 24, 2009, plaintiffs filed a Second
Amended Complaint (“SAC”) to correct the naming of certain parties. The SAC is otherwise substantively
identical to the Amended Complaint, and all motions to dismiss the Amended Complaint have been treated as
responsive to the SAC. On September 1, 2009, the Court heard Defendants’ motions to dismiss the SAC and
ruled at the hearing that all claims against all Defendants are time-barred. The Court also considered whether
there were further independent grounds for dismissing the claims, and supplemental briefing was submitted with
respect to claims against one defendant and plaintiffs’ renewed request for further leave to amend. On March 23,
2010, the Court entered final Orders granting the motions to dismiss as to all Defendants and issued a minute
Order denying plaintiffs’ renewed request for further leave to amend. On May 21, 2010, plaintiffs filed a Notice
of Appeal, and plaintiffs’ appeal is currently pending before the Hawaii Supreme Court. The Company believes
that plaintiffs’ claims and alleged damages are without merit and it intends to continue to defend the litigation
vigorously.

Due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome
of the matter. The Company is unable at this time to determine whether the outcome of the litigation would have
a material impact on its results of operations, financial condition or cash flows.

529 Bryant Litigation

On September 10, 2010, a lawsuit was filed in the Superior Court of California in Santa Clara County by

529 Bryant Street Partners LLC (“Landlord”) against the Company’s wholly-owned subsidiaries Switch & Data
CA Nine LLC (“Tenant”) and Switch & Data Facilities Company, Inc. (“Guarantor”). The lawsuit alleged that
Tenant breached certain non-monetary obligations under its lease (the “Lease”) of the Company’s data center
located at 529 Bryant Street in Palo Alto, California (the “Premises”) and sought monetary damages, specific
performance of those non-monetary obligations and ejectment of Tenant from the Premises. The lawsuit also
alleged that Guarantor breached its obligations under its guaranty of the Lease.

On November 10, 2010, Tenant and Landlord entered into an agreement pursuant to which Landlord agreed

to dismiss its lawsuit against Tenant, and waive and release all claims against Tenant related thereto. In
connection with the agreement, Tenant agreed to an increase in rent under the Lease and Landlord agreed to
certain improved non-monetary lease terms. Equinix also agreed to guaranty the obligations of Tenant under the
Lease.

The lawsuit was dismissed with prejudice on November 15, 2010.

F-64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

Litigation Summary

The Company believes that while an unfavorable outcome to these litigations is reasonably possible, a range
of potential loss cannot be determined at this time. As a result, the Company had not accrued for any amounts in
connection with these legal matters as of December 31, 2010. The Company and its officers and directors intend
to continue to defend the actions vigorously.

Estimated and Contingent Liabilities

The Company estimates exposure on certain liabilities, such as income and property taxes, based on the best
information available at the time of determination. With respect to real and personal property taxes, the Company
records what it can reasonably estimate based on prior payment history, current landlord estimates or estimates
based on current or changing fixed asset values in each specific municipality, as applicable. However, there are
circumstances beyond the Company’s control whereby the underlying value of the property or basis for which
the tax is calculated on the property may change, such as a landlord selling the underlying property of one of the
Company’s IBX data center leases or a municipality changing the assessment value in a jurisdiction and, as a
result, the Company’s property tax obligations may vary from period to period. Based upon the most current
facts and circumstances, the Company makes the necessary property tax accruals for each of its reporting
periods. However, revisions in the Company’s estimates of the potential or actual liability could materially
impact the financial position, results of operations or cash flows of the Company.

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of

its business activities. The Company accrues contingent liabilities when it is probable that future expenditures
will be made and such expenditures can be reasonably estimated. In the opinion of management, there are no
pending claims for which the outcome is expected to result in a material adverse effect in the financial position,
results of operations or cash flows of the Company.

Employment Agreements

The Company has entered into a severance agreement with each of its executive officers that provides for a

severance payment equal to the executive officer’s annual base salary and maximum bonus in the event his or her
employment is terminated for any reason other than cause or he or she voluntarily resigns under certain
circumstances as described in the agreement. In addition, under the agreement, the executive officer is entitled to
the payment of his or her monthly health care premiums under the Consolidated Omnibus Budget Reconciliation
Act for up to 12 months. For certain executive officers, these benefits are only triggered after a change-in-control
of the Company.

Guarantor Arrangements

As permitted under Delaware law, the Company has agreements whereby the Company indemnifies its
officers and directors for certain events or occurrences while the officer or director is, or was serving, at the
Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s
lifetime. The maximum potential amount of future payments the Company could be required to make under these
indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that
limits the Company’s exposure and enables the Company to recover a portion of any future amounts paid. As a
result of the Company’s insurance policy coverage, the Company believes the estimated fair value of these
indemnification agreements is minimal. The Company has no liabilities recorded for these agreements as of
December 31, 2010.

F-65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant

to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for
losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in
connection with any U.S. patent, or any copyright or other intellectual property infringement claim by any third
party with respect to the Company’s services. The term of these indemnification agreements is generally
perpetual any time after execution of the agreement. The maximum potential amount of future payments the
Company could be required to make under these indemnification agreements is unlimited; however, the
Company has never incurred costs to defend lawsuits or settle claims related to these indemnification
agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. The
Company has no liabilities recorded for these agreements as of December 31, 2010.

The Company enters into arrangements with its business partners, whereby the business partner agrees to
provide services as a subcontractor for the Company’s implementations. Accordingly, the Company enters into
standard indemnification agreements with its customers, whereby the Company indemnifies them for other acts,
such as personal property damage, of its subcontractors. The maximum potential amount of future payments the
Company could be required to make under these indemnification agreements is unlimited; however, the
Company has general and umbrella insurance policies that enable the Company to recover a portion of any
amounts paid. The Company has never incurred costs to defend lawsuits or settle claims related to these
indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is
minimal. The Company has no liabilities recorded for these agreements as of December 31, 2010.

The Company has service level commitment obligations to certain of its customers. As a result, service
interruptions or significant equipment damage in the Company’s IBX data centers, whether or not within the
Company’s control, could result in service level commitments to these customers. The Company’s liability
insurance may not be adequate to cover those expenses. In addition, any loss of services, equipment damage or
inability to meet the Company’s service level commitment obligations could reduce the confidence of the
Company’s customers and could consequently impair the Company’s ability to obtain and retain customers,
which would adversely affect both the Company’s ability to generate revenues and the Company’s operating
results. The Company generally has the ability to determine such service level credits prior to the associated
revenue being recognized. The Company has no significant liabilities in connection with service level credits as
of December 31, 2010.

14. Related Party Transactions

The Company has several significant stockholders and other related parties that are also customers and/or

vendors. The Company’s related party transactions are considered arms-length transactions. The Company’s
activity of related party transactions was as follows (in thousands):

Years ended December 31,

2010

2009

2008

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$22,627
3,246

$23,419
1,128

$20,361
1,944

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,719
354

$4,614
34

As of December 31,

2010

2009

F-66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

15. Segment Information

During the year ended December 31, 2010, the Company changed its reportable segments as a result of the

addition of Switch and Data’s Canadian operations in connection with the Switch and Data Acquisition. The
Company’s prior U.S. segment was re-designated as the North America segment. The change in reportable
segments did not impact the Company’s prior periods’ segment disclosures. While the Company has a single line
of business, which is the design, build-out and operation of IBX data centers, it has determined that it has three
reportable segments comprised of its North America, Europe and Asia-Pacific geographic regions. The
Company’s chief operating decision-maker evaluates performance, makes operating decisions and allocates
resources based on the Company’s revenue and adjusted EBITDA performance both on a consolidated basis and
based on these three geographic regions.

The Company provides the following segment disclosures as follows for the years ended December 31 (in

thousands):

Total revenues:

2010

2009

2008

North America (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 776,175(2) $535,489
228,136
118,884

281,793
162,366

$442,803
177,502
84,375

$1,220,334

$882,509

$704,680

Total depreciation and amortization:

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 171,515(2) $105,038
43,415
25,077

59,699
28,962

$ 99,892
41,048
18,107

$ 260,176

$173,530

$159,047

Income from operations:

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 121,118(2) $128,168
31,202
21,709

34,929
38,664

$ 66,202
1,442
5,618

$ 194,711

$181,079

$ 73,262

Capital expenditures:

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 453,371(3) $186,242

$218,698

163,664(4) 152,576(5) 166,849(6)
58,900
90,512

84,726

$ 707,547

$397,718

$470,273

(1)
(2)
(3)

(4)
(5)

(6)

Includes revenues of $762,642 attributed to the U.S for the year ended December 31, 2010.
Includes the operations of Switch and Data from May 1, 2010 to December 31, 2010.
Includes the purchase price for the Switch and Data Acquisition (see Note 2), net of cash acquired, totaling
$113,289.
Includes the purchase price for the Amsterdam IBX property totaling $14,861 (see Note 3).
Includes the purchase price for the Upminster Acquisition (see Note 2), net of cash acquired, totaling
$28,176.
Includes the purchase price for the Virtu Acquisition (see Note 2), net of cash acquired, totaling $23,241.

F-67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

The Company’s long-lived assets are located in the following geographic areas as of December 31 (in

thousands):

North America (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,764,630
596,609
289,714

$1,130,637
493,492
183,986

2010

2009

$2,650,953

$1,808,115

(1)

Includes $1,741,438 of long-lived assets attributed to the U.S.

Revenue information on a services basis is as follows for the years ended December 31 (in thousands):

Colocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interconnection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental

Recurring revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

2008

$ 956,436
171,009
30,502
2,471

1,160,418
59,916

$704,860
106,894
29,004
1,091

841,849
40,660

$542,943
93,739
29,453
1,028

667,163
37,517

$1,220,334

$882,509

$704,680

16. Restructuring Charges

Switch and Data Restructuring Charge

During the year ended December 31, 2010, the Company recorded restructuring charges related to one-time

termination benefits, primarily comprised of severance, attributed to certain Switch and Data employees as
presented below (in thousands):

Severance-related expenses (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash payments (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,360
(2,837)
(1,488)

Accrued restructuring charge as of December 31, 2010 (3) . . . . . . . . . . . . . . . . . . .

$ 1,035

Included in the consolidated statements of operations as a restructuring charge.

(1)
(2) A stock-based compensation charge incurred as a result of modifying equity awards for one of the

former Switch and Data executives to accelerate vesting.
Included within other current liabilities.

(3)

As of December 31, 2010, the Company’s remaining accrued restructuring charge associated with the
Switch and Data Acquisition is expected to be paid out during the first quarter of 2011. The Company anticipates
that it will incur additional restructuring charges in connection with the Switch and Data Acquisition related to
one-time termination benefits during the first four months of 2011.

F-68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

2004 Restructuring Charge

In December 2004, in light of the availability of fully built-out data centers in select markets at costs

significantly below those costs the Company would incur in building out new space, the Company made the
decision to exit leases for excess space adjacent to one of the Company’s New York metro area IBXs, as well as
space on the floor above its original Los Angeles IBX. As a result of the Company’s decision to exit these
spaces, the Company recorded restructuring charges totaling $17,685,000, which represents the present value of
the Company’s estimated future cash payments, net of estimated sublease income and expense, through the
remainder of these lease terms, as well as the write-off of all remaining property, plant and equipment attributed
to the partial build-out of the excess space on the floor above its Los Angeles IBX.

The Company estimated the future cash payments required to exit these two leased spaces, net of any
estimated sublease rental income and expense, through the remainder of these lease terms and then calculated the
present value of such future cash flows in order to determine the appropriate restructuring charge to record.
Subsequent to recording the initial restructuring charge, the Company records accretion expense to accrete its
accrued restructuring liability up to an amount equal to the total estimated future cash payments necessary to
complete the exit of these leases. Should the actual lease exit costs differ from the Company’s estimates, the
Company may need to adjust its restructuring charges associated with the excess lease spaces, which would
impact net income in the period such determination was made.

A summary of the movement in the 2004 accrued restructuring charges during the year ended December 31,

2010 is outlined as follows (in thousands):

Accrued
restructuring
charge as of
December 31,
2009

Accretion
expense

Restructuring
charge
adjustments

Cash
payments

Accrued
restructuring
charge as of
December 31,
2010

Estimated lease exit costs . . . . . . . . . . . . . . . . . . .

$ 5,919

5,919

$303

$303

$1,374

$1,374

$(1,590)

$ 6,006

$(1,590)

6,006

Less current portion . . . . . . . . . . . . . . . . . . . . . . .

(2,403)

$ 3,876

(2,054)

$ 3,952

A summary of the movement in the 2004 accrued restructuring charges during the year ended December 31,

2009 is outlined as follows (in thousands):

Accrued
restructuring
charge as of
December 31,
2008

Accretion
expense

Restructuring
charge
adjustments

Cash
payments

Accrued
restructuring
charge as of
December 31,
2009

Estimated lease exit costs . . . . . . . . . . . . . . . . . . .

$13,311

13,311

$432

$432

$(6,053)

$(1,771)

$ 5,919

$(6,053)

$(1,771)

5,919

Less current portion . . . . . . . . . . . . . . . . . . . . . . .

(6,023)

$ 7,288

F-69

(2,403)

$ 3,876

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

A summary of the movement in the 2004 accrued restructuring charges during the year ended December 31,

2008 is outlined as follows (in thousands):

Accrued
restructuring
charge as of
December 31,
2007

Accretion
expense

Restructuring
charge
adjustments

Cash
payments

Accrued
restructuring
charge as of
December 31,
2008

Estimated lease exit costs . . . . . . . . . . . . . . . . . . .

$12,140

12,140

$792

$792

$3,142

$3,142

$(2,763)

$13,311

$(2,763)

13,311

Less current portion . . . . . . . . . . . . . . . . . . . . . . .

(3,973)

$ 8,167

(6,023)

$ 7,288

During the year ended December 31, 2010, the Company recorded an additional restructuring charge of
$1,374,000 as a result of revised sublease assumptions on its excess space lease in the New York metro area.
During the year ended December 31, 2009, the Company recorded reductions to the restructuring charges totaling
$6,053,000, of which $5,833,000 was a reversal of accrued restructuring charges associated with the Los Angeles
lease as the Company decided to utilize this space it previously abandoned in order to expand its original Los
Angeles IBX data center. During the years ended December 31, 2008, the Company recorded additional
restructuring charges totaling $3,142,000 as a result of revised sublease assumptions. The Company’s excess
space in the New York metro area remains abandoned and continues to be an accrued restructuring charge. As
the Company currently has no plans to enter into lump sum lease terminations with the landlord associated with
the excess space lease in the New York metro area, the Company has reflected its accrued restructuring liability
as both current and non-current liability. The Company reports accrued restructuring charges within other current
liabilities and other liabilities on the accompanying consolidated balance sheets as of December 31, 2010 and
2009. The Company is contractually committed to this excess space lease through 2015.

The Company’s minimum future payments associated with one excess space lease is as follows (in

thousands):

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less amount representing estimated sublease income and expense . . . . . . . . . . . .

Less amount representing accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,463
2,429
2,444
2,459
1,444

11,239
(4,496)

6,743
(738)

6,006
(2,054)

$ 3,952

17. Subsequent Events

On January 1, 2011, pursuant to the provisions of the 2004 Employee Stock Purchase Plan (see Note 11),

the number of common shares in reserve automatically increased by 500,000 shares.

F-70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

In February 2011, the Company amended the Bank of America Revolving Credit Line (see Note 7) and
extended the maturity date to February 2012. The amended Bank of America Revolving Credit Line is used
primarily as a letter of credit issuing facility, and to fund the Company’s working capital if so needed, and is
unsecured.

In February 2011, Zion RJ Participações S.A. (the “Joint Venture”), a Brazilian joint-stock company
controlled indirectly by the Company and Riverwood Capital L.P. (“Riverwood”), entered into a share purchase
agreement and other covenants (the “Share Purchase Agreement”) with the shareholders (the “Sellers”) of ALOG
Data Centers do Brasil S.A. (“ALOG”), ALOG and ALOG’s subsidiaries, pursuant to which, subject to the
satisfaction or waiver of the conditions therein, the Joint Venture will acquire approximately 90% of the
outstanding capital stock of ALOG from the Sellers. The Joint Venture will pay approximately 211,000,000
Brazilian reais in cash, or approximately $127,000,000, to acquire the ALOG capital stock, subject to certain
balance sheet adjustments as provided in the Share Purchase Agreement, at the closing of the transaction
(the “Closing”). A portion of the purchase price will be withheld by the Joint Venture at the Closing to cover
potential indemnification claims, and any balance will be paid to the Sellers by the Joint Venture two years
following the Closing. Under the terms of the Share Purchase Agreement, either the Joint Venture or the Sellers
may terminate the Share Purchase Agreement if the Closing has not taken place on or before May 10, 2011.

18. Quarterly Financial Information (Unaudited)

The Company believes that period-to-period comparisons of its financial results should not be relied upon as

an indication of future performance. The Company’s revenues and results of operations have been subject to
significant fluctuations, particularly on a quarterly basis, and the Company’s revenues and results of operations
could fluctuate significantly quarter-to-quarter and year-to-year. Significant quarterly fluctuations in revenues
will cause fluctuations in the Company’s cash flows and the cash and cash equivalents and accounts receivable
accounts on the Company’s consolidated balance sheet. Causes of such fluctuations may include the volume and
timing of new orders and renewals, the timing of the opening of new IBX data centers, the sales cycle for the
Company’s services, the introduction of new services, changes in service prices and pricing models, trends in the
Internet infrastructure industry, general economic conditions, extraordinary events such as acquisitions or
litigation and the occurrence of unexpected events.

The unaudited quarterly financial information presented below has been prepared by the Company and

reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management
are necessary to present fairly the financial position and results of operations for the interim periods presented.

The following table presents selected quarterly information (in thousands except per share data):

2010

Quarter ended

March 31

June 30 (a)

September 30 December 31

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$248,649
115,599
14,199
0.36
0.35

$296,094
133,512
(2,274)
(0.05)
(0.05)

$330,347
144,871
11,196
0.24
0.24

$345,244
151,685
13,760
0.30
0.29

(a) Represents the first quarter of combined results since the Switch and Data Acquisition (see Note 2).

F-71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EQUINIX, INC.

2009

Quarter ended

March 31

June 30

September 30 December 31

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$199,231
87,426
15,457
0.41
0.40

$213,168
94,634
17,440
0.46
0.44

$227,558
101,551
18,812
0.49
0.47

$242,552
115,478
17,722
0.45
0.44

F-72

EQUINIX, INC.  

December     , 2010  

Exhibit 10.33 

[Name]  
[Address]  
[Address]  

Dear             :  

You and Equinix, Inc. (the “Company”) signed a [severance agreement][change in control severance agreement] dated 
             (the “Severance Agreement”). Benefits under the Severance Agreement are intended to be exempt from the application of 
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). However, to avoid the inadvertent or unintended 
application of Code Section 409A(a)(1) to benefits under the Severance Agreement, the Severance Agreement is hereby amended as 
follows:  

(a) The following sentence is hereby added to the end of Section 2(a) of the Severance Agreement:  

Notwithstanding the foregoing, if the severance payment is considered deferred compensation under Code 
Section 409A, then the Executive will receive his or her severance payment in a cash lump-sum which will be made on the 60  
th
day following Executive’s Qualifying Termination (or, if such day is not a business day, on the first business day thereafter).  

(b) The penultimate sentence of Section 6(a) in the Severance Agreement, entitled “Best After-Tax Result,” is deleted in its 

entirety and replaced with the following:  

In the event that Section 6(a)(ii)(B) above applies, then based on the information provided to the Company by 
Independent Tax Counsel, the Company shall reduce or eliminate the Payments in the following order, until the amounts 
payable or distributable to Executive equals the Reduced Amount: (i) reduction of cash payments; (ii) cancellation of accelerated 
vesting of equity awards other than stock options; (iii) cancellation of accelerated vesting of stock options; and (iv) reduction of 
other benefits paid to the Executive. In the event that acceleration of vesting is reduced, such acceleration of vesting shall be 
cancelled in the reverse order of date of grant of the Executive’s equity awards. In the event that cash payments or other benefits 
are reduced, such reduction shall occur in reverse order beginning with payments or benefits which are to be paid  

[Name]  
[Date]  
Page 2  

the farthest in time from the date of Independent Tax Counsel’s determination under this Section.  

Except as expressly set forth above, the Severance Agreement will remain in effect without change.  

You may indicate your agreement with this amendment of the Severance Agreement by signing and dating the enclosed 

duplicate original of this letter agreement and returning it to me. This letter agreement may be executed in two counterparts, each of 
which will be deemed an original, but both of which together will constitute one and the same instrument.  

Very truly yours,

EQUINIX, INC.

By:
Title:    

I have read and accept this amendment:

Dated:                     

  
  
  
  
  
  
EQUINIX, INC.  

December 14, 2010  

Exhibit 10.34 

Eric Schwartz  
51-53 Great Marlborough Street  
London  
W1F 7JT  
United Kingdom  

Dear Eric:  

You and Equinix, Inc. (the “Company”) signed a change in control severance agreement dated December 19, 2008 (the 

“Severance Agreement”). You also entered into an agreement with the Company dated April 22, 2008 regarding expatriate benefits, 
which was amended on December 19, 2008 and February 17, 2010 (the “Expatriate Agreement” and the “Expatriate Amendments,” 
respectively). Severance benefits under the Severance Agreement, the Expatriate Agreement and the Expatriate Amendments 
(collectively, the “Agreements”) are intended to be exempt from the application of Section 409A of the Internal Revenue Code of 
1986, as amended (the “Code”). However, to avoid the inadvertent or unintended application of Code Section 409A(a)(1) to benefits 
under the Agreements, the Agreements are hereby amended as follows:  

(a) The following sentence is hereby added to the end of Section 2(a) of the Severance Agreement:  

Notwithstanding the foregoing, if the severance payment is considered deferred compensation under Code 
Section 409A, then the Executive will receive his or her severance payment in a cash lump-sum which will be made on the 60  
th
day following Executive’s Qualifying Termination (or, if such day is not a business day, on the first business day thereafter).  

(b) The penultimate sentence of Section 6(a) in the Severance Agreement, entitled “Best After-Tax Result,” is deleted in its 

entirety and replaced with the following:  

In the event that Section 6(a)(ii)(B) above applies, then based on the information provided to the Company by 
Independent Tax Counsel, the Company shall reduce or eliminate the Payments in the following order, until the amounts 
payable or distributable to Executive equals the Reduced Amount: (i) reduction of cash payments; (ii) cancellation of accelerated 
vesting of equity awards other than stock options; (iii) cancellation of accelerated vesting of stock options; and (iv) reduction of 
other benefits paid to the Executive. In the event  

Eric Schwartz  
Page 2  

that acceleration of vesting is reduced, such acceleration of vesting shall be cancelled in the reverse order of date of grant of the 
Executive’s equity awards. In the event that cash payments or other benefits are reduced, such reduction shall occur in reverse 
order beginning with payments or benefits which are to be paid the farthest in time from the date of Independent Tax Counsel’s 
determination under this Section.  

(c) The following sentence is hereby added to the end of the second paragraph of the section entitled “Return to Home 

Country” of the Expatriate Amendment:  

Notwithstanding the foregoing, if the severance payment is considered deferred compensation under Section 409A of 

the Code, then you will receive the severance payment on the 60  day following your Separation (or, if such day is not a 
business day, on the first business day thereafter).  

th

Except as expressly set forth above, the Agreements will remain in effect without change.  

You may indicate your agreement with this amendment of the Agreements by signing and dating the enclosed duplicate 

original of this letter agreement and returning it to me. This letter agreement may be executed in two counterparts, each of which will 
be deemed an original, but both of which together will constitute one and the same instrument.  

Very truly yours,

EQUINIX, INC.

 /s/ Steve Smith 
By:
Title: CEO & President 

I have read and accept this amendment:

/s/ Eric Schwartz 
Dated:

 12/14/2010 

  
  
  
Subsidiaries of Equinix, Inc.

Exhibit 21.1

Name

Equinix Operating Co., Inc.
Equinix RP, Inc.
Equinix South America Holdings, LLC
Equinix RP II LLC
CHI 3, LLC
NY3, LLC
SV1, LLC
LA4, LLC
Equinix Pacific, Inc.
CHI 3 Procurement, LLC
Equinix Asia Pacific Pte Ltd
Equinix Singapore Holdings Pte Ltd
Equinix Singapore Pte Ltd
Equinix Japan KK (in Kanji)
Equinix Australia Pty Ltd
Equinix Hong Kong Ltd
Equinix Europe Ltd
Equinix Group Ltd
Equinix (UK) Ltd
Equinix (Services) Ltd
Equinix Corporation Ltd
Equinix Investments Ltd
Equinix (London) Ltd
Equinix (Dusseldorf) GmbH
Equinix (Real Estate) GmbH
Equinix (Germany) GmbH
Equinix (IBX Services) GmbH
Upminster GmhH
Equinix (France) SAS
Equinix Paris SAS
Interconnect Exchange Europe SL
Equinix (Switzerland) AG
Equinix Services (Switzerland) AG
Intelisite BV
Equinix (Netherlands) BV
Equinix (Netherlands) Holding Coöperatie U.A
Equinix (Holdings) B.V.
Virtu Secure Web Services BV
Equinix (Real Estate) B.V.
Equinix (Luxembourg) Holdings S.à r.l.
Equinix (Luxembourg) Investments S.à r.l.
Switch & Data Facilities Company, Inc.
Switch & Data Holdings, Inc.
Equinix Services, Inc.
Switch & Data Facilities Company LLC
Switch and Data Operating Company LLC
Equinix Operating Co LLC
Equinix Canada Ltd.
Switch & Data AZ One LLC

Jurisdiction

Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Illinois, U.S.
Singapore
Singapore
Singapore
Japan
Australia
Hong Kong
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Germany
Germany
Germany
Germany
Germany
France
France
Spain
Switzerland
Switzerland
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
Luxembourg
Luxembourg
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Canada
Delaware, U.S.

Switch & Data CA One LLC
Switch & Data CA Two LLC
Switch and Data CA Nine LLC
Switch And Data CA Eleven LLC
Switch & Data CO One LLC
Switch & Data FL One LLC
Switch & Data FL Two LLC
Switch and Data FL Seven LLC
Switch and Data GA Three LLC
Switch and Data GA Four LLC
Switch & Data IL One LLC
Switch & Data IN One LLC
Switch & Data MA One LLC
Switch & Data MI One LLC
Switch & Data MO One LLC
Switch And Data NJ Two LLC
Switch & Data NY One LLC
Switch and Data NY Four LLC
Switch and Data NY Five LLC
Switch & Data/NY Facilities Company, LLC
Switch & Data OH One LLC
Switch & Data PA Two LLC
Switch and Data PA Three LLC
Switch and Data PA Four LLC
Switch & Data TN Two LLC
Switch & Data TX One LLC
Switch and Data TX Five LP
Switch and Data Dallas Holdings I LLC
Switch and Data Dallas Holdings II LLC
Switch & Data VA One LLC
Switch & Data VA Two LLC
Switch and Data VA Four LLC
Switch & Data WA One LLC
Switch and Data WA Three LLC

Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.
Delaware, U.S.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos.
333-45280, 333-58074, 333-71870, 333-85202, 333-104078, 333-113765, 333-117892, 333-122142,
333-132466, 333-140946, 333-149452, 333-157545, 333-165033 and 333-166581) and Form S-3 (Nos.
333-165024) of Equinix, Inc. of our report dated February 25, 2011 relating to the financial statements and the
effectiveness of internal control over financial reporting, which appears in this Form 10-K.

Exhibit 23.1

/s/ PricewaterhouseCoopers LLP
San Jose, California
February 25, 2011

Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen M. Smith, certify that:

1. I have reviewed this annual report on Form 10-K of Equinix, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.

Dated: February 25, 2011

/s/ Stephen M. Smith

Stephen M. Smith
Chief Executive Officer and President

Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keith D. Taylor, certify that:

1. I have reviewed this annual report on Form 10-K of Equinix, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.

Dated: February 25, 2011

/s/ Keith D. Taylor

Keith D. Taylor
Chief Financial Officer

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

In connection with the Annual Report of Equinix, Inc. (the “Company”) on Form 10-K for the period ending

December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Stephen M. Smith, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350,
as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange

Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition

and result of operations of the Company.

/s/ Stephen M. Smith

Stephen M. Smith
Chief Executive Officer and President
February 25, 2011

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

In connection with the Annual Report of Equinix, Inc. (the “Company”) on Form 10-K for the period ending

December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
Keith D. Taylor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange

Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition

and result of operations of the Company.

/s/ Keith D. Taylor

Keith D. Taylor
Chief Financial Officer
February 25, 2011