Equinix Annual Report 2015

FY2015 Annual Report · Equinix

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Equinix.comEQUINIX ANNUAL REPORT FY2015Americas Corporate HQEquinix, Inc. One Lagoon Drive Redwood City, CA 94065 USA +1.650.598.6000 info@equinix.comEMEAEquinix (EMEA) BV 7th Floor Rembrandt Tower Amstelplein 1 1096 HA Amsterdam Netherlands +31.20.754.0305 info@eu.equinix.comAsia-PacificEquinix Hong Kong Limited Units 6501-04A & 6507-08, 65/F International Commerce Centre 1 Austin Road West Kowloon, Hong Kong +852.2970.7788 info@ap.equinix.comANNUAL REPORT FY2015“Responding to the demand AquaComms is seeing for high capacity, high reliability connectivity between North America and Europe, we made a strategic decision to deploy with Equinix. Their data centers in New York and London act as major international hubs for network traffic, offering our customers the ability to extend existing networks or expand into new markets.” AquaComms “As video usage continues to grow exponentially on the Internet, its robustness relies on continual improvement of public Internet Exchange Platforms such as the Equinix Internet Exchange. The massive scalability that a 100G-capable platform provides leads to greater efficiency and helps us continue to deliver a great Netflix experience to our members around the world.” NetflixCROSS CONNECTS†170,000+CUSTOMERS8,000+RELIABILITY†99.9999%40MARKETSDATA CENTERS145+Executive Team •Steve Smith Chief Executive Officer & President •Charles Meyers Chief Operating Officer •Keith Taylor Chief Financial Officer •Mark Adams Chief Development Officer •Sara Baack Chief Marketing Officer •Peter Ferris Sr. Vice President, Office of the CEO •Pete Hayes Chief Sales Officer •Sushil (Sam) Kapoor Chief Global Operations Officer •Samuel Lee President, Asia-PacificBoard of Directors •Peter Van Camp Executive Chairman, Equinix •Steve Smith Chief Executive Officer & President, Equinix •Tom Bartlett Executive VP & Chief Financial Officer, American Tower Corporation •Nanci Caldwell Corporate Director and Former CMO, PeopleSoft •Gary Hromadko Venture Partner, Crosslink Capital •John Hughes Corporate Director and former Executive Chairman, Telecity Group •Scott Kriens Chairman of the Board, Juniper Networks, Inc. •William Luby Managing Partner, Seaport Capital •Irving Lyons, III Principal, Lyons Asset Management •Christopher Paisley Dean’s Executive Professor, Leavey School of Business at Santa Clara University •Brian Lillie Chief Information Officer •Debra McCowan Chief Human Resources Officer •Brandi Galvin Morandi Chief Legal Officer, General Counsel and Secretary •Eric Schwartz President, EMEA •Karl Strohmeyer President, Americas •Ihab Tarazi Chief Technology Officer •Brian Thomas Chief of Staff, Office of the CEOThis Annual Report (including the Shareholder Letter) contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that may cause Equinix’s actual results to differ materially from those expressed or implied by these statements. Factors that may affect Equinix’s results are summarized in our Annual Report on Form 10-K filed February 26, 2016 and contained herein. Equinix assumes no obligation and does not intend to update forward-looking statements to reflect subsequent events or circumstances.EQUINIX GLOBAL MAPSEATTLEDENVERATLANTABOSTONPHILADELPHIAMIAMITORONTODUSSELDORFMUNICHHELSINKISTOCKHOLMWARSAWISTANBULSOFIAZURICHMILANGENEVADUBAIPARISLONDONDUBLINRIO DE JANEIROSÃO PAULOAMSTERDAMMANCHESTERFRANKFURTSILICONVALLEYLOS ANGELESCHICAGONEW YORKDALLASWASHINGTON, DCSINGAPOREHONG KONGSHANGHAITOKYOOSAKAJAKARTASYDNEYMELBOURNEEquinix LocationsPartner Data CenterAMERICASEMEAASIA-PACIFIC145+

DATA CENTERS

SHAREHOLDER
LETTER

40MARKETS

170,000+

CROSS CONNECTS†

8,000+

CUSTOMERS

99.9999%

RELIABILITY†

Revenues ($M)3

C A G R =

1 5 %

$2,444

$2,153

$2,726

$1,887

$1,566

2011

2012

2013

2014

2015

Adjusted EBITDA & AFFO ($M)3

C A G R =

1 5 %

$1,272

$1,114

$1,001

$888

$722

$762

$680

$832

2011

2012

2013

2014

2015

Dear Shareholders:

With gratitude to our team and shareholders for their support, we are pleased to
share with you the results of 2015, which was a transformational year for Equinix.
We delivered accelerated growth, completed our first year operating as a REIT,
expanded our global interconnection platform, and established ourselves as a
foundation for the cloud ecosystem that continues to drive IT transformation.

Highlights for 2015 include:

• Delivered strong financial performance with revenues of over $2.7 billion, up 16%

compared with the prior year on a normalized and constant currency basis. Adjusted
EBITDA in 2015 was over $1.27 billion, up 20% compared with the prior year on a
normalized and constant currency basis, or a 47% margin, a more than 100 basis
point improvement compared with last year while continuing to invest in the business.
In addition, AFFO grew 25% compared with the prior year on a normalized and
constant currency basis.(1)

• Significantly expanded the global platform with the acquisitions of Telecity and Bit-isle.
Platform Equinix™ now extends across greater than 145 data centers in 40 metros
and 21 countries and we operate over 14 million gross square feet of colocation space,
reinforcing our position as the largest retail data center company in the world.

• Established Equinix as the Home of the Interconnected Cloud™. Key cloud customers
including Amazon, Cisco, IBM, Microsoft and Oracle are using Equinix to scale their
infrastructure globally and are deployed across an average of 17 markets. These
providers are leveraging the Equinix Cloud Exchange™ to reach and aggregate
customer demand for their cloud platforms.

• Grew our enterprise customer base at an accelerated pace as it adopts an

Interconnection Oriented Architecture™ at Equinix. By leveraging hybrid- and
multi-cloud capabilities resident across our platform, a rich and deep portfolio of
network and managed service providers, and our solutions and professional services
capabilities, enterprises are able to solve for increasing demands on performance
and scale in a new way.

• Extended our position as the global interconnection leader. Revenue

from interconnection continued to outpace overall revenue, growing 20%
year-over-year on a constant currency organic basis as we continue to
benefit from strong secular trends.

• Successfully completed our first year operating as a REIT, as well as added to the

MSCI RMZ and the FTSE NAREIT indices and included in the S&P 500, reflective of
our position as a technology leader and the largest data center REIT. We continued
to strengthen our balance sheet, raising $2.6 billion in debt(2) and equity, optimizing
our capital structure and returning $394 million to our shareholders in the form of
regular quarterly cash dividends.

1. Normalized 2015 results exclude the impact from the Nimbo, Bit-isle (“Bit-isle”), and Telecity Group plc (“Telecity”) acquisitions,
Bit-isle integration and financing costs, and the Telecity transaction-related FX losses; assumes average currency rates used in
our financial results remained the same compared to the comparative period. Bit-isle closed in November 2015 and Telecity
closed in Janaury 2016.

2. Including the GBP300M and USD250M TLB facility drawn on January 8, 2016, after the close of FY15

3. Revenues, Adjusted EBITDA and Adjusted Funds from Operations (AFFO):

• Compound annual growth rate for 2011–2015
• For definitions of these non-GAAP terms and a detailed reconciliation between the non-GAAP financial results and the
corresponding GAAP measures, please refer to the Investor Relations section of our website at Equinix.com.

Adjusted EBITDA

AFFO

† Noted numbers are Equinix Q4 only and do not include numbers related to the acquisitions of Telecity and Bit-isle.

“We are proud to expand
the relationship with Equinix
with the Equinix Cloud
Exchange offering. This
will now provide added
flexibility to our enterprise
customers to pick the
network services that
are best suited for their
diverse workloads.”

Oracle

Our strong financial performance reflects our
position as the global leader in retail colocation and
interconnection, truly serving as the place “where
opportunity connects™” for leading networks, clouds,
content providers and enterprises. We continued
to extend our market-leading network density,
attracting wireline, wireless and, increasingly,
subsea carriers who are using Platform Equinix
to efficiently interconnect and serve their end

customers. Our data centers act as powerful commerce centers for the
largest service providers to reach their customers and are positioning us to
capture the enterprise as they implement next-generation IT architectures.

Our geographic reach continues to be a key competitive differentiator for
us, with over 55% of our revenue coming from customers deployed globally
across all three regions and over 84% from customers deployed across
multiple metros. In 2015, we invested both organically and inorganically to
expand our global footprint. Equinix development included 20 major IBX®
expansions, including five new flagship data centers in the financial and
network hubs of London, New York, Singapore and Toronto, as well as our
new metro in Melbourne, Australia. In response to the strong demand we saw
in 2015, our 2016 capital spending plans have expanded up to $1 billion with
14 projects underway and major expansions planned on owned property on
the Silicon Valley and Ashburn campuses.

Inorganically, we scaled our platform with the acquisitions of Telecity and
Bit-isle. Telecity complements and extends Equinix’s footprint in Europe,
adding seven new markets, including Dublin and Stockholm, and expanding
capacity in existing metros where we see significant demand, such as
Amsterdam and London. The acquisition of Bit-isle positions Equinix as
the fourth-largest data center operator in Japan, one of the world’s largest
colocation markets. Bit-isle gives us customer-ready capacity, as well as
the ability to scale Platform Equinix in this increasingly constrained but
important global market. Our expanded scale from these acquisitions
positions us to continue to capture global data center demand.

Growth Strategy

Our strategic priorities remain centered on driving growth by pressing our
competitive advantage and investing to capture opportunities such as the
cloud-enabled enterprise. We will allocate capital toward these high-value
opportunities and, in turn, will strengthen our economic model.

In the near term, we will focus our energy on successfully integrating Telecity
and Bit-isle and growing our market leadership globally. Organically, our
efforts will be focused on capturing the enterprise through a series of initiatives
to build cloud density, create and deploy innovative product solutions,
generate demand in targeted market segments and provide professional
services focused on enabling the adoption of hybrid- and multi-cloud. We will
also continue to ramp our channel program to enhance our reach into the
enterprise through agents, resellers, systems integrators and key partners.

Steve Smith Chief Executive Officer & President Equinix, Inc. Peter Van Camp Executive Chairman Equinix, Inc. Keith Taylor Chief Financial Officer Equinix, Inc. Charles Meyers Chief Operating Officer Equinix, Inc. Over the long term, interconnection will continue to be our key differentiator, and Equinix is well positioned to become the intersection point between the Internet of Things, clouds, networks and the enterprise. We are making meaningful investments to foster new ecosystems and will continue to invest in scaling our systems and processes and evolving our capabilities in response to customer needs. In closing, we are pleased with our performance in 2015 which gives us the financial firepower to continue to invest in our global platform and develop innovative solutions. Based on what we see in the market and the steps we are taking at Equinix to capitalize on these opportunities, we continue to be very optimistic about our future. Sincerely,“Office 365 customers have been asking for direct connectivity to Office 365 since Azure ExpressRoute launched last year, and we’re pleased that Equinix will be among the first to offer it through Cloud Exchange. With network performance as predictable as a customer’s own on-premises environment, ExpressRoute for Office 365 is like having the full Office 365 productivity solution in your own datacenter.” MicrosoftUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

� ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the ﬁscal year ended December 31, 2015

□ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

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. 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 � 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. 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). 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. □

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 �
Indicate by check mark whether the registrant is a shell company (as deﬁned in Rule 12b-2 of the Exchange Act). Yes � No �
The aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the

Smaller reporting company □

Non-accelerated ﬁler □

Accelerated ﬁler □

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 $14.5 billion. As of January 29, 2016, a total of 69,025,412 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 2016 Annual
Meeting of Stockholders, which is expected to be ﬁled not later than 120 days after the registrant’s ﬁscal year ended December 31,
2015. 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, 2015

TABLE OF CONTENTS

Item

Page No.

PART I

1. Business

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Properties

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Mine Safety Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

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

of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . .

7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . .

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . .

9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . .

11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12. Security Ownership of Certain Beneﬁcial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . .

14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

15. Exhibits and Financial Statement Schedules

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Index to Exhibits

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[This page intentionally left blank.]

PART I

ITEM 1. BUSINESS

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, Inc. connects more than 6,300(1) companies directly to their customers and partners inside the
world’s most interconnected data centers. Today, businesses leverage the Equinix interconnection platform in
33 strategic markets across the Americas, Asia-Paciﬁc, and Europe, Middle East and Africa (EMEA).

In September 2012, we announced that our Board of Directors approved a plan for Equinix to pursue

conversion to a real estate investment trust (a ‘‘REIT’’). On December 23, 2014, our Board of Directors
formally approved our conversion to a REIT effective on January 1, 2015. We completed the implementation
of the REIT conversion in 2014 and as a result, we began operating as a REIT for federal income tax
purposes effective January 1, 2015. In May 2015, we received a favorable response to the private letter ruling
(‘‘PLR’’) we had requested from the U.S. Internal Revenue Service (‘‘IRS’’) in connection with our
conversion to a REIT for federal income tax purposes. The REIT conversion includes almost all of our data
center operations in the U.S., Europe and Japan held through qualiﬁed REIT subsidiaries (‘‘QRSs’’); our data
center operations in other jurisdictions have initially been designated as taxable REIT subsidiaries (‘‘TRSs’’).

In May 2015 we announced an offer for the entire issued and to be issued share capital of Telecity Group

plc (‘‘TelecityGroup’’), valued at approximately £2.4 billion, or $3.8 billion in U.S. dollars. The transaction
closed in January 2016. The total consideration consisted of $1.7 billion in cash and 6.9 million shares of our
common stock, valued at $2.1 billion.

Platform Equinix(cid:31) combines a global footprint of state-of-the-art International Business ExchangeTM

(IBX(cid:31)) data centers, a variety of interconnection opportunities and unique ecosystems. Together, these
components accelerate business growth and opportunity for Equinix’s customers by securing their
infrastructure and applications closer to users. This enables customers to improve performance with
cost-effective and scalable interconnections, work with vendors to deploy new technologies, such as cloud
computing, and collaborate with the widest variety of partners and customers to achieve their ambitions.

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

•

Global Data Centers

(cid:30) A broad footprint of 112 IBX data centers in 15 countries on 5 continents.

(cid:30) More than $8.7 billion of capital invested in capacity, new markets and acquisitions since 1998.

(cid:30)

Equinix delivered uptime of 99.9999% across its footprint in 2015.

•

Interconnection

(cid:30) More than 1,100 networks and approximately 170,000+ cross connects in Equinix sites

(1) All metrics in this Annual Report on Form 10-K are as of December 31, 2015 and do not include

Telecity Group plc.

(cid:31)

Equinix provides less than 10 milliseconds latency to over 90% of the population of
North America and Europe, as well as to key population centers throughout Latin America and
Asia-Paciﬁc.

•

Partners, Customers and Prospects

(cid:31)

Equinix sites house a blue-chip customer base of 6,300+ global businesses.

These customers represent a who’s who of network, digital media, ﬁnancial services, cloud/IT
and enterprise leaders.

•

Opportunity

(cid:31)

Equinix data centers contain a dynamic marketplace for communications services,
interconnecting businesses, networks, carriers and content providers to potential suppliers,
customers and partners.

(cid:31) More than 6,300+ potential partners to deploy world-class solutions.

Equinix has established a critical mass of customers that continues to drive new and existing customer
growth and bookings. Our network- and cloud-neutral business model also contributes to our success in the
market. Rather than selling a particular network, we offer customers direct interconnection to an aggregation
of bandwidth providers. The providers in our sites include the world’s top carriers, mobile providers, Internet
service providers (ISPs), broadband access networks (DSL/cable) and international carriers. Our neutrality also
means our customers can choose to buy from, or partner with, leading companies across our ﬁve targeted
verticals. These include:

•

Network and Mobile Providers (AT&T, British Telecom, China Mobile, Comcast, Level 3
Communications, Lycamobile, NTT Communications, SingTel Ltd., Syniverse Technologies,
T-Mobile, TATA Communications, Verizon)

Cloud and IT Services (Amazon Web Services, Box Inc., Carpathia Hosting Inc., NetApp, Microsoft
Azure, Salesforce.com, SoftLayer, Cisco Systems Inc., Oracle, Datapipe, CloudSigma, Workday,
Inc.)

Content Providers (Brightroll, eBay, DIRECTV, Hulu, LinkedIn, Netﬂix, Priceline.com)

Enterprise (Anheuser-Busch, InBev, Bechtel, Burger King Corporation, Caterpillar, Inc.,
CDM Smith, Chevron, GE, Harper Collins Publishers, Ingram Micro)

Financial Companies (ACTIV Financial, Bloomberg, Chicago Board Options Exchange, DirectEdge,
Quantlab Financial, NASDAQ, OMX Group Inc., NYSE Technologies, Thomson Reuters)

Equinix generates revenue by providing colocation and related interconnection and managed IT

infrastructure offerings on a global platform of 112 IBX data centers.

•

Colocation offerings include operations space, storage space, cabinets and power for customers’
colocation needs.

Interconnection offerings include Equinix Cloud ExchangeTM, which enables simultaneous, direct
and secure connections to multiple clouds from a single port, and Performance HubTM, which takes
enterprise IT inside any one of our global data centers, bringing our customers closer to their end
users for improved network reliability, performance and security. Equinix also offers cross connects,
as well as switch ports on the Equinix Internet Exchange. These offerings provide scalable and
reliable connectivity that allows customers to exchange traffic directly and securely with the service
provider of their choice or with each other, creating a performance optimized business ecosystem for
the exchange of data between strategic partners.

• Managed IT infrastructure services are offered in limited regional markets to allow customers to

leverage Equinix’s signiﬁcant telecommunications expertise, maximize the beneﬁts of our IBX data
centers and optimize their infrastructure and resources.

•

Equinix professional services guide customers though complex IT infrastructure changes and hybrid
and multi-cloud deployments quickly and securely, while delivering continuous and reliable technical
support. Equinix cloud consulting services, led by recently acquired professional service company
Nimbo, optimize cloud migrations, matching service providers and architectures to individual
business needs. Solution Validation CentersTM (SVCsTM) allow customers to test and ﬁne-tune
cloud, network and IT infrastructure rollouts in a real-world setting prior to deployment. Global
Solution ArchitectsTM run our SVCs and are experts in emerging trends and the range of solutions
and services available from providers inside our data centers. They can design, build and implement
solutions that best match enterprise aims and budgets. The Equinix Customer Portal delivers
full-time access to support, instant reporting and requests for Equinix Smart HandsTM technicians.
These highly trained data center experts are on call for everything from routine cable installations to
technical assistance and troubleshooting.

The market for Equinix’s offerings has previously been served by large telecommunications carriers that

have bundled their telecommunications and managed services with their colocation offerings. In addition,
some Equinix customers, such as 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 sizable, wholesale, outsourced data
centers is also being addressed by providers that build large data centers to meet customers’ needs for
standalone data centers, a different customer segment than Equinix serves.

Due to the increasing cost and complexity of the power and cooling requirements of today’s data center

equipment, Equinix has gained many customers that have outgrown their existing data centers or 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 offerings. We continue to leverage our global reach and depth to
differentiate Equinix based upon our ability to support truly global customer requirements in all our markets.

Equinix is beneﬁting from a growth in demand for data center offerings. Several factors contribute to this

growth in demand, including:

•

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 and ecosystems for real-time bidding and fulﬁllment of Internet
advertising.

The adoption of cloud computing technology services, including the growth of hybrid/multi-clouds,
enterprise cloud service offerings such as Software-as-a-Service (SaaS), Infrastructure-as-a-Service
(IaaS) and Platform-as-a-Service (PaaS) and disaster recovery services.

The continuing growth of consumer Internet traffic from new bandwidth-intensive services, such as
video, voice over IP (VoIP), social media, mobile data, gaming, data-rich media, Ethernet and
wireless services. The ﬁnancial services market is experiencing tremendous growth due to electronic
trading and the increased volume of peak messages (transactions per second), requiring optimized
data exchange through business ecosystems.

The increasing requirements for anytime, anywhere and any device interconnection out at the edge
of the corporate network to improve the performance, security, scalability and reliability of
interconnecting people, locations, clouds and data.

Signiﬁcant increases in power and cooling requirements for today’s data center equipment. New
generations of servers continue to concentrate processing capability, with associated power
consumption and cooling load, into smaller footprints, and many legacy-built data centers are unable
to accommodate these new power and cooling demands. 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
between these networks. For example, when a person sends an email to someone who uses a different
provider for his or her connectivity (e.g., Comcast versus Verizon), the email must pass from one network to
the other to get to its ﬁnal destination. Equinix provides a physical point at which that interconnection can
occur.

To accommodate the rapid growth of Internet traffic, an organized approach for network interconnection

was needed. This was the start of the network era, when networks gained mutual advantage by exchanging
data traffic on interoperable platforms. 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 nonproﬁt 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 latter
two are now part 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, 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. These were
the seeds of the connected era, when peering expanded exponentially, and between new players, and access to
information anytime and anywhere became the norm.

To accommodate Internet traffic growth, the largest networks left the NAPs and began connecting and

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 peer. Today, many customers satisfy their requirements for peering through data
center providers like Equinix because this strategy permits them to peer with the networks they require within
one location, using simple, direct and secure connections. Their ability to peer within a data center or across a
data center campus, instead of across a metro area, has increased the scalability of their operations while
decreasing network costs.

The interconnection model has further evolved over the years to include new offerings, as the
collaborative landscape of the interconnected era imposes new demands on connectivity. As enterprises
become increasingly interdependent and cloud-enabled, they need real-time data exchange and reliable, instant
connections between the various corners of any given digital ecosystem to compete. Starting with the peering
and network communities, interconnection has been used for new network services, including carrier Ethernet,
multiprotocol label switching (MPLS), virtual private networks (VPNs) and mobile services, in addition to
traditional international private line and voice services. The industry continues to evolve with a set of new
offerings where interconnection is often used to solve the network-to-network and the cloud-to-cloud
interconnection challenges in order to keep up with the rapid digital transformation of today’s businesses.

In addition, the enterprise customer segment is also evolving. In the past, most enterprises opted to keep

their data center requirements in house. However, current trends are leading more and more enterprise chief
information officers (CIOs) to either outsource their data center requirements, and/or extend their corporate
wide area networks (WANs) into carrier-neutral colocation facilities. The combination of globalization, the
proliferation of bandwidth intensive Internet-facing applications and rich media content, the need to provide
access to cloud computing environments and business continuity and disaster recovery options, plus tight
corporate IT budgets, mean that enterprise CIOs must do more with less. Industry analysts forecast growth in
the colocation market to be approximately 10% per year over the next four years.

Equinix Value Proposition

More than 6,300 companies, including a diversiﬁed mix of cloud and IT service providers, content
providers, enterprises, ﬁnancial companies, and network and mobile service providers, currently operate within
Equinix IBX data centers. These companies derive speciﬁc value from the following elements of the Equinix
service offering:

•

Interconnection leadership: The digital economy’s demands for fast, secure business collaboration
puts the interconnection inside Equinix at a premium. The 6,300 companies inside Equinix represent
a range of global businesses, from cloud, to networks, to ﬁnance. Inside Equinix, customers can
interconnect across industries with the speed, security, reliability and scalability needed to compete
and grow.

Unrivaled cloud access: Equinix is home to 1,300 cloud service providers and a variety of secure
routes to the efficiencies, performance and cost-savings of the cloud. Equinix Cloud Exchange offers
on-demand access to multiple cloud providers from multiple networks, enabling customers to design
scalable cloud services tailored to their needs at a given moment.

Comprehensive global solution: With 112 IBX data centers in 33 markets in the Americas, EMEA
and Asia-Paciﬁc, Equinix offers a consistent global solution.

Premium data centers: Equinix IBX data centers feature advanced design, security, power and
cooling elements to provide customers with industry-leading reliability, including average uptime of
99.9999% globally in 2015. While others in the market have business models that include additional
offerings, Equinix is focused on colocation and interconnection as our core competencies.

Dynamic business ecosystems: Equinix’s network- and cloud-neutral model has enabled us to
attract a critical mass of networks and cloud and IT services providers, and 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. Customers also beneﬁt
from improved economics because 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 1,100 networks inside Equinix’s IBX data centers.

Leading insight: With more than 17 years of industry experience, Equinix has a specialized staff
of industry experts and solutions architects 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.

Our Strategy

Our objective is to expand our global leadership position as the premier network- and cloud-neutral data

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

Improve customer performance through interconnection. To succeed in today’s digital economy,
enterprises around the globe must adopt interconnected, on-demand IT architectures. To help companies
understand, deploy and beneﬁt from interconnection, Equinix created a blueprint for becoming an
interconnected enterprise — the Interconnection Oriented ArchitectureTM (IOATM). Based on work with more
than 100 Fortune 500 customers, and 400+ Equinix Performance HubTM deployments, Equinix developed
IOA as a proven and repeatable engagement model that both enterprises and solution providers can leverage to
directly and securely connect people, locations, clouds and data. IOA shifts the fundamental IT delivery
architecture from siloed and centralized to interconnected and distributed. When combined with Equinix’s
longstanding critical mass of premier network and cloud providers and content companies, this IOA strategy is
enabling Equinix to extend its leadership as one of the core interconnection hubs of the information-driven

world. Equinix’s 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 house more than 1,100 unique networks, including all of the top tier networks, allowing our
customers to directly interconnect with providers that best meet their unique global and regional price and
performance needs. We have a growing mass of key players in cloud and IT services, such as Accenture,
Amazon Web Services, AT&T, Microsoft Azure and Salesforce.com, and in the enterprise and ﬁnancial
sectors, such as Bechtel, Bloomberg, Chicago Board of Trade, The GAP, McGraw-Hill 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 choose 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 2015.

In 2015, more than half of our revenue came from customers with deployments in all three of our global

regions, and as globalization continues, seamless global solutions will become increasingly important data
center selection criteria. We continue to focus on strategic acquisitions to expand our market coverage and on
global product standardization, 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 offerings enable scalable, reliable and
cost-effective interconnectivity 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 and enables companies to create new opportunities within unique ecosystems by working together.
We have efficient and innovative Internet and Cloud Exchange platforms to accelerate commercial growth
within the ecosystems in our IBX sites via 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 appreciate the Equinix value proposition of interconnection, reliability,
global reach and ecosystem collaboration opportunities. Today, we have identiﬁed these segments as cloud
services, content and digital media, ﬁnancial services, enterprises, IT services, and network and mobile 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. In 2014, we completed the acquisition of ALOG Data Centers of Brazil S.A. and
took the remaining ownership interest in the four data centers at ALOG, obtaining the remaining ownership
interest in four data centers, two in São Paulo and two in Rio de Janeiro. In 2015, we acquired professional
services company Nimbo in the U.S. and Bit-isle in Japan. In January 2016, we also closed the TelecityGroup
acquisition in Europe. The TelecityGroup acquisition signiﬁcantly expands Equinix’s global interconnection
platform from 112 data centers in 33 metros to 145 data centers in 40 metros. The new metros we entered
with our TelecityGroup acquisition in 2016 were Dublin, Helsinki, Istanbul, Milan, Soﬁa, Stockholm and
Warsaw. We also added capacity across our global footprint in 2015 by opening our ninth data center in
New York, our second in Toronto, our ﬁrst in Melbourne, our third in Singapore and our sixth in London.

Our strategy is to continue to grow in select existing markets and possibly expand to additional markets
where warranted by demand and ﬁnancial return potential. 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, mobile and other bandwidth providers, cloud and IT services providers,

content providers, ﬁnancial companies and global enterprises. We provide each customer access to a choice of
business partners and solutions based on their colocation, interconnection and managed IT service needs. As
of December 31, 2015, we had more than 6,300 customers worldwide.

Customers in our ﬁve key customer categories include the following:

Cloud and IT Services

Amazon Web Services
Box Inc.
Carpathia Hosting Inc.
Cisco Systems Inc.
CloudSigma
Datapipe
Microsoft Azure
NetApp
Oracle
Salesforce.com
SoftLayer
Workday, Inc.

Content
Providers

Brightroll
DIRECTV
eBay
Hulu
LinkedIn
Netﬂix
Priceline.com

Enterprise

Anheuser-Busch InBev
Bechtel
Burger King Corporation
Caterpillar, Inc.
CDM Smith
Chevron
GE
Harper Collins Publishers
Ingram Micro

Financial
Companies

Network and
Mobile Services

ACTIV Financial
Bloomberg
Chicago Board
Options Exchange
DirectEdge
Quantlab Financial
NASDAQ
OMX Group Inc.
NYSE Technologies
Thomson Reuters

AT&T
British Telecom
China Mobile Comcast
Level 3 Communications
Lycamobile
NTT Communications SingTel
Ltd.
Syniverse Technologies
T-Mobile
TATA Communications Verizon

Customers typically sign renewable contracts of one or more years in length. Our largest customer
accounted for approximately 3% of our recurring revenues for the period ended December 31, 2015 and 2%
of our recurring revenues for the periods ended December 31, 2014 and 2013. Our 50 largest customers
accounted for approximately 34%, 36% and 35% of our recurring revenues for the years ended December 31,
2015, 2014 and 2013, respectively.

Our Offerings

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

solutions and managed IT infrastructure and professional services.

Colocation and Related Offerings

Our IBX data centers provide our customers with secure, reliable and robust 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 (24x7x365), dedicated areas
for customer care and equipment staging, redundant AC/DC power systems and other redundant and
fault-tolerant infrastructure systems. Some speciﬁcations of offerings provided by individual IBX data centers
may differ based on original facility design or market.

Within our IBX data centers, customers can deploy their equipment and interconnect with a choice of
networks, cloud providers or other business partners. We also provide customized solutions for customers
looking to package our IBX offerings as part of their complex solutions. Our colocation offerings 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
certain select markets, 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.

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 Solutions

Our interconnection solutions enable high-performance, secure, scalable, reliable and cost-effective
interconnection and traffic exchange between Equinix customers. These interconnection solutions are either on
a one-to-one basis with direct cross connects or one-to-many through one of our Equinix Exchange solutions.
In the peering community, we play 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 or has held
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 solutions. We expect to continue to develop additional solutions in the area of traffic exchange that will
allow our customers to leverage the critical mass of networks, cloud services providers, and many important
ﬁnancial services and e-commerce industry leaders now available in our IBX data centers. Our current
exchange solutions 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
offerings are priced with an initial installation fee and an ongoing monthly recurring charge.

Equinix Internet ExchangeTM. Customers may choose to connect to and peer through the central
switching fabric of our Equinix Internet Exchange, 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 multiple, linked 10 gigabit ports of capacity, instead of purchasing individual physical cross
connects. The offering 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 Metro Connect. 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.
Metro Connect allows customers to seamlessly interconnect between IBX data centers at capacities up to an
OC-192, or 10 gigabits per second level. Metro Connect offerings are priced with an initial installation fee and
an ongoing monthly recurring charge dependent on the capacity purchased by the customer.

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 and EMEA
regions, is targeted to customers who require a single bill and a single point of support for their entire
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.

Equinix Cloud ExchangeTM. The Equinix Cloud Exchange is an advanced interconnection solution that

enables seamless, on-demand, direct access to multiple clouds from multiple networks around the world.
Cloud Exchange provides virtualized, private direct connections that bypass the Internet to provide better
security and performance with a range of bandwidth options. It enables businesses to connect to many
participants (clouds, networks, enterprise customers) over a single physical port, enabling dynamic bandwidth
allocation among various parties. The Equinix Cloud Exchange Portal and APIs simplify the process of
provisioning and managing connections to multiple cloud services and networks. Equinix Cloud Exchange
offerings are priced with an initial installation fee and an ongoing monthly recurring charge dependent on the
capacity purchased by the customer.

Equinix Performance HubTM. The Equinix Performance Hub enables companies to securely and
directly connect to leading public clouds, easily deploy a private cloud, and lay the foundation of a hybrid
cloud. Performance Hub solutions are extensions of companies’ IT network that reside within Equinix data
centers. An Equinix Performance Hub places corporate IT resources near large user populations in IBX data
centers connected to many networks and clouds. Performance Hub solutions can be implemented gradually,
without closing or moving out of existing data centers. This distributed, connectivity-driven approach to data
center computing has been proven by Gartner, 451 Group, and many enterprise customers to provide dramatic
beneﬁts in application and network performance, as well as in business and IT agility. The Performance Hub
offering is priced per IBX data center with an initial installation fee and an ongoing recurring monthly charge.

Equinix Professional Services

Exponential increases in data traffic and growing demand for interconnection means pressure on

companies to stay competitive. They need a partner with deep knowledge of the global terrain and trends so
they can maximize new technology and information and meet the needs of dispersed and demanding end
users. Equinix professional services are uniquely positioned to be that partner. Equinix experts help companies
tap the resources and opportunities for innovation available on a global platform of 6,300 companies in
33 markets, including more than 1,100 network service providers and 1,300 cloud services providers. Our
technicians have the know-how and experience to help customers introduce new service offerings, optimize
IT architectures, simplify hybrid and multi-cloud migrations and stay up-and-running. Equinix professional
services include:

Cloud Consulting Services. Migration to a hybrid or multi-cloud environment comes with uncertainty,

but it’s also become essential: The cloud’s cost advantages and ﬂexibility are too critical to forego in an era of
rising electronic collaboration and user expectations. Equinix’s cloud consulting services, led by the recently
acquired professional services company Nimbo, are designed to take the mystery out of cloud migration with
a detailed assessment, design and implementation process that gives customers a faster, smoother path to the
cloud. The 1,300 cloud providers and 1,100 network services providers inside Equinix help our experts tailor
cloud deployments to individual business needs and maximize their cloud performance, savings and security
while ensuring future resilience and agility.

Global Solutions ArchitectsTM. Equinix Global Solutions Architects (GSAs) are industry experts,
innovators and thought leaders, committed to helping companies deploy their IT infrastructures in ways that
best serve their business needs and fully exploit the advantages offered by Equinix’s global interconnection
platform. Equinix’s GSAs have decades of combined experience in cloud deployments, facility operations,
business analytics and network design and operations. They work as extensions of our customers’ IT and
technology teams, helping efficiently deploy high-performance solutions, advising them on service provider
choices, and designing IT architectures that help them reach today’s goals and anticipate tomorrow’s
requirements.

Solution Validation CentersTM. Equinix Solution Validation Centers (SVCs) are state-of-the-art
facilities that allow customers to test and ﬁne-tune their IT infrastructure, network, cloud and data center
rollouts in a real-world environment before full build-out and deployment. Customers can measure how their
applications perform when moved off legacy systems, spot and address unforeseen technical barriers, and
optimize various infrastructure components, network connections and applications. Our SVCs operate in eight
strategic markets globally, helping companies reduce risk and maximize their IT investments.

Smart Hands ServicesTM. The Equinix Smart Hands service enables customers to use our highly
trained IBX data center personnel to act as their hands (or eyes and ears) when their own staff can’t be
on-site. Smart Hands technicians offer a range of services, from routine equipment inventory and labeling to
more complex installations and conﬁguring. Smart Hands technicians also provide technical assistance and
troubleshooting services.

Equinix Customer Portal. The Equinix Customer Portal offers all-day, every day access to our

customer care personnel, so customers can report problems, schedule shipments or order Smart Hands services
at any time of the day or night.

Business Continuity Trading Rooms. Trading infrastructure is mission-critical for ﬁnancial ﬁrms
worldwide, and our Business Continuity Trading Rooms (BCTRs) ensure that trading doesn’t stop, even if
primary operations are knocked off-line or disabled. A BCTR backs up our customers’ trading operations in
one of our secure data center facilities, right down to telephone services and multiple desktop monitors. BCTR
offerings are protected with back-up generators and uninterruptible power supply to guarantee reliability and
deliver peace of mind.

Sales and Marketing

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

enterprises, content providers, ﬁnancial companies, and mobile 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 Amsterdam. Our Americas sales offices are located in
Boston, Chicago, Los Angeles, New York, Reston, Silicon Valley and Toronto and sales offices in Brazil
operate out of data centers in Sao Paulo and Rio de Janeiro. Our EMEA sales offices are located in
Amsterdam, Dubai, Dusseldorf, Enschede, Frankfurt, Geneva, London, Munich, Paris, Zurich and Zwolle. Our
Asia-Paciﬁc sales offices are located in Beijing, Hong Kong, Jakarta, Osaka, Seoul, Shanghai, Singapore,
Sydney, Melbourne and Tokyo.

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, cloud providers or managed service providers may refer customers to Equinix as a part of their
total customer solution. Equinix also focuses selling by our vertical sales specialists on supporting speciﬁc
industry requirements for network, mobile and content providers, ﬁnancial services, cloud computing, systems
integrators and enterprise customer segments.

Marketing. To support our sales efforts and to actively promote our brand in the Americas, Asia-Paciﬁc

and EMEA, 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, enterprise IT,
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 our website, 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. 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 more than 650 companies that provide Internet data center offerings 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 offered on the basis of individual racks/cabinets or
cages ranging from 500 to 10,000 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.

• Mobile and network service providers.

•

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 are typically available,
including remote hands technician services and network monitoring services.

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

AT&T, CenturyLink, COLT, CyrusOne, Level 3 Communications, NTT and Verizon Business.

Carrier-Neutral Colocation Providers

In addition to data center space and power, colocation providers also offer interconnection. 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 to
buy Internet connectivity, connect to VoIP telephone networks, perform ﬁnancial 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, such as New York, Ashburn, 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 an 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, Digital Reality, Global Switch, Interxion and Telehouse.

Wholesale Data Center Providers

Wholesale data center providers lease data center space that is typically offered 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 offerings are targeted to both enterprises and 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).

Sample wholesale data center providers include Digital Realty Trust, DuPont Fabros Technology,

e-Shelter and Global Switch.

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 websites.

• 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 AT&T, CenturyLink, NaviSite, Rackspace, SunGard and Verizon

Business.

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 do not have 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 Americas, EMEA and Asia-Paciﬁc locations, the performance and diversity
of our network- and cloud-neutral strategy, and the economic beneﬁts of the aggregation of top network, cloud
and business ecosystems under one roof. We expect to continue to beneﬁt from several industry trends,
including the need for contracting with multiple networks due to the uncertainty in the telecommunications
market; customers’ increasing power requirements; enterprise customers’ increased use of virtualization and
outsourcing; the continued growth of broadband and signiﬁcant growth in Ethernet as a network alternative;
and the growth in mobile applications.

Our Business Segment Financial Information

We currently operate in three reportable segments comprised of our Americas, EMEA and Asia-Paciﬁc

geographic regions. Information attributable to each of our reportable segments is set forth in Note 16 of
Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Employees

We had 5,042 employees as of December 31, 2015. We had 2,329 employees based in the Americas,

1,188 employees based in EMEA and 1,525 employees based in Asia-Paciﬁc. Excluding Bit-isle,
1,963 employees were in engineering and operations, 907 employees were in sales and marketing and
1,486 employees 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 reports 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:

Risks Related to the Acquisition and Integration of TelecityGroup

We have incurred and will continue to incur signiﬁcant transaction, acquisition-related integration and
asset divestment costs in connection with the consummation of the TelecityGroup acquisition.

We have incurred and will continue to incur signiﬁcant costs in connection with consummating the
TelecityGroup acquisition and integrating our and TelecityGroup’s operations into a combined company.
We will also incur costs in connection with the divestment of certain of the assets of the combined company.
The actual costs incurred may exceed those estimated and there may be further unanticipated costs and the
assumption of known and unknown liabilities. While we have assumed that we will incur transaction,
integration and divestment expenses, there are factors beyond our control that could affect the total amount or
the timing of such expenses. Many of the expenses that will be incurred, by their nature, are difficult to
estimate accurately at the present time.

As a result, the transaction, integration and divestment expenses associated with the TelecityGroup
acquisition could, particularly in the near term, exceed the cost savings that we expect to achieve from the
streamlining of operations following the completion of the TelecityGroup acquisition.

The anticipated beneﬁts of the TelecityGroup acquisition may not be realized fully and may take longer
to realize than expected and there will be numerous challenges associated with integration.

The success of the TelecityGroup acquisition will depend, in part, on the combined company’s ability to

successfully integrate our and TelecityGroup’s businesses and realize the anticipated beneﬁts, including
synergies and cost savings, from the combination. If we are unable to achieve these objectives within the
anticipated time frame, or at all, the anticipated beneﬁts may not be realized fully or at all, or may take longer
to realize than expected and the value of the combined company’s common stock may be adversely affected.
We also must successfully divest certain assets of the combined company agreed upon with the European
Commission in order to obtain clearance of the transaction, which could reduce certain of the beneﬁts we
expect to receive from the TelecityGroup acquisition.

We have incurred and will continue to incur signiﬁcant transaction-related costs in connection with the
TelecityGroup acquisition and the integration and divestment processes. We may encounter material challenges
in connection with this integration process, including, without limitation:

•

the diversion of management’s attention from ongoing business concerns and performance shortfalls
at one or both of the companies as a result of the devotion of management’s attention to the
TelecityGroup integration;

managing a larger combined company;

integrating two unique corporate cultures, which may prove to be challenging;

retaining key employees, customers and suppliers, each of whom may experience uncertainty
associated with the TelecityGroup acquisition or who may attempt to negotiate changes in their
current or future business relationships with us;

consolidating corporate and administrative infrastructures and eliminating duplicative operations; and

unforeseen expenses or delays associated with the TelecityGroup acquisition.

Many of these factors will be outside of our control and any one of them could result in increased costs,

decreases in the amount of expected revenues and diversion of management’s time and energy, which could
materially impact our business, ﬁnancial condition and results of operations.

The market price of our common stock may decline as a result of the TelecityGroup acquisition.

The market price of our common stock may decline as a result of the TelecityGroup acquisition if we do

not achieve the perceived beneﬁts of the TelecityGroup acquisition as rapidly or to the extent anticipated by

ﬁnancial or industry analysts or if the effect of the TelecityGroup acquisition on our ﬁnancial results is not
consistent with the expectations of ﬁnancial or industry analysts. In addition, TelecityGroup shareholders now
own approximately 10% of the common stock outstanding, and they may decide to sell their common stock
which may result in additional pressure on the price of our common stock.

We would incur adverse tax consequences if the combined company following the TelecityGroup
acquisition fails to qualify as a REIT for U.S. federal income tax purposes.

We believe that we will continue to integrate TelecityGroup’s assets and operations in a manner that will

allow us to timely satisfy the REIT income, asset, and distribution tests applicable to us. However, the
TelecityGroup integration will be complicated due to the size of TelecityGroup and if we fail to timely satisfy
such tests, we could jeopardize or lose our qualiﬁcation for taxation as a REIT, particularly if we were
ineligible to utilize relief provisions set forth in the Internal Revenue Code (the ‘‘Code’’). For any taxable
year that we fail to qualify for taxation as a REIT, we would not be allowed a deduction for distributions to
our stockholders in computing our taxable income, and would thus be subject to U.S. federal and state income
tax at the regular corporate rates on all of our U.S. federal and state taxable income in the manner of a regular
corporation. Those corporate level taxes would reduce the amount of cash available for distribution to our
stockholders or for reinvestment or other purposes, and would adversely affect our earnings. As a result, our
failure to qualify for taxation as a REIT during any taxable year could have a material adverse effect upon us
and our stockholders. Furthermore, unless prescribed relief provisions apply, we would not be eligible to elect
REIT status again until the ﬁfth taxable year that begins after the ﬁrst year for which we failed to qualify as a
REIT. Finally, even if we are able to utilize relief provisions and thereby avoid disqualiﬁcation for taxation as
a REIT, relief provisions typically involve paying a penalty tax in proportion to the severity and duration of
the noncompliance with REIT requirements, and thus these penalty taxes could be signiﬁcant in the context of
noncompliance stemming from a transaction as large as the TelecityGroup acquisition.

Risks Related to Our Taxation as a REIT

We may not remain qualiﬁed for taxation as a REIT.

We began operating as a REIT for federal income tax purposes, effective for our taxable year that began

January 1, 2015. We believe we are operating so as to qualify for taxation as a REIT under the Code and
believe that our organization and method of operation complies with the rules and regulations promulgated
under the Code and will enable us to continue to qualify for taxation as a REIT. However, we cannot assure
you that we will qualify for taxation as a REIT or that we will remain qualiﬁed for taxation as a REIT.
Qualiﬁcation for taxation as a REIT requires us to satisfy numerous requirements (some on an annual and
others on a quarterly basis) established under highly technical and complex sections of the Code which may
change from time to time; and for which there are only limited judicial and administrative interpretations, and
involves the determination of various factual matters and circumstances not entirely within our control. For
example, in order to qualify for taxation as a REIT, we must derive at least 95% of our gross income in any
year from qualifying sources. In addition, we must satisfy speciﬁed asset tests on a quarterly basis.

If, in any taxable year, we fail to remain qualiﬁed for taxation as a REIT and are not entitled to relief

under the Code:

•

we will not be allowed a deduction for distributions to stockholders in computing our taxable
income;

we will be subject to federal and state income tax, including any applicable alternative minimum
tax, on our taxable income at regular corporate rates; and

we would not be eligible to elect REIT status again until the ﬁfth taxable year that begins after the
ﬁrst year for which we failed to qualify as a REIT.

Any such corporate tax liability could be substantial and would reduce the amount of cash available for

other purposes.

As a REIT, failure to make required distributions would subject us to federal corporate income tax.

We paid quarterly distributions in 2015. We also paid the 2015 Special Distribution (as deﬁned below) in

the fourth quarter of 2015. The amount, timing and form of any future distributions will be determined, and
will be subject to adjustment, by our Board of Directors. To remain qualiﬁed for taxation as a REIT, we are
generally required to distribute at least 90% of our REIT taxable income (determined without regard to the
dividends paid deduction and excluding net capital gain) each year to our stockholders. Generally, we expect
to distribute all or substantially all of our REIT taxable income. If our cash available for distribution falls
short of our estimates, we may be unable to maintain distributions that approximate our REIT taxable income
and may fail to remain qualiﬁed for taxation as a REIT. In addition, our cash ﬂows from operations may be
insufficient to fund required distributions as a result of differences in timing between the actual receipt of
income and the payment of expenses and the recognition of income and expenses for federal income tax
purposes, or the effect of nondeductible expenditures, such as capital expenditures, payments of compensation
for which Section 162(m) of the Code denies a deduction, the creation of reserves or required debt service or
amortization payments.

To the extent that we satisfy the 90% distribution requirement but distribute less than 100% of our REIT

taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In
addition, we will be subject to a 4% nondeductible excise tax on our undistributed taxable income if the
actual amount that we distribute to our stockholders for a calendar year is less than the minimum amount
speciﬁed under the Code.

We may be required to borrow funds or raise equity to satisfy our REIT distribution requirements.

Due to the size and timing of future regular or special distributions, including any distributions made to
satisfy REIT distribution requirements and maintain our qualiﬁcation and taxation as a REIT, we may need to
borrow funds or raise equity, even if the then-prevailing market conditions are not favorable for these
borrowings or offerings.

Any insufficiency of our cash ﬂows to cover our REIT distribution requirements could adversely impact

our ability to raise short- and long-term debt or to offer equity securities in order to fund distributions required
to maintain our qualiﬁcation and taxation as a REIT. Furthermore, the REIT distribution requirements may
increase the ﬁnancing we need to fund capital expenditures, future growth and expansion initiatives. This
would increase our indebtedness. A signiﬁcant increase in our outstanding debt could lead to a downgrade of
our credit rating. A downgrade of our credit rating could negatively impact our ability to access credit
markets. Further, certain of our current debt instruments limit the amount of indebtedness we and our
subsidiaries may incur. Signiﬁcantly more ﬁnancing, therefore, may be unavailable, more expensive or
restricted by the terms of our outstanding indebtedness. For a discussion of risks related to our substantial
level of indebtedness, see ‘‘Other Risks’’.

Whether we issue equity, at what price and the amount and other terms of any such issuances will

depend on many factors, including alternative sources of capital, our then-existing leverage, our need for
additional capital, market conditions and other factors beyond our control. If we raise additional funds through
the issuance of equity securities or debt convertible into equity securities, the percentage of stock ownership
by our existing stockholders may be reduced. In addition, new equity securities or convertible debt securities
could have rights, preferences and privileges senior to those of our current stockholders, which could
substantially decrease the value of our securities owned by them. Depending on the share price we are able to
obtain, we may have to sell a signiﬁcant number of shares in order to raise the capital we deem necessary to
execute our long-term strategy, and our stockholders may experience dilution in the value of their shares as a
result.

Legislative or other actions affecting REITs could have a negative effect on us or our stockholders.

At any time, the federal income tax laws governing REITs or the administrative interpretations of those

laws may be amended. Federal and state tax laws are constantly under review by persons involved in the
legislative process, the IRS, the U.S. Department of the Treasury and state taxing authorities. Changes to the
tax laws, regulations and administrative interpretations, which may have retroactive application, could
adversely affect us. In addition, some of these changes could have a more signiﬁcant impact on us as

compared to other REITs due to the nature of our business and our substantial use of TRSs. We cannot predict
with certainty whether, when, in what forms, or with what effective dates, the tax laws, regulations and
administrative interpretations applicable to us may be changed.

Complying with REIT requirements may limit our ﬂexibility or cause us to forego otherwise attractive
opportunities.

As a REIT for U.S. federal income tax purposes, we must satisfy tests concerning, among other things,
the sources of our income, the nature and diversiﬁcation of our assets and the amounts we distribute to our
stockholders. For example, under the Code, no more than 25% (20% from and after our 2018 taxable year) of
the value of the assets of a REIT may be represented by securities of one or more TRSs. Similar rules apply
to other nonqualifying assets. These limitations may affect our ability to make large investments in other
non-REIT qualifying operations or assets. In addition, in order to maintain qualiﬁcation for taxation as a
REIT, we must annually distribute at least 90% of our REIT taxable income, determined without regard to the
dividends paid deduction and excluding any net capital gains. Even if we maintain our qualiﬁcation for
taxation as a REIT, we will be subject to U.S. federal income tax at regular corporate rates for our
undistributed REIT taxable income, as well as U.S. federal income tax at regular corporate rates for income
recognized by our TRSs. Because of these distribution requirements, we will likely not be able to fund future
capital needs and investments from operating cash ﬂow. As such, compliance with REIT tests may hinder our
ability to make certain attractive investments, including the purchase of signiﬁcant nonqualifying assets and
the material expansion of non-real estate activities.

As a REIT, we are limited in our ability to fund distribution payments using cash generated through
our TRSs.

Our ability to receive distributions from our TRSs is limited by the rules with which we must comply to

maintain our qualiﬁcation for taxation as a REIT. In particular, at least 75% of our gross income for each
taxable year as a REIT must be derived from real estate. Consequently, no more than 25% of our gross
income may consist of dividend income from our TRSs and other nonqualifying types of income. Thus, our
ability to receive distributions from our TRSs may be limited, and may impact our ability to fund distributions
to our stockholders using cash ﬂows from our TRSs. Speciﬁcally, if our TRSs become highly proﬁtable, we
might become limited in our ability to receive net income from our TRSs in an amount required to fund
distributions to our stockholders commensurate with that proﬁtability.

In addition, a signiﬁcant amount of our income and cash ﬂows from our TRSs is generated from our
international operations. In many cases, there are local withholding taxes and currency controls that may
impact our ability or willingness to repatriate funds to the United States to help satisfy REIT distribution
requirements.

Our extensive use of TRSs, including for certain of our international operations, may cause us to fail to
remain qualiﬁed for taxation as a REIT.

The net income of our TRSs is not required to be distributed to us, and income that is not distributed to

us generally is not subject to the REIT income distribution requirement. However, there may be limitations on
our ability to accumulate earnings in our TRSs and the accumulation or reinvestment of signiﬁcant earnings in
our TRSs could result in adverse tax treatment. In particular, if the accumulation of cash in our TRSs causes
the fair market value of our securities in our TRSs and other nonqualifying assets to exceed 25% or from and
after our 2018 taxable year, causes (1) the fair market value of our securities in our TRSs to exceed 20% of
the fair market value of our assets or (2) the fair market value of our securities in our TRSs and other
nonqualifying assets to exceed 25% of the fair market value of our assets, then we will fail to remain
qualiﬁed for taxation as a REIT.

Our cash distributions are not guaranteed and may ﬂuctuate.

A REIT generally is required to distribute at least 90% of its REIT taxable income to its stockholders.

Our Board of Directors, in its sole discretion, will determine on a quarterly basis the amount of cash to

be distributed to our stockholders based on a number of factors including, but not limited to, our results of

operations, cash ﬂow and capital requirements, economic conditions, tax considerations, borrowing capacity
and other factors, including debt covenant restrictions that may impose limitations on cash payments, future
acquisitions and divestitures and any stock repurchase program. Consequently, our distribution levels
may ﬂuctuate.

Even if we remain qualiﬁed for taxation as a REIT, some of our business activities are subject to
corporate level income tax and foreign taxes, which will continue to reduce our cash ﬂows, and we will
have potential deferred and contingent tax liabilities.

Even if we remain qualiﬁed for taxation as a REIT, we may be subject to some federal, state, local and

foreign taxes on our income and assets, including alternative minimum taxes, taxes on any undistributed
income, and state, local or foreign income, franchise, property and transfer taxes. In addition, we could in
certain circumstances be required to pay an excise or penalty tax, which could be signiﬁcant in amount, in
order to utilize one or more relief provisions under the Code to maintain qualiﬁcation for taxation as a REIT.

A portion of our business is conducted through wholly owned TRSs because certain of our business
activities could generate nonqualifying REIT income as currently structured and operated. The income of
our U.S. TRSs will continue to be subject to federal and state corporate income taxes. In addition, our
international assets and operations will continue to be subject to taxation in the foreign jurisdictions where
those assets are held or those operations are conducted. Any of these taxes would decrease our earnings and
our available cash.

We will also be subject to a federal corporate level tax at the highest regular corporate rate (currently
35%) on gain recognized from a sale of a REIT asset where our basis in the asset is determined by reference
to the basis of the asset in the hands of a present or former C corporation (such as (i) an asset that we held as
of the effective date of our REIT election, that is, January 1, 2015, or (ii) an asset that we hold in a QRS
following the liquidation or other conversion of a former TRS). This 35% tax is generally applicable to any
disposition of such an asset during the ﬁve-year period after the date we ﬁrst owned the asset as a REIT asset
(e.g. January 1, 2015 in the case of REIT assets we held at the time of our REIT conversion), to the extent of
the built-in-gain based on the fair market value of such asset on the date we ﬁrst held the asset as a REIT
asset.

In addition, the IRS and any state or local tax authority may successfully assert liabilities against us for

corporate income taxes for our pre-REIT period, in which case we will owe these taxes plus applicable
interest and penalties, if any. Moreover, any increase in taxable income for these pre-REIT periods will likely
result in an increase in pre-REIT accumulated earnings and proﬁts, which could cause us to pay an additional
taxable distribution to our stockholders after the relevant determination.

Restrictive loan covenants could prevent us from satisfying REIT distribution requirements.

Restrictions in our credit facility and our indentures may prevent us from satisfying our REIT distribution

requirements, and we could fail to remain qualiﬁed for taxation as a REIT. If these limits do not jeopardize
our qualiﬁcation for taxation as a REIT but nevertheless prevent us from distributing 100% of our REIT
taxable income, we would be subject to federal corporate income tax, and potentially a nondeductible excise
tax, on the retained amounts. See ‘‘Other Risks’’ for further information on our restrictive loan covenants.

Complying with REIT requirements may limit our ability to hedge effectively and increase the cost of
our hedging and may cause us to incur tax liabilities.

The REIT provisions of the Code limit our ability to hedge assets, liabilities, revenues and expenses.
Generally, income from hedging transactions that we enter into to manage risk of interest rate changes or
ﬂuctuations with respect to borrowings made or to be made by us to acquire or carry real estate assets and
income from certain currency hedging transactions related to our non-U.S. operations, as well as income from
qualifying contracting hedges do not constitute ‘‘gross income’’ for purposes of the REIT gross income tests.
To the extent that we enter into other types of hedging transactions, the income from those transactions is
likely to be treated as nonqualifying income for purposes of the REIT gross income tests. As a result of these
rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through
our TRSs, which we presently do. This increases the cost of our hedging activities because our TRSs are

subject to tax on income or gains resulting from hedges entered into by them and may expose us to greater
risks associated with changes in interest rates or exchange rates than we would otherwise want to bear. In
addition, hedging losses in any of our TRSs may not provide any tax beneﬁt, except for being carried forward
for possible use against future capital gain in the TRSs.

We have limited experience operating as a REIT, which may adversely affect our ﬁnancial condition,
results of operations, cash ﬂow, per share trading price of our common stock and ability to forecast
dividends.

We began operating as a REIT on January 1, 2015 and, as such, have limited operating history as a
REIT. In addition, prior to January 1, 2015 our senior management team had no prior experience operating a
REIT. We can provide no assurance that our past experience has sufficiently prepared us to operate
successfully as a REIT. Our inability to operate successfully as a REIT, including the failure to remain
qualiﬁed for taxation as a REIT, could adversely affect our business, ﬁnancial condition and results of
operations.

Distributions payable by REITs generally do not qualify for preferential tax rates.

Qualifying distributions payable by corporations to individuals, trusts and estates that are U.S.

stockholders are currently eligible for federal income tax at preferential rates. Distributions payable by REITs,
in contrast, generally are not eligible for the preferential rates. The preferential rates applicable to regular
corporate distributions could cause investors who are individuals, trusts and estates to perceive investments in
REITs to be relatively less attractive than investments in the stock of non-REIT corporations that pay
distributions, which could adversely affect the value of the stock of REITs, including our common stock.

Our certiﬁcate of incorporation contains restrictions on the ownership and transfer of our stock, though
they may not be successful in preserving our qualiﬁcation for taxation as a REIT.

In order for us to remain qualiﬁed for taxation as a REIT, no more than 50% of the value of outstanding

shares of our stock may be owned, beneﬁcially or constructively, by ﬁve or fewer individuals at any time
during the last half of each taxable year other than the ﬁrst year for which we elect to be taxed as a REIT. In
addition, rents from ‘‘affiliated tenants’’ will not qualify as qualifying REIT income if we own 10% or more
by vote or value of the customer, whether directly or after application of attribution rules under the Code.
Subject to certain exceptions, our certiﬁcate of incorporation prohibits any stockholder from owning
beneﬁcially or constructively more than (i) 9.8% in value of the outstanding shares of all classes or series of
our capital stock or (ii) 9.8% in value or number, whichever is more restrictive, of the outstanding shares of
any class or series of our capital stock. We refer to these restrictions collectively as the ‘‘ownership limits’’
and we included them in our certiﬁcate of incorporation to facilitate our compliance with REIT tax rules. The
constructive ownership rules under the Code are complex and may cause the outstanding stock owned by a
group of related individuals or entities to be deemed to be constructively owned by one individual or entity.
As a result, the acquisition of less than 9.8% of our outstanding common stock (or the outstanding shares of
any class or series of our stock) by an individual or entity could cause that individual or entity or another
individual or entity to own constructively in excess of the relevant ownership limits. Any attempt to own or
transfer shares of our common stock or of any of our other capital stock in violation of these restrictions may
result in the shares being automatically transferred to a charitable trust or may be void. Even though our
certiﬁcate of incorporation contains the ownership limits, there can be no assurance that these provisions will
be effective to prevent our qualiﬁcation for taxation as a REIT from being jeopardized, including under the
affiliated tenant rule. Furthermore, there can be no assurance that we will be able to enforce the ownership
limits. If the restrictions in our certiﬁcate of incorporation are not effective and as a result we fail to satisfy
the REIT tax rules described above, then absent an applicable relief provision, we will fail to remain qualiﬁed
for taxation as a REIT.

Other Risks

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 numerous acquisitions, including most recently that of
Nimbo and Bit-isle in 2015 and TelecityGroup in January of 2016. We may make additional acquisitions in

the future, which may include (i) acquisitions of businesses, products, services or technologies that we believe
to be complementary, (ii) acquisitions of new IBX data centers or real estate for development of new IBX
data centers or (iii) acquisitions through investments in local data center operators. 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 potential risks, including:

•

the possible disruption of our ongoing business and diversion of management’s attention by
acquisition, transition and integration activities, particularly when multiple acquisitions and
integrations are occurring at the same time;

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 in
connection with our acquisitions of Switch & Data Facilities Company, Inc. in 2010 (‘‘Switch and
Data’’) and TelecityGroup;

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

the potential deterioration to our ability to access credit markets due to increased leverage;

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 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 future acquisitions may present new complexities in deal structure, related
complex accounting and coordination with new partners, particularly in light of our desire to
maintain our taxation as a REIT;

the possibility that future acquisitions may be in geographies and regulatory environments to which
we are unaccustomed;

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;

•

the possibility that asset divestments may be required in order to obtain regulatory clearance for a
transaction; and

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

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 that the price of 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.

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 may need to incur additional debt to support our growth.
Additional debt may also be incurred to fund future acquisitions, any future special distributions, regular
distributions or the other cash outlays associated with maintaining qualiﬁcation for taxation as a REIT. As of
December 31, 2015, our total indebtedness was approximately $6.5 billion, our stockholders’ equity was
$2.7 billion and our cash and investments totaled $2.2 billion. In addition, as of December 31, 2015, we had
approximately $1.1 billion of additional liquidity available to us from our $1.5 billion revolving credit facility
and approximately $700 million of additional liquidity available to us from our undrawn Term Loan B (as
deﬁned below) commitments as part of an approximately $2.7 billion senior credit facility agreement entered
into with a group of lenders, and approximately $8.7 million undrawn from the Bridge Term Loan Agreement
(as deﬁned below) entered into to fund the Bit-isle acquisition. Some of our debt contains covenants which
may limit our operating ﬂexibility. In addition to our substantial debt, we lease a majority of our IBX data
centers and certain equipment under non-cancellable lease agreements, the majority of which are accounted
for as operating leases. As of December 31, 2015, our total minimum operating lease commitments under
those lease agreements, excluding potential lease renewals, was approximately $1.2 billion, which represents
off-balance sheet commitments.

Our substantial amount of debt and related covenants, and our off-balance sheet commitments, could have

important consequences. For example, they could:

•

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

increase the likelihood of negative outlook from our rating agencies;

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

increase our cost of borrowing and even limit our ability to access additional debt to fund future
growth;

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 operating ﬂexibility through covenants with which we must comply, such as limiting our
ability to repurchase shares of our common stock;

•

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. 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.

Adverse global economic conditions and credit market uncertainty could adversely impact our business
and ﬁnancial condition.

Adverse global economic conditions continue and uncertain conditions in the credit markets have created,
and in the future may create, uncertainty and unpredictability and add risk to our future outlook. An uncertain
global economy could also result in churn in our customer base, reductions in revenues from our offerings,
longer sales cycles, slower adoption of new technologies and increased price competition, adversely affecting
our liquidity. The uncertain economic environment could also have an impact on our foreign exchange
forward contracts if our counterparties’ credit deteriorates or they are otherwise unable to perform their
obligations. 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.

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 us or others, or speculations about our future plans, may also have a signiﬁcant

impact on the market price of our common stock. These may relate to:

•

our operating results or forecasts;

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

changes to our capital allocation, tax planning or business strategy;

our qualiﬁcation for taxation as a REIT and our declaration of distributions to our stockholders;

a stock repurchase program;

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;

•

our acquisitions 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 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, obligations to service our debt and
the cash outlays associated with our REIT distribution requirements, are and will continue to be a substantial
burden 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 costs in our international operations are denominated in foreign currencies. Where our prices are
denominated in U.S. dollars, our sales and revenues could be adversely affected by declines in foreign
currencies relative to the U.S. dollar, thereby making our offerings more expensive in local currencies. We are
also exposed to risks resulting from ﬂuctuations in foreign currency exchange rates in connection with our
international operations. To the extent we are paying contractors in foreign currencies, our operations 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 currently undertake, and may decide in the future to further undertake, foreign exchange

hedging transactions to reduce foreign currency transaction exposure, we do not currently intend to eliminate
all foreign currency transaction exposure. In addition, REIT compliance rules may restrict our ability to enter
into hedging transactions. 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 Item 7A of this Annual Report on
Form 10-K.

Changes in U.S. or foreign tax laws, regulations, or interpretations thereof, including changes to tax
rates, may adversely affect our ﬁnancial statements and cash taxes.

We are a U.S. company with global subsidiaries and are subject to income taxes in the U.S. (although

currently limited due to our taxation as a REIT) and many foreign jurisdictions. Signiﬁcant judgment is
required in determining our worldwide provision for income taxes. Although we believe that we have
adequately assessed and accounted for our potential tax liabilities, and that our tax estimates are reasonable,
there can be no certainty that additional taxes will not be due upon audit of our tax returns or as a result of
changes to the tax laws and interpretations thereof. The U.S. Congress as well as the governments of many of
the countries in which we operate are actively discussing changes to the corporate recognition and taxation of

worldwide income. The nature and timing of any changes to each jurisdiction’s tax laws and the impact on
our future tax liabilities cannot be predicted with any accuracy but could materially and adversely impact our
results of operations and ﬁnancial position or cash ﬂows.

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 offerings have a long sales cycle that may harm our revenues and operating results.

A customer’s decision to purchase our offerings 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 devote signiﬁcant time and resources in pursuing a particular sale or customer that does
not result in revenue. We have also signiﬁcantly expanded our sales force in recent years, and it will take time
for these new hires to become fully productive.

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 and cause volatility in our stock price.

Any failure of our physical infrastructure or offerings 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 solutions. We must safehouse our
customers’ infrastructure and equipment located in our IBX data centers. We own certain of our IBX data
centers, but others are leased by us, and we rely on the landlord for basic maintenance of our leased IBX data
centers. 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 offerings 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. 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 a result of a problem at one of our IBX data centers and we may decide to reach
settlements with affected customers irrespective of any such contractual limitations. 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.

Furthermore, we are dependent upon Internet service providers, telecommunications carriers and other

website operators in the Americas, Asia-Paciﬁc and EMEA regions and elsewhere, some of which have
experienced signiﬁcant system failures and electrical outages in the past. Our customers may in the future
experience difficulties due to system failures unrelated to our systems and offerings. 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.

We are currently making signiﬁcant investments in our back office information technology systems,
including those surrounding the customer experience from initial quote to customer billing, and
upgrading our worldwide ﬁnancial application suite. Difficulties, distractions or disruptions to these
efforts may interrupt our normal operations and adversely affect our business and operating results.

Commencing in 2012, we began a signiﬁcant project to overhaul our back office systems that support the
customer experience from initial quote to customer billing and our revenue recognition process. Additionally,
commencing in 2013, we began to devote signiﬁcant resources to the upgrade of our worldwide ﬁnancial
application suite from Oracle’s version 11i to R12. While signiﬁcant milestones have been achieved on both
projects, both projects have continued into 2016. Oracle has already begun to discontinue its support for our
current business application suite. While the Oracle ﬁnancial application suite implementation was largely
completed in July 2014 and the initial implementation of the systems to support our billing and revenue
process was completed in August 2014, work continues on our back office systems and their global
implementation, including upgrades and developing new functionality. As a result of that discontinued support
and our continued work on these projects, we may experience difficulties with our systems, management
distraction and signiﬁcant business disruptions. Difficulties with our systems may interrupt our ability to
accept and deliver customer orders and may adversely impact our overall ﬁnancial operations, including our
accounts payable, accounts receivables, general ledger, close processes, internal ﬁnancial controls and our
ability to otherwise run and track our business. We may need to expend signiﬁcant attention, time and
resources to correct problems or ﬁnd alternative sources for performing these functions. All of these changes
to our ﬁnancial systems create an increased risk of deﬁciencies in our internal controls over ﬁnancial reporting
until such systems are stabilized. Such signiﬁcant investments in our back office systems may take longer to
complete and cost more than originally planned. In addition, we may not realize the full beneﬁts we hoped to
achieve and there is a risk of an impairment charge if we decide that portions of these projects will not
ultimately beneﬁt the company or are de-scoped. Any such difficulty or disruption may adversely affect our
business and operating results.

The insurance coverage that we purchase may prove to be inadequate.

We carry liability, property, business interruption and other insurance policies to cover insurable risks to

our company. We select the types of insurance, the limits and the deductibles based on our speciﬁc risk
proﬁle, the cost of the insurance coverage versus its perceived beneﬁt and general industry standards. Our

insurance policies contain industry standard exclusions for events such as war and nuclear reaction. We
purchase minimal levels of earthquake insurance for certain of our IBX data centers, but for most of our data
centers, including many in California, we have elected to self-insure. The earthquake and ﬂood insurance that
we do purchase would be subject to high deductibles. Any of the limits of insurance that we purchase,
including those for cyber risks, could prove to be inadequate, which could materially and adversely impact our
business, ﬁnancial condition and results of operations.

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 expand an existing
data center, lease a new facility 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. Any related construction requires us to carefully select and rely on the experience of
one or more designers, general contractors, and associated subcontractors during the design and construction
process. Should a designer, general contractor 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/or other negative impacts to our expected returns.

Site selection is also a critical factor in our expansion plans. There may not be suitable properties
available in our markets with the necessary combination of high power capacity and ﬁber connectivity, or
selection may be limited. Thus, while we may prefer to locate new IBX data centers adjacent to our existing
locations it may not always be possible. In the event we decide to build new IBX data centers separate from
our existing IBX data centers, we may provide interconnection solutions to connect these two centers. Should
these solutions not provide the necessary reliability to sustain connection, 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 international 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 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.

Regulation of greenhouse gas (‘‘GHG’’) emissions could increase the cost of electricity by reducing
amounts of electricity generated from fossil fuels, by requiring the use of more expensive generating methods
or by imposing taxes or fees upon electricity generation or use. Electricity is a material cost in connection
with our business, and an increase in the cost of electricity, whether from regulation of GHGs or otherwise,
could adversely affect us. GHG reduction legislation exists in Europe, and in several of the states in the
U.S., and there is a potential for new or additional legislation in the U.S. and other countries in which we
operate. Certain states, like California, already regulate GHG emissions from new and existing state-regulated

facilities by imposing regulatory caps on allowances and by selling or auctioning the rights to such emissions.
These programs have not had a material adverse effect on our electricity costs to date, but due to the market-
driven nature of some of the programs, could do so in the future. Such laws and regulations are also subject
to change at any time.

The U.S. EPA published regulations in October 2015, called the ‘‘Clean Power Plan,’’ that is intended to

reduce GHG emissions from existing fossil fuel-ﬁred power plants by 32 percent from 2005 levels by 2030.
Under the rule, each state is required to develop a plan to reduce state-wide carbon dioxide emissions to meet
a speciﬁed emissions target set by EPA for that state. If implemented, the Clean Power Plan could impose new
emissions trading or credit programs, or other requirements, that could indirectly increase the average cost of
electricity in states in which we operate.

New laws in the U.S. and other countries may arise as a result of international agreements. In

November 2014, the United States and China announced a climate change agreement that established goals for
reducing GHG emissions from both countries, including the prevention of increases in GHG emissions from
China after 2030. In order for China to meet this commitment, China may impose limitations on fossil fuel
generation or costs upon electricity, similar to those imposed in the U.S. and elsewhere.

On December 12, 2015, the Obama Administration reached agreement in Paris with a majority of

194 attending nations concerning a voluntary program for limiting GHGs. This agreement, known as the Paris
Climate Accord (the ‘‘Accord’’) would, if it becomes effective, require signatory countries to establish GHG
reduction goals and report on their implementation of programs to achieve such goals. The Accord would be
open for signature for one year commencing in April 2016, and would become effective commencing in
2020 if at least 55 countries representing at least 55% of aggregate, global GHG emissions sign. The U.S. has
announced a commitment in support of the Accord to achieve reductions of GHG emissions to levels that are
26 − 28 percent below 2005 levels by 2025.

Compliance with international agreements, such as the agreement with China and the Accord, could
require new national legislation to be adopted in the U.S. or other signatory countries. In this case, in the
U.S., if the Clean Power Plan is implemented in the form prescribed by EPA as a ﬁnal regulation, it may
substantially achieve international GHG emissions reduction commitments by the U.S. government.
Accordingly, there may be no new legislation or regulation would be required to implement the Accord,
assuming that the Clean Power Plan is implemented as set forth in the regulation. Nevertheless, laws or
regulations may change over time. To the extent any environmental laws enacted or regulations impose new or
unexpected costs, our business, results of operations or ﬁnancial condition may be adversely affected.

If we are unable to recruit or retain qualiﬁed personnel, our business could be harmed.

We must continue to identify, hire, train and retain IT professionals, technical engineers, operations
employees, and sales, marketing, ﬁnance and senior management personnel who maintain relationships with
our customers and who can provide the technical, strategic and marketing skills required for our company to
grow. There is a shortage of qualiﬁed personnel in these ﬁelds, and we compete with other companies for the
limited pool of talent. The failure to recruit and retain necessary personnel, including, but not limited to,
members of our executive team, could harm our business and our ability to grow our company.

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

We must be able to differentiate our IBX data centers and product offerings from those of our

competitors. In addition to competing with other neutral colocation providers, we compete with traditional
colocation providers, including telecommunications companies, carriers, internet service providers, managed
services providers and large REITs who also operate in our market and may enjoy a cost advantage in
providing offerings similar to those provided by our IBX data centers. We may experience competition from
our landlords which could also reduce the amount of space available to us for expansion in the future. 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, blurring the line between retail
and wholesale space. We may also face competition from existing competitors or new entrants to the market
seeking to replicate our global IBX data center concept by building or acquiring data centers, offering
colocation on neutral terms or by replicating our strategy and messaging. Finally, customers may also decide it

is cost-effective for them to build out their own data centers. Once customers have an established data center
footprint, either through a relationship with one of our competitors or through in-sourcing, it may be
extremely difficult to convince them to relocate to our IBX data centers.

Some of our competitors may adopt aggressive pricing policies, especially if they are not highly
leveraged or have lower return thresholds than we do. As a result, we may suffer from pricing pressure that
would adversely affect our ability to generate revenues. Some of these competitors may also provide our target
customers with additional beneﬁts, including bundled communication services or cloud services, and may do
so in a manner that is more attractive to our potential customers than obtaining space in our IBX data centers.
Similarly, with growing acceptance of cloud-based technologies, Equinix is at risk losing customers that may
decide to fully leverage cloud infrastructure offerings instead of managing their own. Competitors could also
operate more successfully or form alliances to acquire signiﬁcant market share.

Failure to compete successfully may materially adversely affect our ﬁnancial condition, cash ﬂows and

results of operations.

Our business could be harmed by prolonged 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, power shortages, planned or unplanned

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

Power outages, such as those relating to large storms, earthquakes and tsunamis, could harm our

customers and our business. We attempt to limit our 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. Some of our IBXs are located in leased buildings where, depending upon the lease requirements and
number of tenants involved, we may or may not control some or all of the infrastructure including generators
and fuel tanks. As a result, in the event of a power outage, we may be dependent upon the landlord, as well
as the utility company, to restore the power.

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 power our customers draw from their installed circuits. This means that we could face power
limitations in our IBX data 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.

If our internal controls are found to be ineffective, our ﬁnancial results or our stock price may be
adversely affected.

Our most recent evaluation of our controls resulted in our conclusion that, as of December 31, 2015, in

compliance with Section 404 of the Sarbanes-Oxley Act of 2002, our internal controls over ﬁnancial reporting
were effective. Our ability to manage our operations and growth, through, for example, our upgrade of our
worldwide ﬁnancial application suite from Oracle’s version 11i to R12 and our overhaul of our back office
systems that support customer experience from initial quote to customer billing and our revenue recognition
process, will require us to further develop our controls and reporting systems and implement or amend new or
existing controls and reporting systems in those areas where the implementation is still ongoing. All of these
changes to our ﬁnancial systems create an increased risk of deﬁciencies in our internal controls over ﬁnancial
reporting until such systems are stabilized. If, in the future, our internal control over ﬁnancial reporting is
found to be ineffective, or if a material weakness is identiﬁed in our controls over ﬁnancial reporting, our

ﬁnancial results may be adversely affected. Investors may also lose conﬁdence in the reliability of our
ﬁnancial statements which could adversely affect our stock price.

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, 2015, 2014 and 2013, we recognized approximately 49%, 49% and

46%, respectively, of our revenues outside the U.S. We currently operate outside of the U.S. in Canada,
Brazil, EMEA and Asia-Paciﬁc.

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 offerings and pricing to be competitive in those markets. In addition, we
are currently undergoing expansions or evaluating expansion opportunities outside of the U.S. 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:

•

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 anti-bribery and corruption laws;

compliance with economic and trade sanctions enforced by the Office of Foreign Assets Control of
the U.S. Department of Treasury; 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, economic and trade sanctions, 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. Any such violations could include prohibitions on our ability
to offer our offerings 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.

Economic uncertainty in developing markets could adversely affect our revenue and earnings.

We conduct business and are contemplating expansion, in developing markets with economies that tend

to be more volatile than those in the U.S. and Western Europe. The risk of doing business in developing
markets such as Brazil, China, India, Indonesia, Russia, the United Arab Emirates and other economically
volatile areas could adversely affect our operations and earnings. Such risks include the ﬁnancial instability
among customers in these regions, political instability, fraud or corruption and other non-economic factors
such as irregular trade ﬂows that need to be managed successfully with the help of the local governments.
In addition, commercial laws in some developing countries can be vague, inconsistently administered and
retroactively applied. If we are deemed not to be in compliance with applicable laws in developing countries
where we conduct business, our prospects and business in those countries could be harmed, which could then
have a material adverse impact on our results of operations and ﬁnancial position. Our failure to successfully
manage economic, political and other risks relating to doing business in developing countries and
economically and politically volatile areas could adversely affect our business.

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

Some customers have increased their use of high power density equipment, such as blade servers, in our
IBX data centers which has 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 power may exceed the designed
electrical capacity in these centers. As 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 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 higher power speciﬁcation than that of
many of our older IBX data centers, there is a risk that demand will continue to increase and our IBX data
centers could become underutilized sooner than expected.

Our operating results may 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:

•

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 an economic downturn, or 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 offerings and our ability to ramp our newly-hired sales
persons to full productivity within the time period we have forecasted;

restructuring charges or reversals of 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 offerings and the gross margins associated with our
products and offerings;

the timing required for new and future IBX data 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 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 our tax planning strategies or failure to realize anticipated beneﬁts from such strategies;

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.

Our days sales outstanding (DSO) of our accounts receivables have been increasing.

Although we have historically experienced a record of strong collection of our accounts receivables as
evidenced by our prior DSO metrics, our DSO has increased over the past year. Our DSO was affected by the
implementation of a new billing system that was introduced during the second half of 2014. While this new
system is now operational in all three regions, it is not operational in all countries within each region and
further enhancements to the overall system are still ongoing. While our DSO began to improve during the

second half of 2015, our DSO may continue to be adversely impacted by ongoing changes in the billing
system, which would continue to have a negative impact on our operating cash ﬂows, liquidity and ﬁnancial
performance.

We may incur goodwill and other intangible asset impairment charges, or impairment charges to our
property, plant and equipment, which could result in a signiﬁcant reduction to our earnings.

In accordance with GAAP, we are required to assess our goodwill and other intangible assets annually, or
more frequently whenever events or changes in circumstances indicate potential impairment, such as changing
market conditions or any changes in key assumptions. If the testing performed indicates that an asset may not
be recoverable, we are required to record a non-cash impairment charge for the difference between the
carrying value of the goodwill or other intangible assets and the implied fair value of the goodwill or other
intangible assets in the period the determination is made.

We also monitor the remaining net book values of our property, plant and equipment periodically,
including at the individual IBX data center level. Although each individual IBX data center is currently
performing in line with our expectations, the possibility that one or more IBX data centers could begin to
under-perform relative to our expectations is possible and may also result in non-cash impairment charges.

These charges could be signiﬁcant, which could have a material adverse effect on our business, results of

operations or ﬁnancial condition.

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

As of December 31, 2015, our accumulated deﬁcit was $108.2 million. Although we have generated net
income for each ﬁscal year since 2008, except for the year ended December 31, 2014, we are 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 uncertainty 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.

The failure to obtain favorable terms when we renew our IBX data center leases, or the failure to renew
such 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 through 2065. 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 the rent to be set at then-prevailing market rates. To the extent that
then-prevailing market rates or negotiated rates are higher than present rates, these higher costs may adversely
impact our business and results of operations, or we may decide against renewing the lease. In the event that
an IBX data center lease does not have a renewal option, or we fail to exercise a renewal option in a timely
fashion and lose our right to renew the lease, we may not be successful in negotiating a renewal of the lease
with the landlord. A failure to renew a lease could force us to exit a building prematurely, which could be
disruptive to our business, harm our customer relationships, expose us to liability under our customer
contracts, cause us to take impairment charges and negatively affect our operating results.

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.

We face risks associated with unauthorized access to our computer systems, loss or destruction of data,
computer viruses, malware, distributed denial-of-service attacks, or other malicious activities. These threats
may result from human error, equipment failure, or fraud or malice on the part of employees or third parties.
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 our
employees, or cause interruptions or malfunctions in our operations or our customers’ operations. As we
provide assurances to our customers that we provide a high level of security, such a compromise could be
particularly harmful to our brand and reputation. 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 promptly detect that a cyber breach has occurred, or implement security measures in a
timely manner or, if and when implemented, we may not be able to determine the extent to which 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, damage relating to loss of proprietary information,
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 maintain insurance coverage for cyber risks but such coverage
may be unavailable or insufficient to cover our losses.

We offer professional services to our customers where we consult on data center solutions and assist with

implementations. We also offer managed services in certain of our foreign jurisdictions outside of the
U.S. where we manage the data center infrastructure for our customers. The access gained from these services
to our clients’ networks and data creates some risk that our clients’ networks or data will be improperly
accessed. We may also design our clients’ cloud storage systems in such a way that exposes our clients to
increased risk of data breach. If Equinix were held to be responsible for any such a breach, it could result in a
signiﬁcant loss to Equinix, including damage to Equinix’s client relationships, harm to our brand and
reputation, and legal liability.

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
foreign governments. 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.

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, grow 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 our offerings, 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 offerings. 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 offerings, 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 may be subject to securities class action and other litigation, which may harm our business and
results of operations.

We may be subject to securities class action or 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 make assurances 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
adopted new network neutrality rules that may result in 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 (‘‘CFTC’’) have
both sought comments regarding the regulation of independent data centers, such as us, which provide
colocation for ﬁnancial markets and exchanges. The CFTC is also considering regulation of companies that
use automated and high-frequency trading systems. Any such regulation may ultimately affect our provision of
offerings.

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 offerings
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.

If customers combine businesses, they may require less colocation space, which could lead to churn in
our customer base. Regional competitors may also consolidate to become a global competitor. Consolidation
of our customers and/or our competitors may present a risk to our business model and have a negative impact
on our revenues.

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 cyber security, 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 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:

•

ownership limitations and transfer restrictions relating to our stock that are intended to facilitate our
compliance with certain REIT rules relating to share ownership;

authorization for the issuance of ‘‘blank check’’ preferred stock;

the prohibition of cumulative voting in the election of directors;

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

limits on stockholder action by written consent; and

advance notice requirements for nominations to the Board of Directors 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 U.S. Our Asia-Paciﬁc headquarters office is located in Hong Kong and we also have
office space in Shanghai, China; Singapore; Tokyo, Japan; and Sydney, Australia. Our EMEA headquarters
office is located in Amsterdam, the Netherlands and our regional sales offices in EMEA are based in our IBX
data centers in EMEA. We have entered into leases for certain of our IBX data centers in Atlanta, Georgia;
New York, New York; Dallas, Texas; Chicago, Illinois; Englewood, Colorado; Los Angeles, Palo Alto,
San Jose, Santa Clara and Sunnyvale, California; Miami, Florida; Newark, North Bergen and Secaucus,
New Jersey; Philadelphia, Pennsylvania; Reston and Vienna, Virginia; Seattle, Washington; Toronto, Canada;
Waltham, Massachusetts and Rio De Janeiro and Sao Paolo, Brazil in the Americas region; Shanghai, China;
Hong Kong; Singapore; Sydney, Australia and Osaka and Tokyo, Japan in the Asia-Paciﬁc region; Dubai,
U.A.E.; London, United Kingdom; Paris, France; Frankfurt, Munich and Dusseldorf, Germany; Zurich and
Geneva, Switzerland and Enschede and Zwolle, the Netherlands in the EMEA region. We own certain of our
IBX data centers in Ashburn, Virginia; Chicago, Illinois; Los Angeles and San Jose, California; Melbourne,
Australia; Secaucus, New Jersey; New York, New York; Paris, France; Frankfurt, Germany and Amsterdam,
the Netherlands. We own campuses in Ashburn, Virginia, Silicon Valley and Frankfurt, Germany that house
some of our IBX data centers mentioned in the preceding sentence.

The following table presents an overview of our portfolio of IBX data centers as of December 31, 2015

(in thousands):

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc(1)
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total

# of
IBXs
55
30
27
112

Total
cabinet
capacity(2)
62,600
49,500
27,800
139,900

Cabinets
billed
50,600
40,500
22,600
113,700

Cabinet
utilization
%(3)
81%
82%
81%

MRR
per
cabinet(4)
$2,448
1,439
1,903

(1) Other than the number of IBX data centers, these amounts exclude the Bit-isle’s operations. We acquired

Bit-isle on November 2, 2015 and Bit-isle’s related operating metrics are not yet available.

(2) Cabinets represent a speciﬁc amount of space within an IBX data center. Customers can combine and use

multiple adjacent cabinets within an IBX data center, depending on their space requirements.

(3) The cabinet utilization rate represents the percentage of cabinet space billing versus net sellable cabinet

space available, taking into consideration power limitations.

(4) MRR per cabinet represents recurring revenue recognized during the year divided by the average number

of cabinets invoiced to customers during the year.

The following table presents a summary of our signiﬁcant IBX data center expansion projects under

construction as of December 31, 2015:

Property
Americas:

Property
location

Target open
date

Sellable
cabinets

Construction
progress
(in thousands)

Q3 2016
Q4 2016
Q1 2017
Q1 2017

Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q2 2017

Q1 2016
Q2 2016
Q1 2017

365
230
725
1,745
3,065

600
725
1,385
500
1,555
4,765

725
1,500
900
3,125
10,955

$ 31,000
6,000
76,000
57,000
170,000

21,000
32,000
42,000
8,000
113,000
216,000

43,000
97,000
39,000
179,000
$565,000

AT1 Phase IV . . . . . . . . . . . . . . . . . . . . Atlanta
DC7 Phase III
SP 3 Phase I
DC11 Phase III

. . . . . . . . . . . . . . . . . . . . Ashburn

. . . . . . . . . . . . . . . . . . . Ashburn

. . . . . . . . . . . . . . . . . . . . .

Sao Paolo

EMEA:

FR4 Phase V . . . . . . . . . . . . . . . . . . . . .
AM1 Phase III . . . . . . . . . . . . . . . . . . . . Amsterdam
LD6 Phase II . . . . . . . . . . . . . . . . . . . . . London
FR5 Phase III
. . . . . . . . . . . . . . . . . . . .
AM4 Phase I . . . . . . . . . . . . . . . . . . . . . Amsterdam

Frankfurt

Asia-Paciﬁc:

TY5 Phase VII . . . . . . . . . . . . . . . . . . . . Tokyo
Sydney
SY4 Phase I . . . . . . . . . . . . . . . . . . . . . .
HK2 Phase IV . . . . . . . . . . . . . . . . . . . . Hong Kong

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 3. LEGAL PROCEEDINGS

None

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

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 2015
Fourth Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Fiscal Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Fiscal Quarter

Fiscal 2014
Fourth Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Fiscal Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Fiscal Quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Fiscal Quarter

Low

High

$265.41
251.11
233.59
216.86

$304.98
292.02
270.15
238.95

Low

High

$191.96
206.26
170.48
173.42

$234.10
223.58
210.11
194.02

As of January 31, 2016, we had 69,025,412 shares of our common stock outstanding held by

approximately 274 registered holders.

In October 2014, our Board of Directors declared a special distribution of $416.0 million, or

approximately $7.57 per share (the ‘‘2014 Special Distribution’’), to our common stockholders in connection
with our plan to convert to a REIT. The 2014 Special Distribution was paid on November 25, 2014 to our
common stockholders of record as of the close of business on October 27, 2014. Common stockholders had
the option to elect to receive payment of the 2014 Special Distribution in the form of stock or cash, with the
total cash payment to all stockholders limited to no more than 20% of the total distribution. The number of
shares distributed was determined based upon common stockholder elections and the average closing price of
our common stock on the three trading days commencing on November 18, 2014 or $224.45 per share. As
such, we issued 1.5 million shares of our common stock and paid $83.3 million in connection with the 2014
Special Distribution.

In connection with our conversion to a REIT effective January 1, 2015, we began paying quarterly

dividends in 2015. On each of February 19, 2015, May 7, 2015, July 29, 2015 and October 28, 2015, our
Board of Directors declared a quarterly cash dividend of $1.69 per share. For additional information, see
‘‘Dividends’’ in Note 11 of our Notes to Consolidated Financial Statements in Item 8 of this Annual Report
on Form 10-K.

In September 2015, our Board of Directors declared a special distribution of $627.0 million, or
approximately $10.95 per share (the ‘‘2015 Special Distribution’’), to our common stockholders. The 2015
Special Distribution represented an amount that included the sum of: (1) foreign earnings and proﬁts
repatriated as dividend income in 2015; (2) taxable income in 2015 from depreciation recapture in respect of
accounting method changes commenced in our pre-REIT period; and (3) certain other items of taxable
income.

The 2015 Special Distribution was paid on November 10, 2015 to our common stockholders of record as
of the close of business on October 8, 2015. Common stockholders had the option to elect to receive payment
of the 2015 Special Distribution in the form of stock or cash, with the total cash payment to all stockholders
limited to no more than 20% of the total distribution. The number of shares distributed was determined based
upon common stockholder elections and the average closing price of our common stock on the three trading
days commencing on November 3, 2015 or $297.03 per share. As such, we issued 1.7 million shares of our
common stock and paid $125.5 million in connection with the 2015 Special Distribution.

During the year ended December 31, 2015, we did not issue or sell any securities on an unregistered

basis.

Stock Performance Graph

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

between December 31, 2010 and December 31, 2015 with the cumulative total return of (i) the S&P 500
Index, (ii) the NASDAQ Composite Index, (iii) the NASDAQ Telecommunications Index and (iv) the FTSE
NAREIT All REITs Index. The graph assumes the investment of $100.00 on December 31, 2010 in Equinix’s
common stock and in each index, and assumes the reinvestment of dividends, if any. Equinix converted to a
REIT effective January 1, 2015 and thus intends to compare the total stockholder return on Equinix’s common
stock to the cumulative total return of the FTSE NAREIT All REITs Index instead of that of the NASDAQ
Telecommunications index in future ﬁlings.

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.

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 Annual Report on 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.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

* $100 invested on 12/31/10 in stock or index, including reinvestment of dividends. Fiscal year ending

December 31.

ITEM 6.

SELECTED FINANCIAL DATA

The following consolidated statement of operations data for the ﬁve years ended December 31, 2015 and

the consolidated balance sheet data as of December 31, 2015, 2014, 2013, 2012 and 2011 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, 2015 and as of December 31, 2015 and 2014, 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, we completed an
acquisition of Nimbo Technologies Inc. in January 2015 and Bit-isle, Inc. in November 2015, an acquisition
of an approximate 53% controlling equity interest in ALOG Data Centers do Brasil S.A. (‘‘ALOG’’) in
April 2011 and the remaining outstanding shares of ALOG in July 2014, acquisitions of the Frankfurt Kleyer
90 carrier hotel in October 2013, a Dubai IBX data center in November 2012, and acquisitions of Asia Tone
Limited and ancotel GmbH in July 2012. We also sold 16 of our IBX data centers located throughout the
U.S. in November 2012. For further information on our acquisitions during the three years ended
December 31, 2015, refer to Note 2 of our Notes to Consolidated Financial Statements in Item 8 of this
Annual Report on Form 10-K.

2015

Years ended December 31,
2013
(dollars in thousands, except per share data)

2014

2012

2011

Revenues . . . . . . . . . . . . . . . . . . . . . . . . $2,725,867 $2,443,776 $2,152,766 $1,887,376 $1,565,625

Costs and operating expenses:

Cost of revenues . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . .
Restructuring charges (reversals)
. . . . . .
Impairment charges
. . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . .
. . .
Total costs and operating expenses
Income from operations . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Other income (expense)
. . . . . . . . .
Loss on debt extinguishment

Income from operations before income

1,291,506
332,012
493,284
—
—
41,723
2,158,525
567,342
3,581
(299,055)
(60,581)
(289)

1,197,885
296,103
438,016
—
—
2,506
1,934,510
509,266
2,891
(270,553)
119
(156,990)

1,064,403
246,623
374,790
(4,837)
—
10,855
1,691,834
460,932
3,387
(248,792)
5,253
(108,501)

944,617
202,914
328,266
—
9,861
8,822
1,494,480
392,896
3,466
(200,328)
(2,208)
(5,204)

829,024
158,347
265,554
3,481
—
3,297
1,259,703
305,922
2,280
(181,303)
2,821
—

taxes . . . . . . . . . . . . . . . . . . . . . .
Income tax expense(1) . . . . . . . . . . . . . .

210,998
(23,224)

84,733
(345,459)

112,279
(16,156)

188,622
(58,564)

129,720
(37,347)

Net income (loss) from continuing

operations . . . . . . . . . . . . . . . . . . . . . .
Net income from discontinued operations,
net of tax . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . .
Net (income) loss attributable to redeemable
non-controlling interests . . . . . . . . . . . .

187,774

(260,726)

96,123

130,058

92,373

—
187,774

—
(260,726)

—
96,123

13,086
143,144

1,009
93,382

—

1,179

(1,438)
94,685 $ 140,028 $

(3,116)

1,394
94,776

Net income attributable to Equinix . . . . . . . $ 187,774 $ (259,547) $

2015

Years ended December 31,
2013
(dollars in thousands, except per share data)

2014

2012

Earnings per share (‘‘EPS’’) attributable to

Equinix:
Basic EPS from continuing operations . . .
Basic EPS from discontinued operations . .
Basic EPS . . . . . . . . . . . . . . . . . . . . . .
Weighted-average shares . . . . . . . . . . . .
Diluted EPS from continuing operations . .
Diluted EPS from discontinued

operations . . . . . . . . . . . . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . .
Weighted-average shares . . . . . . . . . . . .

3.25
—
3.25
57,790
3.21
$

—
3.21
58,483

$ (4.96)
—
$ (4.96)
52,359
$ (4.96)

—
$ (4.96)
52,359

1.92
—
1.92
49,438
1.89
$

—
1.89
50,116

2.65
0.27
$
2.92
48,004
2.58
$

$ 0.25
$
2.83
51,816

2011

1.75
0.02
$
1.77
46,956
1.72
$

0.02
$
$
1.74
47,898

(1) The increase in income tax expense from the year ended December 31, 2013 to the year ended

December 31, 2014 was primarily attributed to the de-recognition of $324.1 million of deferred tax assets
and deferred tax liabilities in December 2014, when our Board of Directors formally approved our
conversion to a REIT and we reassessed the deferred tax assets and deferred tax liabilities of our
U.S. operations included in the REIT structure.

2015

2014

Years ended December 31,
2013
(dollars in thousands)

2012

2011

Other ﬁnancial data:(1)
Net cash provided by operating activities
Net cash used in investing activities . . . . . .
Net cash provided by (used in) ﬁnancing

. . $

894,793 $ 689,420 $

604,608 $ 632,026 $

(1,134,927)

(435,839)

(1,169,313)

(442,873)

587,320
(1,499,155)

activities . . . . . . . . . . . . . . . . . . . . . . .

1,873,182

107,401

574,907

(222,721)

748,728

(1) For a discussion of our primary non-GAAP ﬁnancial metrics, 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.

2015

2014

As of December 31,
2013
(dollars in thousands)

2012

2011

Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term and

long-term investments . . . . . . . . . . . . . . $ 2,246,297 $1,140,751 $1,030,092 $ 546,524 $1,076,345
139,057
3,223,841
5,753,328

291,964
5,606,436
. . . . . . . . . . . . . . . . . . . . . 10,356,695

262,570
4,998,270
7,781,978

184,840
4,591,650
7,457,039

163,840
3,915,738
6,105,507

Accounts receivable, net . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . .
Total assets(1)
Capital lease and other ﬁnancing obligations,
excluding current portion . . . . . . . . . . .

Mortgage and loans payable, excluding

current portion(1)

Senior notes(1)
Convertible debt, excluding current

. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .

1,287,139

1,168,042

914,032

545,853

390,269

472,769
3,804,634

532,809
2,717,046

197,172
2,220,911

186,287
1,478,482

168,795
1,475,220

portion(1)

. . . . . . . . . . . . . . . . . . . . . .
Redeemable non-controlling interests . . . . .
Total stockholders’ equity . . . . . . . . . . . . .

—
—
2,745,386

145,229
—
2,270,131

720,499
123,902
2,459,064

702,469
84,178
2,313,441

685,593
67,601
1,936,151

(1) The company adopted ASU 2015-03 during the year ended December 31, 2015. As a result, debt

issuance costs of $35,455, $35,320, $30,290, and $33,956 were reclassiﬁed from other assets to debt as
of December 31, 2014, 2013, 2012, and 2011, respectively.

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 December 2015, as more fully described in Note 9 of Notes to Consolidated Financial Statements in

Item 8 of this Annual Report on Form 10-K, we issued $1.1 billion aggregate principal amount of 5.875%
senior notes due January 15, 2026 (the ‘‘2026 Senior Notes’’).

In December 2015, as more fully described in Note 9 of Notes to Consolidated Financial Statements in

Item 8 of this Annual Report on Form 10-K, we entered into the second amendment (the ‘‘Second
Amendment’’) to our Senior Credit Facility. Pursuant to the Second Amendment, our revolving credit facility
was increased by $500.0 million to $1.5 billion and we received commitments for an additional
$250.0 million seven-year term loan facility and for an additional £300.0 million, or approximately
$442.0 million in U.S. dollars at the exchange rate in effect on December 31, 2015, seven-year term loan
(collectively, the ‘‘Term Loan B Commitments’’). We borrowed the full amount of the Term Loan B
Commitments in January 2016.

In November 2015, as more fully described in Note 11 of Notes to Consolidated Financial Statements in
Item 8 of this Annual Report on Form 10-K, we issued and sold 2,994,792 shares of our common stock in a
public offering. We received net proceeds of approximately $829.5 million, after deducting underwriting
discounts, commissions and offering expenses.

We intend to use the net proceeds we received from the sale of our 2026 Senior Notes and from the sale

of our common stock, as well as the net proceeds we received in January 2016 from our Term Loan B
Commitments, for both merger and acquisition activities and general corporate purposes.

In November 2015, 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 our acquisition of Tokyo-based Bit-isle Inc.
(‘‘Bit-isle’’) valued at ¥33.2 billion or approximately $275.4 million U.S. dollars.

In connection with our acquisition of Bit-isle, as more fully described in Note 9 of Notes to Consolidated

Financial Statements, in September 2015 we entered into a term loan agreement (the ‘‘Bridge Term Loan

Agreement’’) with the Bank of Tokyo-Mitsubishi UFJ, Ltd. (‘‘BTMU’’). BTMU has committed to provide a
senior bridge loan facility (the ‘‘Bridge Term Loan’’) in the amount of up to ¥47.5 billion, or approximately
$395.2 million at the exchange rate in effect on December 31, 2015. Proceeds from the Bridge Term Loan are
to be used exclusively for the acquisition of Bit-isle, the repayment of Bit-isle’s existing debt and transaction
costs incurred in connection with the closing of the Bridge Term Loan and the acquisition of Bit-isle. We
borrowed ¥46.5 billion, or approximately $386.5 million in U.S. dollars at the exchange rate in effect on
December 31, 2015, under the Bridge Term Loan in the fourth quarter of 2015. We intend to obtain
permanent ﬁnancing to replace and terminate the Bridge Term Loan in 2016.

In May 2015, as more fully described in Note 2 and Note 9 of Notes to Consolidated Financial

Statements in Item 8 of this Annual Report on Form 10-K, we announced an offer for the entire issued and to
be issued share capital of TelecityGroup, valued at approximately £2.4 billion, or $3.8 billion in U.S. dollars.
The transaction closed in January 2016. The total consideration consisted of $1.7 billion in cash and
6.9 million shares of our common stock, valued at $2.1 billion. In connection with the transaction, we also
entered into a bridge credit agreement (the ‘‘Bridge Loan’’) with J.P. Morgan Chase Bank, N.A. (‘‘JPMCB’’)
as the initial lender and as administrative agent for the lenders (the ‘‘Lenders’’), for a principal amount of
£875.0 million; or approximately $1.3 billion. The Bridge Loan was dedicated solely for the acquisition of
TelecityGroup and to satisfy funds certain requirements under UK takeover code. We terminated the Bridge
Loan in January 2016.

In May 2015, we received a favorable response to the PLR request we had submitted to the IRS in
connection with our conversion to a REIT for federal income tax purposes effective for the taxable year
commencing January 1, 2015.

In April 2015, as more fully described in Note 9 of Notes to Consolidated Financial Statements in Item 8

of this Annual Report on Form 10-K, we entered into the ﬁrst amendment (the ‘‘First Amendment’’) of our
credit agreement dated December 17, 2014 (the ‘‘Senior Credit Facility’’). The amendment allowed for the
conversion of the outstanding U.S. dollar-denominated principal amount of the term loan facility to an
approximately equivalent amount denominated in four foreign currencies. In connection with the execution of
the amendment, on April 30, 2015, we repaid the U.S. dollar-denominated $490.0 million remaining principal
balance of the term loan facility and immediately re-borrowed under the term loan facility the aggregate
principal amount of CHF 47.8 million, €184.9 million, £92.6 million and ¥11.9 million, or approximately
$490.0 million in U.S dollars in total.

Overview

Equinix provides global data center offerings 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 data centers in 33 markets around the world for the safekeeping 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 solutions: (i) premium data center colocation,
(ii) interconnection and (iii) exchange and outsourced IT infrastructure services. As of December 31, 2015, we
operated or had partner International Business Exchange (‘‘IBX’’) data centers in the Atlanta, Boston,
Chicago, Dallas, Denver, Los Angeles, Miami, New York, Philadelphia, Rio de Janeiro, Sao Paulo, Seattle,
Silicon Valley, Toronto and Washington, D.C. metro areas in the Americas region; France, Germany, Italy, the
Netherlands, Switzerland, the United Arab Emirates and the United Kingdom in the Europe, Middle East and
Africa (‘‘EMEA’’) region; and Australia, China, Hong Kong, Indonesia, Japan and Singapore in the
Asia-Paciﬁc region.

Our data centers in 33 markets around the world are a global platform, which allows our customers to

increase information and application delivery performance while signiﬁcantly reducing costs. This global
platform and the quality of our IBX data centers have enabled us to establish a critical mass of customers. As
more customers choose our IBX data centers, it beneﬁts their suppliers and business partners to colocate with
us as well, in order to gain the full economic and performance beneﬁts of our offerings. These partners, in
turn, pull in their business partners, creating a ‘‘marketplace’’ for their services. Our global platform enables
scalable, reliable and cost-effective colocation, interconnection and traffic exchange that lowers overall cost
and increases ﬂexibility. Our focused business model is built on our critical mass of customers and the

resulting ‘‘marketplace’’ effect. This global platform, combined with our strong ﬁnancial position, continues to
drive new customer growth and bookings.

Historically, our market has been served by large telecommunications carriers who have bundled
telecommunications products and services with their colocation offerings. The data center market landscape
has evolved to include cloud computing/utility providers, application hosting providers and systems
integrators, managed infrastructure hosting providers and colocation providers. More than 350 companies
provide data center solutions in the U.S. alone. Each of these data center solutions providers can bundle
various colocation, interconnection and network offerings, and outsourced IT infrastructure services. We are
able to offer our customers a global platform that reaches 21 countries with proven operational reliability,
improved application performance and network choice, and a highly scalable set of offerings.

Our utilization rate represents the percentage of our cabinet space billing versus net sellable cabinet space

available, taking into account power limitations. Our utilization rate was approximately 81% and 78% as of
December 31, 2015 and December 31, 2014, respectively. However, excluding the impact of IBX data center
expansion projects that have opened during the last 12 months, our utilization rate would be approximately
85% as of December 31, 2015. Our utilization rate varies from market to market among our IBX data centers
across the Americas, EMEA 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 high power-demand customers. This increased
power consumption has driven us 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 IBX data 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 IBX data 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 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 on a free cash ﬂow basis, 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 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 and related interconnection

and managed infrastructure offerings. We consider these offerings recurring because 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 any given quarter of the past three years, more than
half of our monthly recurring revenue bookings came from existing customers, contributing to our revenue
growth. Our largest customer accounted for approximately 3% of our recurring revenues for the period ended
December 31, 2015 and 2% of our recurring revenues for the periods ended December 31, 2014 and 2013.
Our 50 largest customers accounted for approximately 34%, 36% and 35% of our recurring revenues for
the years ended December 31, 2015, 2014 and 2013.

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
because they are billed typically once, upon completion of the installation or the 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 expected life of the customer installation. Additionally, revenue from
contract settlements, when a customer wishes to terminate their contract early, is recognized when no
remaining performance obligations exist and collectability is reasonably assured, to the extent that the revenue
has not previously been recognized. As a percentage of total revenues, we expect non-recurring revenues to
represent less than 10% of total revenues for the foreseeable future.

Our Americas revenues are derived primarily from colocation and related interconnection offerings, and

our EMEA and Asia-Paciﬁc revenues are derived primarily from colocation and managed infrastructure
offerings.

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 that 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 generally increase in the future on a per-unit or ﬁxed basis, in addition to
the variable increase related to the growth in consumption by our customers. 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 revenues over time,
although we expect each of them to grow in absolute dollars in connection with our growth. 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 revenue. Furthermore, in relation to cost of revenues, we note
that the Americas region has a lower cost of revenues as a percentage of revenue than either EMEA or
Asia-Paciﬁc. This is due to both the increased scale and maturity of the Americas region, compared to either
the EMEA or Asia-Paciﬁc region, as well as a higher cost structure outside of the Americas, particularly in
EMEA. 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 that sees the Americas having the lowest cost of revenues as
a percentage of revenues to continue. As a result, to the extent that revenue growth outside the Americas
grows in greater proportion than revenue growth in the Americas, our overall cost of revenues as a percentage
of revenues may increase in future periods. Sales and marketing expenses may periodically increase as
a percentage of revenues as we continue to scale our operations to invest in sales and marketing initiatives to
further increase our revenue, including the hiring of additional headcount and new product innovations.

General and administrative expenses may also periodically increase as a percentage of revenues as we
continue to scale our operations to support our growth.

Real Estate Investment Trust Conversion

We began operating as a REIT for federal income tax purposes effective January 1, 2015. In May 2015,
we received a favorable PLR from the IRS in connection with our conversion to a REIT. As of December 31,
2015, our REIT structure includes all of our data center operations in the U.S., Canada, Europe and the
historical data center operations in Japan. Our data center operations in other jurisdictions, as well as the data
center operations acquired in the Bit-isle Acquisition, have initially been designated as TRSs.

As a REIT, we generally are permitted to deduct from federal taxable income the dividends we pay to

our stockholders (including, for this purpose, the value of any deemed distribution on account of adjustments
to the conversion rate relating to our outstanding debt securities that are convertible into our common stock).
The income represented by such dividends is not subject to federal taxation at the entity level but is taxed, if
at all, at the stockholder level. Nevertheless, the income of our TRSs which hold our U.S. operations that may
not be REIT-compliant, are subject, as applicable, to federal and state corporate income tax. Likewise, our
foreign subsidiaries continue to be subject to foreign income taxes in jurisdictions in which they hold assets or
conduct operations, regardless of whether held or conducted through TRSs or through QRSs. We are also
subject to a separate corporate income tax on gain recognized from a sale of a REIT asset where our basis in
the asset is determined by reference to the basis of the asset in the hands of a present or former C corporation
(such as (i) an asset that we held as of the effective date of our REIT election, that is, January 1, 2015 or
(ii) an asset that we hold in a QRS following the liquidation or other conversion of a former TRS). This
built-in-gains tax is generally applicable to any disposition of such an asset during the ﬁve-year period after
the date we ﬁrst owned the asset as a REIT asset (e.g., January 1, 2015 in the case of REIT assets we held at
the time of our REIT conversion), to the extent of the built-in-gain based on the fair market value of such
asset on the date we ﬁrst held the asset as a REIT asset. If we fail to qualify for taxation as a REIT, we will
be subject to federal income tax at regular corporate rates. Even if we remain qualiﬁed for taxation as a REIT,
we may be subject to some federal, state, local and foreign taxes on our income and property in addition to
taxes owed with respect to our TRSs’ operations. In particular, while state income tax regimes often parallel
the federal income tax regime for REITs, many states do not completely follow federal rules and some may
not follow them at all.

We incurred a total of approximately $364.0 million in tax liabilities associated with a change in our
methods of depreciating and amortizing various data center assets for tax purposes from our prior methods to
methods that are more consistent with the characterization of such assets as real property for REIT purposes.
These liabilities were generally payable over a four-year period starting in 2012.

On September 28, 2015, we announced the declaration by our Board of Directors of a special distribution

(the ‘‘2015 Special Distribution’’) of $627.0 million on our shares of common stock, payable in either
common stock or cash to, and at the election of, our stockholders of record as of October 8, 2015 (the
‘‘Record Date’’). The 2015 Special Distribution included: (1) foreign earnings and proﬁts repatriated as
dividend income recognized in 2015; (2) taxable income in 2015 from depreciation recapture in respect of
accounting method changes commenced in our pre-REIT period; and (3) certain other items of taxable
income. The 2015 Special Distribution was paid on November 10, 2015 to our common stockholders of
record as of the close of business on October 8, 2015 in the form of an aggregate of approximately
$125.5 million in cash and 1.69 million shares of our common stock. The 2015 Special Distribution followed
an initial special distribution of $416.0 million paid in cash and common stock to stockholders in
November 2014.

In connection with our conversion to a REIT effective January 1, 2015, we also paid quarterly cash

dividends of $1.69 per share on each of March 25, 2015, June 17, 2015, September 16, 2015, and
December 16, 2015. The amount of the 2015 Special Distribution, plus the amount of all of our other
distributions during 2015 and the value of the deemed distributions on account of the adjustments to the
conversion rate relating to our outstanding 4.75% convertible subordinated notes that were made as a result of
all our 2015 distributions, equaled or exceeded the taxable income that we recognized in 2015.

We have initially designated all the legal entities acquired in the Bit-isle acquisition as taxable REIT
subsidiaries (‘‘TRSs’’), which we believe will not impact our qualiﬁcation for taxation as a REIT. We plan to
integrate the data center business of Bit-isle into our REIT structure by the end of 2016.

We will initially designate all the legal entities acquired in the TelecityGroup acquisition as taxable REIT
subsidiaries (‘‘TRSs’’), which we believe will not impact our qualiﬁcation for taxation as a REIT. We plan to
integrate a signiﬁcant portion of the TelecityGroup businesses into our REIT structure by the end of 2016 and
to complete almost all remaining REIT integration efforts in the ﬁrst half of 2017.

We continue to monitor our REIT compliance to maintain our qualiﬁcation for taxation as a REIT. For

this, and other reasons, as necessary, we may convert certain of our data center operations in additional
countries into the REIT in future periods.

Results of Operations

Our results of operations for the year ended December 31, 2015 include the results of operations of the

Nimbo and Bit-isle acquisitions from January 15, 2015 and November 2, 2015 respectively. Our results of
operations for the year ended December 31, 2013 include the operations of Frankfurt Kleyer 90 carrier hotel
acquisition from October 1, 2013.

Years Ended December 31, 2015 and 2014

Revenues. Our revenues for the years ended December 31, 2015 and 2014 were generated from the

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

Americas:

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

EMEA:

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

Asia-Paciﬁc:

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

Total:

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

Years ended December 31,

% change

2015

2014

Actual

Constant
currency

$1,432,084
80,451
1,512,535

52% $1,311,518
64,585
3%
1,376,103
55%

651,778
47,029
698,807

485,279
29,246
514,525

24%
2%
26%

18%
1%
19%

598,953
38,312
637,265

407,319
23,089
430,408

54%
3%
57%

24%
1%
25%

17%
1%
18%

2,569,141
156,726
$2,725,867

94%
6%

2,317,790
125,986
100% $2,443,776

95%
5%
100%

9%
25%
10%

9%
23%
10%

19%
27%
20%

11%
24%
12%

12%
25%
13%

23%
41%
24%

31%
39%
31%

18%
32%
19%

Americas Revenues. During the years ended December 31, 2015 and 2014, our revenues from the

United States, the largest revenue contributor in the Americas region for the periods, represented
approximately 93% and 91%, respectively, of the regional revenues. Growth in Americas revenues was
primarily due to (i) $44.5 million of revenue generated from our recently-opened IBX data centers and IBX
data center expansions in the Dallas, New York, Rio de Janeiro, Silicon Valley, Toronto and Washington DC
metro areas and (ii) an increase in orders from both our existing customers and new customers during the
period as reﬂected in the growth in our utilization rate, as discussed above, in both our new and existing IBX
data centers.. During the year ended December 31, 2015, currency ﬂuctuations resulted in approximately
$37.7 million of unfavorable foreign currency impact on our Americas revenues primarily due to the generally
stronger U.S. dollar relative to the Brazilian real and Canadian dollar during the year ended December 31,

2015 compared to the year ended December 31, 2014. We expect that our Americas revenues will continue to
grow in future periods as a result of continued growth in the recently-opened IBX data centers and additional
IBX data center expansions currently taking place in the Atlanta, Sao Paulo and Washington, D.C. metro
areas, which are expected to open during 2016 and 2017. Our estimates of future revenue growth also take
into account expected changes in recurring revenues attributed to customer bookings, customer churn or
changes or amendments to customers’ contracts.

EMEA Revenues. During the years ended December 31, 2015 and 2014, our revenues from the

United Kingdom, the largest revenue contributor in the EMEA region for the periods, represented
approximately 37% and 36%, respectively, of the regional revenues. Our EMEA revenue growth was due to
(i) $23.6 million of revenue generated from our recently-opened IBX data centers and IBX data center
expansions in the Amsterdam, Frankfurt, London, and Paris metro areas and (ii) an increase in orders from
both our existing customers and new customers during the period as reﬂected in the growth in our utilization
rate, as discussed above, in both our new and existing IBX data centers. During the year ended December 31,
2015, currency ﬂuctuations resulted in approximately $94.1 million of net unfavorable foreign currency impact
on our EMEA revenues primarily due to the generally stronger U.S. dollar relative to the British pound and
Euro during the year ended December 31, 2015 compared to the year ended December 31, 2014. We expect
that our EMEA revenues will continue to grow in future periods as a result of continued growth in
recently-opened IBX data centers and additional IBX data center expansions currently taking place in the
Amsterdam, Frankfurt and London metro areas, which are expected to open during 2016 and 2017, and as a
result of our acquisition of TelecityGroup, which closed in January 2016. Our estimates of future revenue
growth also take into account expected changes in recurring revenues attributed to customer bookings,
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 37% and 38% of the regional revenues for the years ended December 31,
2015 and 2014. Our Asia-Paciﬁc revenue growth was due to (i) $58.8 million of revenue generated from our
recently-opened IBX data centers and IBX data center expansions in the Hong Kong, Melbourne, Shanghai,
Singapore and Tokyo metro areas and (ii) an increase in orders from both our existing customers and new
customers during the period as reﬂected in the growth in our utilization rate, as discussed above, in both our
new and existing IBX data centers. In addition, our Asia-Paciﬁc revenues for the year ended December 31,
2015 included $21.6 million of revenue attributable to our acquisition of Bit-isle, which closed on
November 2, 2015. During the year ended December 31, 2015, currency ﬂuctuations resulted in approximately
$46.4 million of net unfavorable foreign currency impact on our Asia-Paciﬁc revenues primarily due to the
generally stronger U.S. dollar relative to the Australian dollar, Japanese yen and Singapore dollar during the
year ended December 31, 2015 compared to the year ended December 31, 2014. 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 data center expansions and additional expansions currently taking place in the
Hong Kong, Sydney, and Tokyo metro areas, which are expected to open during 2016 and 2017, and as a
result of our acquisition of Bit-isle. Our estimates of future revenue growth also take into account expected
changes in recurring revenues attributed to customer bookings, customer churn or changes or amendments to
customers’ contracts.

Cost of Revenues. Our cost of revenues for the years ended December 31, 2015 and 2014 were split

among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

. . . . . . . . . . . . . . . . . . . .
Americas
EMEA . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Total

2015
$ 637,604
350,270
303,632
$1,291,506

2014

%
49% $ 605,184
337,095
27%
24%
255,606
100% $1,197,885

%
51%
28%
21%
100%

Actual
5%
4%
19%
8%

Constant
currency
10%
19%
30%
17%

Cost of revenues as a percentage of revenues:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended
December 31,

2015

2014

42%
50%
59%
47%

44%
53%
59%
49%

Americas Cost of Revenues. Our Americas cost of revenues for the years ended December 31, 2015 and

2014 included $219.1 million and $218.4 million, respectively, of depreciation expense. The increase in our
Americas cost of revenues was primarily due to (i) $17.4 million of higher office expense, utilities, and repair
and maintenance costs in support of our business growth, (ii) $7.3 million of higher compensation costs,
including general salaries, bonuses, stock-based compensation and headcount growth (1,032 employees
included in Americas cost of revenues as of December 31, 2015 versus 941 as of December 31, 2014),
(iii) $3.9 million of higher costs associated with equipment resales to support the growth of non-recurring
revenues and (iv) $3.5 million of higher property and real property tax expenses primarily due to our
newly-opened IBX data centers during the year ended December 31, 2015, partially offset by $2.6 million of
lower rent and facility costs primarily as a result of certain leases being accounted for as capital leases rather
than as operating leases. During the year ended December 31, 2015, currency ﬂuctuations resulted in
approximately $29.6 million of net favorable foreign currency impact on our Americas cost of revenues
primarily due to the generally stronger U.S. dollar relative to the Brazilian real and Canadian dollar during the
year ended December 31, 2015 compared to the year ended December 31, 2014. We expect Americas cost of
revenues to increase as we continue to grow our business.

EMEA Cost of Revenues. EMEA cost of revenues included $97.8 million of depreciation expense for
the years ended December 31, 2015 and 2014. The increase in our EMEA cost of revenues was primarily due
to $3.4 million of higher compensation costs, including general salaries, bonuses, stock-based compensation
and headcount growth (541 employees included in EMEA cost of revenues as of December 31, 2015 versus
473 as of December 31, 2014), and $13.2 million of higher costs associated with equipment resales,
bandwidth and other customer services in support of our non-recurring revenues growth as well as an increase
in net losses related to cash ﬂow derivatives. These increases were partially offset by $5.0 million of lower
rent, facilities and utilities expenses and $2.7 million of lower consulting costs. During the year ended
December 31, 2015, the impact of foreign currency ﬂuctuations resulted in approximately $50.8 million of net
favorable foreign currency impact on our EMEA cost of revenues primarily due to the generally stronger
U.S. dollar relative to the British pound and Euro during the year ended December 31, 2015 compared to the
year ended December 31, 2014. We expect EMEA cost of revenues to increase as we continue to grow our
business and as a result of our acquisition of TelecityGroup, which closed in January 2016.

Asia-Paciﬁc Cost of Revenues. Asia-Paciﬁc cost of revenues for the year ended December 31, 2015

included $17.4 million of cost of revenues attributable to our acquisition of Bit-isle, which closed in
November 2015. Excluding cost of revenues attributable to Bit-isle, Asia-Paciﬁc cost of revenues for the year
ended December 31, 2015 was $286.2 million compared to $255.6 for the year ended December 31, 2014.
Depreciation expense, excluding Bit-isle, was $116.9 million and $101.4 million for the years ended
December 31, 2015 and 2014, respectively. Growth in depreciation expense was primarily due to our IBX
data center expansion activity. In addition to the increase in depreciation expense, the increase in Asia-Paciﬁc
cost of revenues, excluding cost of revenues attributable to Bit-isle, was primarily due to $9.9 million in
higher consulting costs, utility costs, repairs and maintenance costs and rent and facility costs in support of
our revenue growth as well as $2.8 million of higher compensation costs, including general salaries, bonuses,
stock-based compensation and headcount growth (390 employees included in Asia-Paciﬁc cost of revenues,
excluding Bit-isle employees, as of December 31, 2015 versus 342 as of December 31, 2014). During the year
ended December 31, 2015, currency ﬂuctuations resulted in approximately $24.7 million of net favorable
foreign currency impact on our Asia-Paciﬁc cost of revenues primarily due to the generally stronger
U.S. dollar relative to the Australian dollar, Japanese yen and Singapore dollar during the year ended

December 31, 2015 compared to the year ended December 31, 2014. We expect Asia-Paciﬁc cost of revenues
to increase as we continue to grow our business and as a result of our acquisition of Bit-isle.

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

2015 and 2014 were split among the following geographic regions (dollars in thousands):

Americas
. . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Total

Years ended December 31,

% change

2015
$208,310
71,871
51,831
$332,012

2014

%
63% $172,264
79,890
22%
43,949
15%
100% $296,103

%
58%
27%
15%
100%

Actual
21%
(10)%
18%
12%

Constant
currency
24%
0%
27%
18%

Sales and marketing expenses as a percentage of revenues:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Years ended
December 31,

2015

2014

14%
10%
10%
12%

13%
13%
10%
12%

Americas Sales and Marketing Expenses. The increase in our Americas sales and marketing expenses
was primarily due to (i) $26.5 million of higher compensation costs, including sales compensation, general
salaries, bonuses, commission and stock-based compensation as a result of business and headcount growth
(497 Americas sales and marketing employees as of December 31, 2015 versus 450 as of December 31, 2014)
and (ii) $8.6 million of higher travel, consulting and advertising and promotion costs in support of our
business growth. During the year ended December 31, 2015, currency ﬂuctuations resulted in approximately
$4.7 million of net favorable foreign currency impact on our Americas sales and marketing expenses primarily
due to the generally stronger U.S. dollar relative to the Brazilian real and Canadian dollar during the year
ended December 31, 2015 compared to the year ended December 31, 2014. Over the past several years, we
have been investing in our Americas sales and marketing initiatives to further increase our revenue. These
investments have included the hiring of additional headcount and new product innovation efforts. Although we
anticipate that we will continue to invest in Americas sales and marketing initiatives, we believe our Americas
sales and marketing expenses as a percentage of revenues will remain at approximately current levels over the
next year or two but should ultimately decrease as we continue to grow our business.

EMEA Sales and Marketing Expenses. The decrease in our EMEA sales and marketing expenses was
primarily due to $4.5 million of lower professional fees primarily due to the termination of certain contracts
during 2014. During the year ended December 31, 2015, the impact of foreign currency ﬂuctuations resulted
in approximately $8.3 million of net favorable foreign currency impact on our EMEA sales and marketing
expenses primarily due to the generally stronger U.S. dollar relative to the British pound and Euro compared
to the year ended December 31, 2014. Over the past several years, we have been investing in our EMEA sales
and marketing initiatives to further increase our revenue. These investments have included the hiring of
additional headcount and new product innovation efforts and, as a result, our EMEA sales and marketing
expenses as a percentage of revenues have increased. We expect our EMEA sales and marketing expenses to
further increase as a result of the TelecityGroup acquisition. Although we anticipate that we will continue to
invest in EMEA sales and marketing initiatives, including the integration of TelecityGroup, we believe our
EMEA sales and marketing expenses as a percentage of revenues will ultimately decrease as we continue to
grow our business beyond 2016.

Asia-Paciﬁc Sales and Marketing Expenses. Asia-Paciﬁc sales and marketing expenses for the year

ended December 31, 2015 included $2.2 million of sales and marketing expenses attributable to our
acquisition of Bit-isle, which closed in November 2015. Excluding Bit-isle, Asia-Paciﬁc sales and marketing
expenses were $49.6 million for the year ended December 31, 2015 compared to $43.9 million for the year

ended December 31, 2014. The increase in our Asia-Paciﬁc sales and marketing expenses, excluding Bit-isle,
was primarily due to $3.6 million of higher compensation costs, including sales compensation, general
salaries, bonuses, commission and stock-based compensation as a result of business and headcount growth
(183 Asia-Paciﬁc sales and marketing employees, excluding Bit-isle employees, versus 155 as of
December 31, 2014). During the year ended December 31, 2015, the impact of foreign currency ﬂuctuations
resulted in approximately $3.6 million of net favorable impact on our Asia-Paciﬁc sales and marketing
expenses primarily due to a generally stronger U.S. dollar relative to the Australian dollar, Japanese yen and
Singapore dollar during the year ended December 31, 2015 compared to the year ended December 31, 2014.
Over the past several years, we have been investing in our Asia-Paciﬁc sales and marketing initiatives to
further increase our revenue. These investments have included the hiring of additional headcount and new
product innovation efforts and, as a result, our Asia-Paciﬁc sales and marketing expenses have increased. We
expect our APAC sales and marketing expenses to further increase as a result of the Bit-Isle acquisition.
Although we anticipate that we will continue to invest in Asia-Paciﬁc sales and marketing initiatives,
including the integration of Bit-isle, we believe our Asia-Paciﬁc sales and marketing expenses as a percentage
of revenues will ultimately decrease as we continue to grow our business.

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

December 31, 2015 and 2014 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2015
$347,421
92,803
53,060
$493,284

2014

%
70% $315,533
79,942
19%
42,541
11%
100% $438,016

General and Administrative expenses as a percentage of revenues:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Constant
currency
11%
26%
35%
16%

%
72%
18%
10%
100%

Actual
10%
16%
25%
13%

Years ended
December 31,

2015

2014

23%
13%
10%
18%

Americas General and Administrative Expenses. The increase in our Americas general and

administrative expenses was primarily due to (i) $15.0 million of higher compensation costs, including general
salaries, bonuses and stock-based compensation as a result of headcount growth (800 Americas general and
administrative employees as of December 31, 2015 versus 731 as of December 31, 2014), (ii) $17.0 million of
higher depreciation expenses primarily associated with the implementation of the Oracle R12 ERP system and
certain systems to support the REIT conversion and (iii) $10.9 million of higher office expenses, travel,
entertainment, and rent and facility costs, in support of our business growth, partially offset by an
$11.3 million reduction in professional fees related to our REIT conversion as compared to those incurred
during the year ended December 31, 2014. During the year ended December 31, 2015, currency ﬂuctuations
resulted in approximately $3.2 million of net favorable foreign currency impact on our Americas general and
administrative expenses primarily due to the generally stronger U.S. dollar relative to the Brazilian real and
Canadian dollar during the year ended December 31, 2015 compared to the year ended December 31, 2014.
Over the course of the past year, we have been investing in our Americas general and administrative functions
to scale this region effectively for growth, which has included additional investments into improving our back
office systems. We expect our current efforts to improve our back office systems will continue over the next
several years. Going forward, although we are carefully monitoring our spending, we expect Americas general
and administrative expenses to increase as we continue to further scale our operations to support our growth,
including these investments in our back office systems and maintaining our REIT qualiﬁcation.

EMEA General and Administrative Expenses. The increase in our EMEA general and administrative
expenses was primarily due to (i) approximately $4.2 million of higher compensation costs, including general
salaries, bonuses and stock-based compensation as a result of headcount growth (420 EMEA general and
administrative employees as of December 31, 2015 versus 353 as of December 31, 2014), (ii) $4.3 million of
higher depreciation expenses due to implementation of the Oracle R12 ERP system and certain systems to
support the REIT conversion and (iii) $2.8 million of higher consulting costs primarily due to integration
efforts in connection with our acquisition of TelecityGroup as well as an increase in net losses related to cash
ﬂow hedging derivatives. During the year ended December 31, 2015, the impact of foreign currency
ﬂuctuations resulted in approximately $7.8 million of net favorable foreign currency impact on our EMEA
general and administrative expenses primarily due to the generally stronger U.S. dollar relative to the British
pound and Euro during the year ended December 31, 2015 compared to the year ended December 31, 2014.
Going forward, although we are carefully monitoring our spending, we expect our EMEA general and
administrative expenses to increase in future periods as a result of our acquisition of TelecityGroup and 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. Asia-Paciﬁc general and administrative expenses for

the year ended December 31, 2015 included $5.8 million of general and administrative expenses attributable
to our acquisition of Bit-isle, which closed on November 2, 2015. Excluding general and administrative
expenses attributable to Bit-isle, Asia-Paciﬁc general and administrative expenses for the year ended
December 31, 2015 were $47.3 million compared to $42.5 million for the year ended December 31, 2014.
Excluding general and administrative expenses attributable to Bit-isle, the increase in our Asia-Paciﬁc general
and administrative expenses was primarily due to a $2.2 million increase in consulting costs, legal fees and
other costs for tax-related matters as well as higher compensation costs, including general salaries, bonuses
and stock-based compensation as a result of headcount growth (266 Asia-Paciﬁc general and administrative
employees, excluding Bit-isle employees, as of December 31, 2015 versus 224 as of December 31, 2014).
During the year ended December 31, 2015, the impact of foreign currency ﬂuctuations resulted in
approximately $3.4 million of net favorable impact on our Asia-Paciﬁc general and administrative expenses
primarily due to a generally stronger U.S. dollar relative to the Australian dollar, Japanese yen and Singapore
dollar compared to the year ended December 31, 2014. Going forward, although we are carefully monitoring
our spending, we expect Asia-Paciﬁc general and administrative expenses to increase as a result of our
acquisition of Bit-isle and as we continue to scale our operations to support our growth; however, as
a percentage of revenues, we generally expect them to decrease.

Acquisition Costs. During the year ended December 31, 2015, we recorded acquisition costs totaling

$41.7 million primarily attributed to the EMEA region, and to a lesser degree, to the Asia-Paciﬁc region.
During the year ended December 31, 2014, we recorded acquisition costs totaling $2.5 million primarily
attributed to the EMEA region.

Income from Operations. Our income from operations for the years ended December 31, 2015 and

2014 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2015
$324,458
145,527
97,357
$567,342

2014

%
57% $282,219
138,685
26%
88,362
17%
100% $509,266

%
56%
27%
17%
100%

Actual
15%
5%
10%
11%

Constant
currency
15%
23%
24%
19%

Americas Income from Operations. The increase in our Americas income from operations was due to
higher revenues as result of our IBX data center expansion activity and organic growth as described above,
partially offset by higher operating expenses as a percentage of revenues primarily attributable to higher
compensation and other headcount related expenses to support our growth.

EMEA Income from Operations. The increase in our EMEA income from operations was primarily due

to higher revenues as a result of our IBX data center expansion activity and organic growth as described

above. During the year ended December 31, 2015, currency ﬂuctuations resulted in approximately
$25.6 million of net unfavorable foreign currency impact on our EMEA income from operations primarily due
to the generally stronger U.S. dollar relative to the British pounds and Euro during the year ended
December 31, 2015 compared to the year ended December 31, 2014.

Asia-Paciﬁc Income from Operations. The increase in our Asia-Paciﬁc income from operations was
primarily due to higher revenues as a result of our IBX data center expansion activity and organic growth as
described above, partially offset by higher operating expenses as a percentage of revenues primarily
attributable to higher compensation and other headcount related expenses and higher professional fees to
support our growth. During the year ended December 31, 2015, currency ﬂuctuations resulted in
approximately $17.5 million of net unfavorable foreign currency impact on our Asia-Paciﬁc income from
operations primarily due to the generally stronger U.S. dollar relative to the Australian dollar, Japanese yen
and Singapore dollar during the year ended December 31, 2015 compared to the year ended
December 31, 2014.

Interest Income.

Interest income was $3.6 million and $2.9 million for the years ended December 31,

2015 and 2014, respectively. The average yield for the year ended December 31, 2015 was 0.38% versus
0.33% for the year ended December 31, 2014. We expect our interest income to remain at these low levels for
the foreseeable future due to the impact of a continued low interest rate environment and a portfolio more
weighted towards short-term securities and U.S. government securities in order to satisfy REIT compliance
requirements.

Interest Expense.

Interest expense increased to $299.1 million for the year ended December 31, 2015
from $270.6 million for the year ended December 31, 2014. This increase in interest expense was primarily
due to the full impact recognized for the year ended December 31, 2015 of our $1.25 billion of senior notes
issued in November 2014, the $0.5 billion Term loan A we borrowed in December 2014 under our senior
credit facility and $18 million of higher interest expense from various capital lease and other ﬁnancing
obligations to support our expansion projects, which was partially offset by the redemption of our 7.00%
senior notes in December 2014, the settlement of the 3.00% convertible notes and the partial redemption of
the 4.75% convertible notes in June 2014. During the years ended December 31, 2015 and 2014, we
capitalized $10.9 million and $19.0 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 $1.1 billion
of senior notes issued in December 2015 and the full impact of ﬁnancing our acquisition of Bit-isle as well as
the impact of approximately $0.7 billion of borrowings under our Term loan B commitments under our senior
credit facility that we completed in January 2016. We may also incur additional indebtedness to support our
growth, resulting in higher interest expense.

Other Income (Expense). We recorded net expense of $60.6 million and net income of $0.1 million for

the years December 31, 2015 and 2014, respectively, primarily due to foreign currency exchange gains and
losses during the periods. The expense recorded in 2015 is primarily attributed to foreign currency losses to
fund the TelecityGroup acquisition purchase price.

Loss on Debt Extinguishment. During the year ended December 31, 2015, we recorded a $0.3 million

loss on debt extinguishment which was attributable to partial conversions of our 4.75% convertible
subordinated notes in December 2015. During the year ended December 31, 2014, we recorded a
$157.0 million loss on debt extinguishment, of which $51.2 million was attributable to the exchanges of the
3.00% convertible subordinated notes and 4.75% convertible subordinated notes, $103.3 million was
attributable to the redemption of our $750.0 million 7.00% senior notes and $2.5 million was attributable to
the prepayment and termination of our $750.0 million multicurrency credit facility. For additional information,
see ‘‘Loss on Debt Extinguishment’’ in Note 9 of Notes to Consolidated Financial Statements in Item 8 of this
Annual Report on Form 10-K.

Income Taxes. Effective January 1, 2015, we have operated as a REIT for federal income tax purposes.

As a REIT, we are generally not subject to U.S. income taxes on taxable income distributed to our
stockholders. We distributed the entire taxable income generated by the operations of our REIT and its QRSs

for the tax year ending December 31, 2015. As such, no provision for U.S. federal income taxes for the
REIT and its QRSs has been included in the accompanying consolidated ﬁnancial statements for the year
ended December 31, 2015.

We have made TRS elections for some of our subsidiaries in and outside the U.S. In general, a TRS may
provide services that would otherwise be considered impermissible for REITs to provide and may hold assets
that REITs cannot hold directly. U.S. income taxes for the TRS entities located in the U.S. and foreign income
taxes for our foreign operations regardless of whether the foreign operations are operated as a QRS or
TRS were accrued, as necessary, for the year ended December 31, 2015.

For the years ended December 31, 2015 and 2014, we recorded $23.2 million and $345.5 million of

income tax expenses, respectively. We recognized a signiﬁcantly lower income tax provision in 2015 as
compared to the income tax provision in 2014 primarily due to the de-recognition, in 2014, of the deferred tax
assets and liabilities of our U.S. operations upon conversion to a REIT. As a REIT, we are entitled to a
deduction for dividends paid, resulting in a substantial reduction of U.S. income tax expense. Substantially all
of our income tax expense for 2015 is for foreign income taxes incurred by our foreign subsidiaries and
U.S. income tax incurred by our U.S. TRSs.

The $345.5 million of income tax expense recorded during the year ended December 31, 2014 was

primarily attributable to the statutory tax rate change due to our REIT conversion, which resulted in a
$324.1 million domestic deferred tax assets write-off. In connection with the formal approval of our
conversion to a REIT by our Board of Directors in December 2014, we reassessed, in the fourth quarter of
2014, the deferred tax assets and liabilities of our U.S. operations to be included in the REIT structure. The
reevaluation resulted in de-recognizing the deferred tax assets and liabilities of our REIT’s U.S. operations,
excluding the deferred tax liabilities associated with the depreciation and amortization recapture expected in
2015. The de-recognition of the deferred tax assets and liabilities of our REIT’s U.S. operations occurred
because the expected recovery or settlement of the related assets and liabilities will not result in deductible or
taxable amounts in any post-REIT conversion periods. The deferred tax assets and liabilities associated with
our foreign operations, regardless of whether such foreign operations were part of the REIT conversion, are
not subject to the de-recognition assessment. We generally do not expect our occasional sale of assets to result
in a material tax liability.

Our effective tax rates were 11.0% and 407.7%, respectively, for the years ended December 31, 2015 and

2014. Our effective tax rate for the year ended December 31, 2014 was primarily due to tax expense
attributable to the $324.1 million domestic deferred tax assets write-off as a result of our REIT conversion.
Excluding this tax expense, our effective tax rate would have been 25.2% for the year ended December 31,
2014. Due to our REIT conversion, we are entitled to a deduction for dividends paid, which results in a
substantial reduction of U.S income tax expense. As a REIT, substantially all of our income tax expense is the
foreign income tax incurred by our foreign subsidiaries and the U.S. income tax expense incurred by our
U.S. TRSs. Assuming no material changes to tax rules and regulations, as a REIT we expect our effective
long-term world-wide cash tax rate to remain in the range of 10% to 15%.

We recorded excess income tax beneﬁts of $30,000 and $18.6 million during the years ended

December 31, 2015 and 2014, respectively, in our consolidated balance sheets.

Adjusted EBITDA. Adjusted EBITDA is a key factor in how we assess the performance of our
segments, measure the operational cash generating abilities of our segments and develop regional growth
strategies such as IBX data center expansion decisions. We deﬁne adjusted EBITDA as income or loss from
operations plus depreciation expense, amortization expense, accretion expense, stock-based compensation
expense, restructuring charges, impairment charges and acquisition costs. See ‘‘Non-GAAP Financial
Measures’’ below for more information about adjusted EBITDA and a reconciliation of adjusted EBITDA to
income or loss from operations. Periodically, we enter into new lease agreements or amend existing lease
agreements. To the extent we conclude that a lease is an operating lease, the rent expense may decrease our
adjusted EBITDA whereas to the extent we conclude that a lease is a capital or ﬁnancing lease, and this lease
was previously reported as an operating lease, this outcome may increase our adjusted EBITDA. Our adjusted
EBITDA for the years ended December 31, 2015 and 2014 was split among the following geographic regions
(dollars in thousands):

Years ended December 31,

% change

2015
$ 698,604
318,561
254,462
$1,271,627

2014

%
55% $ 635,007
269,222
25%
209,662
20%
100% $1,113,891

%
57%
24%
19%
100%

Actual
10%
18%
21%
14%

Constant
currency
12%
35%
34%
22%

Americas Adjusted EBITDA. The increase in our Americas adjusted EBITDA was due to higher
revenues as result of our IBX data center expansion activity and organic growth as described above, partially
offset by higher adjusted operating expenses as a percentage of revenues primarily attributable to higher
compensation and other headcount related expenses to support our growth. During the year ended
December 31, 2015, currency ﬂuctuations resulted in approximately $12.2 million of net unfavorable foreign
currency impact on our Americas adjusted EBITDA primarily due to the generally stronger U.S. dollar relative
to the Brazilian real and Canadian dollar during the year ended December 31, 2015 compared to the year
ended December 31, 2014.

EMEA Adjusted EBITDA. The increase in our EMEA adjusted EBITDA was primarily due to higher
revenues as a result of our IBX data center expansion activity and organic growth as described above. During
the year ended December 31, 2015, currency ﬂuctuations resulted in approximately $45.4 million of net
unfavorable foreign currency impact on our EMEA adjusted EBITDA primarily due to the generally stronger
U.S. dollar relative to the British pounds and Euro during the year ended December 31, 2015 compared to the
year ended December 31, 2014.

Asia-Paciﬁc Adjusted EBITDA. The increase in our Asia-Paciﬁc adjusted EBITDA was primarily due to
higher revenues as a result of our IBX data center expansion activity and organic growth as described above,
partially offset by higher adjusted operating expenses as percentages of revenues primarily attributable to
higher compensation and other headcount related expenses and higher professional fees to support our growth.
During the year ended December 31, 2015, currency ﬂuctuations resulted in approximately $26.1 million of
net unfavorable foreign currency impact on our Asia-Paciﬁc adjusted EBITDA primarily due to the generally
stronger U.S. dollar relative to the Australian dollar, Japanese yen and Singapore dollar during the year ended
December 31, 2015 compared to the year ended December 31, 2014.

Years Ended December 31, 2014 and 2013

Revenues. Our revenues for the years ended December 31, 2014 and 2013 were generated from the

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

Americas:

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

EMEA:

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

Asia-Paciﬁc:

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

Total:

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

Years ended December 31,

% change

2014

2013

Actual

Constant
currency

$1,311,518
64,585
1,376,103

54% $1,214,301
3%
50,473
1,264,774
57%

598,953
38,312
637,265

407,319
23,089
430,408

24%
1%
25%

17%
1%
18%

492,361
32,657
525,018

343,300
19,674
362,974

56%
3%
59%

23%
1%
24%

16%
1%
17%

2,317,790
125,986
$2,443,776

95%
5%

2,049,962
102,804
100% $2,152,766

95%
5%
100%

8%
28%
9%

22%
17%
21%

19%
17%
19%

13%
23%
14%

10%
28%
11%

19%
19%
19%

22%
26%
22%

14%
25%
15%

Americas Revenues. During the years ended December 31, 2014 and 2013, our revenues from the

United States, the largest revenue contributor in the Americas region for the periods, represented
approximately 91% of the regional revenues. Growth in Americas revenues was primarily due to
(i) $38.3 million of revenue generated from our recently-opened IBX data centers and IBX data center
expansions in the Atlanta, Chicago, Dallas, Miami, New York and Sao Paolo metro areas and (ii) an increase
in orders from both our existing customers and new customers during the period as reﬂected in the growth in
our utilization rate, as discussed above. During the year ended December 31, 2014, currency ﬂuctuations
resulted in approximately $22.1 million of unfavorable foreign currency impact on our Americas revenues
primarily due to the generally stronger U.S. dollar relative to the Brazilian real and Canadian dollar during the
year ended December 31, 2014 compared to the year ended December 31, 2013. We expect that our Americas
revenues will continue to grow in future periods as a result of continued growth in the recently-opened IBX
data centers and additional IBX data center expansions currently taking place in the Dallas, New York,
Philadelphia, Rio de Janeiro, Seattle, Silicon Valley, Toronto and Washington, D.C. metro areas, which opened
during 2015.

EMEA Revenues. During the years ended December 31, 2014 and 2013, our revenues from the

United Kingdom, the largest revenue contributor in the EMEA region for the periods, represented
approximately 36% of the regional revenues. Our EMEA revenue growth was due to (i) $20.0 million of
revenue generated from our recently-opened IBX data centers and IBX data center expansions in the
Amsterdam and Frankfurt metro areas and (ii) an increase in orders from both our existing customers and new
customers during the period as reﬂected in the growth in our utilization rate, as discussed above, in both our
new and existing IBX data centers. During the year ended December 31, 2014, currency ﬂuctuations resulted
in approximately $11.1 million of favorable foreign currency impact on our EMEA revenues primarily due to
the generally weaker U.S. dollar relative to the British pound, Euro and Swiss franc during the year ended
December 31, 2014 compared to the year ended December 31, 2013. We expect that our EMEA revenues will
continue to grow in future periods as a result of continued growth in recently-opened IBX data centers and an
additional IBX data center expansion currently taking place in the Amsterdam, Frankfurt, London and Paris
metro areas, which opened during 2015.

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, 2014 and 2013. Our Asia-Paciﬁc revenue growth was due to (i) $53.4 million of revenue
generated from our recently-opened IBX data centers and IBX data center expansions in the Hong Kong,
Melbourne, Osaka, Singapore, Sydney and Tokyo metro areas and (ii) an increase in orders from both our
existing customers and new customers during the period as reﬂected in the growth in our utilization rate, as
discussed above, in both our new and existing IBX data centers. During the year ended December 31, 2014,
currency ﬂuctuations resulted in approximately $13.7 million of net unfavorable foreign currency impact on
our Asia-Paciﬁc revenues primarily due to the generally stronger U.S. dollar relative to the Australian dollar,
Japanese yen and Singapore dollar during the year ended December 31, 2014 compared to the year ended
December 31, 2013. 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 data center expansions and additional expansions
currently taking place in the Hong Kong, Singapore and Tokyo metro areas, which opened during 2015 or are
expected to open during 2016.

Cost of Revenues. Our cost of revenues for the years ended December 31, 2014 and 2013 were split

among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2014
$ 605,184
337,095
255,606
$1,197,885

2013

%
51% $ 576,869
271,965
28%
215,569
21%
100% $1,064,403

%
54%
26%
20%
100%

Actual
5%
24%
19%
13%

Constant
currency
8%
22%
22%
14%

Years ended
December 31,

2014

2013

44%
53%
59%
49%

46%
52%
59%
49%

Americas Cost of Revenues. Our Americas cost of revenues for the years ended December 31, 2014 and

2013 included $218.4 million and $216.6 million, respectively, of depreciation expense. Excluding
depreciation expense, the increase in our Americas cost of revenues was primarily due to (i) $17.7 million of
higher utilities and repair and maintenance expense in support of our business growth, (ii) $8.7 million of
higher compensation costs, including general salaries, bonuses, stock-based compensation and headcount
growth (941 employees included in Americas cost of revenues as of December 31, 2014 versus 894 as of
December 31, 2013), (iii) $8.1 million of higher costs associated with equipment resales to support the growth
of non-recurring revenues and (iv) $3.9 million of higher accretion expenses as a result of the reversal of asset
retirement obligations during the year ended December 31, 2013 associated with the execution of certain lease
amendments, partially offset by $12.9 million of lower rent and facility costs primarily as a result of either
certain leases no longer being subject to operating lease treatment or the purchase of previously-leased sites.
During the year ended December 31, 2014, currency ﬂuctuations resulted in approximately $16.3 million of
favorable foreign currency impact on our Americas cost of revenues primarily due to the generally stronger
U.S. dollar relative to the Brazilian real and Canadian dollar during the year ended December 31, 2014
compared to the year ended December 31, 2013.

EMEA Cost of Revenues. EMEA cost of revenues for the years ended December 31, 2014 and 2013

included $97.8 million and $77.9 million, respectively, of depreciation expense. Growth in depreciation
expense was primarily due to our IBX data center expansion activity. Excluding depreciation expense, the
increase in our EMEA cost of revenues was primarily due to (i) $29.9 million of higher utility costs,
repair and maintenance, professional fees and rent and facility costs in support of our revenue growth,

(ii) $7.4 million of higher compensation, including general salaries, bonuses, stock-based compensation and
headcount growth (473 employees included in EMEA cost of revenues as of December 31, 2014 versus
396 as of December 31, 2013) and (iii) $5.8 million of higher costs associated with equipment resales,
bandwidth and other customer services in support of our non-recurring revenues growth. During the year
ended December 31, 2014, the impact of foreign currency ﬂuctuations resulted in approximately $4.4 million
of unfavorable foreign currency impact on our EMEA cost of revenues primarily due to the generally weaker
U.S. dollar relative to the British pound, Euro and Swiss franc during the year ended December 31, 2014
compared to the year ended December 31, 2013.

Asia-Paciﬁc Cost of Revenues. Asia-Paciﬁc cost of revenues for the years ended December 31, 2014

and 2013 included $101.4 million and $82.6 million, respectively, of depreciation expense. Growth in
depreciation expense was primarily due to our IBX data center expansion activity. Excluding depreciation
expense, the increase in Asia-Paciﬁc cost of revenues was primarily due to (i) $13.7 million in higher utility
costs, repairs and maintenance costs, as well as rent and facility costs in support of our revenue growth;
(ii) $2.7 million of higher compensation costs, including general salaries, bonuses, stock-based compensation
and headcount growth (342 employees included in Asia-Paciﬁc cost of revenues as of December 31, 2014
versus 289 as of December 31, 2013) and (iii) $3.3 million of higher costs associated with equipment resales
in support of our non-recurring revenues growth. During the year ended December 31, 2014, currency
ﬂuctuations resulted in approximately $8.4 million of net favorable foreign currency impact on our
Asia-Paciﬁc cost of revenues primarily due to the generally stronger U.S. dollar relative to the Australian
dollar, Japanese yen and Singapore dollar during the year ended December 31, 2014 compared to the year
ended December 31, 2013.

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

2014 and 2013 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2014
$172,264
79,890
43,949
$296,103

2013

%
58% $144,178
68,925
27%
33,520
15%
100% $246,623

Constant
currency
21%
12%
35%
21%

%
58%
28%
14%
100%

Actual
19%
16%
31%
20%

Years ended
December 31,

2014

2013

13%
13%
10%
12%

11%
13%
9%
11%

Americas Sales and Marketing Expenses. The increase in our Americas sales and marketing expenses
was primarily due to (i) $21.6 million of higher compensation costs, including sales compensation, general
salaries, bonuses, commission, stock-based compensation as a result of headcount growth (450 Americas sales
and marketing employees as of December 31, 2014 versus 395 as of December 31, 2013) and (ii) $5.3 million
of higher travel, advertising and promotion costs in support of our business growth. During the year ended
December 31, 2014, currency ﬂuctuations resulted in approximately $2.5 million of favorable foreign currency
impact on our Americas sales and marketing expenses primarily due to the generally stronger U.S. dollar
relative to the Brazilian real and Canadian dollar during the year ended December 31, 2014 compared to the
year ended December 31, 2013.

EMEA Sales and Marketing Expenses. The increase in our EMEA sales and marketing expenses was
primarily due to $8.2 million of higher compensation costs, including sales compensation, general salaries,
bonuses and stock-based compensation expense as a result of business growth, which incorporates a change in

our sales commission practices whereby our sales commission accrual will occur when sales orders are
booked versus when the sales orders are billed. For the year ended December 31, 2014, the impact of foreign
currency ﬂuctuations on our EMEA sales and marketing expenses was not signiﬁcant when compared to
average exchange rates of the year ended December 31, 2013.

Asia-Paciﬁc Sales and Marketing Expenses. The increase in our Asia-Paciﬁc sales and marketing
expenses was primarily due to $9.5 million of higher compensation costs, including sales compensation,
general salaries, bonuses, commission, stock-based compensation as a result of business and headcount growth
(155 Asia-Paciﬁc sales and marketing employees as of December 31, 2014 versus 120 as of December 31,
2013), which incorporates a change in our sales commission practices whereby our sales commission accrual
will occur when sales orders are booked versus when the sales orders are billed. For the year ended
December 31, 2014, the impact of foreign currency ﬂuctuations to our Asia-Paciﬁc sales and marketing
expenses was not signiﬁcant when compared to average exchange rates of the year ended December 31, 2013.

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

December 31, 2014 and 2013 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2014
$315,533
79,942
42,541
$438,016

2013

%
72% $263,145
72,867
18%
38,778
10%
100% $374,790

Constant
currency
21%
7%
12%
17%

%
70%
19%
11%
100%

Actual
20%
10%
10%
17%

Years ended
December 31,

2014

2013

23%
13%
10%
18%

21%
14%
11%
17%

Americas General and Administrative Expenses. The increase in our Americas general and

administrative expenses was primarily due to (i) $24.9 million of higher compensation costs, including general
salaries, bonuses, stock-based compensation, as a result of headcount growth (731 Americas general and
administrative employees as of December 31, 2014 versus 695 as of December 31, 2013) and the exercise of
the ALOG stock options, (ii) $15.2 million of higher professional fees, recruiting, training and travel expenses
to support the REIT conversion, (iii) $5.4 million of higher depreciation expenses primarily due to
implementation of our Oracle R12 ERP system and certain systems to support the REIT conversion and
(iv) $4.0 million higher of office expenses in support of our business growth. During the year ended
December 31, 2014, currency ﬂuctuations resulted in approximately $2.4 million of favorable foreign currency
impact on our Americas general and administrative expenses primarily due to the generally stronger
U.S. dollar relative to the Brazilian real and Canadian dollar during the year ended December 31, 2014
compared to the year ended December 31, 2013.

EMEA General and Administrative Expenses. The increase in our EMEA general and administrative
expenses was primarily due to (i) approximately $3.7 million of higher compensation costs, including general
salaries, bonuses and headcount growth (353 EMEA general and administrative employees as of December 31,
2014 versus 301 as of December 31, 2013) and (ii) $2.5 million of higher depreciation expenses due to
implementation of the Oracle R12 ERP system and certain systems to support the REIT conversion. During
the year ended December 31, 2014, the impact of foreign currency ﬂuctuations resulted in approximately
$2.0 million of unfavorable foreign currency impact on our EMEA general and administrative expenses
primarily due to the generally weaker U.S. dollar relative to the British pound, Euro and Swiss franc during
the year ended December 31, 2014 compared to the year ended December 31, 2013.

Asia-Paciﬁc General and Administrative Expenses. The increase in our Asia-Paciﬁc general and
administrative expenses was primarily due to $4.2 million of higher compensation costs, including general
salaries, bonuses and headcount growth (224 Asia-Paciﬁc general and administrative employees as of
December 31, 2014 versus 208 as of December 31, 2013). For the year ended December 31, 2014, the impact
of foreign currency ﬂuctuations on our Asia-Paciﬁc general and administrative expenses was not signiﬁcant
when compared to average exchange rates of the year ended December 31, 2013.

Restructuring Charges. During the year ended December 31, 2014, we did not record any restructuring

charges. During the year ended December 31, 2013, we recorded a $4.8 million reversal of the restructuring
charge accrual for our excess space in the New York 2 IBX data center as a result of our decision to purchase
this property and utilize the space. See ‘‘Restructuring Charges’’ in Note 17 of Notes to Consolidated
Financial Statements in Item 8 of this Annual Report on Form 10-K.

Acquisition Costs. During the year ended December 31, 2014, we recorded acquisition costs totaling
$2.5 million primarily attributed to the EMEA region. During the year ended December 31, 2013, we recorded
acquisition costs totaling $10.9 million primarily attributed to our Americas and EMEA regions.

Income from Operations. Our income from operations for the years ended December 31, 2014 and

2013 were split among the following geographic regions (dollars in thousands):

Years ended December 31,

% change

2014
$282,219
138,685
88,362
$509,266

2013

%
56% $279,785
106,221
27%
74,926
17%
100% $460,932

%
61%
23%
16%
100%

Actual
1%
31%
18%
10%

Constant
currency
1%
28%
22%
11%

Americas Income from Operations. The increase in our Americas income from operations was due to
higher revenues as result of our IBX data center expansion activity and organic growth as described above,
partially offset by higher operating expenses as a percentage of revenues primarily attributable to higher
compensation expense and higher professional fees to support our growth.

EMEA Income from Operations. The increase in our EMEA income from operations was primarily due

to higher revenues as a result of our IBX data center expansion activity and organic growth as described
above, partially offset by higher operating expenses as a percentage of revenues primarily attributable to
higher compensation expense and higher professional fees to support our growth. During the year ended
December 31, 2014, currency ﬂuctuations resulted in approximately $3.3 million of net favorable foreign
currency impact on our EMEA income from operations primarily due to the generally weaker U.S. dollar
relative to the Euro and Swiss franc during the year ended December 31, 2014 compared to the year ended
December 31, 2013.

Asia-Paciﬁc Income from Operations. The increase in our Asia-Paciﬁc income from operations was
primarily due to higher revenues as a result of our IBX data center expansion activity and organic growth as
described above, partially offset by higher operating expenses as a percentage of revenues primarily
attributable to higher compensation expense and higher professional fees to support our growth. During the
year ended December 31, 2014, currency ﬂuctuations resulted in approximately $3.2 million of net
unfavorable foreign currency impact on our Asia-Paciﬁc income from operations primarily due to the
generally stronger U.S. dollar relative to the Australian dollar, Japanese yen and Singapore dollar during the
year ended December 31, 2014 compared to the year ended December 31, 2013.

Interest Income.

Interest income was $2.9 million and $3.4 million for the years ended December 31,

2014 and 2013, respectively. The average yield for the year ended December 31, 2014 was 0.33% versus
0.32% for the year ended December 31, 2013.

Interest Expense.

Interest expense increased to $270.6 million for the year ended December 31, 2014
from $248.8 million for the year ended December 31, 2013. This increase in interest expense was primarily
due to the impact of our $1.25 billion senior notes offering in November 2014 and $29.8 million of higher

interest expense from various capital lease and other ﬁnancing obligations to support our expansion projects,
which was offset by the redemption of our 7.00% senior notes in December 2014, the settlement of the 3.00%
convertible notes, the partial redemption of the 4.75% convertible notes in June 2014 and more capitalized
interest expense. During the years ended December 31, 2014 and 2013, we capitalized $19.0 million and
$10.6 million, respectively, of interest expense to construction in progress.

Other Income (Expense). We recorded $0.1 million and $5.3 million, respectively, of other income for

the years ended December 31, 2014 and 2013, primarily due to foreign currency exchange gains (losses)
during the periods.

Loss on Debt Extinguishment. During the year ended December 31, 2014, we recorded a

$157.0 million loss on debt extinguishment, of which $51.2 million was attributable to the exchanges of the
3.00% convertible subordinated notes and 4.75% convertible subordinated notes, $103.3 million was
attributable to the redemption of our $750.0 million 7.00% senior notes and $2.5 million was attributable to
the prepayment and termination of our $750.0 million multicurrency credit facility. During the year ended
December 31, 2013, we recorded a $108.5 million loss on debt extinguishment, of which $93.6 million was
attributable to the redemption of our $750 million 8.125% senior notes, $13.2 million was attributable to the
extinguishment of the ﬁnancing liabilities for our London 4 and 5 IBX data centers and $1.7 million was
attributable to an amendment of our New York 5 and 6 IBX lease. For additional information, see ‘‘Loss on
Debt Extinguishment’’ in Note 9 of Notes to Consolidated Financial Statements in Item 8 of this Annual
Report on Form 10-K.

Income Taxes. During the year ended December 31, 2014, we recorded $345.5 million of income tax

expense. The income tax expense recorded during the year ended December 31, 2014 was primarily
attributable to the statutory tax rate change due to our anticipated REIT conversion, which resulted in a
$324.1 million domestic deferred tax assets write-off. In connection with the formal approval of our
conversion to a REIT by our Board of Directors in December 2014, we reassessed, in the fourth quarter of
2014, the deferred tax assets and liabilities of our U.S. operations to be included in the REIT structure. The
reevaluation resulted in de-recognizing the deferred tax assets and liabilities of our REIT’s U.S. operations,
excluding the deferred tax liabilities associated with the depreciation and amortization recapture expected in
2015. The de-recognition of the deferred tax assets and liabilities of our REIT’s U.S. operations occurred
because the expected recovery or settlement of the related assets and liabilities will not result in deductible or
taxable amounts in any post-REIT conversion periods. The deferred tax assets and liabilities associated with
our foreign operations, regardless of whether such foreign operations are part of the REIT conversion, are not
subject to the de-recognition assessment. In addition, we generally do not expect our occasional sale of assets
to result in a material tax liability. As of December 31, 2014, we had a net deferred tax liability of
approximately $52.2 million for our domestic operations, which included approximately $82.5 million of
deferred tax liabilities associated with the depreciation and amortization recapture.

During the year ended December 31, 2013, we recorded $16.2 million of income tax expense. The

income tax expense recorded during the year ended December 31, 2013 was primarily attributable to our
foreign operations, as we incurred losses in our domestic operations during the period. Our effective tax rates
were 407.7% and 14.4%, respectively, for the years ended December 31, 2014 and 2013. The increase in our
effective tax rate was primarily due to tax expense attributable to the domestic deferred tax assets write-off as
a result of our REIT conversion. Excluding this tax expense, our effective tax rate would have been 25.2% for
the year ended December 31, 2014.

During the year ended December 31, 2013, we utilized all of our federal net operating losses free of
Section 382 limitations in the U.S. for which a deferred tax asset had been previously recognized and all of
our windfall tax losses in the U.S. for which a deferred tax asset had not been previously recognized. We
recorded excess income tax beneﬁts of $18.6 million and $25.6 million during the year ended December 31,
2014 and 2013, respectively, in our consolidated balance sheet.

To better align our EMEA corporate structure and intercompany relationship with the nature of our
business activities and regional centralization, we commenced certain reorganization activities during the
fourth quarter of 2012 in the EMEA region. The new organizational structure centralized the majority of our
EMEA business management activities in the Netherlands effective July 1, 2013. In December 2013, our

Dutch subsidiaries that were created to carry-out EMEA’s centralized management activities received favorable
rulings from the Dutch Tax Authorities effective July 1, 2013. The rulings acknowledge the reorganization and
agree to a lower level of earnings by our Dutch subsidiaries subject to tax in the Netherlands. The rulings also
require both the Dutch Tax Authorities and our Dutch subsidiaries to revisit and renew the agreement in
ﬁve years from the effective date. As a result, we expect our overall effective tax rate will be lower in
subsequent periods as the new structure takes full effect.

Adjusted EBITDA. Adjusted EBITDA is a key factor in how we assess the performance of our
segments, measure the operational cash generating abilities of our segments and develop regional growth
strategies such as IBX data center expansion decisions. We deﬁne adjusted EBITDA as income or loss from
operations plus depreciation expense, amortization expense, accretion expense, stock-based compensation,
restructuring charges, impairment charges and acquisition costs. See ‘‘Non-GAAP Financial Measures’’ below
for more information about adjusted EBITDA and a reconciliation of adjusted EBITDA to income or loss
from operations. Periodically, we enter into new lease agreements or amend existing lease agreements. To the
extent we conclude that a lease is an operating lease, the rent expense may decrease our adjusted EBITDA
whereas to the extent we conclude that a lease is a capital or ﬁnancing lease, and this lease was previously
reported as an operating lease, this outcome may increase our adjusted EBITDA. Our adjusted EBITDA for
the years ended December 31, 2014 and 2013 was split among the following geographic regions (dollars in
thousands):

Years ended December 31,

% change

2014
$ 635,007
269,222
209,662
$1,113,891

2013

%
57% $ 608,718
216,186
24%
175,994
19%
100% $1,000,898

%
61%
22%
17%
100%

Actual
4%
25%
19%
11%

Constant
currency
6%
22%
23%
12%

Americas Adjusted EBITDA. The increase in our Americas adjusted EBITDA was due to higher
revenues as result of our IBX data center expansion activity and organic growth as described above, partially
offset by higher adjusted operating expenses as a percentage of revenues primarily attributable to higher
compensation expense and higher professional fees to support our growth. During the year ended
December 31, 2014, currency ﬂuctuations resulted in approximately $8.1 million of unfavorable foreign
currency impact on our Americas adjusted EBITDA primarily due to the generally stronger U.S. dollar relative
to the Brazilian real and Canadian dollar during the year ended December 31, 2014 compared to the year
ended December 31, 2013.

EMEA Adjusted EBITDA. The increase in our EMEA adjusted EBITDA was primarily due to higher

revenues as a result of our IBX data center expansion activity and organic growth as described above,
partially offset by higher adjusted operating expenses as a percentage of revenues primarily attributable to
higher compensation expense and higher professional fees to support our growth. During the year ended
December 31, 2014, currency ﬂuctuations resulted in approximately $4.9 million of net favorable foreign
currency impact on our EMEA adjusted EBITDA primarily due to the generally weaker U.S. dollar relative to
the Euro and Swiss franc during the year ended December 31, 2014 compared to the year ended
December 31, 2013.

Asia-Paciﬁc Adjusted EBITDA. The increase in our Asia-Paciﬁc adjusted EBITDA was primarily due to
higher revenues as a result of our IBX data center expansion activity and organic growth as described above,
partially offset by higher adjusted operating expenses as a percentage of revenues primarily attributable to
higher compensation expense and higher professional fees to support our growth. During the year ended
December 31, 2014, currency ﬂuctuations resulted in approximately $7.0 million of net unfavorable foreign
currency impact on our Asia-Paciﬁc adjusted EBITDA primarily due to the generally stronger U.S. dollar
relative to the Australian dollar, Japanese yen and Singapore dollar during the year ended December 31, 2014
compared to the year ended December 31, 2013.

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 to evaluate our
operations.

Non-GAAP ﬁnancial measures are not a substitute for ﬁnancial information prepared in accordance with

GAAP. Non-GAAP ﬁnancial measures should not be considered in isolation, but should be considered
together with the most directly comparable GAAP ﬁnancial measures and the reconciliation of the non-GAAP
ﬁnancial measures to the most directly comparable GAAP ﬁnancial measures. 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 these non-GAAP ﬁnancial measures provides consistency and comparability with past
reports and provides a better understanding of the overall performance of the business and 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 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 those of other companies. Investors
should therefore exercise caution when comparing non-GAAP ﬁnancial measures used by us to similarly titled
non-GAAP ﬁnancial measures of other companies.

Our primary non-GAAP ﬁnancial measures, adjusted funds from operations (‘‘AFFO’’) and adjusted
EBITDA, 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 an IBX data center do not recur with respect to such data center, although we may incur initial construction
costs in future periods with respect to additional IBX data centers, 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 AFFO and adjusted EBITDA, we exclude amortization expense related to
certain intangible assets, as it represents the amortization of a cost that may not recur and is not meaningful in
the evaluation 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 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. 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. We also
exclude impairment charges related to certain long-lived assets. The impairment charges are related to expense
recognized whenever events or changes in circumstances indicate that the carrying amount of long-lived assets
are not recoverable. Finally, we exclude acquisition costs from AFFO and adjusted EBITDA. The acquisition
costs relate to costs we incur in connection with business combinations. Management believes items such as
restructuring charges, impairment charges and acquisition costs are non-core transactions; however, these types
of costs may occur in future periods.

Adjusted EBITDA

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

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

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

2015
$ 567,342
528,929
133,633
—
41,723
$1,271,627

Years ended December 31,
2014
$ 509,266
484,129
117,990
—
2,506
$1,113,891

2013
$ 460,932
431,008
102,940
(4,837)
10,855
$1,000,898

Our adjusted EBITDA results have improved each year and in each region in total dollars 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 also discussed earlier in ‘‘Overview’’.

Funds from Operations (‘‘FFO’’) and AFFO

We use FFO and AFFO, which are non-GAAP ﬁnancial measures commonly used in the REIT industry.

FFO is calculated in accordance with the standards established by the National Association of Real Estate
Investment Trusts (‘‘NAREIT’’). FFO represents net income (loss), excluding gains (losses) from the
disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for
unconsolidated joint ventures’ and non-controlling interests’ share of these items.

We use AFFO to evaluate our performance on a consolidated basis and as a metric in the determination

of employees’ annual bonuses beginning in 2015 and vesting of restricted stock units that were granted in
2015 that have both service and performance conditions. In presenting AFFO, we exclude certain items that
we believe are not good indicators of our current or future operating performance. AFFO represents
FFO excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based
compensation, restructuring charges, impairment charges, acquisition costs, an installation revenue adjustment,
a straight-line rent expense adjustment, amortization of deferred ﬁnancing costs, gains (losses) on debt
extinguishment, an income tax expense adjustment, recurring capital expenditures and adjustments for
unconsolidated joint ventures’ and non-controlling interests’ share of these items. We include an adjustment for
revenue from installation fees, since installation fees are deferred and recognized ratably over the expected life
of the installation, although the fees are generally paid in a lump sum upon installation. We include an
adjustment for straight-line rent expense on its operating leases, since the total minimum lease payments are
recognized ratably over the lease term, although the lease payments generally increase over the lease term.
The adjustments for both installation revenue and straight-line rent expense are intended to isolate the cash
activity included within the straight-lined or amortized results in the consolidated statement of operations. We
exclude the amortization of deferred ﬁnancing costs as these expenses relate to the initial costs incurred in
connection with debt ﬁnancings that have no current or future cash obligations. We exclude gains (losses) on
debt extinguishment since it represents a cost that may not recur and is not a good indicator of our current or
future operating performance. We include an income tax expense adjustment, which represents changes in its
income tax reserves and valuation allowances that may not recur or may not relate to the current year’s
operations. We also excludes recurring capital expenditures, which represent expenditures to extend the useful
life of its IBX centers or other assets that are required to support current revenues.

Our FFO and AFFO for were as follows (in thousands):

Net income (loss)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net (income) loss attributable to redeemable non-controlling

2015
$187,774

Years ended December 31,
2014
$(260,726)

2013
$ 96,123

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (income) loss attributable to Equinix . . . . . . . . . . . . . . . .

—
187,774

1,179
(259,547)

(1,438)
94,685

Adjustments:

Real estate depreciation and amortization . . . . . . . . . . . . . .
Gain/loss on disposition of real estate property . . . . . . . . . .
Adjustments for FFO from unconsolidated joint ventures . . .
Non-controlling interests’ share of above adjustments . . . . . .
. . . . . . . .

NAREIT FFO attributable to common shareholders

439,969
1,382
113
—
$629,238

417,703
301
112
(5,303)
$ 153,266

377,049
825
112
(6,711)
$465,960

NAREIT FFO attributable to common shareholders
Adjustments:

. . . . . . . .

Installation revenue adjustment . . . . . . . . . . . . . . . . . . . . .
Straight-line rent expense adjustment . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .
Amortization of deferred ﬁnancing costs
Stock-based compensation expense . . . . . . . . . . . . . . . . . .
Non-real estate depreciation expense . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recurring capital expenditures . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment
Restructuring charge reversal
. . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense adjustment(1)
. . . . . . . . . . . . . . . . . . .
Adjustments for AFFO from unconsolidated joint ventures . .
Non-controlling interests’ share of above adjustments . . . . . .

Adjusted Funds from Operations (AFFO) attributable to

2015
$ 629,238

Years ended December 31,
2014
$ 153,266

2013
$465,960

35,498
7,931
16,135
133,633
58,165
27,446
3,349
(120,281)
289
—
41,723
(1,270)
(58)
—

25,720
13,048
19,020
117,990
36,232
27,756
2,438
(105,366)
156,990
—
2,506
315,289
(76)
(3,134)

25,017
8,612
24,429
102,940
28,395
27,287
(1,723)
(93,504)
108,501
(4,837)
10,855
(16,421)
(185)
(5,824)

common shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 831,798

$ 761,679

$679,502

(1) Represents changes in its income tax reserves and valuation allowances that may not relate to the current

year’s operations.

Our AFFO results have improved due to the improved operating results discussed earlier in ‘‘Results of
Operations,’’ as well as due to the nature of our business model which consists of a recurring revenue stream
and a cost structure which has a large base that is ﬁxed in nature as discussed earlier in ‘‘Overview.’’

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 Brazilian reals, British pound, Canadian dollar, Euro, Swiss franc,
Australian dollar, Chinese Yuan, 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 period-over-period 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, 2014 are used as exchange rates for the year ended December 31, 2015 when
comparing the year ended December 31, 2015 with the year ended December 31, 2014, and average rates in
effect for the year ended December 31, 2013 are used as exchange rates for the year ended December 31,
2014 when comparing the year ended December 31, 2014 with the year ended December 31, 2013).

Liquidity and Capital Resources

As of December 31, 2015, our total indebtedness was comprised of (i) convertible debt principal totaling

$150.1 million from our 4.75% convertible subordinated notes (gross of discount) and (ii) non-convertible
debt and ﬁnancing obligations totaling approximately $6.4 billion consisting of (a) approximately $3.9 billion
of principal from our senior notes, (b) approximately $1.3 billion from our capital lease and other ﬁnancing
obligations, (c) $325.6 million from our revolving credit facility, and (c) $920.1 million of principal from our
mortgage and other loans payable (gross of discount and premium).

We believe we have sufficient cash, coupled with anticipated cash generated from operating activities, to

meet our operating requirements, including repayment of the current portion of our debt as it becomes due,
payment of regular dividend and special distributions due to our REIT conversion (see below) and completion
of our publicly-announced expansion projects. As of December 31, 2015, we had $2.2 billion of cash, cash
equivalents and short-term and long-term investments, of which approximately $2.0 billion was held in the
U.S. In January 2016, we used £1.2 billion, or approximately $1.7 billion in U.S. dollars at exchange rates in
effect on January 15, 2016, to fund the cash portion of the TelecityGroup purchase price. We believe that our
current expansion activities in the U.S. can be funded with our cash and cash equivalents and investments.

As of December 31, 2015, we had 30 irrevocable letters of credit totaling $55.3 million issued and
outstanding under the revolving credit facility; as a result of these letters of credit plus $325.6 million of
outstanding borrowings under our revolving credit facility, we had a total of approximately $1.1 of additional
liquidity available to us under the revolving credit facility. Besides any further 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. Additionally, 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. We are also now operating as a REIT (see below). While we
expect to fund these plans with our existing resources, additional ﬁnancing, either debt or equity, may be
required 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.

Impact of REIT Conversion

We completed our conversion to a REIT in 2014 and began operating as a REIT effective January 1,
2015. As a result of our conversion to a REIT, we made special distributions to our stockholders in 2015 and
2014. The distributions were payable in common stock or cash at the election of our stockholders, with the
cash portion of the distributions subject to certain maximum amounts. As a result of the special distributions,
we paid a total of $125.5 million in 2015 and $83.3 million in 2014 and distributed 1.7 million and
1.5 million shares of common stock in 2015 and 2014, respectively. Also as a result of our conversion to a
REIT, we began paying quarterly dividends in 2015. We paid an aggregate of $396.0 million of cash
dividends during 2015, which consisted of $393.6 million of cash dividends paid to shareholders and
$2.4 million of cash paid in lieu of stock for fractional shares upon the vesting of restricted stock units.

We have incurred $78.3 million in costs to support our conversion to a REIT since 2012, including

$4.5 million and $49.4 million in 2015 and 2014, respectively. We expect to incur approximately
$10.0 million annually in REIT compliance costs.

Sources and Uses of Cash

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

Operating Activities

894,793
(1,134,927)
1,873,182

2015

2013

Years ended December 31,
2014
(dollars in thousands)
$ 689,420
(435,839)
107,401

604,608
(1,169,313)
574,907

The increase in net cash provided by operating activities during 2015 compared to 2014 was primarily

due to improved operating results. The increase in net cash provided by operating activities during 2014
compared to 2013 was primarily due to improved operating results, offset by unfavorable working capital
activities such as decreased collections of customer receivables and a $51.4 million increase in interest
payments. We expect we will continue to generate cash from our operating activities during 2016.

Investing Activities

The increase in net cash used in investing activities during 2015 compared to 2014 was primarily due to

a $513.9 million increase in restricted cash, primarily in connection with our cash and share offer for
TelecityGroup, $245.6 million, net of cash for our acquisition of Bit-isle and Nimbo, $207.9 million of higher
capital expenditures primarily as a result of expansion activity and $21.5 million of higher purchase of real
estate, partially offset by $187.0 million of lower purchase of investments and $87.6 million of higher sales
and maturities of investment. The decrease in net cash used in investing activities during 2014 compared to
2013 was primarily due to $423.0 million of lower purchases of investments, $295.7 million of higher sales
and maturities of investments, $57.5 million of lower real estate purchases and $49.3 million of lower
business acquisition spending, partially offset by $87.8 million of higher capital expenditures as a result of
more IBX expansion activity.

In May 2015, we announced a cash and share offer valued at £2.4 billion or $3.8 billion U.S dollars for
the entire issued and outstanding share capital of TelecityGroup. The acquisition closed on January 15, 2016.

During 2016, we expect that our IBX expansion construction activity will be greater than our 2015
levels. However, if the opportunity to expand is greater than planned and we have sufficient funding to pursue
such expansion opportunities, we may further increase the level of capital expenditures to support this growth
as well as pursue additional business acquisitions, property acquisitions or joint ventures.

Financing Activities

Net cash provided by ﬁnancing activities during 2015 was primarily due to (i) $1.1 billion of gross
proceeds from the senior notes offering in December 2015, (ii) $829.5 million of net proceeds from our public
offering of common stock in November 2015, (iii) $1.2 billion of proceeds from loans payable including
proceeds from our term loan modiﬁcation, our bridge term loan and our revolving credit facility, partially
offset by (iv) $715.3 million repayment of mortgage and loans payable including repayment of $171.2 million
of loans assumed in the Bit-isle acquisition and repayment of $544.1 million of U.S. dollar-denominated term
loan and other mortgage and loan payments, (v) $396.0 million of quarterly dividend distributions and
(vi) $125.5 million of special distributions. The net cash provided by ﬁnancing activities for 2014 was
primarily due to $1.25 billion of proceeds from the senior notes offering in November 2014, $500.0 million of
proceeds from the term loan facility, partially offset by (i) $1.1 billion for repayment of debt including
$750.0 million for the redemption of the 7.00% senior notes, prepayment of the remaining principal balance
of the U.S. term loan of $110.0 million, $43.5 million for repayments of mortgage and other loan payable,
and $29.5 million for the exchanges of the 3.00% convertible subordinated notes and 4.75% convertible
subordinated notes, (ii) $298.0 million for the purchases of treasury stock, (iii) $226.3 million for the purchase
of Riverwood’s interest in ALOG and the approximate 10% of ALOG owned by ALOG management and

(iv) $83.3 million for the cash portion of the special distribution. The net cash provided by ﬁnancing activities
for 2013 was primarily due to $1.5 billion of proceeds from the senior notes offering in March 2013, partially
offset by $834.7 million for the redemption of the $750.0 million 8.125% senior notes, repayments of various
debt and purchases of treasury stock. Going forward, we expect that our ﬁnancing activities will consist
primarily of repayment of our debt and additional ﬁnancings needed to support expansion opportunities,
additional acquisitions or joint ventures and the payment of our regular cash dividends.

Debt Obligations

Debt Facilities

We have various debt obligations with maturity dates ranging from 2016 to 2026 under which a total

principal balance of $5.2 billion remained outstanding as of December 31, 2015. For further information on
debt obligations, see ‘‘Debt Facilities’’ in Note 9 of Notes to Consolidated Financial Statements in Item 8 of
this Annual Report on Form 10-K.

Capital Lease and Other Financing Obligations

We have numerous capital lease and other ﬁnancing obligations with maturity dates ranging from 2016 to
2065 under which a total principal balance of $1.3 billion remained outstanding as of December 31, 2015 with
a weighted average effective interest rate of 8.17%. 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.

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 2065. The following represents our debt maturities, ﬁnancings, leases and other
contractual commitments as of December 31, 2015 (in thousands):

2016

2017

2018

2019

2020

Thereafter

Convertible debt(1) . . . . $ 150,082 $
Senior notes(2) . . . . . . .
Term loan A(2)
. . . . . .
Bridge term loan(2) . . . .
Brazil ﬁnancings(2) . . . .
Mortgage payable(2)
. . .
Other loans payable(2) . .
Revolving credit

—
41,565
386,547
11,540
1,049
3,720

— $
—
39,541
—
7,936
1,094
2,477

— $
—
39,540
—
4,419
1,141
2,515

— $

— $
— 500,000
—
—
—
1,242
1,982

336,094
—
—
1,191
2,044

— $

3,350,000
—
—
—
26,626
7,801

Total
150,082
3,850,000
456,740
386,547
23,895
32,343
20,539

facility(2) . . . . . . . . .
. . . . . . . . . .

Interest(3)
Capital lease and other

325,622
203,872

—
220,234

—
218,821

—
217,806

—
201,034

—
682,032

325,622
1,743,799

. . . . . .
. . . .

140,632
115,091

139,653
113,624

140,981
108,810

138,847
100,462

136,587
89,227

1,346,341
632,677

2,043,041
1,159,891

. . . .

476,217

79,750

18,898

4,252

4,302

25,540

608,959

Asset retirement
obligations(7)

. . . . . .

491

9,982
$1,856,428 $614,291

4,150
$539,275

11,297
$811,993

3,651

78,482
48,911
$938,025 $6,119,928 $10,879,940

(1) Represents principal only. As of December 31, 2015, had the holders of the 4.75% convertible

subordinated notes due 2016 converted their notes, the 4.75% convertible subordinated notes would have
been convertible into approximately 2.0 million shares of our common stock, which would have a total
value of $593.0 million based on the closing price of our common stock on December 31, 2015.

(2) Represents principal only.

ﬁnancing
obligations(4)
Operating leases(5)
Other contractual
commitments(6)

(3) Represents interest on Brazil ﬁnancings, convertible debt, mortgage payable, senior notes and term loan

facility based on their approximate interest rates as of December 31, 2015.

(4) Represents principal and interest.
(5) Represents minimum operating lease payments, excluding potential lease renewals.
(6) Represents unaccrued contractual commitments. Other contractual commitments are described below.
(7) Represents liability, net of future accretion expense.

In connection with certain of our leases and other contracts requiring deposits, we entered into

30 irrevocable letters of credit totaling $55.3 million under the revolving credit facility. These letters of credit
were provided in lieu of cash deposits under the revolving credit facility. If the landlords for these IBX leases
decide to draw down on these letters of credit triggered by an event of default under the lease, we will be
required to fund these letters of credit either through cash collateral or borrowing under the revolving credit
facility. These contingent commitments are not reﬂected in the table above.

We had accrued liabilities related to uncertain tax positions totaling approximately $26.8 million as of
December 31, 2015. These liabilities, which are reﬂected on our balance sheet, are not reﬂected in the table
above since it is unclear when these liabilities will be paid.

Primarily as a result of our various IBX data center expansion projects, as of December 31, 2015, we

were contractually committed for $256.8 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 2016 and thereafter, is reﬂected in the table above as ‘‘other
contractual commitments.’’

We had other non-capital purchase commitments in place as of December 31, 2015, 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 2016 and beyond. Such other purchase commitments as of
December 31, 2015, which total $352.2 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 $359.6 million to $459.6 million, in addition to the $609.0 million in
contractual commitments discussed above as of December 31, 2015, in our various IBX data center expansion
projects during 2016 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. As of December 31, 2015, there were no signiﬁcant liabilities
recorded for these arrangements. For additional information, see ‘‘Guarantor Arrangements’’ in Note 14 of
Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

Our consolidated ﬁnancial statements are prepared in accordance with generally accepted accounting
principles in the U.S. (‘‘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 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 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.

Effect if Actual Results
Differ From Assumptions

As of December 31, 2015 and
2014, we recorded a total of net
deferred tax liabilities of
$39.5 million and $100.8 million,
respectively. As of December 31,
2015 and 2014, we had a total
valuation allowance of
$29.9 million and $27.2 million,
respectively. During the year ended
December 31, 2015 and 2014, we
decided to provide a partial release
of valuation allowance against the
net deferred tax assets associated
with certain foreign operating
entities, which resulted in an
insigniﬁcant income tax beneﬁt in
our results of operations.

Our decisions to release our
valuation allowances were based
on our belief that the operations of
these jurisdictions 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.

Description

Judgments and Uncertainties

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 settled.

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%) that such assets
will not be realized.

A tax beneﬁt from an uncertain
income tax position may be
recognized in the ﬁnancial
statements only if it is more likely
than not that the position is
sustainable, based solely on its
technical merits and consideration
of the relevant taxing authority’s
widely understood administrative
practices and precedents.

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
that 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.

In assessing the tax beneﬁt from
an uncertain income tax position,
the tax position that meets the
more-likely-than-not recognition
threshold is initially and
subsequently measured as the
largest amount of tax beneﬁt that
is greater than 50% likely of
being realized upon ultimate
settlement with a taxing authority
that has full knowledge of all
relevant information.

Description

Judgments and Uncertainties

Effect if Actual Results
Differ From Assumptions

Our remaining valuation allowance
as of December 31, 2015 was
$29.9 million and primarily relates
to certain of our subsidiaries
outside of the U.S. If and when we
release our remaining valuation
allowances, it will have a favorable
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.

As of December 31, 2015 and
2014, we had unrecognized tax
beneﬁts of $30.8 million and
$36.1 million, respectively,
exclusive of interest and penalties.
During the year ended
December 31, 2015, the
unrecognized tax beneﬁts
decreased by $5.3 million
primarily due to an agreement with
Dutch Tax Authorities on the
availability of historical loss
carry-forwards to offset future
proﬁts generated by the Dutch
ﬁscal unity. During the year ended
December 31, 2014, the
unrecognized tax beneﬁts
decreased by an insigniﬁcant
amount primarily due to the
settlement of a tax audit and the
lapse of statute of limitations in
our foreign operations. The
unrecognized tax beneﬁts of
$30.8 million as of December 31,
2015, if subsequently recognized,
will affect our effective tax rate
favorably at the time when such
beneﬁts are recognized.

Description

Judgments and Uncertainties

Effect if Actual Results
Differ From Assumptions

Accounting for Business
Combinations
In accordance with the accounting
standard 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 and
contingent consideration. 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 three business
combinations, including the Bit-isle
acquisition in November 2015, the
Nimbo acquisition in January 2015
and the Frankfurt Kleyer 90
Carrier Hotel acquisition in
October 2013. The purchase price
allocation for the Bit-isle and
Frankfurt Kleyer 90 Carrier Hotel
acquisitions were completed in the
fourth quarters of 2015 and 2013,
respectively.

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
allocations 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 in 2016 or beyond.

Description

Judgments and Uncertainties

Effect if Actual Results
Differ From Assumptions

As of December 31, 2015,
goodwill attributable to the
Americas reporting unit, the
EMEA reporting unit and the
Asia-Paciﬁc reporting unit was
$460.2 million, $374.1 million and
$228.9 million, respectively.

Future events, changing market
conditions and any changes in key
assumptions may result in an
impairment charge. While we have
not recorded an impairment charge
against our goodwill to date, the
development of adverse business
conditions in our Americas, EMEA
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.

Any potential impairment charge
against our goodwill would not
exceed the amounts recorded on
our consolidated balance sheets.

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, 2014, we changed
our annual goodwill impairment
testing date from November 30th to
October 31st of each year,
commencing on October 31, 2014.

During the year ended
December 31, 2015, we elected to
assess qualitative factors to
determine whether it is more likely
than not that the fair value of a
reporting unit in which goodwill
resides is less than its carrying
value.

During the year ended
December 31, 2015, we completed
annual goodwill impairment
assessment of the Americas
reporting unit, the EMEA reporting
unit and the Asia-Paciﬁc reporting
unit and concluded that it is more
likely than not that the fair value
of these reporting units exceeded
their carrying value, goodwill is
not considered impaired and we
are not required to perform the
two-step goodwill impairment test.

During the year ended
December 31, 2015, we elected
to assess qualitative factors to
determine whether it is more
likely than not that the fair value
of a reporting unit is less than its
carrying value requires
assumptions and estimates before
performing the two-step goodwill
impairment test, the assessment
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.

Prior to 2015, when we elected
to perform the ﬁrst step of the
two-step goodwill impairment
test, we used both the income
and market approach. 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.
The market approach requires
judgment in determining the
appropriate market comparables.

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

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. 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 and
integral equipment located in
leased properties).

Accounting for property, plant and
equipment includes determining
the appropriate period in which to
depreciate such assets, making
assessments for leased properties
to determine whether they are
capital or operating leases,
determining if construction projects
performed at leased properties
trigger build-to-suit lease
accounting, assessing such assets
for potential impairment,
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 on 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 end 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. We
periodically review the estimated
useful lives of certain of our
property, plant and equipment
and changes in these estimates in
the future are possible.

We did not revise the estimated
useful lives of our property, plant
and equipment during the years
ended December 31, 2015 and
2013. During the quarter ended
December 31, 2014, we revised the
estimated useful lives of certain of
our property, plant and equipment.
As a result, we recorded an
insigniﬁcant amount of higher
depreciation expense for the
quarter ended December 31, 2014
due to the reduction of 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 over a shorter
period than originally anticipated
and, therefore, the estimated useful
lives of certain of our property,
plant and equipment has been
shortened. This change was
accounted for as a change in
accounting estimate on a
prospective basis effective
October 1, 2014 under the
accounting standard for change in
accounting estimates.

As of December 31, 2015, 2014
and 2013, we had property, plant
and equipment of $5.6 billion,
$5.0 billion, and $4.6 billion,
respectively. During the years
ended December 31, 2015, 2014
and 2013, we recorded
depreciation expense of
$498.1 million, $453.9 million, and
$405.5 million, respectively.
Further changes in our estimated
useful lives of our property, plant
and equipment could have a
signiﬁcant impact on our results of
operations.

Description

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 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 and establishing the
incremental borrowing rate to
calculate the present value of the
minimum lease payment for the
lease test. All of these judgments
are inherently uncertain. Different
assumptions or estimates could
result in a different accounting
treatment for a lease.

The assessment of long-lived
assets for impairment requires
assumptions and estimates of
undiscounted and discounted
future cash ﬂows. These
assumptions and estimates require
signiﬁcant judgment and are
inherently uncertain.

Effect if Actual Results
Differ From Assumptions

As of December 31, 2015 and
2014, we had property, plant and
equipment under capital leases and
other ﬁnancing obligations of
$1.5 billion, $1.1 billion and
$949.0 million, respectively.
During the years ended
December 31, 2015, 2014 and
2013, we recorded depreciation
expense of $52.9 million,
$43.2 million, and $32.5 million
respectively, related to property,
plant and equipment under capital
leases and other ﬁnancing
obligations. During the year ended
December 31, 2015, 2014, 2013,
we recorded interest expense of
$104.4 million, $86.4 million,
$56.6 million, respectively related
to property, plant, equipment,
under capital leases and other
ﬁnancing obligations.

Additionally, during the years
ended December 31, 2015, 2014
and 2013, we recorded rent
expense of $200.0 million
$105.4 million, and $112.7 million
under operating leases.

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 changes in interest rates and foreign currency exchange rates and ﬂuctuations in the prices of certain
commodities, primarily electricity.

We 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

We maintain an investment portfolio of various holdings, types, and maturities that is prioritized on

meeting REIT asset requirements. All of our marketable securities are designated as available-for-sale and,
therefore, are recorded on our consolidated balance sheets at fair value with unrealized gains or losses
reported as a component of other comprehensive income, net of tax. 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 any anticipated recovery. We anticipate that we will
recover the entire cost basis of these securities and have determined that no other-than-temporary impairments
associated with credit losses were required to be recognized during the year ended December 31, 2015.

As of December 31, 2015, our investment portfolio of cash equivalents and marketable securities

consisted of money market fund investments, U.S. government securities, certiﬁcates of deposits and publicly
traded equity securities and publicly traded ﬁxed income securities. The amount in our investment portfolio
that could be susceptible to market risk totaled $1.1 billion.

Interest Rate Risk

Our primary objective for holding ﬁxed income securities is to achieve an appropriate investment return

consistent with preserving principal and managing risk which meets asset measurement requirements for REIT
qualiﬁcation. At any time, a sharp rise in interest rates or credit spreads could have a material adverse impact
on the fair value of our ﬁxed income investment portfolio. Securities with longer maturities are subject to a
greater interest rate risk than those with shorter maturities. As of December 31, 2015, the average duration of
our portfolio was less than one year. An immediate hypothetical shift in the yield curves of plus or minus 50
basis points from their position as of December 31, 2015 would not have a material impact on the fair value
of our investment portfolio. This sensitivity analysis assumes a parallel shift of all interest rates, however,
interest rates do not always move in such a manner and actual results may differ materially. We monitor our
interest rate and credit risk, including our credit exposures to speciﬁc rating categories and to individual
issuers. There were no impairment charges on our cash equivalents and ﬁxed income securities during the year
ended December 31, 2015.

An immediate 10% increase or decrease in current interest rates from their position as of December 31,
2015 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 senior credit facility, the Brazil ﬁnancings
and bridge term loan, which bear interest at variable rates, 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
$6.9 million based on the total balance of our primary borrowings under the term loan A facility, revolving
credit facility, bridge term loan and the Brazil ﬁnancings as of December 31, 2015. As of December 31, 2015,
we had not employed any interest rate derivative products against our debt obligations. However, we may
enter into interest rate hedging agreements in the future to mitigate our exposure to interest rate risk.

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 our convertible debt, which is traded in the market, is based on quoted market
prices. The fair value of our loans payable, which are not traded in the market, is estimated by considering
our credit rating, current rates available to us for debt of the same remaining maturities and the terms of the
debt. The following table represents the carrying value and estimated fair value of our loans payable, senior
notes and convertible debt as of (in thousands):

December 31, 2015

December 31, 2014

Carrying
Value(1)
$ 920,064
150,082
3,850,000
325,622

Fair
Value
$ 916,602
151,997
3,954,000
325,617

Carrying
Value(1)
$ 595,752
157,885
2,750,000
—

Fair
Value
$ 553,045
162,159
2,790,023
—

Mortgage and loans payable . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Convertible debt
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving credit facility . . . . . . . . . . . . . . . . . .

(1) The carrying value is gross of debt discount.

Foreign Currency Risk

A signiﬁcant portion of our revenue is denominated in U.S. dollars, however, approximately 48.5% of our

revenues and 48.6% of our operating costs are attributable to Brazil, Canada and the EMEA 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 Brazilian Reals, Canadian dollar, British pound, Euro, Swiss franc, United Arab
Emirates dirham, Australian dollar, Chinese Yuan, Hong Kong dollar, Japanese yen and Singapore 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 have entered into foreign currency forward contracts to
manage the risk associated with certain foreign currency-denominated assets and liabilities. We entered into
foreign currency forward contracts to help manage our exposure to foreign currency exchange rate ﬂuctuations
for forecasted revenues and expenses in our EMEA region. 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, 2015, the outstanding foreign currency forward contracts had
maturities of less than two years.

For the foreseeable future, we anticipate that more than 50% 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. During
ﬁscal 2015, the U.S. dollar was generally strong relative to certain of the currencies of the foreign countries in
which we operate. This overall strength of the U.S. dollar had a negative impact on our consolidated results of
operations because the foreign denominations translated into less 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.

Excluding consideration from hedging contracts, an immediate 10% appreciation in current foreign

exchange rates as of December 31, 2015 would have resulted in an increase of $130.8 million and
$23.1 million in revenue and net income before taxes. Excluding consideration from hedging contracts, an
immediate 10% depreciation in current foreign exchange rates as of December 31, 2015 would have resulted
in a decrease of $128.4 million and $25.2 million in revenue and net income before taxes.

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 2014 and beyond in certain locations in the U.S., Australia, Brazil, France,
Germany, Japan, the 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 at the reasonable assurance level
as of December 31, 2015.

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 (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our evaluation under the framework in Internal Control — Integrated Framework (2013), our

management concluded that our internal control over ﬁnancial reporting was effective as of December 31,
2015.

The evaluation of the effectiveness of our internal control over ﬁnancial reporting as of December 31,
2015 did not include the internal controls of Bit-isle Inc. We excluded Bit-isle Inc. from our assessment of
internal control over ﬁnancial reporting as of December 31, 2015 as it was acquired in November 2015.
Bit-isle Inc. is our wholly-owned subsidiary whose total assets represented 4% and total revenues represented
1% of the related consolidated ﬁnancial statements amounts as of and for the year ended December 31, 2015.

The effectiveness of our internal control over ﬁnancial reporting as of December 31, 2015 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 is also 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 was no change in our internal controls over ﬁnancial reporting during the fourth quarter of ﬁscal

2015 that has materially affected, or is reasonable likely to affect, our internal controls over ﬁnancial
reporting.

ITEM 9B. OTHER INFORMATION

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

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

2016 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 2016 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

2016 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

2016 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

2016 Annual Meeting of Stockholders.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

2016 Annual Meeting of Stockholders.

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 Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity and Other Comprehensive Income

(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-1
F-3
F-4
F-5

F-6
F-7
F-8

(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

2.1

2.2

2.3

3.1

3.2

3.3

3.4

3.5

3.6
4.1

4.2

4.3

4.4

Exhibit Description

Rule 2.7 Announcement, dated as May 29, 2015.
Recommended Cash and Share Offer for Telecity Group
plc by Equinix, Inc.
Cooperation Agreement, dated as of May 29, 2015, by and
between Equinix, Inc. and Telecity Group plc.
Amendment to Cooperation Agreement, dated as of
November 24, 2015, by and between Equinix, Inc. and
Telecity Group plc.
Amended and Restated Certiﬁcate of Incorporation of the
Registrant, as amended to date.
Certiﬁcate of Amendment to the Amended and Restated
Certiﬁcate of Incorporation of the Registrant
Certiﬁcate of Amendment to the Amended and Restated
Certiﬁcate of Incorporation of the Registrant
Certiﬁcate of Amendment to the Amended and Restated
Certiﬁcate of Incorporation of the Registrant
Certiﬁcate of Designation of Series A and Series A-1
Convertible Preferred Stock.
Amended and Restated Bylaws of the Registrant.
Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, 3.5
and 3.6.
Indenture dated June 12, 2009 by and between Equinix,
Inc. and U.S. Bank National Association, as trustee.
Form of 4.75% Convertible Subordinated Note Due 2016
(see Exhibit 4.2).
Indenture for the 2020 Notes dated March 5, 2013 by and
between Equinix, Inc. and U.S. Bank National Association
as trustee

Incorporated by Reference

Filing Date/
Period
End Date

Exhibit

Filed
Herewith

5/29/15

2.1

Form

8-K

5/29/15

2.2

10-K/A

12/31/02

3.1

8-K

6/14/11

3.1

8-K

6/11/13

3.1

10-Q

6/30/2014

3.4

10-K/A

12/31/02

3.3

8-K

01/19/16

3.1

8-K

6/12/09

4.1

8-K

3/5/13

4.1

Exhibit Description

Form

Filing Date/
Period
End Date

Exhibit

Filed
Herewith

Incorporated by Reference

Exhibit
Number

4.5

4.6

4.7

4.8

4.9

Form of 4.875% Senior Note due 2020 (see Exhibit 4.4)

Indenture for the 2023 Notes dated March 5, 2013 by and
between Equinix, Inc. and U.S. Bank National Association
as trustee

Form of 5.375% Senior Note due 2023 (see Exhibit 4.6)

Indenture, dated as of November 20, 2014, between
Equinix, Inc. and U.S. Bank National Association, as
trustee

First Supplemental Indenture, dated as of November 20,
2014, between Equinix, Inc. and U.S. Bank National
Association, as trustee

4.10

Form of 5.375% Senior Note due 2022 (see Exhibit 4.9)

4.11

4.12
4.13

Second Supplemental Indenture, dated as of November 20,
2014, between Equinix, Inc. and U.S. Bank National
Association, as trustee
Form of 5.750% Senior Note due 2025 (see Exhibit 4.11)
Third Supplemental Indenture, dated as of December 4,
2015, between Equinix, Inc. and U.S. Bank National
Association, as trustee
Form of 5.875% Senior Note due 2026 (see Exhibit 4.13)
4.14
Form of Registrant’s Common Stock Certiﬁcate
4.15
10.1** Form of Indemniﬁcation Agreement between the
Registrant and each of its officers and directors.

10.2** 2000 Equity Incentive Plan, as amended.
10.3** 2000 Director Option Plan, as amended.
10.4** 2001 Supplemental Stock Plan, as amended.
10.5** Equinix, Inc. 2004 Employee Stock Purchase Plan, as

amended.

8-K

3/5/13

4.3

8-K

11/20/14

4.1

8-K

11/20/14

4.2

8-K

11/20/14

4.4

8-K

12/04/15

4.2

10-K
S-4
(File No.
333-93749)
10-Q
10-K
10-K
10-Q

12/31/14
12/29/1999

4.13
10.5

3/31/12
12/31/07
12/31/07
6/30/14

10.2
10.4
10.5
10.5

10.6** Severance Agreement by and between Stephen Smith and

10-K

12/31/08

10.31

Equinix, Inc. dated December 18, 2008.

10.7** Severance Agreement by and between Peter Van Camp
and Equinix, Inc. dated December 10, 2008.
10.8** Severance Agreement by and between Keith Taylor and

Equinix, Inc. dated December 19, 2008.

10-K

12/31/08

10.32

10-K

12/31/08

10.33

10.9** Change in Control Severance Agreement by and between

10-K

12/31/08

10.35

Eric Schwartz and Equinix, Inc. dated December 19, 2008.

10.10 Conﬁrmation for Base Capped Call Transaction dated as

8-K

6/12/09

10.1

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

10.11 Conﬁrmation for Additional Capped Call Transaction dated

8-K

6/12/09

10.2

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

Exhibit
Number

10.12

10.13

10.14

10.15

Exhibit Description

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

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

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

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

10.16** Switch & Data 2007 Stock Incentive Plan.

Incorporated by Reference

Filing Date/
Period
End Date

Exhibit

Filed
Herewith

6/12/09

10.4

Form

8-K

6/12/09

10.5

8-K

6/12/09

10.7

8-K

6/12/09

10.8

2/5/07

10.9

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

10.17** Change in Control Severance Agreement by and between

10-Q

9/30/10

10.42

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

10.18** Form of amendment to existing severance agreement
between the Registrant and each of Messrs. Meyers,
Smith, Taylor and Van Camp.

10.19** 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.

10-K

12/31/10

10.33

10-K

12/31/10

10.34

10.20** Offer Letter from Equinix, Inc. to Sara Baack dated

10-Q

3/31/13

10.42

July 31, 2012.

10.21** Change in Control Severance Agreement by and between

10-Q

3/31/13

10.44

Sara Baack and Equinix, Inc. dated July 31, 2012.

10.22** Form of Revenue/Adjusted EBITDA Restricted Stock

Unit Agreement for CEO and CFO.

10.23** Form of Revenue/Adjusted EBITDA Restricted Stock

Unit Agreement for all other Section 16 officers.

10.24** International Long-Term Assignment Letter by and

between Equinix, Inc. and Eric Schwartz, dated May 21,
2013.

10-Q

3/31/13

10.46

3/31/13

10.47

6/30/13

10.51

10.25** Employment Agreement by and between Equinix

10-Q

9/30/13

10.54

(EMEA) B.V. and Eric Schwartz, dated as of August 7,
2013.

Exhibit
Number

Exhibit Description

10.26** Restricted Stock Unit Agreement dated August 14, 2013
for Charles Meyers under the Equinix, Inc. 2000 Equity
Incentive Plan.

Incorporated by Reference

Filing Date/
Period
End Date

Exhibit

Filed
Herewith

9/30/13

10.55

Form

10-Q

10.27** Offer Letter from Equinix, Inc. to Karl Strohmeyer dated

10-Q

3/31/14

10.49

October 28, 2013.

10.28** Restricted Stock Unit Agreement for Karl Strohmeyer

10-Q

3/31/14

10.50

under the Equinix, Inc. 2000 Equity Incentive Plan.

10.29** Change in Control Severance Agreement by and between

10-Q

3/31/14

10.51

Karl Strohmeyer and Equinix, Inc. dated December 2,
2013.

10.30** 2014 Form of Revenue/Adjusted EBITDA Restricted
Stock Unit Agreement for CEO and CFO.

10-Q

3/31/14

10.52

10.31** 2014 Form of Revenue/Adjusted EBITDA Restricted

10-Q

3/31/14

10.53

Stock Unit Agreement for all other Section 16 officers.

10.32** 2014 Form of TSR Restricted Stock Unit Agreement for

10-Q

3/31/14

10.54

CEO and CFO.

10.33** 2014 Form of TSR Restricted Stock Unit Agreement for

10-Q

3/31/14

10.55

10.34

10.35

10.36

10.37

10.38

all other Section 16 officers.
Lease between Digital 1350 Duane, LLC and Equinix
LLC, dated March 27, 2014.
Amendment Agreement dated as of May 2, 2014, between
Equinix, Inc. and Goldman, Sachs & Co., amending and
restating the Master Terms and Conditions for Capped Call
Transactions between Equinix, Inc. and Goldman, Sachs &
Co. and amending the Conﬁrmation for Base Capped Call
Transaction.
Amendment Agreement dated as of May 2, 2014, between
Equinix, Inc. and Deutsche Bank AG, London Branch,
amending and restating the Master Terms and Conditions
for Capped Call Transactions between Equinix, Inc. and
Deutsche Bank AG, London Branch and amending the
Conﬁrmation for Base Capped Call Transaction.
Amendment Agreement dated as of May 2, 2014, between
Equinix, Inc. and JPMorgan Chase Bank, National
Association, London Branch, amending and restating the
Master Terms and Conditions for Capped Call
Transactions between Equinix, Inc. and JPMorgan Chase
Bank, National Association, London Branch and amending
the Conﬁrmation for Base Capped Call Transaction.
Amendment Agreement, dated as of May 13, 2014,
between Equinix, Inc. and Goldman, Sachs & Co.,
amending the Conﬁrmation for Base Capped Call
Transaction.

10-Q

3/31/14

10.56

10-Q

6/30/14

10.54

10-Q

6/30/14

10.55

10-Q

6/30/14

10.56

10-Q

6/30/14

10.57

Exhibit
Number

10.39

10.40

10.41

Exhibit Description

Amendment Agreement dated as of May 13, 2014,
between Equinix, Inc. and Deutsche Bank AG, London
Branch, amending the Conﬁrmation for Base Capped Call
Transaction.

Amendment Agreement dated as of May 13, 2014,
between Equinix, Inc. and JPMorgan Chase Bank,
National Association, London Branch, amending the
Conﬁrmation for Base Capped Call Transaction.

Amendment Agreement, dated as of June 6, 2014, between
Equinix, Inc. and Goldman, Sachs & Co., amending the
Conﬁrmation for Base Capped Call Transaction.

10.42

10.43

10.44

Amendment Agreement dated as of June 6, 2014, between
Equinix, Inc. and Deutsche Bank AG, London Branch,
amending the Conﬁrmation for Base Capped Call
Transaction.
Amendment Agreement dated as of June 6, 2014, between
Equinix, Inc. and JPMorgan Chase Bank, National
Association, London Branch, amending the Conﬁrmation
for Base Capped Call Transaction.
Agreement for Purchase and Sale of Shares Among RW
Brasil Fundo de Investimentos em Participação, Antônio
Eduardo Zago De Carvalho and Sidney Victor da Costa
Breyer, as Sellers, and Equinix Brasil Participaçãoes Ltda.,
as Purchaser, and Equinix South America Holdings LLC.,
as a Party for Limited Purposes and ALOG Soluções de
Tecnologia em Informática S.A. as Intervening Consenting
Party dated July 18, 2014
Credit Agreement, by and among Equinix, Inc., as
borrower, Equinix LLC and Switch & Data LLC as
guarantors, the Lenders (deﬁned therein), Bank of
America, N.A., as administrative agent, a Lender and L/C
issuer, JPMorgan Chase Bank, N.A., and TD Securities
(USA) LLC, as co-syndication agents, Barclays Bank
PLC, Citibank, N.A., Royal Bank of Canada and ING
Bank N.V., Singapore Branch, as Co-Documentation
Agents and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities LLC, and TD
Securities (USA) LLC, as joint lead arrangers and book
runners, dated December 17, 2014.
10.46** Equinix, Inc. 2015 Incentive Plan.
10.47** 2015 Form of Revenue/AFFO Restricted Stock Unit

10.45

Incorporated by Reference

Filing Date/
Period
End Date

Exhibit

Filed
Herewith

6/30/14

10.58

Form

10-Q

6/30/14

10.59

10-Q

6/30/14

10.60

10-Q

6/30/14

10.61

10-Q

6/30/14

10.62

10-Q

9/30/14

10.67

10-K

12/31/14

10.48

10-Q
10-Q

3/31/15
3/31/15

10.49
10.50

Agreement for executives.

10.48** 2015 Form of TSR Restricted Stock Unit Agreement for

10-Q

3/31/15

10.51

executives.

10.49** 2015 Form of Time-Based Restricted Stock Unit

10-Q

3/31/15

10.52

Agreement for executives.

Exhibit
Number

10.50

10.51

10.52

10.53

10.54

10.55

21.1
31.1

31.2

32.1

32.2

Exhibit Description

First Amendment to Credit Agreement and ﬁrst
Amendment to Pledge and Security Agreement by and
among Equinix, Inc., as borrower, the Guarantors (deﬁned
therein), the Lenders (deﬁned therein) and Bank of
America, N.A., as administrative agent, dated April 30,
2015.

Bridge Credit Agreement dated as of May 28, 2015 among
Equinix, Inc. as Borrower, Various Financial Institutions as
Lenders, and JPMorgan Chase Bank, N.A., as
Administrative Agent. JPMorgan Securities LLC as sole
Arranger and Bookrunner.

First Amendment to the Bridge Credit Agreement Dated as
of May 28, 2015 as Amended on June 19, 2015 among
Equinix, Inc., as Borrower, Various Financial Institutions
as Lenders, and JP Morgan Chase Bank, N.A. as
Administrative Agent. JPMorgan Securities LLC, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, CityGroup
Global Markets Inc. and RBC Capital Markets, LLC as
Lead Arrangers and Bookrunners and TD Securities (USA)
LLC, ING Bank N.V., HSBC Securities (USA) Inc. and
The Bank of Tokyo-Mitsubishi UFJ, LTD as Co-Managers
Term Loan Agreement dated as of September 30, 2015
among QAON G.K. and certain other direct and indirect
subsidiaries of Equinix, Inc., as Borrowers, and The Bank
of Tokyo-Mitsubishi UFJ, Ltd. as Arranger and Lender.
First Amendment to Term Loan Agreement, dated as of
October 26, 2015, among QAON G.K. and certain other
direct and indirect subsidiaries of Equinix, Inc., as
Borrowers, and The Bank of Tokyo-Mitsubishi UFJ, Ltd.
as Arranger and Lender.

Second Amendment to Credit Agreement by and among
Equinix, Inc., as borrower, the Guarantors (deﬁned
therein), the Lenders (deﬁned therein) and Bank of
America, N.A., as administrative agent, dated December 8,
2015.

Subsidiaries of Equinix, Inc.
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.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema Document.

Incorporated by Reference

Filing Date/
Period
End Date

Exhibit

Filed
Herewith

9/30/2015

10.52

Form

10-Q

6/30/15

10.53

10-Q

6/30/15

10.54

10-Q

9/30/15

10.55

10-Q

9/30/15

10.56

X
X

Exhibit
Number

Exhibit Description

Form

Filing Date/
Period
End Date

Exhibit

Filed
Herewith

Incorporated by Reference

101.CAL XBRL Taxonomy Extension Calculation Document.

101.DEF XBRL Taxonomy Extension Deﬁnition Document.

101.LAB XBRL Taxonomy Extension Labels Document.

101.PRE XBRL Taxonomy Extension Presentation Document.

** Management contracts or compensation plans or arrangements in which directors or executive officers are

eligible to participate.

(b) Exhibits.

See (a) (3) above.

See (a) (2) above.

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.

SIGNATURES

February 26, 2016

EQUINIX, INC.
(Registrant)

By /s/ STEPHEN M. SMITH

Stephen M. Smith
President and Chief Executive Offıcer

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

/s/ PETER F. VAN CAMP
Peter F. Van Camp

/s/ THOMAS A. BARTLETT
Thomas A. Bartlett

/s/ NANCI CALDWELL
Nanci Caldwell

/s/ GARY F. HROMADKO
Gary F. Hromadko

/s/ JOHN HUGHES
John Hughes

/s/ SCOTT G. KRIENS
Scott G. Kriens

/s/ WILLIAM K. LUBY
William K. Luby

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

/s/ CHRISTOPHER B. PAISLEY
Christopher B. Paisley

President and Chief Executive Officer (Principal
Executive Officer)

February 26, 2016

Chief Financial Officer (Principal Financial and
Accounting Officer)

February 26, 2016

Executive Chairman

February 26, 2016

Director

February 26, 2016

INDEX TO EXHIBITS

Description of Document

Amendment to Cooperation Agreement, dated as of November 24, 2015, by and between
Equinix, Inc. and Telecity Group plc.

Second Amendment to Credit Agreement by and among Equinix, Inc., as borrower, the
Guarantors (deﬁned therein), the Lenders (deﬁned therein) and Bank of America, N.A., as
administrative agent, dated December 8, 2015.

Subsidiaries of Equinix, Inc.

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.

Exhibit
Number

2.3

10.55

21.1

31.1

31.2

32.1

32.2

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Document.

XBRL Taxonomy Extension Deﬁnition Document.

101.DEF
101.LAB XBRL Taxonomy Extension Labels Document.
101. PRE XBRL Taxonomy Extension Presentation Document.

Report of Independent Registered Public Accounting Firm

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

In our opinion, the consolidated ﬁnancial statements listed in the index appearing under Item 15(a)(1)

present fairly, in all material respects, the ﬁnancial position of Equinix, Inc. and its subsidiaries at
December 31, 2015 and December 31, 2014, and the results of their operations and their cash ﬂows for each
of the three years in the period ended December 31, 2015 in conformity with accounting principles generally
accepted in the United States of America. In addition, in our opinion, the ﬁnancial statement schedule listed in
the accompanying index presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated ﬁnancial statements. Also in our opinion, the Company maintained,
in all material respects, effective internal control over ﬁnancial reporting as of December 31, 2015, based on
criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible
for these ﬁnancial statements and ﬁnancial statement schedule, for maintaining effective internal control over
ﬁnancial reporting and for its assessment of the effectiveness of internal control over ﬁnancial reporting,
included in Management’s Report on Internal Control over Financial Reporting under Item 9A. Our
responsibility is to express opinions on these ﬁnancial statements, on the ﬁnancial statement schedule, 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.

As discussed in Note 1 to the consolidated ﬁnancial statements, the Company changed the manner in
which it classiﬁes deferred tax assets and liabilities and debt issuance costs on the consolidated balance sheet
in 2015.

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.

F-1

As described in Management’s Report on Internal Control over Financial Reporting, management has
excluded Bit-isle, Inc. from its assessment of internal control over ﬁnancial reporting as of December 31,
2015 because it was acquired by the Company in a purchase business combination during 2015. We have also
excluded Bit-isle Inc. from our assessment of internal control over ﬁnancial reporting. Bit-isle, Inc. is a
wholly-owned subsidiary with total assets and total revenue representing approximately 4% and 1%,
respectively of the consolidated ﬁnancial statement amounts as of and for the year ended December 31, 2015.

/s/ PricewaterhouseCoopers LLP

San Jose, CA
February 26, 2016

F-2

EQUINIX, INC.

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

Current assets:

Assets

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,228,838 $ 610,917
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
529,395
Accounts receivable, net of allowance for doubtful accounts of $10,352 and

12,875

December 31,

2015

2014

$9,466 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets held for sale
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net
Restricted cash, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets

262,570
3,057
85,004
—
1,490,943
439
4,998,270
1,002,129
147,527
14,060
128,610
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,356,695 $7,781,978

291,964
479,417
212,929
33,257
3,259,280
4,584
5,606,436
1,063,200
224,565
10,172
188,458

Total assets

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 . . . . . . . . . . . . . . . . . . . . . . .
Current portion of convertible debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease and other ﬁnancing obligations, less current portion . . . . . . . . . . . .
Mortgage and loans payable, less current portion . . . . . . . . . . . . . . . . . . . . . . .
Convertible debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

400,948 $ 285,796
114,469
103,107
21,362
40,121
59,466
770,236
146,121
—
162,664
192,286
3,535
—
643,757
1,656,354
1,168,042
1,287,139
532,809
472,769
145,229
—
2,717,046
3,804,634
304,964
390,413
5,511,847
7,611,309

Commitments and contingencies (Note 14)

Stockholders’ equity:

Preferred stock, $0.001 par value per share: 100,000,000 shares authorized in

2015 and 2014; zero shares issued and outstanding . . . . . . . . . . . . . . . . . .

—

Common stock, $0.001 par value per share: 300,000,000 shares authorized in
2015 and 2014; 62,134,894 issued and 62,100,159 outstanding in 2015 and
56,505,122 issued and 56,451,255 outstanding in 2014 . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost; 34,735 shares in 2015 and 53,867 shares in 2014 . . . . . . .
Accumulated dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deﬁcit
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57
3,334,305
(11,411)
(424,387)
(332,443)
(295,990)
2,270,131
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . $10,356,695 $7,781,978

62
4,838,444
(7,373)
(1,468,472)
(509,059)
(108,216)
2,745,386

See accompanying notes to consolidated ﬁnancial statements.

F-3

EQUINIX, INC.

Consolidated Statements of Operations
(in thousands, except per share data)

2015
$2,725,867

Years ended December 31,
2014
$2,443,776

2013
$2,152,766

1,064,403
246,623
374,790
(4,837)
10,855
1,691,834
460,932
3,387
(248,792)
5,253
(108,501)
112,279
(16,156)
96,123

(1,438)
94,685

1.92
49,438
1.89
50,116

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Costs and operating expenses:

Cost of revenues
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring reversals
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and operating expenses . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment
Income from operations before income taxes . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss)

Net (income) loss attributable to redeemable non-controlling

1,291,506
332,012
493,284
—
41,723
2,158,525
567,342
3,581
(299,055)
(60,581)
(289)
210,998
(23,224)
187,774

1,197,885
296,103
438,016
—
2,506
1,934,510
509,266
2,891
(270,553)
119
(156,990)
84,733
(345,459)
(260,726)

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to Equinix . . . . . . . . . . . . . . . . .

—
$ 187,774

1,179
$ (259,547)

Earnings per share (‘‘EPS’’) attributable to Equinix:

Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . .

3.25
57,790
3.21
58,483

(4.96)
52,359
(4.96)
52,359

See accompanying notes to consolidated ﬁnancial statements.

F-4

EQUINIX, INC.

Consolidated Statements of Comprehensive Income (Loss)
(in thousands)

Net income (loss)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment (‘‘CTA’’) loss . . . . . .
Net investment hedge CTA gain . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on available-for-sale securities . . . . . . . . . . .
Unrealized gain (loss) on cash ﬂow hedges
. . . . . . . . . . . . .
Net actuarial gain (loss) on deﬁned beneﬁt plans . . . . . . . . . .
Total other comprehensive loss, net of tax . . . . . . . . . . . .
Comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . .
Net (income) loss attributable to redeemable non-controlling

2015
$ 187,774

Years ended December 31,
2014
$(260,726)

2013
$ 96,123

(186,763)
4,484
(40)
4,550
1,153
(176,616)
11,158

(204,065)
—
(279)
8,790
(2,001)
(197,555)
(458,281)

(18,203)
—
(298)
(1,750)
—
(20,251)
75,872

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

1,179

(1,438)

Other comprehensive (income) loss attributable to redeemable

non-controlling interest

. . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income (loss) attributable to Equinix . . . . . . . . .

—
$ 11,158

(1,810)
$(458,912)

7,526
$ 81,960

See accompanying notes to consolidated ﬁnancial statements.

F-5

EQUINIX, INC.

Consolidated Statements of Stockholders’ Equity and Other Comprehensive Income (Loss)
For the Three Years Ended December 31, 2015
(in thousands, except share data)

. . . . 49,139,851

Common stock
Shares

Amount
$49
— —

Treasury stock

Shares
(363,743) $ (36,676) $2,582,238 $

Amount

Additional
paid-in
capital

Accumulated
dividends

— —
— —

— —

—

—
—

—

—
—

—

—
—

—

Accumulated
deﬁcit

Total
stockholder’s
equity

$(131,128) $2,313,441
96,123

96,123

(1,438)
—

(1,438)
(20,251)

stock for employee equity awards

. . . . . .

. . .

1,093,373

8,198

805

31,087

interests

. . . . . . .

Balance as of December 31, 2012 . . . . . .
Net income .
.
.
.
Net income attributable to non-controlling
.
.

. .
.
.
.
. . . .
Other comprehensive loss .
Other comprehensive loss attributable to redeemable
. .

. . . . . .
Issuance of common stock and release of treasury

. . . . . . .
.

non-controlling interests

. . . . . . . . .

. . . . . .

. . . . .

. .

convertible debt

Release of treasury stock upon conversions of
.
.

. . . . . .
.
Common shares repurchased . . . . . .
Change in redemption value of redeemable

. . . . . . .
.
. . . . . .

non-controlling interests

. . . .

forfeitures .

Tax beneﬁt from employee stock plans . . . . . .
Stock-based compensation, net of estimated
.
.
Balance as of December 31, 2013 . . . . . .
Net loss
.
.
.
.
.
Net loss attributable to non-controlling interests . . .
Other comprehensive loss .
. . . .
Other comprehensive income attributable to

. . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . .

. . . . .

. . . . . . . . . .
. .

stock for employee equity awards

. . . . . .

Common shares repurchased .
. . . . . . . . . .
Issuance of common stock and release of treasury

stock for the exchanges and conversions of 4.75%
. . .
.
convertible debt

.
.
Issuance of common stock and release of treasury
stock for the exchange of 3.00% convertible
. . . . . . . . . .
.
.
debt
Issuance of common stock and release of treasury

. . . . . . . . . .

. .

— —
— —

68
(288,739)

7
(48,799)

(1)
—

—
—

(47,940)
25,638

— —
50
— —
— —
— —

—
(644,216)
—
—
—

—

102,865
(84,663) 2,693,887
—
—
—

—
—
—

. . . . 50,233,224

redeemable non-controlling interests . . . . . .
Issuance of common stock and release of treasury

. .

— —

—

. . .
. .

933,554

7,846
— — (1,517,743)

1,185
(297,958)

28,134
—

1,411,851

. .

1,248,578

1,000,102

147,706

43,024

700,000

139,004

77,953

stock for conversions of 3.00% convertible debt . .
Issuance of common stock for special distribution . .
Accrued dividends on unvested equity awards . . . .
Change in redemption value of redeemable

1,195,496
1,482,419

1
2
— —

400,144
—
—

83,315
—
—

. . . . . .

forfeitures .

non-controlling interests

. . . . . .
Purchase of redeemable non-controlling interests
Tax beneﬁt from employee stock plans . . . . . .
Stock-based compensation, net of estimated
.
.
Balance as of December 31, 2014 . . . . . .
Net income .
.
.
.
.
Other comprehensive loss .
Issuance of common stock in public offering of
.
.
Issuance of common stock and release of treasury

. . . . . . .
.

common stock .

. . . . . . . . .

. . . . . . . .

. . . . . .

. . . . .

. .
. . . .

. .
. .
. .

— —
— —
— —

. . . . .

. . . . 56,505,122

— —
57
— —
— —

. . . . . . . .

2,994,792

stock for employee equity awards

. . . .

. . . . .

856,406

Issuance of common stock and release of treasury

—
—
—

—
(53,867)
—
—

95,428
332,732
—

(90,913)
17,977
18,561

—
—
—

—

829,493

7,348

1,546

28,493

—

awards .

. . . . . .
.
. . . . . . . .

stock for the exchanges and conversions of 4.75%
. . . . . . .
.
convertible debt
.
. . . . .
.

.
.
Dividend distributions .
.
Settlement of accrued dividends on vested equity
. . . . . . . . . .
.
.
Issuance of common stock and cash payment for
.
.
.
Accrued dividends on unvested equity awards . . . .
Tax beneﬁt from employee stock plans . . . . . .
. .
Stock-based compensation, net of estimated
.
.
Balance as of December 31, 2015 . . . . . .

special distribution .

. . . . . . . . . . .

. . . . . . . .

forfeitures .

. . . . .

. .

90,163 —
— —

11,784
—

2,492
—

5,392

—
— (393,584)

— —

1,688,411

1
— —
— —

—

—
—
—

—

—
—
—

3,775

—

501,513
—
30

(627,221)
(23,280)

. . . . 62,134,894

— —
$62

—

—
(34,735) $ (7,373) $4,838,444 $(1,468,472)

135,443

—

See accompanying notes to consolidated ﬁnancial statements.

F-6

Accumulated
other
comprehensive
income (loss)
— $(101,042)
—
—

—
—

—

—
—

—
(20,251)

7,526

—

—
—

—

—
—

7,526

31,893

6
(48,799)

(47,940)
25,638

102,865
2,459,064
(260,726)
1,179
(197,555)

(1,810)

29,320
(297,958)

190,732

216,958

178,744
(82,122)
(9,531)

(90,913)
(1,334)
18,561

—
—
— (113,767)
—
—
—
—
— (197,555)

—
(36,443)
(260,726)
1,179
—

—

—
—

—

—
(414,856)
(9,531)

(1,810)

—
—

—

—
—
—

—
(19,311)
—

—

—
—

—

—
—
—

—

—
—

—

—
—
—

—

—
—

—

—
—
—

829,496

30,040

7,884
(393,584)

3,775

(125,707)
(23,280)
30

—
$(509,059)

—

135,443
$(108,216) $2,745,386

—

117,522
(11,411) 3,334,305
—
—

—
—

—
—
(332,443)
(424,387)
—
—
— (176,616)

—
(295,990)
187,774
—

117,522
2,270,131
187,774
(176,616)

EQUINIX, INC.

Consolidated Statements of Cash Flows
(in thousands)

Years ended December 31,
2014

2013

2015

Cash ﬂows from operating activities:

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

187,774 $ (260,726) $

96,123

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

activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax beneﬁts from stock-based compensation . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs and debt discounts
. . . . . . . . . . . . . .
Provision for allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges (reversals)
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Foreign currency transactions and other, net

Changes in operating assets and liabilities:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes, net
Other assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . .

498,134
132,443
(30)
27,446
16,050
5,037
—
289
16,490

(44,583)
(109,579)
(70,371)
109,125
126,568
894,793

Cash ﬂows from investing activities:

Purchases of investments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturities of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . .
Purchases of real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of other property, plant and equipment . . . . . . . . . . . . . . . . . . . .
Increase in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . .

(359,031)
837,708
35,431
(245,553)
(38,282)
(868,120)
(512,319)
15,239
(1,134,927)

453,935
117,990
(19,582)
27,756
18,667
7,093
—
156,990
19,912

(101,966)
226,774
(6,496)
10,681
38,392
689,420

(545,997)
573,582
211,966
—
(16,791)
(660,203)
(968)
2,572
(435,839)

Cash ﬂows from ﬁnancing activities:

30,040
30
(521,461)

Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from employee equity awards . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax beneﬁts from stock-based compensation . . . . . . . . . . . . . . . . . .
Payment of dividends and special distribution . . . . . . . . . . . . . . . . . . . . . .
Purchase of non-controlling interests
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from public offering of common stock, net of issuance costs . . . . . . .
Proceeds from senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of senior notes
Repayment of convertible debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of capital lease and other ﬁnancing obligations . . . . . . . . . . . . . .
Repayment of mortgage and loans payable
. . . . . . . . . . . . . . . . . . . . . . .
Debt extinguishment costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by ﬁnancing activities . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency exchange rates on cash and cash equivalents . . . . . . . .
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,228,838 $ 610,917 $

— (297,958)
29,320
19,582
(83,266)
— (226,276)
—
1,250,000
508,826
— (750,000)
(29,513)
—
(18,030)
(28,663)
(153,473)
(715,270)
— (116,517)
(25,294)
107,401
(11,959)
349,023
261,894

(18,098)
1,873,182
(15,127)
1,617,921
610,917

829,496
1,100,000
1,197,108

405,444
102,940
(27,330)
27,027
23,868
5,819
(4,837)
108,501
11,543

(27,956)
(108,189)
(36,853)
7,242
21,266
604,608

(968,971)
276,351
213,484
(49,337)
(74,332)
(572,406)
(837,190)
843,088
(1,169,313)

(48,799)
31,892
27,330
—
—
—
1,500,000
28,038
(750,000)
—
(40,133)
(52,500)
(97,864)
(23,057)
574,907
(521)
9,681
252,213
261,894

Supplemental cash ﬂow information

Cash paid for taxes
Cash paid for interest

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

132,302 $ 117,197 $
237,410 $ 262,018 $

123,690
210,629

See accompanying notes to consolidated ﬁnancial statements.

F-7

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 colocation space and related services. Global enterprises, content providers, ﬁnancial companies and
network service providers rely upon Equinix’s insight and expertise to safehouse and connect their most
valued information assets. The Company operates International Business ExchangeTM (‘‘IBX(cid:31)’’) data centers,
or IBX data centers across Americas; Europe, Middle East and Africa (‘‘EMEA’’) and Asia-Paciﬁc geographic
regions where customers directly interconnect with a network ecosystem of partners and customers. More than
1,000 network service providers offer access to 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.

The Company began operating as a Real Estate Investment Trust (‘‘REIT’’) for federal income tax

purposes effective January 1, 2015. See ‘‘Income Taxes’’ in Note 1 below for additional information.

On November 2, 2015, the Company acquired Bit-isle, Inc. (‘‘Bit-isle), a Tokyo-based company which
primarily provides data center services in Japan. On January 15, 2016, the Company completed its acquisition
of Telecity Group plc (‘‘TelecityGroup’’) which provides data center services in Europe. As a result of these
acquisitions, the Company operates 145 IBX data centers in 40 markets across ﬁve continents.

Basis of Presentation, Consolidation and Foreign Currency

The accompanying consolidated ﬁnancial statements include the accounts of Equinix and its subsidiaries,

including the acquisitions of Bit-isle Inc. (‘‘Bit-isle) from November 2, 2015, Nimbo Technologies Inc.
(‘‘Nimbo’’) from January 14, 2015 and Frankfurt Kleyer 90 Carrier Hotel from October 1, 2013. All
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 ‘‘Accumulated Other
Comprehensive Loss’’ in Note 11.

Use of Estimates

The preparation of consolidated ﬁnancial statements in conformity with accounting principles generally
accepted in the United States (‘‘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. On an ongoing basis, the Company evaluates its
estimates, including, but not limited to, those related to the allowance for doubtful accounts, fair values of
ﬁnancial instruments, intangible assets and goodwill, useful lives of intangible assets and property, plant and
equipment, assets acquired and liabilities assumed from acquisitions, asset retirement obligations, restructuring
charges, redemption value of redeemable non-controlling interests and income taxes. The Company bases its
estimates on historical experience and on various other assumptions that are believed to be reasonable.

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 corporations and certiﬁcates of deposit with original maturities up to 90 days.
Short-term investments generally consist of debt securities with original maturities of between 90 days and
one year. Long-term investments consist of debt securities with original maturities greater than 365 days and
publicly traded equity securities. The Company’s ﬁxed income securities and publicly traded equity securities

F-8

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

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 (loss). 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.

Equity method and cost method investments

The Company’s non-marketable securities are accounted under cost method accounting. The Company

records the dividends declared by the investees in other income and expense in the consolidated statement of
operations and records any dividends in excess of earnings as a reduction of cost of investment. The
Company’s other equity investments include private equity investments which are accounted under equity
method accounting. The Company adjusts the carrying amount of an investment for its share of the earnings
and losses of the investees and recognizes its share of income or loss in other income and expense in the
consolidated statement of operations. The Company records cost method and equity method investments in
other assets in the consolidated balance sheet. The Company reviews these investments periodically to
determine if any investments may be other-than-temporarily impaired primarily based on the ﬁnancial
condition and near-term prospects of these companies and funds.

Financial Instruments and Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist of

cash, cash equivalents, short-term investments, long-term investments and accounts receivable. Risks
associated with cash, cash equivalents, short-term investments 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 Short Term Rating and A-/A3 Long Term Rating, as determined by independent credit rating
agencies. Risk to the Company’s investment portfolio is further mitigated by its signiﬁcant weighting in
U.S. government securities in order to achieve REIT asset measure requirements.

A signiﬁcant portion of the Company’s customer base is comprised of businesses throughout the

Americas. However, a portion of the Company’s revenues are derived from the Company’s EMEA and
Asia-Paciﬁc operations. The following table sets forth percentages of the Company’s revenues by geographic
region for the years ended December 31:

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
55%
26%
19%

2014
56%
26%
18%

2013
59%
24%
17%

No single customer accounted for greater than 10% of accounts receivable or revenues as of or for

the years ended December 31, 2015, 2014 and 2013.

Property, Plant and Equipment

Property, plant and equipment are stated at the Company’s original cost or 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. 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

F-9

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

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.

The Company’s estimated useful lives of its property, plant and equipment are as follows:

Core systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 − 25 years
12 − 50 years
12 − 40 years
N/A
3 − 10 years

During the three months ended December 31, 2014, the Company revised 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
Company recorded an insigniﬁcant amount of higher depreciation expense for the quarter ended December 31,
2014 due to the reduction of the estimated useful lives of certain of its property, plant and equipment. This
change was accounted for as a change in accounting estimate on a prospective basis effective October 1, 2014
under the accounting standard for change in accounting estimates. The Company did not revise the estimated
useful lives of the property, plant and equipment during the years ended December 31, 2015 and 2013.

The Company’s 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 costs incurred under construction contracts including project
management services, engineering and schematic design services, design development, construction services
and other construction-related fees and services. In addition, the Company has capitalized 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.

Asset Retirement Costs

The fair value of a liability for an asset retirement obligation is recognized in the period in which it is

incurred. 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. The majority 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 2017 to 2065 and most of them enable the
Company to extend the lease terms.

Goodwill and Other Intangible Assets

The Company has three reportable segments comprised of the 1) Americas, 2) EMEA and 3) Asia-Paciﬁc
geographic regions, which the Company also determined are its reporting units. As of December 31, 2015, the
Company had goodwill attributable to its Americas, EMEA and Asia-Paciﬁc reporting units. In 2014, the
Company changed its annual goodwill impairment testing date from November 30th to October 31st of each
year, commencing on October 31, 2014, to better align its annual goodwill impairment test with the timing of
the Company’s budgeting and forecasting process.

F-10

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

The Company has the option to assess qualitative factors to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying value. If, after assessing the qualitative factors,
the Company determines that it is not more likely than not that the fair value of a reporting unit is less than
its carrying value, then performing the two-step impairment test is unnecessary. However, if the Company
concludes otherwise, then it is required to perform the ﬁrst step of the two-step goodwill impairment test. The
ﬁrst step, identifying a potential impairment, compares the fair value of a reporting unit with its carrying
amount, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the second step
would need to be conducted; otherwise, no further steps are necessary as no potential impairment exists. The
second step, measuring the impairment loss, compares the implied fair value of the reporting unit goodwill
with the carrying amount of that goodwill. Any excess of the reporting unit goodwill carrying value over the
respective implied fair value is recognized as an impairment loss.

The Company assessed qualitative and quantitative factors during the fourth quarter of 2015 to determine

whether it was more likely than not that the fair value of its Americas reporting unit, EMEA reporting unit
and Asia-Paciﬁc reporting unit was less than its carrying value. Qualitative factors considered in the
assessment include industry and market conditions, overall ﬁnancial performance, and other relevant events
and factors affecting the reporting unit. Additionally, as part of this analysis, the Company may perform a
quantitative analysis to support the qualitative factors by evaluating sensitivities to assumptions and inputs
used in measuring a reporting unit’s fair value. Prior to 2015, the Company performed the ﬁrst step of the
two-step goodwill impairment test for its Americas, EMEA and Asia-Paciﬁc reporting units during the quarter
ended December 31, 2014 and 2013. In order to determine the fair value of each reporting unit, the Company
utilizes the discounted cash ﬂow and market methods. The Company had used 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 each 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 was
determined using the Company’s best estimates as of the date of the impairment review. As of October 31,
2015, the Company concluded that it was more likely than not that goodwill attributed to the Company’s
Americas, EMEA and Asia-Paciﬁc reporting units was not impaired as the fair value of each reporting unit
exceeded the carrying value of its respective reporting unit, including goodwill. In addition, the Company
concluded that no events occurred or circumstances changed subsequent to October 31, 2015 through
December 31, 2015 that would more likely than not reduce the fair value of the Americas, EMEA and
Asia-Paciﬁc reporting units below its carrying value. 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.

F-11

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

For further information on goodwill and other intangible assets, see Note 5 below.

Debt Issuance Costs

Loan fees and costs are capitalized and are amortized over the life of the related loans based on the

effective interest method. Such amortization is included as a component of interest expense.

The Company adopted Accounting Standards Update 2015-03, Interest — Imputation of Interest

(‘‘ASU 2015-03’’), and Accounting Standards Update 2015-15, Interest — Imputation of Interest Presentation
and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
(‘‘ASU 2015-15’’), during the year ended December 31, 2015. In accordance with ASU 2015-03, loan fees
and costs associated with outstanding debt have been classiﬁed as a reduction of debt in the accompanying
consolidated balance sheets. In accordance with ASU 2015-15, loans fees and costs associated with the
line-of-credit arrangements have been classiﬁed as other assets in the accompanying consolidated balance
sheets. As a result of the adoption of ASU 2015-03, the Company reclassiﬁed debt issuance costs of
$35,455,000 at December 31, 2014 from other assets to debt. As of December 31, 2015, debt issuance costs of
$47,028,000 were classiﬁed as a reduction of debt.

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. Foreign currency gains or losses associated
with derivatives that do not qualify for hedge accounting are recorded within other income (expense), net in
the Company’s consolidated statements of operations, with the exception of foreign currency embedded
derivatives contained in certain of the Company’s customer contracts (see ‘‘Revenue Recognition’’ below),
which are recorded within revenues in the Company’s consolidated statements of operations.

To assess effectiveness of derivatives that qualify for hedge accounting, 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 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 portion of cash ﬂow hedges is 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 6 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

F-12

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

maturity of the related instruments. The fair value of the Company’s debt, which is traded in the public debt
market, is based on quoted market prices. The fair value of the Company’s debt, which is not publicly traded,
is estimated by considering the Company’s credit rating, current rates available to the Company for debt of
the same remaining maturities and terms of the debt.

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, publicly traded equity securities and derivatives.

The Company also follows the accounting standard for the measurement of fair value for non-ﬁnancial

assets and liabilities on a nonrecurring basis. These include:

•

Non-ﬁnancial assets and non-ﬁnancial 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 non-ﬁnancial assets and non-ﬁnancial liabilities measured at fair value for
goodwill impairment tests;

Indeﬁnite-lived intangible assets measured at fair value for impairment assessments;

Non-ﬁnancial long-lived assets or asset groups measured at fair value for impairment assessments or
disposal;

Asset retirement obligations initially measured at fair value but not subsequently measured at fair
value; and

Non-ﬁnancial liabilities associated with exit or disposal activities initially measured at fair value but
not subsequently measured at fair value.

For further information on fair value measurements, see Note 7 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 assessed 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.

The Company did not record any impairment charges related to its long-lived assets during the years

ended December 31, 2015, 2014 and 2013.

Revenue Recognition

Equinix derives more than 90% of its revenues from recurring revenue streams, consisting primarily of

(1) colocation, which includes the licensing of cabinet space and power; (2) interconnection offerings, such as
cross connects and Equinix Exchange ports; (3) managed infrastructure services and (4) other revenues
consisting of rental income from tenants or subtenants. The remainder of the Company’s revenues are from
non-recurring revenue streams, such as 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 colocation customers.

F-13

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

Non-recurring installation fees, although generally paid in a lump sum upon installation, are deferred and
recognized ratably over the period the customer is expected to beneﬁt from 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 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,
2015, 2014 and 2013.

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.

As a result of certain customer agreements being priced in currencies different from the functional
currencies of the parties involved, under applicable accounting rules, the Company is deemed to have foreign
currency forward contracts embedded in these contracts. The Company refers to these as foreign currency
embedded derivatives (see Note 6). These instruments are separated from their host contracts and held on the
Company’s consolidated balance sheet at their fair value. The majority of these foreign currency embedded
derivatives arise in certain of the Company’s subsidiaries where the local currency is the subsidiary’s
functional currency and the customer contract is denominated in the U.S. dollar. Changes in their fair values
are recognized within revenues in the Company’s consolidated statements of operations.

The Company assesses collectability 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. Any amounts that were previously recognized as
revenue and subsequently determined to be uncollectible are charged to bad debt expense included in general
and administrative expense in the consolidated statements of operations. A speciﬁc bad debt reserve of up to
the full amount of a particular invoice value is provided for certain problematic customer balances. An

F-14

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

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 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. A tax beneﬁt from an uncertain income tax position
may be recognized in the ﬁnancial statements only if it is more likely than not that the position is sustainable,
based solely on its technical merits and consideration of the relevant taxing authority’s widely understood
administrative practices and precedents.

The Company began operating as a REIT for federal income tax purposes effective January 1, 2015. In
May 2015, the Company received a favorable private letter ruling (‘‘PLR’’) from the U.S. Internal Revenue
Service (‘‘IRS’’). As a result, the Company may deduct the distributions made to its shareholders from taxable
income generated by the Company’s Qualiﬁed REIT Subsidiaries (‘‘QRSs’’). The Company’s dividends paid
deduction generally eliminates the U.S. taxable income of the Company’s QRSs, resulting in no U.S. income
tax due. However, the Taxable REIT Subsidiaries (‘‘TRSs’’) will continue to be subject to income taxes on
any taxable income generated by them. In addition, the foreign operations of the Company will continue to be
subject to local income taxes regardless of whether the foreign operations are operated as a QRS or TRS.

The Company recognizes interest and penalties related to unrecognized tax beneﬁts 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.

The Company grants restricted stock units to its employees and these equity awards generally have only

a service condition. The Company grants restricted stock units to its executives and these awards generally
have a service and performance condition or a service and market condition. To date, 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. The Company uses a Monte Carlo simulation option-pricing model to determine the fair
value of restricted stock units with a service and market condition.

The Company uses the Black-Scholes option-pricing model to determine the fair value of its employee

stock purchase plan. The determination of the fair value of shares purchased under the employee stock
purchase plan 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 purchase behaviors. The Company estimated the expected volatility by using the average historical
volatility of its common stock that it believed was best representative of future volatility. The risk-free interest

F-15

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

rate used was based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term of
the equity awards. The expected dividend rate used in 2015 was based on average dividend yields and the
expected dividend rate used prior to 2015 was zero as the Company did not anticipate paying dividends. The
expected term used was equal to the term of each purchase window.

The accounting standard for stock-based 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 recognizes the beneﬁt from
stock-based compensation in equity when the excess tax beneﬁt is realized by following the
‘‘with-and-without’’ approach.

For further information on stock-based compensation, see Note 12 below.

Foreign Currency Translation

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.

Earnings Per Share

The Company computes basic and diluted EPS for net income (loss) attributable to the Company. Basic

EPS is computed using net income (loss) attributable to the Company and the weighted-average number of
common shares outstanding. Diluted EPS is computed using net income attributable to the Company, adjusted
for interest expense as a result of the assumed conversion of the Company’s 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 shares issuable upon the assumed conversion of the 3.00% Convertible Subordinated
Notes and 4.75% Convertible Subordinated Notes.

Redeemable Non-Controlling Interests

Non-controlling interests in subsidiaries that are redeemable for cash or other assets outside of the
Company’s control are classiﬁed as mezzanine equity, outside of equity and liabilities, and are adjusted to fair
value on each balance sheet date. The resulting changes in fair value of the estimated redemption amount,
increases or decreases, are recorded with corresponding adjustments against retained earnings or, in the
absence of retained earnings, additional paid-in-capital

For further information on redeemable non-controlling interests, see Note 10 below.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

EQUINIX, INC.

Treasury Stock

The Company accounts for treasury stock under the cost method. When treasury stock is re-issued at a

higher price than its cost, the difference is recorded as a component of additional paid-in capital to the extent
that there are gains to offset the losses. If there are no treasury stock gains in additional paid-in capital, the
losses are recorded as a component of accumulated deﬁcit.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards
Update (‘‘ASU’’) 2016-02, Leases (Topic 842) (‘‘ASU 2016-02’’). Under the new guidance, lessees will be
required to recognize the following for all leases (with the exception of short-term leases) at the
commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a
lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the
lessee’s right to use, or control the use of, a speciﬁed asset for the lease term. Under the new guidance, lessor
accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor
accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The
new lease guidance simpliﬁed the accounting for sale and leaseback transactions primarily because lessees
must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for
sales-type, direct ﬁnancing, and operating leases) must apply a modiﬁed retrospective transition approach for
leases existing at, or entered into after, the beginning of the earliest comparative period presented in the
ﬁnancial statements. The modiﬁed retrospective approach would not require any transition accounting for
leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full
retrospective transition approach. ASU 2016-02 is effective for public companies for ﬁscal years beginning
after December 15, 2018, including interim periods within those ﬁscal years, with early adoption permitted.
While the Company is currently evaluating the impact that the adoption of this standard will have on its
consolidated ﬁnancial statements, the Company believes this standard will have a signiﬁcant impact on its
consolidated ﬁnancial statements due, in part, to the substantial amount of operating leases it has.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10)
(‘‘ASU 2016-01’’), which requires all equity investments to be measured at fair value with changes in the fair
value recognized through net income other than those accounted for under equity method of accounting or
those that result in consolidation of the investees). The ASU also requires that an entity to present separately
in other comprehensive income the portion of the total change in the fair value of a liability resulting from a
change in the instrument-speciﬁc credit risk when the entity has elected to measure the liability at fair value in
accordance with the fair value option for ﬁnancial instruments. In addition the ASU eliminates the requirement
to disclose the fair value of ﬁnancial instruments measured at amortized cost for entities that are not public
business entities and the requirement to disclose the method(s) and signiﬁcant assumptions used to estimate
the fair value that is required to be disclosed for ﬁnancial instruments measured at amortized cost on the
balance sheet for public business entities. ASU 2016-01 is effective for public companies for ﬁscal years
beginning after December 15, 2017, including interim periods within those ﬁscal years. The Company is
currently evaluating the impact that the adoption of this standard will have on its consolidated ﬁnancial
statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classiﬁcation of Deferred Taxes

(‘‘ASU 2015-17’’), to simplify the presentation of deferred income taxes by eliminating the requirement to
separate deferred tax assets and liabilities into current and noncurrent amounts. ASU 2015-17 requires that all
deferred tax assets and liabilities, along with any related valuation allowance, be classiﬁed as noncurrent and
is effective for ﬁnancial statements issued for ﬁscal years beginning after December 15, 2016, and interim
periods within those ﬁscal years. Earlier application is permitted as of the beginning of an interim or annual
reporting period. The Company adopted ASU 2015-17 as of December 31, 2015 and applied the guidance
prospectively.

F-17

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

In September 2015, the FASB issued ASU 2015-16, Business Combinations (‘‘ASU 2015-16’’), to
simplify accounting for adjustments made to provisional amounts recognized in a business combination by
eliminating the requirement to retrospectively account for those adjustments. This ASU is effective for
ﬁnancial statements issued for ﬁscal years beginning after December 15, 2015, and interim periods within
those ﬁscal years with early adoption permitted. The amendments in this ASU require that the acquirer record,
in the same period’s ﬁnancial statements, the effect on earnings of changes in depreciation, amortization or
other income effects as a result of changes to provisional amounts, calculated as if the accounting had been
completed at the acquisition date. The Company is currently evaluating the impact that the adoption of this
standard will have on its consolidated ﬁnancial statements.

In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (‘‘ASU 2015-07’’), which permits
a reporting entity, as a practical expedient, to measure the fair value of certain investments using the net asset
value per share of the investment. This ASU is effective for ﬁnancial statements issued for ﬁscal years
beginning after December 15, 2015, and interim periods within those ﬁscal years with early adoption
permitted. A reporting entity should apply the amendment retrospectively to all periods presented. The
retrospective approach requires that an investment for which fair value is measured using the net asset value
per share practical expedient be removed from the fair value hierarchy in all periods presented in an entity’s
ﬁnancial statements. The Company does not believe the adoption of ASU 2015-07 will have a signiﬁcant
impact on its consolidated ﬁnancial statements.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (‘‘ASU 2015-03’’), to

simplify the presentation of debt issuance costs. The ASU requires debt issuance costs to be presented in the
balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt
discounts or premiums. The recognition and measurement guidance for debt issuance costs is not affected by
this ASU. This ASU is effective for ﬁnancial statements issued for ﬁscal years beginning after December 15,
2015, and interim periods within ﬁscal years beginning after December 15, 2016, with early adoption
permitted. In August 2015, the FASB issued ASU 2015-15, Interest — Imputation of Interest Presentation
and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
(‘‘ASU 2015-15’’), which amends ASU 2015-03 and provides guidance for the presentation of debt issuance
costs associated with line-of-credit arrangements. ASU 2015-15 provides that debt issuance costs associated
with line-of-credit arrangements may be presented in the balance sheet as assets. The Company adopted
ASU 2015-03 and ASU 2015-15 in the three months ended September 30, 2015. As a result of the adoption of
ASU 2015-03, the Company reclassiﬁed debt issuance costs of $35,455,000 at December 31, 2014 from other
assets to debt. As of December 31, 2015, debt issuance costs of $47,028,000 were classiﬁed as a reduction
of debt.

In February 2015, the FASB issued ASU 2015-02, Consolidations (‘‘ASU 2015-02’’). This ASU requires
companies to adopt a new consolidation model, speciﬁcally: (1) the ASU modiﬁes the evaluation of whether
limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities;
(2) the ASU eliminates the presumption that a general partner should consolidate limited partnership; (3) the
ASU affects the consolidation analysis of reporting entities that involved with VIEs and (4) the ASU provides
a scope exception from consolidation guidance for reporting entities with interests in legal entities that are
required to comply with or operate in accordance with requirements that are similar Rule 2a-7 of the
Investment Company Act of 1940 for registered money market funds. This ASU is effective for ﬁscal years,
and for interim periods within those ﬁscal years, beginning after December 15, 2015, with early adoption
permitted. The Company does not believe the adoption of ASU 2015-02 will have a signiﬁcant impact on its
consolidated ﬁnancial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement — Extraordinary and Unusual Items
(‘‘ASU 2015-01’’), to simplify the income statement presentation requirements by eliminating the concept of
extraordinary items. ASU 2015-01 is effective for ﬁscal years, and interim periods within those ﬁscal years,

F-18

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Signiﬁcant Accounting Policies − (continued)

beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from
the beginning of the ﬁscal year of adoption. The Company does not believe the adoption of ASU 2015-01 will
have a signiﬁcant impact on its consolidated ﬁnancial statements.

In August 2014, the Financial Accounting Standards Board (‘‘FASB’’) issued ASU 2014-15, Disclosure of

Uncertainties about an Entity’s Ability to Continue as a Going Concern (‘‘ASU 2014-15’’), to provide
guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s
ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective
for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after
December 15, 2016, with early adoption permitted. The Company does not believe the adoption of
ASU 2014-15 will have a signiﬁcant impact on its consolidated ﬁnancial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers

(‘‘ASU 2014-09’’). This ASU requires companies to recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reﬂects the consideration to which companies expect to be
entitled in exchange for those goods or services. This ASU will replace most existing revenue recognition
guidance in GAAP when it becomes effective. This ASU was originally effective for ﬁscal years and interim
periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from
Contracts with Customers (‘‘ASU 2015-14’’), which amends ASU 2014-09 and defers its effective date to
ﬁscal years and interim reporting periods beginning after December 15, 2017. ASU 2015-14 permits earlier
application only as of annual reporting periods beginning after December 15, 2016, including interim reporting
periods within that reporting period. The Company is currently evaluating the impact that the adoption of
these standards will have on its consolidated ﬁnancial statements.

2. Acquisitions

Bit-isle Acquisition

On November 2, 2015, the Company, acting through its Japanese subsidiary, completed a cash tender

offer for approximately 97% of the equity instruments, including stock options, of Tokyo-based Bit-isle. The
Company acquired the remaining outstanding equity instruments of Bit-isle in December 2015. The offer price
was JPY 922 per share, in an all cash transaction totaling ¥33,196,000,000 or approximately $275,367,000.

On September 30, 2015, the Company, acting through its Japanese subsidiaries as borrowers, entered into

a term loan agreement (the ‘‘Bridge Term Loan Agreement’’) with the Bank of Tokyo-Mitsubishi UFJ, Ltd.
(‘‘BTMU’’). Pursuant to the Bridge Term Loan Agreement, BTMU has committed to provide a senior bridge
loan facility (the ‘‘Bridge Term Loan’’) in the amount of up to ¥47,500,000,000, or approximately
$395,339,000 at the exchange rate in effect on December 31, 2015. Proceeds from the Bridge Term Loan are
to be used exclusively for the acquisition of Bit-isle, the repayment of Bit-isle’s existing debt and transaction
costs incurred in connection with the closing of the Bridge Term Loan and the acquisition of Bit-isle. For
further information on the Bridge Term Loan, see Note 9 below.

The Company included Bit-isle’s results of operations from November 2, 2015 and the estimated fair
value of assets acquired and liabilities assumed in its consolidated balance sheets beginning November 2,
2015. The Company incurred acquisition costs of approximately $8,645,000 for the year ended December 31,
2015 related to the Bit-isle Acquisition.

The Company has initially designated all the legal entities acquired in the Bit-isle Acquisition as taxable

REIT subsidiaries (‘‘TRSs’’).

F-19

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Acquisitions − (continued)

Purchase Price Allocation

Under the acquisition method of accounting, the total purchase price was allocated to Bit-isle’s net
tangible and intangible assets based upon their fair value as of the Bit-isle acquisition date. Based upon the
purchase price and the valuation of Bit-isle, the purchase price allocation was as follows (in thousands):

Cash and cash equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease and other ﬁnancing obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage and loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 33,198
7,359
51,038
3,806
308,985
95,444
111,374
22,981
634,185
(15,028)
(465)
(108,833)
(190,227)
(8,689)
(32,192)
(3,384)
$ 275,367

The following table presents certain information on the acquired identiﬁable intangible assets (dollars in

thousands):

Intangible assets
Customer relationships
. . . . . . . . . . . . . . . . . . . . . .
Trade name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Favorable solar contracts . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Other intangible assets

Fair value
$105,434
3,455
2,410
75

Estimated
useful lives
(years)
13
2
18
0.25

Weighted-average
estimated useful
lives (years)
13.0
2.0
18.0
0.25

The fair value of customer relationships 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
existing customers less costs to realize the revenue. The Company applied a weighted-average discount rate of
approximately 11.0%, which reﬂected the nature of the assets as it relates to the estimated future operating
cash ﬂows. Other signiﬁcant assumptions used to estimate the fair value of the customer relationships include
projected revenue growth, customer attrition rates, sales and marketing expenses and operating margins. The
fair value of the Bit-isle trade name was estimated using the relief of royalty approach. The Company applied
a relief of royalty rate of 2.0% and a weighted-average discount rate of approximately 12.0%. 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 loans payable assumed in the Bit-isle Acquisition by
estimating Bit-isle’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. During the year ended December 31, 2015, the
Company prepaid and terminated the majority of these loans payable. In conjunction with the repayment of

F-20

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Acquisitions − (continued)

the loans payable, the company incurred an insigniﬁcant amount of pre-payment penalties and interest rate
swap termination costs, which were recorded as interest expense in the consolidated statement of operations.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible

assets acquired. The goodwill is not expected to be deductible for local tax purposes. Goodwill will not be
amortized and will be tested for impairment at least annually. Goodwill recorded as a result of the Bit-isle
acquisition is attributable to the Company’s Asia-Paciﬁc reportable segment (see Note 16) and reporting unit
(see Note 5). For the quarter and year ended December 31, 2015, Bit-isle recognized revenues of $21,588,000
and had a net loss of $3,233,000, which were included in the Company’s consolidated statements of
operations.

Unaudited Pro Forma Combined Consolidated Financial Information

The following unaudited pro forma combined consolidated ﬁnancial information has been prepared by the

Company using the acquisition method of accounting to give effect to the Bit-isle Acquisition as though the
acquisition occurred on January 1, 2014. The unaudited pro forma combined consolidated ﬁnancial
information reﬂect certain adjustments, such as additional depreciation, amortization and interest expense on
assets and liabilities acquired.

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 acquisitions occurred on the above dates, 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):

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$2,847,411
195,501

2014
$2,614,127
(251,067)

Nimbo Acquisition

On January 14, 2015, the Company acquired all of the issued and outstanding share capital of Nimbo
Technologies Inc. (‘‘Nimbo’’), a company which specializes in migrating business applications to the cloud
with extensive experience moving legacy applications into a hybrid cloud architecture, and connecting legacy
data centers to the cloud, for a cash payment of $10,000,000 and a contingent earn-out arrangement to be paid
over two years (the ‘‘Nimbo Acquisition’’). Nimbo continues to operate under the Nimbo name. The Nimbo
Acquisition was accounted for using the acquisition method. As a result of the Nimbo Acquisition, the
Company recorded goodwill of $17,192,000, which represents the excess of the total purchase price over the
fair value of the assets acquired and liabilities assumed. The Company recorded the contingent earn-out
arrangement at its estimated fair value. The results of operations for Nimbo are not signiﬁcant to the
Company; therefore, the Company does not present its purchase price allocation or pro forma combined
results of operations. In addition, any prospective changes in the Company’s earn-out estimates are not
expected to have a material effect on the Company’s consolidated statement of operations.

Offer for TelecityGroup

On May 29, 2015, the Company announced a cash and share offer for the entire issued and to be issued

share capital of Telecity Group plc (‘‘TelecityGroup’’). TelecityGroup operates data center facilities in strategic
internet hub cities across Europe. The acquisition of TelecityGroup enhances the Company’s existing data
center portfolio by adding seven new markets in Europe including Bulgaria, Finland, Ireland, Italy, Poland,
Sweden and Turkey. The transaction closed in January 2016. See Note 18 for additional information.

F-21

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Acquisitions − (continued)

As the offer to TelecityGroup included an element of cash, the Company was required to include a
conﬁrmation that the Company had sufficient cash available to fulﬁll the offer, according to the UK Takeover
Code. As a result, the Company placed £322,851,000 or approximately $475,689,000 into a restricted cash
account, which was included in the current portion of restricted cash in the consolidated balance sheet as of
December 31, 2015.

In connection with TelecityGroup acquisition, the Company entered into a bridge credit agreement with

J.P. Morgan Chase Bank, N.A. (‘‘JPMCB’’) as the initial lender and as administrative agent for the lenders
(the ‘‘Lenders’’) for a principal amount of £875,000,000 or approximately $1,289,000,000 at the exchange rate
in effect on December 31, 2015 (the ‘‘Bridge Loan’’). The Bridge Loan had an initial maturity of 12 months
from the date of the ﬁrst drawdown and, at the initial maturity date (if not repaid prior to that time), would
have been converted into seven-year extended term loan. Commitment fees associated with the Bridge Loan
were approximately £4,375,000 or $6,446,000 at the exchange rate in effect on December 31, 2015. As of
December 31, 2015, the Company had accrued the commitment fees associated with the Bridge Loan and the
fees were included in interest expense in the consolidated statement of operations. The Bridge Loan was
unsecured and was guaranteed by certain of the Company’s domestic subsidiaries. As of December 31, 2015,
the Company had not made any advances on the Bridge Loan. The Bridge Loan was terminated on
January 8, 2016.

The Company will initially designate all the legal entities acquired as taxable REIT subsidiaries

(‘‘TRSs’’).

Frankfurt Kleyer 90 Carrier Hotel Acquisition

On October 1, 2013, the Company completed the purchase of a property located in Frankfurt, Germany
for cash consideration of approximately $50,092,000 (the ‘‘Frankfurt Kleyer 90 Carrier Hotel Acquisition’’).
A portion of the building was leased to the Company and was being used by the Company as its Frankfurt 5
IBX data center. The remainder of the building was leased by other parties, who became the Company’s
tenants upon closing. The Frankfurt Kleyer 90 Carrier Hotel constitutes a business under the accounting
standard for business combinations and as a result, the Frankfurt Kleyer 90 Carrier Hotel Acquisition was
accounted for as a business acquisition using the acquisition method of accounting.

The Company included Frankfurt Kleyer 90 Carrier Hotel’s results of operations from October 1, 2013

and the estimated fair value of assets acquired and liabilities assumed in its consolidated balance sheets
beginning October 1, 2013. The Company incurred acquisition costs of approximately $4,794,000 for the year
ended December 31, 2013 related to the Frankfurt Kleyer 90 Carrier Hotel Acquisition.

Purchase Price Allocation

Under the acquisition method of accounting, the total purchase price was allocated to Frankfurt Kleyer 90

Carrier Hotel’s net tangible and intangible assets based upon their fair value as of the Frankfurt Kleyer 90
Carrier Hotel acquisition date. Based upon the purchase price and the valuation of Frankfurt Kleyer 90 Carrier
Hotel, the purchase price allocation was as follows (in thousands):

Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible − unfavorable leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 85,969
10,011
95,980
(42,906)
(2,982)
$ 50,092

F-22

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Acquisitions − (continued)

The following table presents certain information on the acquired identiﬁable intangible assets (dollars in

thousands):

Intangible assets
Customer contracts . . . . . . . . . . . . . . . . . . . . . . . . .
Unfavorable leases . . . . . . . . . . . . . . . . . . . . . . . . .
Favorable leases . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value
$ 9,363
(2,982)
648

Estimated
useful lives
(years)
0.3 − 8
1 − 6
1 − 8

Weighted-average
estimated useful
lives (years)
4.9
4.8
7.5

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 by existing
customer relationships less costs to realize the revenue. The Company applied a discount rate of
approximately 9.0%, which reﬂects the nature of the assets as it relates 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 and marketing expenses and operating margins. The fair value
of leases was estimated using the market approach. 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 mortgage payable assumed in the Frankfurt Kleyer 90
Hotel Acquisition by estimating Frankfurt Kleyer 90 Hotel’s debt rating and reviewing market data with a
similar debt rating and other characteristics of the debt, including the maturity date and security type.

For the year ended December 31, 2013, revenues and net income recorded from Frankfurt Kleyer 90

Hotel were not material and were included in the Company’s consolidated statements of operations.

ALOG Acquisition

On April 25, 2011 (the ‘‘ALOG Acquisition Date’’), the Company and RW Brasil Fundo de Investimento

em Participações, a subsidiary of Riverwood Capital L.P. (‘‘Riverwood’’), completed the acquisition of
approximately 90% of the outstanding capital stock of ALOG Data Centers do Brasil S.A. (‘‘ALOG’’). As a
result, the Company acquired an approximate 53% controlling equity interest in ALOG (the ‘‘ALOG
Acquisition’’).

In July 2014, the Company and Riverwood entered into a purchase and sale agreement in which the
Company acquired Riverwood’s interest in ALOG and the approximate 10% of ALOG owned by ALOG
management, which resulted in the Company owning 100% of ALOG. The net purchase price of
$225,629,000 consisted of: (i) $216,484,000 of cash paid to Riverwood and ALOG management to acquire
their interests in ALOG, (ii) $8,459,000 of cash paid for the common shares of ALOG related to vested and
outstanding stock options to purchase common shares of ALOG that were held by ALOG employees and
(iii) $686,000 for the assumption of Riverwood’s portion of the contingent consideration in connection with
the acquisition of ALOG in 2011. The cash portion of the purchase price was paid on the closing date in
July 2014. The net increase in the redemption value of the redeemable non-controlling interests of
$90,966,000 and transaction costs of $1,333,000 were recorded in additional paid-in capital during the year
ended December 31, 2014.

F-23

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Earnings Per Share

The following table sets forth the computation of basic and diluted EPS for the years ended December 31

(in thousands, except per share amounts):

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net (income) loss attributable to redeemable

2015
$187,774

2014
$(260,726)

2013
$96,123

non-controlling interests . . . . . . . . . . . . . . . . . . .

—

1,179

(1,438)

Net income (loss) attributable to Equinix, basic and

diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$187,774

$(259,547)

$94,685

Weighted-average shares used to calculate basic EPS . . .

57,790

52,359

49,438

Effect of dilutive securities:

Employee equity awards . . . . . . . . . . . . . . . . . . .
Total dilutive potential shares . . . . . . . . . . . . . .
Weighted-average shares used to calculate diluted EPS . .

693
693
58,483

—
—
52,359

678
678
50,116

EPS attributable to Equinix:

Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$
$

3.25
3.21

$
$

(4.96)
(4.96)

$
$

1.92
1.89

The following table sets forth potential shares of common stock that are not included in the diluted EPS

calculation above because to do so would be anti-dilutive for the years ended December 31 (in thousands):

2015

2014

2013

Shares related to the potential conversion of 3.00%

convertible subordinated notes

. . . . . . . . . . . . . . . .

—

Shares related to the potential conversion of 4.75%

convertible subordinated notes

. . . . . . . . . . . . . . . .
Common stock related to employee equity awards . . . . .

1,977
88
2,065

861

2,824
1,820
5,505

3,613

4,432
254
8,299

4. Assets Held for Sale

In order to obtain the approval of the European Commission for the acquisition of TelecityGroup, the
Company and TelecityGroup have agreed to divest certain data centers, including the Company’s London 2
data center in London, UK (‘‘LD2’’). There is no deﬁnitive agreement to date with any buyer or buyers and
any such agreement will be subject to the approval of the European Commission. The assets and liabilities of
this data center, which are included within the EMEA operating segment, were classiﬁed as held for sale in
the fourth quarter of 2015 and, therefore, the corresponding depreciation and amortization expense was ceased
at that time. This anticipated divestiture is not presented as discontinued operations in our consolidated
statements of operations, because it does not represent a strategic shift in our business, as the Company will
continue operating similar businesses after the acquisition. During the fourth quarter of 2015, the Company
entered into an agreement to sell a parcel of land in San Jose, California, whose sale was completed in
February 2016. The consolidated ﬁnancial statements reﬂect the LD2 data center assets and liabilities and San
Jose land parcel as held for sale in the accompanying consolidated balance sheet as of December 31, 2015.
During the years ended December 31, 2015 and 2014, the Company recognized revenue of $17,579,000 and
$21,772,000, respectively, and net income of $7,166,000 and $9,218,000, respectively from LD2.

When an asset is classiﬁed as held for sale, the asset’s book value is evaluated and adjusted to the lower
of its carrying amount or fair value less cost to sell. As of December 31, 2015, the Company determined that
assets held for sale had not been impaired.

F-24

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Assets Held for Sale − (continued)

The following table summarizes the assets and liabilities of the LD2 data center and San Jose land parcel

classiﬁed as held for sale in the consolidated balance sheet as of December 31, 2015 (in thousands):

Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets
Total assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,222
408
23,533
5,000
784
1,310
$33,257

$ (654)
(816)
(435)
(1,630)
$ (3,535)

5. 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

December 31 (in thousands):

Cash and cash equivalents:

Cash(1)
Cash equivalents:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

$1,139,554

$ 207,953

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .

1,089,284
2,228,838

402,964
610,917

Marketable securities:
U.S. government securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. government agency securities . . . . . . . . . . . . . . . . . . . . . . . . .
Certiﬁcates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Publicly traded equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash, cash equivalents and short-term and long-term

—
—
14,106
3,353
17,459

336,440
192,955
439
—
529,834

investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,246,297

$1,140,751

(1) Excludes restricted cash.

As of December 31, 2015 and 2014, cash and cash equivalents included investments which were readily

convertible to cash and had original maturity dates of 90 days or less. The maturities of debt instruments
classiﬁed as short-term investments were one year or less as of December 31, 2015 and 2014. The maturities
of debt instruments classiﬁed as long-term investments were greater than one year and less than three years as
of December 31, 2015 and 2014. Through the acquisition of Bit-isle, the Company acquired certain
publicly-traded equity securities which were included in long-term investment in the consolidated balance
sheet as of December 31, 2015.

F-25

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Balance Sheet Components − (continued)

The following table summarizes the cost and estimated fair value of marketable debt securities based on

stated effective maturities as of December 31 (in thousands):

. . . . . . . . . . . . . . . . . . . . .
Due within one year
Due after one year through three years . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

2015

2014

Amortized
Cost
$12,875
1,231
$14,106

Fair Value
$12,875
1,231
$14,106

Amortized
Cost
$529,567
439
$530,006

Fair Value
$529,395
439
$529,834

As of December 31, 2015, the Company’s net unrealized gains (losses) on its available-for-sale securities

were comprised of the following (in thousands):

Certiﬁcates of deposit . . . . . . . . . . . . . . . . . . . .
Publicly traded equity securities . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

Amortized
Cost
$14,106
3,561
$17,667

Gross
unrealized
gains
$—
—
$—

Gross
unrealized
losses
$ —
(208)
$(208)

Fair Value
$14,106
3,353
$17,459

None of the securities held at December 31, 2015 were other-than-temporarily impaired.

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, 2015.

As of December 31, 2014, the Company’s net unrealized gains (losses) on its available-for-sale securities

were comprised of the following (in thousands):

U.S. government securities . . . . . . . . . . . . . . . . .
U.S. government agency securities . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
Certiﬁcates of deposit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

Amortized
Cost
$336,561
193,006
439
$530,006

Gross
unrealized
gains
$45
30
—
$75

Gross
unrealized
losses
$(166)
(81)
—
$(247)

Fair Value
$336,440
192,955
439
$529,834

None of the securities held at December 31, 2014 were other-than-temporarily impaired.

Accounts Receivable

Accounts receivable, net, consisted of the following as of December 31 (in thousands):

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$302,316
(10,352)
$291,964

2014
$272,036
(9,466)
$262,570

Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest.

F-26

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Balance Sheet Components − (continued)

The following table summarizes the activity of the Company’s allowance for doubtful accounts

(in thousands):

Balance as of December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net write-offs
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net write-offs
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net write-offs
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Current Assets

Other current assets consisted of the following as of December 31 (in thousands):

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net
Other receivables
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$ 48,322
33,979
—
1,925
60,165
68,538
$212,929

$ 3,716
5,819
(2,833)
(62)
6,640
7,093
(3,825)
(442)
9,466
5,037
(3,438)
(713)
$10,352

2014
$29,501
17,071
6,579
2,324
17,732
11,797
$85,004

Property, Plant and Equipment

Property, plant and equipment consisted of the following as of December 31 (in thousands):

Core systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$ 3,820,772
2,383,387
1,204,900
351,697
450,914
183,946
8,395,616
(2,789,180)
$ 5,606,436

2014
$ 3,252,569
2,074,382
1,053,451
460,259
387,909
160,035
7,388,605
(2,390,335)
$ 4,998,270

F-27

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Balance Sheet Components − (continued)

Core systems, buildings, leasehold improvements, personal property and construction in progress recorded

under capital leases aggregated $725,337,000 and $585,288,000 as of December 31, 2015 and 2014,
respectively. Amortization of the assets recorded under capital leases is included in depreciation expense and
accumulated depreciation on such assets totaled $117,338,000 and $83,291,000 as of December 31, 2015 and
2014, respectively.

Goodwill and Other Intangibles

Goodwill and other intangible assets, net, consisted of the following as of December 31 (in thousands):

Goodwill:

Americas
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible assets:

Intangible assets − customer contracts . . . . . . . . . . . . . . . . . . .
Intangible assets − favorable leases . . . . . . . . . . . . . . . . . . . . .
Intangible assets − licenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets − others . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated amortization − customer contracts . . . . . . . . . . . . .
Accumulated amortization − favorable leases
. . . . . . . . . . . . . .
Accumulated amortization − licenses . . . . . . . . . . . . . . . . . . . .
Accumulated amortization − others . . . . . . . . . . . . . . . . . . . . .

2015

2014

$ 460,203
374,070
228,927
$1,063,200

$ 463,902
404,093
134,134
$1,002,129

$ 311,581
22,783
9,697
13,491
357,552
(117,167)
(8,909)
(1,942)
(4,969)
(132,987)
$ 224,565

$ 220,674
24,300
9,697
8,132
262,803
(102,074)
(7,656)
(1,294)
(4,252)
(115,276)
$ 147,527

Changes in the carrying amount of goodwill by geographic regions are as follows (in thousands):

Balance as of December 31, 2013 . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . .
Balance as of December 31, 2014 . . . . . . . . . . . .
Purchase accounting adjustments . . . . . . . . . . .
Asset held for sale adjustments
. . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . .
Balance as of December 31, 2015 . . . . . . . . . . . .

Americas
$471,845
(7,943)
463,902
17,192
—
(20,891)
$460,203

EMEA
$435,041
(30,948)
404,093
—
(5,000)
(25,023)
$374,070

Asia-Paciﬁc
$135,267
(1,133)
134,134
95,437
—
(644)
$228,927

Total
$1,042,153
(40,024)
1,002,129
112,629
(5,000)
(46,558)
$1,063,200

F-28

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Balance Sheet Components − (continued)

Changes in the net book value of intangible assets by geographic regions are as follows (in thousands):

Balance as of December 31, 2012 . . . . . . . . . . . .
Frankfurt Kleyer 90 Carrier Hotel acquisition

(see Note 2)

. . . . . . . . . . . . . . . . . . . . . . .
New York IBX Center purchase . . . . . . . . . . . .
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangibles . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . .
Balance as of December 31, 2013 . . . . . . . . . . . .
Amortization of intangibles . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . .
Balance as of December 31, 2014 . . . . . . . . . . . .
Nimbo acquisition . . . . . . . . . . . . . . . . . . . . .
Bit-Isle acquisition . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Asset held for sale adjustments
. . . . . . . . . . . . . .
Write-off of intangible asset
Amortization of intangibles . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . .
Balance as of December 31, 2015 . . . . . . . . . . . .

Americas
$ 89,467

EMEA
$ 84,186

Asia-Paciﬁc
$ 27,909

Total
$201,562

—
1,100
—
(12,604)
(1,739)
76,224
(12,257)
(1,013)
62,954
1,089
—
—
—
(11,432)
(1,968)
$ 50,643

10,010
—
(2,070)
(11,613)
2,196
82,709
(12,795)
(7,729)
62,185
—
—
(784)
(357)
(11,675)
(5,014)
$ 44,355

—
—
—
(2,810)
150
25,249
(2,704)
(157)
22,388
—
111,374
—
—
(4,339)
144
$129,567

10,010
1,100
(2,070)
(27,027)
607
184,182
(27,756)
(8,899)
147,527
1,089
111,374
(784)
(357)
(27,446)
(6,838)
$224,565

The Company’s goodwill and intangible assets in EMEA, denominated in the United Arab Emirates
dirham, British pounds and Euros, goodwill and intangible assets in Asia-Paciﬁc, denominated in Singapore
dollars, Hong Kong dollars, Japanese yen and Chinese yuan and certain goodwill and intangibles in Americas,
denominated in Canadian dollars and Brazilian reals, are subject to foreign currency ﬂuctuations. The
Company’s foreign currency translation gains and losses, including goodwill and intangibles, are a component
of other comprehensive income and loss.

Estimated future amortization expense related to these intangibles is as follows (in thousands):

Year ending:

2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 35,298
33,644
29,690
24,978
19,217
81,738
$224,565

F-29

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Balance Sheet Components − (continued)

Other Assets

Other assets consisted of the following as of December 31 (in thousands):

Deferred tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses, non-current
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$ 61,152
54,372
19,709
33,132
8,735
11,358
$188,458

2014
$ 45,134
37,006
9,022
26,068
5,007
6,373
$128,610

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of December 31 (in thousands):

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable
. . . . . . . . . . . . . . . . . . . . . . . .
Accrued compensation and beneﬁts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest
Accrued taxes(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued utilities and security . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$ 49,892
131,204
67,077
37,004
31,789
18,380
3,618
61,984
$400,948

2014
$ 30,221
115,184
29,116
41,295
31,531
8,148
4,086
26,215
$285,796

(1)

Includes income taxes payable of $14,527,000 and $21,941,000, respectively, as of December 31, 2015
and 2014.

Other Current Liabilities

Other current liabilities consisted of the following as of December 31 (in thousands):

Deferred tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred installation revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments
Deferred recurring revenue
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

—
56,055
23,676
79,256
12,515
3,572
13,674
—
3,538
$192,286

2014
$ 83,264
48,707
13,492
810
6,879
2,675
4,559
945
1,333
$162,664

F-30

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Balance Sheet Components − (continued)

Other Liabilities

Other liabilities consisted of the following as of December 31 (in thousands):

Asset retirement obligations, non-current
. . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred installation revenue, non-current
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent, non-current
Accrued taxes, non-current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends payable, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred recurring revenue, non-current . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities

2015
$ 78,482
100,624
86,660
68,787
26,763
13,394
4,701
3,645
669
6,688
$390,413

2014
$ 63,913
69,212
76,744
52,968
24,726
4,972
4,618
445
—
7,366
$304,964

The following table summarizes the activity of the Company’s asset retirement obligation liability

(in thousands):

Asset retirement obligations as of December 31, 2012 . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations as of December 31, 2013 . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations as of December 31, 2014 . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations as of December 31, 2015 . . . . . . . . . . . . . . . . . . . . .

$ 63,150
8,713
(14,874)
2,932
(373)
59,548
5,774
(871)
2,438
(2,031)
64,858
17,337
(4,676)
3,349
(2,386)
$ 78,482

(1) Reversal of asset retirement obligations associated with leases that were amended.

6. Derivatives and Hedging Instruments

Derivatives Designated as Hedging Instruments

Net Investment Hedges. The Company is exposed to the impact of foreign exchange rate ﬂuctuations in

the investments in its wholly-owned foreign subsidiaries that are denominated in currencies other than the
U.S. dollar. In order to mitigate the volatility in foreign exchange rates, the Company entered into a foreign
currency term loan in April 2015, as discussed in Note 9, and designated 100% of the term loan to hedge its
net investment in its wholly-owned foreign subsidiaries that are denominated in the same currencies as the
term loan. All changes in the fair value of the hedging instrument designated as a net investment hedge,
except the ineffective portion, are recorded as a component of other comprehensive income (loss) in the

F-31

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Derivatives and Hedging Instruments − (continued)

consolidated balance sheet. Effective December 15, 2015, the Company terminated hedging its net investment
in subsidiaries that are denominated in Swiss Francs. As of December 31, 2015, the Company recorded
foreign exchange gain of $4,484,000 in other comprehensive income for the year ended December 31,
2015. The Company recorded no ineffectiveness from its net investment hedges for the year ended
December 31, 2015.

Cash Flow Hedges. During the fourth quarter of 2013, the Company initiated a program to hedge its
exposure to foreign currency exchange rate ﬂuctuations for forecasted revenues and expenses in its EMEA
region in order to help manage the Company’s exposure to foreign currency exchange rate ﬂuctuations
between the U.S. Dollar and the British Pound, Euro and Swiss Franc. The foreign currency forward and
option contracts that the Company uses to hedge this exposure are designated as cash ﬂow hedges under the
accounting standard for derivatives and hedging.

Effective January 1, 2015, the Company entered into intercompany hedging instruments (‘‘intercompany

derivatives’’) with a wholly-owned subsidiary of the Company and simultaneously entered into derivative
contracts with unrelated parties to hedge certain forecasted revenues and expenses denominated in currencies
other than the U.S. dollar.

The following disclosure is prepared on a consolidated basis. Assets and liabilities resulting from

intercompany derivatives have been eliminated in consolidation.

As of December 31, 2015, the Company’s cash ﬂow hedge instruments had maturity dates ranging from

January 2016 to December 2017 as follows (in thousands):

Derivative assets
. . . . . . . . . . . . . . . . . . . . . . . .
Derivative liabilities . . . . . . . . . . . . . . . . . . . . . .

Notional
Amount
$367,330
47,447
$414,777

Fair
Value(1)
$16,027
(813)
$15,214

Accumulated
other
comprehensive
income (loss)(2)(3)
$ 34,578
(19,709)
$ 14,869

(1) All derivative assets related to cash ﬂow hedges are included in the consolidated balance sheets within

other current assets, other assets, other current liabilities and other liabilities.
Included in the consolidated balance sheets within accumulated other comprehensive income (loss).

(2)
(3) The Company recorded a net gain of $12,940 within accumulated other comprehensive income (loss)
relating to cash ﬂow hedges that will be reclassiﬁed to revenue and expenses as they mature over the
next 12 months.

As of December 31, 2014, the Company’s cash ﬂow hedge instruments had maturity dates ranging from

January 2015 to January 2016 as follows (in thousands):

Derivative assets
. . . . . . . . . . . . . . . . . . . . . . . .
Derivative liabilities . . . . . . . . . . . . . . . . . . . . . .

Notional
Amount
$281,055
—
$281,055

Fair
Value(1)
$8,404
—
$8,404

Accumulated
other
comprehensive
income (loss)(2)
$8,480
—
$8,480

(1) All derivative assets related to cash ﬂow hedges are included in the consolidated balance sheets within

other current assets.
Included in the consolidated balance sheets within accumulated other comprehensive income (loss).

(2)

F-32

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Derivatives and Hedging Instruments − (continued)

During the years ended December 31, 2015 and 2014, the ineffective and excluded portions of cash ﬂow
hedges recognized in other income (expense) were not signiﬁcant. During the year ended December 31, 2015,
the amount of net gains reclassiﬁed from accumulated other comprehensive income (loss) to revenue were
$27,973,000 and the amount of net losses reclassiﬁed from accumulated other comprehensive income (loss) to
operating expenses were $6,256,000. During the year ended December 31, 2014, the amount of net gains
reclassiﬁed from accumulated other comprehensive income (loss) to revenue were $4,332,000 and the amount
of net losses reclassiﬁed from accumulated other comprehensive income (loss) to operating expenses were not
signiﬁcant. During the year ended December 31, 2013, the amount of gains (losses) reclassiﬁed from
accumulated other comprehensive income (loss) to revenue and operating expenses were not signiﬁcant.

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. The Company is deemed to have foreign currency forward contracts embedded
in certain of the Company’s customer agreements that are priced in currencies different from the functional or
local currencies of the parties involved. These embedded derivatives are separated from their host contracts
and carried on the Company’s balance sheet at their fair value. The majority of these embedded derivatives
arise as a result of the Company’s foreign subsidiaries pricing their customer contracts in the U.S. dollar.
Gains and losses on these embedded derivatives are included within revenues in the Company’s consolidated
statements of operations. During the year ended December 31, 2015, the gain or loss associated with these
embedded derivatives was insigniﬁcant. During the years ended December 31, 2014 and 2013, the Company
recognized a net gain of $3,807,000 and $4,836,000 associated with these embedded derivatives, respectively.

Economic Hedges of Embedded Derivatives. The Company uses foreign currency forward contracts to
help manage the foreign exchange risk associated with the Company’s customer agreements that are priced in
currencies different from the functional or local currencies of the parties involved (‘‘economic hedges of
embedded derivatives’’). 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.
Gains and losses on these contracts are included in revenues along with gains and losses of the related
embedded derivatives. The Company entered into various economic hedges of embedded derivatives during
the years ended December 31, 2015, 2014 and 2013 and recognized a net loss of $2,287,000, $2,602,000 and
$4,497,000, respectively.

Foreign Currency Forward and Option Contracts. The Company also uses foreign currency

forward and option 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 its foreign currency-denominated assets and liabilities change. Gains and losses on these
contracts are included in other income (expense), net, along with the 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 foreign currency forward and option contracts during the years
ended December 31, 2015, 2014 and 2013. The Company recognized a net loss of $24,319,000 during the
year ended December 31, 2015 and a net gain of $12,657,000 during the year ended December 31, 2014.
Gains (losses) from these foreign currency forward contracts were not signiﬁcant during the year ended
December 31, 2013.

F-33

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Derivatives and Hedging Instruments − (continued)

Offsetting Derivative Assets and Liabilities

The following table presents the fair value of derivative instruments recognized in the Company’s

consolidated balance sheets as of December 31, 2015 (in thousands):

Gross
amounts
offset in the
balance sheet

Net
balance
sheet
amounts(1)

Gross
Amounts

Gross
amounts
not offset in
the balance
sheet(2)

Net

Assets:

Designated as hedging instruments:

Foreign currency forward and option

contracts . . . . . . . . . . . . . . . . . . .

$16,027

$—

$16,027

(813)

$15,214

Not designated as hedging instruments:

Embedded derivatives . . . . . . . . . . . .
Economic hedges of embedded

derivatives . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts . . .

Additional netting beneﬁt

. . . . . . . . .

Liabilities:

Designated as hedging instruments:

Foreign currency forward and option

8,926

744
43,203
52,873
—
$68,900

—

—
—
—
—
$—

8,926

—

8,926

744
43,203
52,873
—
$68,900

—
(34,577)
(34,577)
(9,512)
$(44,902)

744
8,626
18,296
(9,512)
$23,998

contracts . . . . . . . . . . . . . . . . . . .

813

$—

813

(813)

$ —

Not designated as hedging instruments:

Embedded derivatives . . . . . . . . . . . .
Economic hedges of embedded

derivatives . . . . . . . . . . . . . . . . . .
Foreign currency forward contracts . . .

Additional netting beneﬁt

. . . . . . . . . . .

1,772

417
76,923
79,112
—
$79,925

—

—
—
—
—
$—

1,772

—

1,772

417
76,923
79,112
—
$79,925

—
(34,577)
(34,577)
(9,512)
$(44,902)

417
42,346
44,535
(9,512)
$35,023

(1) As presented in the Company’s consolidated balance sheets within other current assets, other assets, other

current liabilities and other liabilities.

(2) The Company enters into master netting agreements with its counterparties for transactions other than
embedded derivatives to mitigate credit risk exposure to any single counterparty. Master netting
agreements allow for individual derivative contracts with a single counterparty to offset in the event of
default.

F-34

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Derivatives and Hedging Instruments − (continued)

The following table presents the fair value of derivative instruments recognized in the Company’s

consolidated balance sheets as of December 31, 2014 (in thousands):

Gross
amounts
offset in the
balance sheet

Gross
Amounts

Net
amounts(1)

Gross
amounts
not offset in
the balance
sheet(2)

Net

Assets:

Designated as hedging instruments:
Foreign currency forward contracts

. . . .

$ 8,404

$—

$ 8,404

$ —

$ 8,404

Not designated as hedging instruments:

Embedded derivatives . . . . . . . . . . . .
Foreign currency forward and option

contracts . . . . . . . . . . . . . . . . . . .

Additional netting beneﬁt . . . . . . . . . . . . .

Liabilities:

Designated as hedging instruments:

9,182

5,153
14,335
—
$22,739

—

—
—
—
$—

9,182

—

9,182

5,153
14,335
—
$22,739

(138)
(138)
(508)
$(646)

5,015
14,197
(508)
$22,093

Foreign currency forward contracts . . .

$ —

$—

$ —

Not designated as hedging instruments:

Embedded derivatives . . . . . . . . . . . .
Economic hedges of embedded

derivatives . . . . . . . . . . . . . . . . . .

Foreign currency forward and option

contracts . . . . . . . . . . . . . . . . . . .

Additional netting beneﬁt . . . . . . . . . . . . .

390

416
810
—
810

—

—
—
—
$—

390

416
810
—
810

—

(138)
(138)
(508)
$(646)

390

278
672
(508)
164

(1) As presented in the Company’s consolidated balance sheets within other current assets, other assets, other

current liabilities and other liabilities.

F-35

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Fair Value Measurements

The Company’s ﬁnancial assets and liabilities measured at fair value on a recurring basis as of

December 31, 2015 were as follows (in thousands):

Assets:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market and deposit accounts . . . . . . . . . .
Publicly traded equity securities . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
Certiﬁcates of deposit
Derivative instruments(1)
. . . . . . . . . . . . . . . . . .

Fair value at
December 31,
2015

Fair value measurement using

Level 1

Level 2

$1,139,554
1,089,284
3,353
14,106
68,900
$2,315,197

$1,139,554
1,089,284
3,353
—
—
$2,232,191

$ —
—
—
14,106
68,900
$83,006

Liabilities:

Derivative instruments(1)

. . . . . . . . . . . . . . . . . .

79,925

—

$79,925

(1)

Includes both foreign currency embedded derivatives and foreign currency forward and option contracts.
Amounts are included within other current assets, other assets, other current liabilities and other liabilities
in the Company’s accompanying consolidated balance sheet.

The Company’s ﬁnancial assets and liabilities measured at fair value on a recurring basis at

December 31, 2014 were as follows (in thousands):

Assets:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market and deposit accounts . . . . . . . . . .
U.S. government securities . . . . . . . . . . . . . . . . .
U.S. government agency securities
. . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
Certiﬁcates of deposit
Derivative instruments(1)
. . . . . . . . . . . . . . . . . .

Fair value at
December 31,
2014

Fair value measurement using

Level 1

Level 2

$ 207,953
402,964
336,440
192,955
439
22,739
$1,163,490

$207,953
402,964
336,440
—
—
—
$947,357

—
—
—
192,955
439
22,739
$216,133

Liabilities:

Derivative instruments(1)

. . . . . . . . . . . . . . . . . .

810

—

810

(1)

Includes embedded derivatives, foreign currency embedded derivatives and foreign currency forward
contracts. Amounts are included within other current assets, other current liabilities and other liabilities in
the Company’s accompanying consolidated balance sheet.

The Company did not have any Level 3 ﬁnancial assets or ﬁnancial liabilities during the years ended

December 31, 2015 and 2014.

F-36

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Fair Value Measurements − (continued)

Valuation Methods

Fair value estimates are made as of a speciﬁc point in time based on methods using the market approach
valuation method which uses prices and other relevant information generated by market transactions involving
identical or comparable assets or liabilities 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.

Cash, Cash Equivalents and Investments. The fair value of the Company’s investments in money

market funds approximates their face value. Such instruments are included in cash equivalents. The
Company’s U.S. government securities, money market funds and publicly traded equity securities are
classiﬁed within Level 1 of the fair value hierarchy because they are valued using quoted prices for identical
instruments in active markets. The fair value of the Company’s other investments approximate their face
value, including certiﬁcates of deposit and 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 priced based on the quoted market price for similar instruments or nonbinding market
prices that are corroborated by observable market data. Such instruments are classiﬁed within Level 2 of the
fair value hierarchy. The Company determines the fair values of its Level 2 investments by using inputs such
as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from
quoted market prices, custody bank, third-party pricing vendors, or other sources. The Company uses such
pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its
investment portfolio and has not made, during the periods presented, any material adjustments to such inputs.
The Company is responsible for its consolidated ﬁnancial statements and underlying estimates.

The Company uses the speciﬁc identiﬁcation method in computing realized gains and losses. Realized

gains and losses on the investments are included within other income (expense) in the Company’s
consolidated statements of operations. Short-term and long-term investments 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 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.

Derivative Assets and Liabilities. For derivatives, the Company uses forward contract and option
models employing market observable inputs, such as spot currency rates and forward points with adjustments
made to these values utilizing published credit default swap rates of its foreign exchange trading
counterparties and other comparable companies. The Company has determined that the inputs used to value its
derivatives fall within Level 2 of the fair value hierarchy, therefore the derivatives are categorized as Level 2.

During the years ended December 31, 2015 and 2014, the Company did not have any nonﬁnancial assets

or liabilities measured at fair value on a recurring basis.

8. Leases

Capital Lease and Other Financing Obligations

The Company’s capital lease and other ﬁnancing obligations expire at various dates ranging from 2015 to

2053. The weighted average effective interest rate of the Company’s capital lease and other ﬁnancing
obligations was 8.17% as of December 31, 2015.

F-37

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Leases − (continued)

The Company’s capital lease and other ﬁnancing obligations are summarized as follows as of

December 31, 2015 (dollars in thousands):

2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total minimum lease payments . . . . . . . . . . . . . . . .
Plus amount representing residual property value . . . . .
Less estimated building costs . . . . . . . . . . . . . . . . . . .
Less amount representing interest . . . . . . . . . . . . . . . .
. . . . .
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . .

Present value of net minimum lease payments

Capital lease
obligations
74,457
$
73,537
74,053
74,857
74,868
827,789
1,199,561
—
—
(557,433)
642,128
(23,435)
$ 618,693

Other
ﬁnancing
obligations
$ 66,175
66,116
66,928
63,990
61,719
518,552
843,480
467,616
(247)
(625,717)
685,132
(16,686)
$ 668,446

Total
140,632
139,653
140,981
138,847
136,587
1,346,341
2,043,041
467,616
(247)
(1,183,150)
1,327,260
(40,121)
$ 1,287,139

Atlanta 1 Capital Lease

In May 2015, the Company entered into a lease amendment to extend the lease term of the Company’s
Atlanta 1 IBX (the ‘‘AT1 Lease’’). The lease was originally accounted for as an operating lease. Pursuant to
the accounting standard for leases, the Company reassessed the lease classiﬁcation of the AT1 Lease as a
result of the lease amendment and determined that upon the amendment the lease should be accounted for as a
capital lease. The Company recorded a capital lease asset and liability totaling approximately $21,274,000
during the three months ended June 30, 2015. The lease term was extended to September 2035.

Atlanta 2 Capital Lease

In January 2015, the Company entered into a lease amendment to extend the lease term of the

Company’s Atlanta 2 IBX (the ‘‘AT2 Lease’’). The lease was originally accounted for as an operating lease.
Pursuant to the accounting standard for leases, the Company reassessed the lease classiﬁcation of the
AT2 Lease as a result of the lease amendment and determined that upon the amendment the lease should be
accounted for as a capital lease. The Company recorded a capital lease asset totaling approximately
$25,960,000 and a capital lease liability totaling approximately $26,230,000 during the three months ended
March 31, 2015. The lease term, including a renewal option, was extended to December 2024.

Operating Leases

The Company also leases its IBX data centers and certain equipment under noncancelable operating lease

agreements. The majority of the Company’s operating leases for its land and IBX data centers expire at
various dates through 2053 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 5, ‘‘Other Current Liabilities’’ and ‘‘Other
Liabilities’’).

F-38

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Leases − (continued)

Minimum future operating lease payments as of December 31, 2015 are summarized as follows

(in thousands):

Year ending:

2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total

$ 115,091
113,624
108,810
100,462
89,227
632,677
$1,159,891

Total rent expense was approximately $199,975,000, $105,391,000 and $112,704,000 for the years ended

December 31, 2015, 2014 and 2013, respectively.

9. Debt Facilities

Mortgage and Loans Payable

The Company’s mortgage and loans payable consisted of the following as of December 31

(in thousands):

Term loan A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bridge term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving credit facility borrowings . . . . . . . . . . . . . . . . . . . . . . . .
Brazil ﬁnancings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage payable and other loans payable . . . . . . . . . . . . . . . . . . . .

Less the amount representing debt discount and debt issuance cost
. . .
Add the amount representing mortgage premium . . . . . . . . . . . . . . .

Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$ 456,740
386,547
325,622
27,113
47,677
1,243,699
(2,681)
1,987
1,243,005
(770,236)
$ 472,769

2014
$500,000
—
—
56,863
36,608
593,471
(3,477)
2,281
592,275
(59,466)
$532,809

Senior Credit Facility

On December 17, 2014, the Company entered into a credit agreement with a group of lenders for a

$1,500,000,000 credit facility (‘‘Senior Credit Facility’’), comprised of a $1,000,000,000 multicurrency
revolving credit facility (‘‘Revolving Credit Facility’’) and a $500,000,000 multicurrency term loan facility
(‘‘Term Loan A Facility’’). The Senior Credit Facility contains two ﬁnancial covenants with which the
Company must comply on a quarterly basis, including a maximum consolidated net lease adjusted leverage
ratio and a minimum consolidated ﬁxed charge coverage ratio. The Senior Credit Facility is guaranteed by
certain of the Company’s domestic subsidiaries and is secured by its domestic accounts receivable as well as
pledges of the equity interest of certain of the Company’s direct and indirect subsidiaries. The Revolving
Credit Facility and the Term Loan A Facility both have a ﬁve-year term, maturing on December 17, 2019,
subject to the satisfaction of certain conditions with respect to the Company’s outstanding convertible
subordinated notes. The Company may use the remaining Senior Credit Facility for working capital, capital
expenditures and other corporate purposes.

F-39

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

The Term Loan A Facility bears interest at a rate based on LIBOR or, at the Company’s option, the base

rate, which is deﬁned as the highest of (a) the Federal Funds Rate plus 1⁄2 of 1%, (b) the Bank of America
prime rate and (c) one-month LIBOR plus, in either case, a margin that varies as a function of the Company’s
consolidated net lease adjusted leverage ratio that ranges between 1.25% and 1.75% per annum if the
Company elects to use the LIBOR index and in the range of 0.25% to 0.75% per annum if the Company
elects to use the base rate index. In December 2014, the Company utilized $110,740,000 of the Term Loan A
Facility to repay the remaining principal of the U.S. term loan as well as fees and interest.

The Revolving Credit Facility allows the Company to borrow, repay and reborrow over the term. The
Revolving Credit Facility provides a sublimit for the issuance of letters of credit of up to $150,000,000 at any
one time. Borrowings under the Revolving Credit Facility bear interest at a rate based on LIBOR or, at the
Company’s option, the base rate, as deﬁned above, plus, in either case, a margin that varies as a function of
its consolidated net lease adjusted leverage ratio that ranges between 1.00% and 1.40% per annum if the
Company elects to use the LIBOR index and in the range of 0.25% to 0.75% per annum if the Company
elects to use the base rate index. The Company is required to pay a quarterly letter of credit fee on the face
amount of each letter of credit, which fee is based on the same margin that applies from time to time to
LIBOR-indexed borrowings under the revolving credit line. The Company is also required to pay a quarterly
facility fee ranging from 0.25% to 0.35% per annum of the revolving credit facility, regardless of the amount
utilized, which fee also varies as a function of our consolidated net lease adjusted leverage ratio. In
December 2014, the outstanding letters of credit issued under the U.S. revolving credit line (see below) were
assumed under the Revolving Credit Facility and the U.S. revolving credit line was terminated.

As of December 31, 2014, the Company had $500,000,000 outstanding under the Term Loan A Facility.
Borrowings under the Term Loan A Facility were denominated in U.S dollars as of December 31, 2014. The
Company was required to repay the U.S. dollar denominated borrowings under the term loan facility in
quarterly installments in the amount of $10,000,000 per quarter, commencing on March 31, 2015, with a
balloon payment of $300,000,000 at the end of the term.

First Amendment

On April 30, 2015, the Company, as borrower, and certain subsidiaries as guarantors entered into the ﬁrst

amendment (the ‘‘First Amendment’’) to the Senior Credit Facility. The First Amendment provided for the
conversion of the outstanding U.S. dollar-denominated borrowings under the Term Loan A Facility into an
approximately equivalent amount denominated in four foreign currencies. In connection with the execution of
the First Amendment, on April 30, 2015 the Company repaid the U.S. dollar-denominated $490,000,000
remaining principal balance of the Term Loan A Facility and immediately reborrowed under the Term Loan A
Facility in the aggregate principal amounts of CHF 47,780,000, €184,945,000, £92,586,000 and
¥11,924,000,000, or approximately $490,000,000 in U.S. dollars at exchange rates in effect on April 30, 2015.
The Company accounted for this transaction as a debt modiﬁcation. Fees paid to third parties were expensed.

The Company is required to repay the foreign-currency denominated borrowings under the Term Loan A

Facility in equal quarterly installments on the last business day of each March, June, September and
December, commencing on June 30, 2015, equal to the amount of 2.00% of the result of the respective Term
Loan A Facility on April 30, 2015 divided by 0.98. The remaining principal amount will be paid on the
maturity date of the Term Loan A Facility.

Second Amendment

On December 8, 2015, the Company, as borrower, and certain subsidiaries as guarantors entered into the

second amendment (the ‘‘Second Amendment’’) to the Senior Credit Facility. Pursuant to the Second
Amendment, the Revolving Credit Facility was increased by $500,000,000 to $1,500,000,000 and the
Company received commitments from the lenders for a $250,000,000 seven years term loan (the ‘‘USD Term
Loan B Commitment’’) and for a £300,000,000, or approximately $442,020,000 in U.S. dollars at the
exchange rate in effect on December 31, 2015, seven years term loan (the ‘‘Sterling Term Loan B

F-40

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

Commitment’’, and collectively, the ‘‘Term Loan B Commitments’’). The Company may borrow the full
amount of the Term Loan B Commitments in a single borrowing on or before June 30, 2016.

An original issue discount applies to borrowings under the Term Loan B Commitments. The original

issue discount for borrowings under the USD Term Loan B Commitment is 0.25% of the principal. The
original issue discount for borrowings under the Sterling Term Loan B Commitment is 0.50% of the principal.
Funding of the Term Loan B will be net of the applicable original issue discount.

Loans made under the Term Loan B Commitments (the ‘‘Term Loan B’’) must be repaid in equal
quarterly installments of 0.25% of the original principal, with the remaining amount outstanding to be repaid
in full on the seventh anniversary of the funding date of the Term Loan B. Once repaid, amounts borrowed
under the Term Loan B Commitments may not be reborrowed.

Term Loan B made under the USD Term Loan B Commitment bear interest at a rate based on LIBOR or,

at the Company’s option, the base rate, which is deﬁned as the highest of (a) the Federal Funds Rate plus 1⁄2
of 1%, (b) the Bank of America prime rate and (c) one-month LIBOR, or 0.75% if LIBOR is less than 0.75%,
plus a margin of 3.25%. Term Loan B made under the Sterling Term Loan B Commitment bear interest at a
rate based on LIBOR, or 0.75% if LIBOR is less than 0.75%, plus a margin of 3.75%.

Outstanding Borrowings
As of December 31, 2015, the Company had CHF 44,855,000, €173,622,000, £86,918,000 and

¥11,437,306,000, or approximately $456,740,000 in U.S dollars at exchange rates in effect as of December 31,
2015, outstanding under the Term Loan A Facility with a weighted average effective interest rate of 1.68% per
annum. Debt issuance costs related to the Term Loan A, net of amortization, were $1,031,000 as of
December 31, 2015. As of December 31, 2015, the Company had no borrowings outstanding under the Term
Loan B Commitments.

The Company commenced borrowing under the Revolving Credit Facility in late 2015. During 2015, the

Company borrowed $245,000,000, of which $20,000,000 had been repaid as of December 31, 2015 and
¥12,094,000,000, or approximately $100,622,000 in U.S dollars at the exchange rate in effect on
December 31, 2015. As of December 31, 2015, a total of $325,622,000 was outstanding under the Revolving
Credit Facility with interest rates ranging from 1.25% to 1.60%. In addition, the Company had 30 irrevocable
letters of credit totaling $55,331,000 issued and outstanding under the Revolving Credit Facility as of
December 31, 2015. As a result, the amount available to the Company to borrow under the Revolving Credit
Facility was $1,119,047,000 as of December 31, 2015.

As of December 31, 2015, the Company was in compliance with all covenants of the Senior Credit

Facility.

Bridge Term Loan

In connection with its acquisition of Bit-isle, on September 30, 2015, the Company, acting through its
Japanese subsidiaries as borrowers, entered into a term loan agreement (the ‘‘Bridge Term Loan Agreement’’)
with the Bank of Tokyo-Mitsubishi UFJ, Ltd. (‘‘BTMU’’). Pursuant to the Bridge Term Loan Agreement,
BTMU has committed to provide a senior bridge loan facility (the ‘‘Bridge Term Loan’’) in the amount of up
to ¥47,500,000,000, or approximately $395,200,000 in U.S dollars at the exchange rate in effect on
December 31, 2015. Proceeds from the Bridge Term Loan were used exclusively for the acquisition of
Bit-isle, the repayment of Bit-isle’s existing debt and transaction costs incurred in connection with the closing
of the Bridge Term Loan and the acquisition of Bit-isle.

In October 2015, the Company completed its ﬁrst draw down under the Bridge Term Loan of
¥27,260,000,000 or approximately $226,803,000 at the exchange rate in effect on December 31, 2015. In
December 2015, the Company completed an additional draw down of ¥19,200,000,000, or approximately

F-41

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

$159,744,000 at the exchange rate in effect on December 31, 2015. Total outstanding borrowings under the
Bridge Term Loan were ¥46,460,000,000 or $386,547,000 in U.S dollars at the exchange rate in effect as of
December 31, 2015.

The Bridge Term Loan is due one year after borrowing the ﬁrst tranche. Borrowings under the Bridge
Term Loan bear interest at the Tokyo Interbank Offered Rate for Japanese Yen, plus a margin of 0.4% per
annum for the ﬁrst ten months following the ﬁrst draw down. Thereafter, the margin increases to 1.75% per
annum.

U.S. Financing

In June 2012, the Company entered into a credit agreement with a group of lenders for a $750,000,000
credit facility (the ‘‘U.S. Financing’’), comprised of a $200,000,000 term loan facility (the ‘‘U.S. Term Loan’’)
and a $550,000,000 multicurrency revolving credit facility (the ‘‘U.S. Revolving Credit Line’’). The U.S. Term
Loan bore interest at a rate based on LIBOR or, at the option of the Company, the Base Rate (deﬁned as the
highest of (a) the Federal Funds Rate plus 1⁄2 of 1%, (b) the Bank of America prime rate and (c) one-month
LIBOR plus 1.00%) plus, in either case, a margin that varies as a function of the Company’s senior leverage
ratio in the range of 1.25%-2.00% per annum if the Company elects to use the LIBOR index and in the range
of 0.25%-1.00% per annum if the Company elected to use the Base Rate index. In July 2012, the Company
fully utilized the U.S. Term Loan and used the funds to prepay the outstanding balance of and terminate a
multi-currency credit facility in the Company’s Asia-Paciﬁc region. Borrowings under the U.S. Revolving
Credit Line bore interest at a rate based on LIBOR or, at the option of the Company, the Base Rate (deﬁned
above) plus, in either case, a margin that varies as a function of the Company’s senior leverage ratio in the
range of 0.95%-1.60% per annum if the Company elected to use the LIBOR index and in the range of
0.00%-0.60% per annum if the Company elected to use the Base Rate index. The Company was required to
pay a quarterly letter of credit fee on the face amount of each letter of credit, which fee was based on the
same margin that applies from time to time to LIBOR-indexed borrowings under the U.S. Revolving Credit
Line. The Company was also required to pay a quarterly facility fee ranging from 0.30%-0.40% per annum of
the U.S. Revolving Credit Line (regardless of the amount utilized), which fee also varied as a function of the
Company’s senior leverage ratio. In June 2012, the outstanding letters of credit issued under an existing
revolving credit facility were replaced by the U.S. Revolving Credit Line and the existing revolving credit
facility was terminated.

In December 2014, the Company paid down the remaining principal of U.S. Term Loan of $110,000,000

and replaced the U.S. Revolving Credit Line with the revolving credit facility (see above). As a result,
Company recorded a loss on debt extinguishment of $2,534,000.

Brazil Financings

In November 2013, the Company completed a 60,318,000 Brazilian real borrowing agreement, or
approximately $25,536,000 (the ‘‘2013 Brazil Financing’’). The 2013 Brazil Financing has a ﬁve-year term
with semi-annual principal payments beginning in the third year of its term and semi-annual interest payments
during the entire term. The 2013 Brazil Financing bears an interest rate of 2.25% above the local borrowing
rate. The 2013 Brazil Financing contains ﬁnancial covenants, which Brazil must comply with annually,
consisting of a leverage ratio and a ﬁxed charge coverage ratio. As of December 31, 2015, the Company was
in compliance with all ﬁnancial covenants under the 2013 Brazil Financing. The 2013 Brazil Financing is not
guaranteed by the Company. The 2013 Brazil Financing is not secured by the Company’s assets. The 2013
Brazil Financing has a ﬁnal maturity date of November 2018. During the three months ended December 31,
2013, the Company fully utilized the 2013 Brazil Financing. As of December 31, 2015, the effective interest
rate under the 2013 Brazil Financing was 16.39% per annum.

In June 2012, the Company completed a 100,000,000 Brazilian real borrowing agreement, or

approximately $48,807,000 (the ‘‘2012 Brazil Financing’’). The 2012 Brazil Financing has a ﬁve-year term
with semi-annual principal payments beginning in the third year of its term and quarterly interest payments

F-42

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

during the entire term. The 2012 Brazil Financing bears an interest rate of 2.75% above the local borrowing
rate. The 2012 Brazil Financing contains ﬁnancial covenants, which the Company must comply with annually,
consisting of a leverage ratio and a ﬁxed charge coverage ratio. As of December 31, 2015, the Company was
in compliance with all ﬁnancial covenants under the 2012 Brazil Financing. The 2012 Brazil Financing is not
guaranteed by the Company. The 2012 Brazil Financing is not secured by the Company’s assets. The 2012
Brazil Financing has a ﬁnal maturity date of June 2017. During the three months ended September 30, 2012,
the Company fully utilized the 2012 Brazil Financing and used a portion of the funds to prepay and terminate
Brazil loans payable outstanding. As of December 31, 2015, the effective interest rate under the 2012 Brazil
Financing was 16.89% per annum.

Mortgage Payable

In October 2013, as a result of the Frankfurt Kleyer 90 Carrier Hotel Acquisition, the Company assumed

a mortgage payable of $42,906,000 (see Note 2) with an effective interest rate of 4.25%. The mortgage
payable has monthly principal and interest payments and has an expiration date of August 2022.

Convertible Debt

The Company’s convertible debt consisted of the following as of December 31 (in thousands):

4.75% Convertible Subordinated Notes
Less amount representing debt discount and debt issuance cost

. . . . . . . . . . . . . . . . . . . . .
. . . . .

2015
$150,082
(3,961)
$146,121

2014
$157,885
(12,656)
$145,229

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.

In June 2014, the Company entered into an agreement with a note holder to exchange an aggregate of
$217,199,000 of the principal amount of the 3.00% Convertible Subordinated Notes for 1,948,578 shares of
the Company’s common stock and $5,387,000 in cash, comprised of accrued interest and a premium. As a
result, the Company recognized a loss on debt extinguishment of $4,210,000 during the three months ended
June 30, 2014 in its consolidated statement of operations. In the Company’s consolidated statement of cash
ﬂows for the year ended December 31, 2014, the premium paid was included within net cash provided by
ﬁnancing activities and the accrued interest paid was included within net cash provided by operating activities.

In October 2014, upon maturity the Company settled with the remaining holders of 3.00% Convertible

Subordinated Notes. The conversion rate was adjusted to 8.9264 per $1,000 principal amount of 3.00%
convertible notes. Approximately $178,741,000 in aggregate principal amount of the 3.00% Convertible
Subordinated Notes was converted into 1,595,496 shares of common stock. The remaining 3.00% Convertible
Subordinated Notes, plus accrued interest, were settled in cash.

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 and commenced on 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

F-43

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

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 was 11.8599 shares of common stock per $1,000 principal amount of the
4.75% Convertible Subordinated Notes, subject to adjustment. This represented an initial conversion price of
approximately $84.32 per share of common stock. In November 2014, the Company adjusted the conversion
rate of the 4.75% Convertible Subordinated Notes from 11.8599 shares of its common stock per $1,000
principal amount of the notes to 12.2736 shares per $1,000 principal amount of the notes, which was effective
as of October 24, 2014. The adjustment was the result of the declaration of the 2014 Special Distribution.
This represented an adjusted conversion price of approximately $81.48 per share of common stock as of
December 31, 2014.

During 2015, the Company adjusted the conversion rate as a result of the declaration of each quarterly

dividend and the 2015 Special Distribution. As of December 31, 2015, the conversion rate of the 4.75%
Convertible Subordinated Notes was 13.0655 shares of the Company’s common stock per $1,000 principal
amount of the notes. This represented an adjusted conversion price of $76.54 per share of common stock as of
December 31, 2015. 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 adjusted conversion price per share of common stock on such last trading day,
which was approximately $104.14 per share after the adjustment from the 2015 special distribution
and quarterly dividend (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.

Upon conversion, if the Company elected to pay a sufficiently large portion of the conversion obligation

in cash, additional consideration beyond the gross proceeds received would be required.

Holders of the 4.75% Convertible Subordinated Notes were eligible to convert their notes during the year

ended December 31, 2015 and are eligible to convert their notes during the three months ending March 31,
2016, since the Stock Price Condition Conversion Clause was met during the applicable periods. As of

F-44

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

December 31, 2015, had the holders of the remaining outstanding 4.75% Convertible Subordinated Notes
converted their notes, the 4.75% Convertible Subordinated Notes would have been convertible into a
maximum of 1,960,896 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 canceled, 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.

In May and June 2014, certain holders of the 4.75% Convertible Subordinated Notes elected to convert a

total of $215,830,000 of the principal amount of the notes for 2,411,851 shares of the Company’s common
stock and $51,671,000 in cash, comprised of accrued interest, premium and cash paid in lieu of issuing shares
for certain note holders’ principal amount. As a result, the Company recognized a loss on debt extinguishment
of $46,973,000 for the year ended December 31, 2014 in its consolidated statement of operations. The loss on
debt extinguishment included the premium paid and the excess of the fair value of liability component of the
4.75% Convertible Subordinated Notes over its carrying amount, including debt discount and unamortized
debt issuance costs, in accordance with the accounting standard for convertible debt instruments that may be
settled in cash upon conversion (including partial cash settlement). In the Company’s consolidated statement
of cash ﬂows for the year ended December 31, 2014, the premium and cash paid in lieu of issuing shares to
settle a portion of the principal amount were included within net cash provided by ﬁnancing activities and the
accrued interest paid was included within net cash provided by operating activities.

In December 2015, certain holders of the 4.75% Convertible Subordinated Notes elected to convert a

total of $7,803,000 of the principal amount of the notes at a conversion rate of 13.0655 shares of the
Company’s common stock per $1,000 principal amount of the notes. The Company issued a total
101,947 shares of its common stock and paid approximately $1,000 in cash for residual shares in connection
with the conversions. The Company recorded a $289,000 loss on debt extinguishment as a result of the
conversions.

F-45

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

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)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$ 42,091

2014
$ 44,278

Liability component:

Principal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less debt discount and debt issuance costs, net(2) . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net carrying amount

$150,082
(3,961)
$146,121

$157,885
(12,656)
$145,229

(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 4.75% Convertible Subordinated Notes.

As of December 31, 2015, the remaining life of the 4.75% Convertible Subordinated Notes was

0.46 years.

The following table sets forth total interest expense recognized related to the 4.75% Convertible

Subordinated Notes for the years ended December 31 (in thousands):

Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount

2015
$ 7,501
428
8,060
$15,989

2014
$10,976
629
10,448
$22,053

Effective interest rate of the liability component

. . . . . . . . . . . . . . .

10.65%

10.88%

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 in 2009.
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. In May and June 2014, the Company amended the
Capped Call to provide that early exchanges of the 4.75% Convertible Subordinated Notes would not result in
the termination of a relative amount of the Capped Call if the Company did not exercise the Capped Call at
the time the 4.75% Convertible Subordinated Notes were exchanged. Instead, the Capped Call will remain
outstanding in its entirety. The amendment to the Capped Call had no impact to the Company’s consolidated
ﬁnancial statements for the years ended December 31, 2015 and 2014, 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.

Pursuant to the declaration of the special distribution in October 2014, the Company further amended the

Capped Call agreement to adjust the effective conversion price of the 4.75% Convertible Subordinated Notes
from $81.48 to $110.85 per share of common stock as of December 31, 2014. Pursuant to the declaration of
each quarterly dividend during 2015 and the declaration of the special distribution in September 2015, the
Company further amended the Capped Call agreement to adjust the effective conversion price of the 4.75%
Convertible Subordinated Notes from $76.54 to $104.14 per share of common stock as of December 31, 2015.

F-46

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

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 1,294,192 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 $76.54 or lower at the time of conversion and will receive less shares than the 1,294,192 share maximum
as described above for share prices in excess of $104.14 at the time of conversion than it would have received
at a share price of $104.14 (the Company’s beneﬁt from the Capped Call is capped at $104.14 and the beneﬁt
received begins to decrease above this price).

Senior Notes

The Company’s senior notes consisted of the following as of December 31 (in thousands):

5.375% Senior Notes due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . .
5.375% Senior Notes due 2022 . . . . . . . . . . . . . . . . . . . . . . . . . .
4.875% Senior Notes due 2020 . . . . . . . . . . . . . . . . . . . . . . . . . .
5.75% Senior Notes due 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.875% Senior Notes due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . .

Less amount representing debt issuance cost

. . . . . . . . . . . . . . . . .

2015
$1,000,000
750,000
500,000
500,000
1,100,000
3,850,000
(45,366)
$3,804,634

2014
$1,000,000
750,000
500,000
500,000
—
2,750,000
(32,954)
$2,717,046

2022 Senior Notes and 2025 Senior Notes

In November 2014, the Company issued $750,000,000 million aggregate principal amount of 5.375%
senior notes due January 1, 2022, and $500,000,000 million aggregate principal amount of 5.750% senior
notes due January 1, 2025, which are referred to as the ‘‘2022 Senior Notes’’ and ‘‘2025 Senior Notes’’,
respectively, and collectively, as the ‘‘2022 and 2025 Senior Notes’’. Interest on each series of the notes is
payable semi-annually in arrears on January 1 and July 1 of each year, commencing on July 1, 2015.

The 2022 and 2025 Senior Notes are unsecured and rank equal in right of payment to the Company’s
existing or future senior indebtedness and senior in right of payment to the Company’s existing and future
subordinated indebtedness. The 2022 and 2025 Senior Notes are effectively subordinated to all of the existing
and future secured debt, including debt outstanding under any bank facility or secured by any mortgage, to the
extent of the assets securing such debt. They are also structurally subordinated to any existing and future
indebtedness and other liabilities (including trade payables) of any of the Company’s subsidiaries.

The 2022 and 2025 Senior Notes are governed by an indenture between the Company and U.S. Bank
National Association, as trustee. The 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;

F-47

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

•

make investments; and

merge or consolidate with any other person.

Subject to compliance with the limitations described above, the Company may issue an unlimited
principal amount of additional notes at later dates under the same indenture as the 2022 and 2025 Senior
Notes. Any additional notes the Company issues under the indenture will be identical in all respects to the
2022 and 2025 Senior Notes except that the additional notes will have different issuance dates and may have
different issuance prices.

The Company is not required to make any mandatory redemption with respect to the 2022 and 2025

Senior Notes, however under certain circumstances as speciﬁed in the restrictions described above, the
Company may be required to offer to purchase the 2022 and 2025 Senior Notes.

At any time prior to January 1, 2018, the Company may on any one or more occasions redeem up to

35% of the aggregate principal amount of the 2022 Senior Notes (calculated giving effect to any issuance of
additional notes of such series) outstanding under the 2022 Senior Notes indenture, at a redemption price
equal to 105.375% of the principal amount of the 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 2022 Senior Notes issued under the 2022
indenture remains outstanding immediately after the occurrence of such redemption (excluding 2022 Senior
Notes held by the Company and its subsidiaries) and (ii) the redemption must occur within 90 days of the
date of the closing of such equity offerings.

On or after January 1, 2018, the Company may redeem all or a part of the 2022 Senior Notes, on any

one or more occasions, at the redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest thereon, if any, to, but not including, the applicable redemption date, if
redeemed during the twelve-month period beginning January 1 of the years indicated below:

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemption Price
of the 2022 Notes
104.031%
102.688%
101.344%
100.000%

In addition, at any time prior to January 1, 2018, the Company may redeem all or a part of the 2022
Senior Notes at a redemption price equal to 100% of the principal amount of 2022 Senior Notes redeemed
plus the applicable premium (the ‘‘2022 Senior Notes Applicable Premium’’) as of, and accrued and unpaid
interest, if any, to, but not including, the date of the redemption, subject to the rights of the holders of record
of 2022 Senior Notes on the relevant record date to receive interest due on the relevant interest payment date.
The 2022 Senior Notes Applicable Premium means the greater of:

•

1.0% of the principal amount of the 2022 Senior Notes;

the excess of: (a) the present value at such redemption date of (i) the redemption price of the 2022
Senior Notes at January 1, 2018 (such redemption price being set forth in the table as shown in the
above table), plus (ii) all required interest payments due on the 2022 Senior Notes through
January 1, 2018 (excluding accrued but unpaid interest, if any, to, but not including the, the
redemption date,) computed using a discount rate equal to the treasury rate as of such redemption
date plus 0.5 basis points; and

•

the principal amount of the 2022 Senior Notes.

F-48

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

At any time prior to January 1, 2018, the Company may on any one or more occasions redeem up to

35% of the aggregate principal amount of the 2025 Senior Notes (calculated giving effect to any issuance of
additional notes of such series) outstanding under the 2025 Senior Notes indenture, at a redemption price
equal to 105.750% of the principal amount of the 2025 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 (1) at least 65% of the aggregate principal amount of the 2025 Senior Notes issued under the
2025 Senior Notes indenture remains outstanding immediately after the occurrence of such redemption
(excluding 2025 Senior Notes held by the Company and its subsidiaries); and (2) the redemption must occur
within 90 days of the date of the closing of such equity offering.

On or after January 1, 2020, the Company may redeem all or a part of the 2025 Senior Notes, on any

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemption Price
of the 2025 Notes
102.875%
101.917%
100.958%
100.000%

In addition, at any time prior to January 1, 2020, the Company may also redeem all or a part of the 2025

Senior Notes at a redemption price equal to 100% of the principal amount of 2025 Senior Notes redeemed
plus the applicable premium (the ‘‘2025 Senior Notes Applicable Premium’’) as of, and accrued and unpaid
interest, if any, to, but not including, the redemption date, subject to the rights of holders of record of 2025
Senior Notes on the relevant record date to receive interest due on the relevant interest payment date. The
2025 Senior Notes Applicable Premium means the greater of:

•

1.0% of the principal amount of the 2025 Senior Notes;

the excess of: (a) the present value at such redemption date of (i) the redemption price of the 2025
Senior Notes at January 1, 2020 (such redemption price being set forth in the table as shown in the
above table), plus (ii) all required interest payments due on the 2025 Senior Notes through
January 1, 2020 (excluding accrued but unpaid interest, if any, to, but not including the, the
redemption date,) computed using a discount rate equal to the treasury rate as of such redemption
date plus 0.5 basis points; and

•

the principal amount of the 2025 Senior Notes.

As of December 31, 2015, debt issuance costs related to the 2022 and 2025 Senior Notes, net of

amortization, were $14,622,000.

2026 Senior Notes

In December 2015, the Company issued $1,100,000,000 million aggregate principal amount of 5.875% of

additional senior notes due January 15, 2026, which are referred to as the ‘‘2026 Senior Notes’’. Interest on
the notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on
July 15, 2016.

F-49

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

The 2026 Senior Notes are unsecured and rank equal in right of payment to the Company’s existing or
future senior indebtedness and senior in right of payment to the Company’s existing and future subordinated
indebtedness. The senior notes are effectively subordinated to all of the existing and future secured debt,
including debt outstanding under any bank facility or secured by any mortgage, to the extent of the assets
securing such debt. They are also structurally subordinated to any existing and future indebtedness and other
liabilities (including trade payables) of any of the Company’s subsidiaries.

The 2026 Senior Notes are governed by a supplemental indenture to the indenture between the Company
and U.S. Bank National Association, as trustee, that governs the Company’s 2022 and 2025 Senior Notes. The
supplemental 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.

The 2026 Senior Notes provided for a special mandatory redemption if the TelecityGroup acquisition was
not completed on or prior to November 29, 2016, or if, prior to such date, the TelecityGroup offer had lapsed
or been withdrawn for the purposes of the UK City Code on Takeovers and Mergers. In either case, the
Company would have been required to redeem all of the 2026 Senior Notes at a redemption price equal to
100% of the principal amount of the notes, plus accrued and unpaid interest to, but excluding, the redemption
date. The acquisition of TelecityGroup closed on January 15, 2016. As a result, the Company is no longer
subject to a mandatory redemption of the 2026 Senior Notes.

The 2026 Senior Notes also provide for optional redemption. At any time prior to January 15, 2019, the

Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the
2026 Senior Notes (calculated giving effect to any issuance of additional notes of such series) outstanding
under the 2026 Senior Notes indenture, at a redemption price equal to 105.875% of the principal amount of
the 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 2026 Senior Notes (calculated giving effect to any issuance of additional notes) issued under
the 2026 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.

F-50

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

On or after January 15, 2021, the Company may redeem all or a part of the 2026 Senior Notes, on any

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemption Price
of the 2026 Notes
102.938%
101.958%
100.979%
100.000%

In addition, at any time prior to January 15, 2021, the Company may redeem all or a part of the 2026
Senior Notes at a redemption price equal to 100% of the principal amount of 2026 Senior Notes redeemed
plus the applicable premium (the ‘‘2026 Senior Notes Applicable Premium’’) as of, and accrued and unpaid
interest, if any, to, but not including, the date of the redemption, subject to the rights of the holders of record
of 2026 Senior Notes on the relevant record date to receive interest due on the relevant interest payment date.
The 2026 Senior Notes Applicable Premium means the greater of:

•

1.0% of the principal amount of the 2022 Senior Notes;

the excess of: (a) the present value at such redemption date of (i) the redemption price of the 2022
Senior Notes at January 15, 2021 (such redemption price being set forth in the table as shown in the
above table), plus (ii) all required interest payments due on the 2026 Senior Notes through
January 15, 2021 (excluding accrued but unpaid interest, if any, to, but not including the, the
redemption date,) computed using a discount rate equal to the treasury rate as of such redemption
date plus 0.5 basis points; over (b) the principal amount of the 2026 Senior Notes, if greater.

As of December 31, 2015, debt issuance costs related to the 2026 Senior Notes, net of amortization,

were $16,904,000.

2020 Senior Notes and 2023 Senior Notes

In March 2013, the Company issued $1,500,000,000 aggregate principal amount of senior notes, which

consist of $500,000,000 aggregate principal amount of 4.875% senior notes due April 1, 2020 (the ‘‘2020
Senior Notes’’) and $1,000,000,000 aggregate principal amount of 5.375% senior notes due April 1, 2023 (the
‘‘2023 Senior Notes’’). Interest on both the 2020 Senior Notes and the 2023 Senior Notes is payable
semi-annually on April 1 and October 1 of each year and commenced on October 1, 2013.

The 2020 Senior Notes and the 2023 Senior Notes are governed by separate indentures dated March 5,

2013, between the Company, as issuer, and U.S. Bank National Association, as trustee (the ‘‘Senior Notes
Indentures’’). The Senior Notes Indentures contain 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;

F-51

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

•

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 2020 Senior
Notes and the 2023 Senior Notes are unsecured and rank equal in right of payment with the Company’s
existing or future senior unsecured debt and senior in right of payment with the Company’s existing and
future subordinated debt. The 2020 Senior Notes and the 2023 Senior Notes are junior to the Company’s
secured indebtedness and guaranteed indebtedness of its subsidiaries.

At any time prior to April 1, 2016, the Company may on any one or more occasions redeem up to 35%

of the aggregate principal amount of the 2020 Senior Notes outstanding at a redemption price equal to
104.875% of the principal amount of the 2020 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 2020 Senior Notes issued under the
2020 Senior Notes indenture remains outstanding immediately after the occurrence of such redemption
(excluding the 2020 Senior Notes held by the Company and its subsidiaries); and (ii) the redemption must
occur within 90 days of the date of the closing of such equity offering.

On or after April 1, 2017, the Company may redeem all or a part of the 2020 Senior Notes, on any one

or more occasions, at the redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon, if any, to, but not including, the applicable redemption date, if
redeemed during the twelve-month period beginning on April 1 of the years indicated below:

2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemption Price of
the 2020 Senior Notes
102.438%
101.219%
100.000%

At any time prior to April 1, 2017, the Company may also redeem all or a part of the 2020 Senior Notes

at a redemption price equal to 100% of the principal amount of the 2020 Senior Notes redeemed plus an
applicable premium (the ‘‘2020 Senior Notes Applicable Premium’’), and accrued and unpaid interest, if any,
to, but not including, the date of redemption (the ‘‘2020 Senior Notes Redemption Date’’). The 2020 Senior
Notes Applicable Premium means the greater of:

•

1.0% of the principal amount of the 2020 Senior Notes; and

the excess of: (a) the present value at such redemption date of (i) the redemption price of the 2020
Senior Notes at April 1, 2017 as shown in the above table, plus (ii) all required interest payments
due on the 2020 Senior Notes through April 1, 2017 (excluding accrued but unpaid interest, if any,
to, but not including the 2020 Senior Notes Redemption Date), computed using a discount rate equal
to the yield to maturity of the U.S. Treasury securities with a constant maturity most nearly equal to
the period from the 2020 Senior Notes Redemption Date to April 1, 2017, plus 0.50%; over (b) the
principal amount of the 2020 Senior Notes.

At any time prior to April 1, 2016, the Company may on any one or more occasions redeem up to 35%

of the aggregate principal amount of the 2023 Senior Notes outstanding at a redemption price equal to
105.375% of the principal amount of the 2023 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 2023 Senior Notes issued under the
2023 Senior Notes indenture remains outstanding immediately after the occurrence of such redemption

F-52

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

(excluding the 2023 Senior Notes held by the Company and its subsidiaries); and (ii) the redemption must
occur within 90 days of the date of the closing of such equity offering.

On or after April 1, 2018, the Company may redeem all or a part of the 2023 Senior Notes, on any one

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemption Price of
the 2023 Senior Notes
102.688%
101.792%
100.896%
100.000%

At any time prior to April 1, 2018, the Company may also redeem all or a part of the 2023 Senior Notes

at a redemption price equal to 100% of the principal amount of the 2023 Senior Notes redeemed plus an
applicable premium (the ‘‘2023 Senior Notes Applicable Premium’’), and accrued and unpaid interest, if any,
to, but not including, the date of redemption (the ‘‘2023 Senior Notes Redemption Date’’). The 2023 Senior
Notes Applicable Premium means the greater of:

•

1.0% of the principal amount of the 2023 Senior Notes; and

the excess of: (a) the present value at such redemption date of (i) the redemption price of the 2023
Senior Notes at April 1, 2018 as shown in the above table, plus (ii) all required interest payments
due on the 2023 Senior Notes through April 1, 2018 (excluding accrued but unpaid interest, if any,
to, but not including the 2023 Senior Notes Redemption Date), computed using a discount rate equal
to the yield to maturity of the U.S. Treasury securities with a constant maturity most nearly equal to
the period from the 2023 Senior Notes Redemption Date to April 1, 2018, plus 0.50%; over (b) the
principal amount of the 2023 Senior Notes.

Debt issuance costs related to the 2020 Senior Notes and 2023 Senior Notes, net of amortization, were

$13,865,000 as of December 31, 2015.

7.00% Senior Notes

In July 2011, the Company issued $750,000,000 aggregate principal amount of 7.00% Senior Notes due
July 15, 2021 (the ‘‘7.00% Senior Notes’’). Interest was payable semi-annually in arrears on January 15 and
July 15 of each year and commenced on January 15, 2012. The indenture governing the 7.00% senior notes
permitted the Company to redeem the 7.00% senior notes at the redemption prices set forth in the 7.00%
senior notes indenture plus accrued and unpaid interest to, but not including the redemption price.

In December 2014, the Company redeemed the 7.00% Senior Notes and paid $866,861,000 in cash
including the principal amount of $750,000,000 plus a premium of $93,965,000 and accrued and unpaid
interest of $22,896,000. During the three months of December 31, 2014, the Company recognized a loss on
debt extinguishment of $103,273,000, including the unamortized debt issuance costs and the redemption
premium.

F-53

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

Loss on Debt Extinguishment

During the year ended December 31, 2015, the Company recorded $289,000 of loss on debt

extinguishment as a result of the conversions of the 4.75% Convertible Subordinated Notes.

During the year ended December 31, 2014, the Company recorded $156,990,000 of loss on debt
extinguishment comprised of (i) $103,273,000 of loss on debt extinguishment from the redemption of the
7.00% Senior Notes, which included the $93,965,000 redemption premium that was paid in cash and
$9,307,000 related to the write-off of unamortized debt issuance costs, (ii) $51,183,000 related to the
exchanges of the 3.00% Convertible Subordinated Notes and 4.75% Convertible Subordinated Notes and
(iii) $2,534,000 as a result of the prepayment and termination of the U.S. Term Loan and the U.S. Revolving
Credit Line.

During the year ended December 31, 2013, the Company recorded $108,501,000 of loss on debt

extinguishment comprised of (i) $93,602,000 loss on debt extinguishment from the redemption of the 8.125%
Senior Notes, which included the $80,925,000 applicable premium that was paid in cash, $8,927,000 related
to the write-off of unamortized debt issuance costs and $3,750,000 of other transaction-related fees,
(ii) $13,189,000 from the new leases for the London 4 and 5 IBX data centers that replaced the existing leases
and (iii) $1,710,000 from an amendment of the New York 5 and 6 IBX data center lease.

Maturities of Debt Facilities

The following table sets forth maturities of the Company’s debt, including loans payable, convertible debt

and senior notes, gross of debt issuance costs and discounts, as of December 31, 2015 (in thousands):

Year ending:

$ 920,125
51,048
47,615
339,329
503,224
3,384,427
$5,245,768

Fair Value of Debt Facilities

The following table sets forth the estimated fair values of the Company’s mortgage, loans payable,
convertible debt, senior notes and revolving credit line, including current maturities, as of December 31
(in thousands):

Mortgage and loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior notes
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving credit line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$ 916,602
151,997
3,954,000
325,617

2014
$ 553,045
162,159
2,790,023
—

The fair value of the mortgage, loans payable and convertible debt, which were not publicly traded, was
estimated by considering the Company’s credit rating, current rates available to the Company for debt of the
same remaining maturities and terms of the debt (level 2). The fair value of the senior notes, which were
traded in the public debt market, was based on quoted market prices (level 1).

F-54

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt Facilities − (continued)

Interest Charges

The following table sets forth total interest costs incurred and total interest costs capitalized for the years

ended December 31 (in thousands):

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest capitalized . . . . . . . . . . . . . . . . . . . . . . . . .
Interest charges incurred . . . . . . . . . . . . . . . . . . .

2015
$299,055
10,943
$309,998

2014
$270,553
19,004
$289,557

2013
$248,792
10,608
$259,400

10. Redeemable Non-Controlling Interests

The following table provides a summary of the activities of the Company’s redeemable non-controlling

interests (in thousands):

Balance as of December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable to redeemable non-controlling interest
. . . . . . . . . . . . . . . .
Other comprehensive income attributable to redeemable non-controlling interests. .
Increase in redemption value of non-controlling interests . . . . . . . . . . . . . . . . . .
Impact of foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of vested and outstanding ALOG stock options . . . . . . . . . . . . . . . . . .
Purchase price of redeemable non-controlling interests . . . . . . . . . . . . . . . . . . .
Balances as of December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 123,902
(1,179)
1,810
90,913
1,724
8,459
(225,629)
—

11. 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, 2015 and 2014, the Company had no preferred stock issued
and outstanding.

Common Stock

In November 2015, the Company issued and sold 2,994,792 shares of its common stock in a public
offering pursuant to a registration statement and a related prospectus and prospectus supplement, in each case
ﬁled with the Securities and Exchange Commission. The shares issued and sold included the full exercise of
the underwriters’ option to purchase 390,625 additional shares. The Company received net proceeds of
approximately $829,496,000, after deducting underwriting discounts and commissions of $32,344,000 and
estimated offering expenses of $660,000.

In December 2015, certain holders of the Company’s 4.75% Convertible Subordinated Notes elected to
convert a portion of the notes into 101,947 shares of the Company’s common stock. See convertible debt in
Note 9 for additional information.

As of December 31, 2015, the Company had reserved the following shares of authorized but unissued

shares of common stock for future issuances:

Conversion of 4.75% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . . . .
Common stock options and restricted stock units . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock employee purchase plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,960,896
5,848,288
3,577,911
11,387,095

F-55

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Stockholders’ Equity − (continued)

Accumulated Other Comprehensive Loss

The components of the Company’s accumulated other comprehensive loss consisted of the following as

of December 31, 2015 (in thousands):

Foreign currency translation adjustment (‘‘CTA’’) loss . . .
Unrealized gain (loss) on cash ﬂow hedges(1)
. . . . . . . . .
Net investment hedge CTA gain(1) . . . . . . . . . . . . . . . . .
Unrealized gain (loss) on available for sale securities(2)
. .
Net actuarial gain (loss) on deﬁned beneﬁt plans(3)
. . . . .

Balance as of
December 31,
2014
$(336,946)
6,603
—
(99)
(2,001)
$(332,443)

Net
Change
$(186,763)
4,550
4,484
(40)
1,153
$(176,616)

Balance as of
December 31,
2015
$(523,709)
11,153
4,484
(139)
(848)
$(509,059)

(1) Refer to Note 6 for a discussion of the amounts reclassiﬁed from accumulated other comprehensive loss

to net income (loss).

(2) The realized gains and losses reclassiﬁed from accumulated other comprehensive loss to net income

(loss) were insigniﬁcant for the year ended December 31, 2015.

(3) The Company has a deﬁned beneﬁt pension plan covering all employees in one country where such plans

are mandated by law. The Company does not have any deﬁned beneﬁt plans in any other countries. The
unamortized gain (loss) on deﬁned beneﬁt plans includes gains or losses resulting from a change in the
value of either the projected beneﬁt obligation or the plan assets resulting from a change in an actuarial
assumption, net of amortization.

Changes in foreign currencies can have a signiﬁcant impact to the Company’s consolidated balance sheets

(as evidenced above in the Company’s foreign currency translation gain or loss), as well as its consolidated
results of operations, as amounts in foreign currencies are generally translating into more U.S. dollars when
the U.S. dollar weakens or less U.S. dollars when the U.S. dollar strengthens. At December 31, 2015, the
U.S. dollar was generally stronger relative to certain of the currencies of the foreign countries in which the
Company operates. This overall strength of the U.S. dollar had an overall negative impact on the Company’s
consolidated ﬁnancial position because the foreign denominations translated into less U.S. dollars as evidenced
by an increase in foreign currency translation loss for the year ended December 31, 2015 compared to the
year ended December 31, 2014 as reﬂected in the above table. In future periods, the volatility of the
U.S. dollar as compared to the other currencies in which the Company does business could have a signiﬁcant
impact on its consolidated ﬁnancial position and results of operations including the amount of revenue that the
Company reports in future periods.

Share Repurchase Program

2013 Share Repurchase Program

In December 2013, the Company’s Board of Directors (the ‘‘Board’’) approved a share repurchase

program (the ‘‘2013 Share Repurchase Program’’) to repurchase up to $500,000,000 in value of the
Company’s common stock in the open market or private transactions through December 31, 2014. The 2013
Share Repurchase Program was designed to return value to the Company’s shareholders and minimize dilution
from stock issuances.

F-56

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Stockholders’ Equity − (continued)

During the year ended December 31, 2014, the Company repurchased a total of 1,517,743 shares of its

common stock in the open market at an average price of $196.32 per share for total consideration of
$297,958,000 under the 2013 Share Repurchase Program. During the year ended December 31, 2013, the
Company repurchased a total of 288,739 shares of its common stock in the open market at an average price of
$169.01 per share for total consideration of $48,799,000 under the 2013 Share Repurchase Program. The 2013
Share Repurchase Program expired on December 31, 2014.

During the year ended December 31, 2015, the Company re-issued 7,348 shares of its treasury stock with

a total value of $1,807,000 related to the settlement of restricted stock units and 11,784 shares of its treasury
stock with a total value of $3,546,000 related to the exchange and conversion of the 4.75% Convertible
Subordinated Notes (see Note 9). During the year ended December 31, 2014, the Company re-issued a total of
1,752,615 shares of its treasury stock with a total value of $345,858,000 primarily related to the exchange and
conversions of the 4.75% Convertible Subordinated Notes and the exchanges and settlement of the 3.00%
Convertible Subordinated Notes (see Note 9).

2011 Share Repurchase Program

In November 2011, the Board approved a share repurchase program (the ‘‘2011 Share Repurchase
Program’’) to repurchase up to $250,000,000 in value of the Company’s common stock in the open market or
private transactions through December 31, 2012. The 2011 Share Repurchase Program was designed to return
value to the Company’s shareholders and minimize dilution from stock issuances.

During the years ended December 31, 2012 and 2011, the Company repurchased a total of

131,489 shares and 870,421 shares, respectively, of its common stock in the open market at an average price
of $101.64 and $99.57 per share for total consideration of $100,030,000 under the 2011 Share Repurchase
Program. The 2011 Share Repurchase Program expired on December 31, 2012.

During the year ended December 31, 2014, the Company re-issued a total of 355,477 shares of its

treasury stock with a total value of $66,424,000, primarily related to the exchange and conversions of the
4.75% Convertible Subordinated Notes (see Note 9). During the year ended December 31, 2013, the Company
re-issued a total of 8,266 shares of its treasury stock with a total value of $811,000, primarily related to the
settlement of restricted stock units. During the year ended December 31, 2012, the Company re-issued a total
of 638,167 shares of its treasury stock with a total value of $63,354,000, primarily related to the settlement of
the 2.50% Convertible Subordinated Notes (see Note 9).

Special Distributions

In September 2015, the Company’s Board of Directors declared a special distribution of $627,000,000, or

approximately $10.95 per share (the ‘‘2015 Special Distribution’’), to its common stockholders. The 2015
Special Distribution represents an amount that includes the sum of: (1) foreign earnings and proﬁts repatriated
as dividend income in 2015; (2) taxable income in 2015 from depreciation recapture in respect of accounting
method changes commenced in the Company’s pre-REIT period; and (3) certain other items of taxable
income.

The 2015 Special Distribution was paid on November 10, 2015 to the Company’s common stockholders

of record as of the close of business on October 8, 2015. Common stockholders had the option to elect to
receive payment of the 2015 Special Distribution in the form of stock or cash. The number of shares
distributed was determined based upon common stockholder elections and the average closing price of the
Company’s common stock on the three trading days commencing on November 3, 2015 or $297.03 per share.
As such, the Company issued 1,688,411 shares of its common stock and paid $125,486,000 in connection with
the 2015 Special Distribution.

F-57

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Stockholders’ Equity − (continued)

In October 2014, the Company’s Board of Directors declared a special distribution of $416,000,000, or
approximately $7.57 per share (the ‘‘2014 Special Distribution’’), to its common stockholders in connection
with the Company’s planned conversion to a REIT. The 2014 Special Distribution was paid on November 25,
2014 to the Company’s common stockholders of record as of the close of business on October 27, 2014.
Common stockholders had the option to elect to receive payment of the 2014 Special Distribution in the form
of stock or cash, with the total cash payment to all stockholders limited to no more than 20% of the total
distribution. The number of shares distributed was determined based upon common stockholder elections and
the average closing price of the Company’s common stock on the three trading days commencing on
November 18, 2014 or $224.45 per share. As such, the Company issued 1,482,419 shares of its common stock
and paid $83,266,000 in connection with the 2014 Special Distribution.

Shares issued in connection with the 2015 Special Distribution and the 2014 Special Distribution impact

weighted average shares outstanding from the date of issuance, thus impacting the Company’s earnings per
share data prospectively from the distribution date.

Dividends

During the year ended December 31, 2015, the Company’s Board of Directors declared quarterly cash

dividends of $1.69 per share on October 28, July 29, May 7 and February 19, 2015, with record dates of
December 9, August 26, May 27 and March 11, 2015, respectively, and payment dates of December 16,
September 16, June 17 and March 25, 2015, respectively. The Company paid a total of $393,584,000 in cash
dividends during the year ended December 31, 2015.

In addition, as of December 31, 2015, for dividends and special distributions attributed to the

RSU awards, the Company recorded a short term dividend payable of $13,674,000 and a long term dividend
payable of $13,394,000 for the restricted stock units that have not yet vested (See Note 12).

12. Stock-Based Compensation

ALOG Equity Awards

In July 2011, ALOG, in which the Company had an indirect controlling interest (see Note 2), granted

885,840 stock options to purchase common shares of ALOG to certain of ALOG’s employees with a
weighted-average exercise price of approximately $6.35 and a weighted-average fair value of approximately
$1.53 (the ‘‘2011 ALOG Stock Options’’). The 2011 ALOG Stock Options were canceled in December 2012
and replaced with a new grant of stock options for 18,421,648 shares of which stock options for
4,711,808 shares were immediately vested (the ‘‘2012 ALOG Stock Options’’). The 2012 ALOG Stock
Options were accounted for as liability-classiﬁed awards under the accounting standard for share-based
payments and were be re-measured each reporting period prospectively until the underlying shares were
settled. Under certain circumstances, the 2012 ALOG Stock Options were eligible for net cash settlement by
the stock option holders.

In July 2014, the Company paid $8,459,000 in cash to settle all vested and outstanding stock options to

purchase common shares of ALOG that were held by ALOG employees.

Equinix Equity Awards

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 are
canceled 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%

F-58

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Stock-Based Compensation − (continued)

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 7 years from the grant date, subject to continuous service of the optionee. Equity
awards granted under the 2000 Equity Incentive Plan generally vest over 4 years. As of December 31, 2015,
the Company had reserved a total of 16,636,172 shares for issuance under the 2000 Equity Incentive Plan of
which 3,628,457 were still available for grant. 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 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 Option Plan, and replaced them with an automatic restricted
stock unit grant mechanism under the 2000 Equity Incentive Plan. As of December 31, 2015, the Company
had reserved 594,403 shares for issuance under the 2000 Director Option Plan of which 505,646 were still
available for grant. 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, 2015, the Company had reserved a total of 1,494,275 shares for issuance
under the 2001 Supplemental Stock Plan, of which 260,498 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.

The 1998 Stock Plan, 2000 Equity Incentive Plan, 2000 Director Option Plan and 2001 Supplemental

Stock Plan are collectively referred to as the ‘‘Equity Compensation Plans.’’

F-59

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Stock-Based Compensation − (continued)

Stock Options

Stock option activity under the Equity Compensation Plans is summarized as follows:

Stock options outstanding at December 31, 2012 . . . . . .
Stock options exercised . . . . . . . . . . . . . . . . . . . . . .
Stock options canceled . . . . . . . . . . . . . . . . . . . . . .
Stock options outstanding at December 31, 2013 . . . . . .
Stock options exercised . . . . . . . . . . . . . . . . . . . . . .
Additional shares granted due to special distribution . .
Stock options outstanding at December 31, 2014 . . . . . .
Stock options exercised . . . . . . . . . . . . . . . . . . . . . .
Additional shares granted due to special distribution . .
Stock options expired . . . . . . . . . . . . . . . . . . . . . . .
Stock options outstanding at December 31, 2015 . . . . . .
Stock options vested and exercisable at December 31,

Number of
shares
outstanding
296,529
(147,819)
(655)
148,055
(71,780)
1,659
77,934
(41,889)
1,454
(250)
37,249

Weighted
average
exercise
price
per share
$68.68
63.66
3.06
73.99
72.44
—
73.84
64.18
—
41.12
82.06

2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37,249

82.06

Weighted
average
remaining
contractual
life (years)

Aggregate
intrinsic
value(1)
(dollars in
thousands)

1.72

$8,208

8,208

(1) The aggregate intrinsic value is calculated as the difference between the market value of the stock as of

December 31, 2015 and the exercise price of the option.

The following table summarizes information about outstanding stock options as of December 31, 2015:

Range of exercise prices
$28.56 to $54.22 . . . . . . . . . . . . . . . . . . .
$80.84 to $81.23 . . . . . . . . . . . . . . . . . . .
$88.56 to $89.23 . . . . . . . . . . . . . . . . . . .

Outstanding
Weighted
average
remaining
contractual
life (years)
2.88
1.21
2.35
1.72

Exercisable

Weighted-
average
exercise
price
$35.83
81.13
88.63
82.06

Number of
shares
1,631
21,183
14,435
37,249

Weighted-
average
exercise
price
$35.83
81.13
88.63
82.06

Number of
shares
1,631
21,183
14,435
37,249

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

2015
$ —

2014

2013

485

exercised(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,198

9,227

19,385

(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.

F-60

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Stock-Based Compensation − (continued)

Restricted Stock Units

Since 2008, the Company primarily grants restricted stock units to its employees, including executives
and non-employee directors, in lieu of stock options. The Company generally grants restricted stock units that
have a service condition only or have both a service and performance condition. Each restricted stock 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, December 31, 2012 . .
Restricted stock units granted . . . . . . . . . . . . . . . . .
Restricted stock units released, vested . . . . . . . . . . .
Restricted stock units canceled . . . . . . . . . . . . . . . .
Restricted shares outstanding, December 31, 2013 . . . . .
Restricted stock units granted . . . . . . . . . . . . . . . . .
Additional shares granted due to special distribution . .
Restricted stock units released, vested . . . . . . . . . . .
Restricted stock units canceled . . . . . . . . . . . . . . . .
Restricted shares outstanding, December 31, 2014 . . . . .
Restricted stock units granted . . . . . . . . . . . . . . . . .
Additional shares granted due to special distribution .
Restricted stock units released, vested . . . . . . . . . . .
Special distribution shares released . . . . . . . . . . . . .
Restricted stock units canceled . . . . . . . . . . . . . . . .
Special distribution shares canceled . . . . . . . . . . . . .
Restricted shares outstanding, December 31, 2015 . . . . .

Number of
shares
outstanding
1,583,840
775,029
(738,767)
(110,720)
1,509,382
803,692
48,171
(703,393)
(253,878)
1,403,974
711,990
51,432
(623,554)
(19,966)
(103,922)
(3,516)
1,416,438

Weighted-
average
grant date
fair value
per share
$115.22
204.20
199.14
138.27
122.05
190.90
224.45
201.85
179.71
114.56
236.89
297.03
173.79
227.99
198.67
235.43
148.53

Weighted-
average
remaining
contractual
life (years)

Aggregate
intrinsic
value(1)
(dollars in
thousands)

1.21

$428,331

(1) The intrinsic value is calculated based on the market value of the stock as of December 31, 2015.

The total fair value of restricted stock units vested and released during the years ended December 31,

2015, 2014 and 2013 was $157,605,000, $141,980,000 and $147,119,000.

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 increased on January 1 each year,
beginning in 2005 and ending in 2014 by the lesser of 2% of the shares of common stock then outstanding or
500,000 shares. Effective November 25, 2014, 3,197 shares were added to the 2004 Purchase Plan,
representing an anti-dilutive adjustment pursuant to the 2014 Special Distribution. Effective November 10,
2015, 9,020 shares were added to the 2004 Purchase Plan, representing an anti-dilutive adjustment pursuant to
the 2015 Special Distribution. As of December 31, 2015, a total of 3,577,911 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

F-61

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Stock-Based Compensation − (continued)

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 2024
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.

The Company provides the following disclosures for the 2004 Purchase Plan as of December 31 (dollars,

except shares):

Weighted-average purchase price per share . . . . . . . . .
Weighted average grant-date fair value per share of

shares purchased . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares purchased . . . . . . . . . . . . . . . . . . .

2015
$ 150.13

2014
$ 144.95

2013
$ 108.97

57.63
182,175

53.37
166,384

41.30
214,985

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) . . . . . . . . . . . . . . . . . . .

2015
2.65 − 2.81%
31%
0.26%
1.25

2014

0%
34%
0.19%
1.25

2013

0%
41%
0.37%
1.25

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 conditions or performance conditions,
stock-based compensation expense is recognized on a straight-line basis over the requisite service period for
each vesting tranche of the award.

In October 2014, the Compensation Committee approved amendments to the terms of all outstanding
restricted stock units (‘‘RSUs’’) granted prior to January 1, 2014 to provide for dividend equivalent rights
(‘‘DERs’’) in the event of future dividends paid on the Company’s common stock. The Compensation
Committee also approved an adjustment to outstanding stock options, including those under the Company’s
Employee Stock Purchase Plan (‘‘ESPP’’), to ensure that the cash portion of the 2014 Special Distribution
would not negatively impact the intrinsic value of the options. Pursuant to the accounting standard for stock
compensation, these actions affecting the terms of the awards are considered modiﬁcations for accounting
purposes that resulted in incremental stock-based compensation expenses and will be recognized over the
requisite service period for each vesting tranche of the award. The total charges associated with this
modiﬁcation are insigniﬁcant to the ﬁnancial statements.

As of December 31, 2015, the total stock-based compensation cost related to unvested equity awards not

yet recognized, net of estimated forfeitures, totaled $201,206,000 which is expected to be recognized over a
weighted-average period of 2.08 years.

F-62

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Stock-Based Compensation − (continued)

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 years ended December 31 (in
thousands):

. . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenues
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . .

2015
9,878
36,847
86,908
$133,633

2014
8,511
30,084
79,395
$117,990

2013
7,855
26,538
68,547
$102,940

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 plan . . . . . . . . . . . . . . . . .

2015
1,679
124,512
7,442
$133,633

2014
4,917
104,235
8,838
$117,990

2013
3,456
88,411
11,073
$102,940

Stock-based compensation for stock options for the year ended December 31, 2015 included $1,191,000

in as a result of the Company’s acquisition of Bit-isle in November 2015. During the years ended
December 31, 2015, 2014 and 2013, the Company capitalized $2,987,000, $3,958,000 and $3,305,000,
respectively, of stock-based compensation expense as construction in progress in property, plant and
equipment.

13. Income Taxes

In September 2012, the Company announced that its Board of Directors approved a plan for Equinix to

pursue conversion to a REIT. On December 23, 2014, its Board of Directors formally approved its conversion
to a REIT effective on January 1, 2015. The Company completed the implementation of the REIT conversion
in 2014, and, as a result, the Company elected to be treated as a REIT for federal income tax purposes
effective January 1, 2015.

In May 2015, the Company received a favorable PLR from the IRS in connection with the Company’s

conversion to a REIT for federal income tax purposes. As a result, the Company may deduct the distributions
made to its shareholders from taxable income generated by the Company and its QRSs. The Company’s
dividends paid deduction generally eliminates the taxable income of the Company and its QRSs, resulting in
no U.S. income tax due. However, the TRSs will continue to be subject to income taxes on any taxable
income generated by them. In addition, the foreign operations of the Company will continue to be subject to
local income taxes regardless of whether the foreign operations are operated as a QRS or a TRS.

Income (loss) before income taxes is attributable to the following geographic locations for the years

ended December 31, (in thousands):

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes and income (loss)

2015
$123,153
87,845

2014
$ (46,876)
131,609

2013
$ (28,362)
140,641

attributable to redeemable non-controlling interests . .

$210,998

$ 84,733

$112,279

F-63

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Income Taxes − (continued)

The tax beneﬁt (expenses) for income taxes consisted of the following components for the years ended

December 31, (in thousands):

Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal

Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal
Provision for income taxes . . . . . . . . . . . . . . . . . . . .

2015

2014

2013

$ (85,352)
(3,984)
(27,090)
(116,426)

$ (98,445)
(16,243)
(31,844)
(146,532)

$(100,035)
(15,260)
(29,377)
(144,672)

87,801
4,600
801
93,202
$ (23,224)

(177,877)
(21,539)
489
(198,927)
$(345,459)

111,721
17,044
(249)
128,516
$ (16,156)

State and foreign taxes not based on income are included in general and administrative expenses and the

aggregate amounts were insigniﬁcant for the years ended December 31, 2015, 2014 and 2013.

The Company is entitled to a deduction for federal and state tax purposes with respect to employee

equity award activity. The reduction in income tax payable related to windfall tax beneﬁts for stock-based
compensation awards has been reﬂected as an adjustment to additional paid-in capital. For the years ended
December 31, 2015, 2014 and 2013, the beneﬁts arising from employee equity award activity that resulted in
an adjustment to additional paid-in capital were approximately $30,000, $18,561,000 and $25,638,000,
respectively. The amount of beneﬁts for 2015 is signiﬁcantly lower than the prior years due to the zero
effective U.S. tax rate that applies to the REIT as the Company distributed 100% of its U.S. taxable income
for 2015.

The ﬁscal 2015, 2014 and 2013 income tax 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 and local taxes . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets generated in current year not

beneﬁted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign income tax rate differential . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . .
Foreign ﬁnancing beneﬁts . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions reserve . . . . . . . . . . . . . . . . .
Statutory rate change due to REIT conversion . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
. . . . . . . . . . . . . . . . . . . .
Total income tax expense

2015
$(73,849)
945

(4,916)
30,387
(14,252)
(3,922)
710
2,592
(3,191)
45,823
(3,551)
$(23,224)

2014
$ (29,657)
1,370

(3,311)
20,002
(1,274)
(4,496)
1,655
2,981
(463)
(324,142)
(8,124)
$(345,459)

2013
$(39,298)
7,435

(4,777)
21,392
(2,525)
(3,273)
1,362
4,303
2,952
—
(3,727)
$(16,156)

The Company had not previously provided for deferred taxes on the excess of the ﬁnancial reporting over

the tax basis in its investments in foreign subsidiaries that are essentially permanent in duration because the

F-64

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Income Taxes − (continued)

Company intended to reinvest the earnings outside the U.S. for an indeﬁnite period of time. As a result of the
Company’s conversion to a REIT effective January 1, 2015, it is no longer the Company’s intent to
indeﬁnitely reinvest undistributed foreign earnings from its operations in Europe and Canada. However, no
deferred tax liability has been recognized to account for this change because the expected recovery of the
basis difference will not result in taxes in the post-REIT conversion periods. As it continues to qualify as a
REIT, the Company will not incur U.S. tax liability on the future repatriation of the foreign earnings and
proﬁts of the above noted jurisdictions due to the zero tax rate that will apply provided the Company
distributes 100% of its taxable income. The Company will continue to reinvest its undistributed foreign
earnings in jurisdictions other than Europe indeﬁnitely. The foreign withholding taxes are expected to be
immaterial if these undistributed foreign earnings are distributed.

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):

Deferred tax assets:
Reserves and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized currency gains/losses . . . . . . . . . . . . . . . . . . . . . . . . . .
Others, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized currency gains/losses . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets fair value step-up . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

$ 13,013
1,459
10,656
18
34,457
59,603
(29,894)
29,709

(3,365)
—
(5,683)
(60,133)
(69,181)
$(39,472)

$ 11,952
1,185
—
—
27,687
40,824
(27,181)
13,643

(78,261)
(502)
(7,210)
(28,433)
(114,406)
$(100,763)

The tax basis of REIT assets, excluding investments in TRSs, is greater than the amounts reported

for such assets in the accompanying consolidated balance sheet by approximately $984,400,000 at
December 31, 2015.

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 taxable income and tax planning strategies, management concluded that valuation
allowances were required in certain foreign jurisdictions. A valuation allowance continues to be 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 EMEA and Asia-Paciﬁc regions, as well as two entities in Brazil. The
operations in these jurisdictions have a history of signiﬁcant losses as of December 31, 2015. As such,
management does not believe these operations have established a sustained history of proﬁtability and that a
valuation allowance is, therefore, necessary.

F-65

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Income Taxes − (continued)

Changes in the valuation allowance for deferred tax assets for the years ended December 31, 2015, 2014

and 2013 are as follows (in thousands):

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized into income . . . . . . . . . . . . . . . . . . . . .
Current Increase (Decrease) . . . . . . . . . . . . . . . . . . .
NOL and tax credit expiration . . . . . . . . . . . . . . . . .
Translation adjustment
. . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$27,181
(710)
4,513
—
(1,090)
$29,894

2014
$31,058
(1,655)
721
238
(3,181)
$27,181

2013
$ 44,868
(1,362)
(10,156)
11
(2,303)
$ 31,058

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 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
during the year ended December 31, 2015. In addition, the net operating loss acquired in the Switch and Data
acquisition in 2010 is subject to the Section 382 limitation; however, the Company has determined that none
of the acquired net operating losses will expire unused as a result of the limitation.

The Company utilized all of its net operating loss carryforwards that were not subject to the limitation
under Section 382 as discussed above for federal income tax purposes during the year ended December 31,
2013. The Company’s U.S. operations generated signiﬁcant taxable income (versus book income) for the years
ended December 31, 2015 and 2014 primarily due to the change in the tax method for depreciation of the
Company’s property, plant and equipment. As the result of announcing its plan to pursue a REIT conversion,
the Company changed its methods of depreciating and amortizing various data center assets to methods that
are more consistent with the characterization of such assets as real property for REIT purposes. The change in
the depreciation method resulted in the recapture of depreciation expense deducted in prior years and a much
smaller amount of depreciation expense for the years ended December 31, 2015 and 2014.

F-66

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Income Taxes − (continued)

The Company’s net operating loss carryforwards for federal, state and foreign tax purposes which expire,

if not utilized, at various intervals from 2015, are outlined below (in thousands):

Expiration Date
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 to 2019 . . . . . . . . . . . . . . . . . . . . . . . . .
2020 to 2022 . . . . . . . . . . . . . . . . . . . . . . . . .
2023 to 2025 . . . . . . . . . . . . . . . . . . . . . . . . .
2026 to 2028 . . . . . . . . . . . . . . . . . . . . . . . . .
2029 to 2031 . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Federal(1)
—
$
—
213,390
26,838
12,186
—
—
$252,414

State(1)
$12,793
190
—
4,005
—
3,330
—
$20,318

Foreign

1,464
32,464
11,798
9,611
—
—
152,073
$207,410

Total
$ 14,257
32,654
225,188
40,454
12,186
3,330
152,073
$480,142

(1) The total amount of net operating loss carryforwards that will not be available to offset the Company’s
future taxable income after dividend paid deduction due to Section 382 limitations was $258,339,
comprising $241,766 of federal and $16,573 of state.

Approximately $4,443,000 of the total net operating loss carryforwards is attributable to excess tax

deductions related to employee stock awards, the beneﬁt from which will be credited to additional paid-in
capital when subsequently utilized in future years.

The beginning and ending balances of the Company’s unrecognized tax beneﬁts are reconciled below for

the years ended December 31 (in thousands):

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increases related to prior year tax positions . . . .
Gross decreases related to prior year tax positions . . . .
Gross increases related to current year tax positions . . .
Decreases resulting from expiration of statute of

limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreases resulting from settlements . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$36,138
—
(8,645)
4,802

(1,450)
—
$30,845

2014
$36,552
1,200
(984)
1,538

(1,112)
(1,056)
$36,138

2013
$25,050
14,596
(3,028)
1,498

(1,564)
—
$36,552

The Company recognizes interest and penalties related to unrecognized tax beneﬁts within income tax
beneﬁt (expense) in the consolidated statement of operations. During the years ended December 31, 2015,
2014 and 2013, the accrued interest and penalties related to the unrecognized tax beneﬁts were decreased by
$1,701,000, $3,126,000 and $1,612,000, respectively, primarily resulting from the settlement of tax audits and
the lapse of statutes of limitations in its foreign operations. The Company has accrued $3,736,000 and
$5,437,000 for interest and penalties accrued at December 31, 2015 and 2014, respectively.

The unrecognized tax beneﬁts of $30,845,000 as of December 31, 2015, if subsequently recognized, will

affect the Company’s effective tax rate favorably at the time when such a beneﬁt is recognized.

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 12 months as the Company may be subject
to either examination by tax authorities or a lapse in statute of limitations. The Company is currently unable
to estimate the range of possible adjustments to the balance of unrecognized tax beneﬁts.

F-67

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Income Taxes − (continued)

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 2005 through 2014 remain open and subject to examination by local tax authorities in certain foreign
jurisdictions in which the Company has major operations.

14. Commitments and Contingencies

Purchase Commitments

Primarily as a result of the Company’s various IBX expansion projects, as of December 31, 2015, the

Company was contractually committed for $256,757,000 of unaccrued capital expenditures, primarily for
IBX 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, 2015, such as commitments
to purchase power in select locations, primarily in select locations through 2016 and thereafter, and other open
purchase orders for goods or services to be delivered or provided during 2016 and thereafter. Such other
miscellaneous purchase commitments totaled $352,202,000 as of December 31, 2015.

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.

F-68

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Commitments and Contingencies − (continued)

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, 2015.

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 offerings. 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, 2015.

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, 2015.

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, 2015.

F-69

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Related Party Transactions

The Company has several signiﬁcant stockholders and other related parties that are also customers and/or

vendors. The Company’s activity of related party transactions was as follows (in thousands):

Revenues
Costs and services

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .

Years ended December 31,
2014
$8,392
8,351

2013
$20,140
4,819

2015
$10,745
10,808

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16. Segment Information

As of December 31,
2014
$1,022
—

2015
$797
254

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 Americas, EMEA
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 reportable segments. The Company deﬁnes
adjusted EBITDA as income or loss from operations plus depreciation, amortization, accretion, stock-based
compensation expense, restructuring charges, impairment charges and acquisition costs as presented below for
the years ended December 31 (in thousands):

2015

2014

2013

Adjusted EBITDA:

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total adjusted EBITDA . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion expense . . . .
Stock-based compensation expense . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . .

$ 698,604
318,561
254,462
1,271,627
(528,929)
(133,633)
—
(41,723)
$ 567,342

$ 635,007
269,222
209,662
1,113,891
(484,129)
(117,990)
—
(2,506)
$ 509,266

$ 608,718
216,186
175,994
1,000,898
(431,008)
(102,940)
4,837
(10,855)
$ 460,932

F-70

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. Segment Information − (continued)

The Company provides the following segment disclosures related to its continuing operations as follows

for the years ended December 31 (in thousands):

Total revenues:
Americas(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total depreciation and amortization:

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital expenditures:

2015

2014

2013

$1,512,535
698,807
514,525
2,725,867

$1,376,103
637,265
430,408
$2,443,776

$1,264,774

525,018(2)
362,974
$2,152,766

$ 278,216
117,655
129,709
$ 525,580

$ 261,018
114,511
106,162
$ 481,691

$ 254,365

90,891(2)
87,475
$ 432,731

$ 401,685
202,322
264,113
$ 868,120

$ 333,315
151,634
175,254
$ 660,203

$ 261,936
170,365
140,105
$ 572,406

(1)

(2)

Includes revenues of $1,404,648, $1,257,661 and $1,157,790, respectively, attributed to the U.S. for
the years ended December 31, 2015, 2014 and 2013.
Includes the operations of Frankfurt Kleyer 90 Carrier Hotel from October 1, 2013 to
December 31, 2013.

The Company’s long-lived assets are located in the following geographic areas as of December 31

(in thousands):

Americas(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia-Paciﬁc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2015
$3,025,450
1,157,304
1,423,682
$5,606,436

2014
$2,874,562
1,135,319
988,389
$4,998,270

(1)

Includes $2,781,924 and $2,609,268, respectively, of long-lived assets attributed to the U.S. as of
December 31, 2015 and 2014.

Revenue information by category is as follows for the years ended December 31 (in thousands):

Colocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interconnection . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed infrastructure . . . . . . . . . . . . . . . . . . . . . .
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recurring revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Non-recurring revenues . . . . . . . . . . . . . . . . . . . . . .

2015
$2,024,963
435,809
97,688
10,681
2,569,141
156,726
$2,725,867

2014
$1,829,812
372,350
105,292
10,336
2,317,790
125,986
2,443,776

2013
$1,628,179
319,863
97,400
4,520
2,049,962
102,804
2,152,766

F-71

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. Restructuring Charges

During the years ended December 31, 2015 and 2014, the Company did not record any restructuring

charges.

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.

In May 2013, the Company entered into a binding commitment to purchase the New York 2 IBX data
center for leased space in respect of which the Company had previously recorded a restructuring reserve. As a
result, the Company recorded a reversal to its outstanding accrued restructuring charge during the year ended
December 31, 2013.

A summary of the movement in the 2004 accrued restructuring charges during the year ended

December 31, 2013 is outlined as follows (in thousands):

Accrued restructuring charge as of December 31, 2012 . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charge adjustments
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued restructuring charge as of December 31, 2013 . . . . . . . . . . . . . . . . . . . .

$ 5,679
137
(4,837)
(979)
$ —

18. Subsequent Events

TelecityGroup Acquisition

On January 15, 2016, the Company completed the previously announced acquisition of the entire issued

share capital of Telecity Group plc (‘‘TelecityGroup’’) (the ‘‘Transaction’’). As a result of the Transaction,
TelecityGroup has become a wholly-owned subsidiary of Equinix. Under the transaction, the Company
acquired all outstanding common shares of TelecityGroup for 572.5 pence in cash and 0.0336 new shares of
the Company’s common stock for each TelecityGroup’s share for a total purchase price of approximately
$1,683,000,000 in cash and 6,853,500 shares of Equinix common stock valued at approximately
$2,078,000,000 based on the Company’s share price on January 15, 2016. This amount excludes any value
attributed to the Telecity employee equity awards assumed. TelecityGroup’s operating results will be reported
in the EMEA region following the date of acquisition. The purchase price allocation for the acquisition is not
yet complete. As a result, the fair value of assets acquired and liabilities assumed are still being appraised by
a third-party and have not yet been ﬁnalized.

Dividends

On February 18, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $1.75 per

share, which is payable on March 23, 2016 to the Company’s common stockholders of record as of the close
of business on March 9, 2016.

Debt

In January 2016, the Company terminated its bridge credit agreement for a principal amount of

£875,000,000 or approximately $1,289,000,000 related to the TelecityGroup acquisition. In January 2016, the
Company borrowed $250,000,000 from its USD Term Loan B Commitment and £300,000,000, or

F-72

EQUINIX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Subsequent Events − (continued)

approximately $442,020,000 at the exchange rate in effect on December 31, 2015 from its Sterling Term Loan
B Commitment to fund the TelecityGroup acquisition.

Real estate

In February 2016, the Company sold a parcel of land in San Jose, California, with a sales price of

approximately $23,557,000.

19. 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 offerings, the introduction of new offerings, changes in 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 tables present selected quarterly information (in thousands, except per share data):

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to Equinix . . . . . . .
Comprehensive income (loss) attributable to

2015
Quarter Ended

March 31
$643,174
344,861
76,452

June 30
$665,582
349,825
59,459

September 30
$686,649
361,181
41,132

December 31
$730,462
378,494
10,731

Equinix . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(59,141)

104,323

(23,707)

(10,317)

EPS attributable to Equinix

Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . .

1.35
1.34

1.04
1.03

0.72
0.71

0.18
0.18

2014
Quarter Ended

March 31
$580,053
292,528
41,387

June 30
$605,161
312,302
11,328

September 30
$620,441
316,389
42,841

December 31
$ 638,121
324,672
(355,103)

Equinix . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55,329

33,640

(97,814)

(450,067)

EPS attributable to Equinix

Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . .

0.83
0.81

0.22
0.22

0.81
0.79

(6.42)
(6.42)

F-73

EQUINIX INC.

SCHEDULE III — SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2015
(Dollars in thousands)

Initial Costs to Company(1)

Costs Capitalized
Subsequent to Acquisition
or Lease

Total Costs

Encumbrances

Land

Buildings and
Improvements(2)

Land

Buildings and
Improvements(2)

Land

Buildings and
Improvements(2)

Accumulated
Depreciation

Date of
Construction

Date of
Acquisition
or Lease(3)

.
.
.

.
.
.
.
.
.

(METRO)

Americas:
.
AT1 ATLANTA .
.
AT2 ATLANTA .
AT3 ATLANTA .
.
BO1 BOSTON (METRO)
CH1 CHICAGO (METRO)
CH2 CHICAGO (METRO)
CH3 CHICAGO (METRO)
CH4 CHICAGO (METRO)
.
DA1 DALLAS .
.
DA2 DALLAS .
.
DA3 DALLAS .
.
DA4 DALLAS .
.
DA6 DALLAS .
DA7 DALLAS .
.
DC1 WASHINGTON, DC
.
DC2 WASHINGTON, DC
.
DC3 WASHINGTON, DC
.
DC4 WASHINGTON, DC
.
DC5 WASHINGTON, DC
.
DC6 WASHINGTON, DC
.
DC7 WASHINGTON, DC
.
DC8 WASHINGTON, DC
.
DC10 WASHINGTON, DC
.
DC11 WASHINGTON, DC
.
DE1 DENVER (METRO)
.
LA1 LOS ANGELES .
.
LA2 LOS ANGELES .
.
.
LA3 EL SEGUNDO .
.
LA4 EL SEGUNDO .
.
.
MI2 MIAMI (METRO)
.
MI3 MIAMI (METRO)
.
.
.
NY1 NEWARK .
NY2 NEW YORK CITY
.
NY4 NEW YORK CITY
.
NY5 NEW YORK CITY
.
NY6 NEW YORK CITY
.
NY7 NEW YORK CITY
.

(METRO)

. . . .
. . . .
. . . .
. . . .
. . .
. . .
. . .
. . .
. . . .
. . . .
. . . .
. . . .
. . . .
. . . .

. . . .

. . . .
. . . .
. . . .
. . . .
. . . .
. . . .
. . . .
. . . .
. . . .

. . . .

—
—
—
—
—
—
—
—
—
—
—
—
—
—

—

—
—
—
—
—
—
—
—
—

—

—
—
—
—
—
—
9,759
—
—
—
—
—
—
—

—

1,906

1,429

—

1,429
—
—
—
—
19,333
—
—
—

—

—
—
—
—
—
—
—
—
—
—
—
—
20,522
—

—

37,451

7,272

4,983

5,082

—

44,601

5,082
—
—
—
34,727
137,630
—
—
—

—

24,660

—
—
—
—
—
—
352
—
—
—
—
—
—
—

—

95,053
41,648
3,538
11,261
153,239
96,664
222,935
21,025
72,470
77,185
84,048
16,674
78,386
24,525

—
—
—
—
—
—
10,111
—
—
—
—
—
—
—

95,053
41,648
3,538
11,261
153,239
96,664
222,935
21,025
72,470
77,185
84,048
16,674
98,908
24,525

(26,396)
(13,454)
(875)
(5,264)
(94,134)
(43,580)
(78,240)
(6,520)
(44,727)
(13,327)
(21,349)
(6,672)
(6,942)
(177)

N/A
N/A
N/A
N/A
2001
2005
2007
2010
2000
2011
N/A
N/A
2013
2015

1,520

—

1,520

(197)

2007

5,047

150,144

5,047

150,144

(123,646)

1999

—

—
—
—
—
3,959
—
—
—
—

51,589

—

89,040

(42,295)

2004

70,087

1,906

77,359

(42,918)

2007

86,875

1,429

91,858

(47,548)

2008

85,311

1,429

90,393

(30,425)

2010

15,348

4,684

67,402

114,865
8,322
107,511
11,367
18,950
27,997
21,510
28,869
79,447

—

1,429
—
—
—
3,959
19,333
—
—
—

15,348

(9,135)

4,684

(4,532)

N/A

112,003

(20,225)

2012

119,947
8,322
107,511
11,367
53,677
165,627
21,510
28,869
79,447

(13,880)
(4,966)
(55,793)
(9,566)
(39,778)
(51,666)
(9,439)
(5,750)
(39,430)

2013
N/A
2000
2001
2005
2009
N/A
2012
1999

17,859

187,115

17,859

187,115

(115,457)

2002

—

322,863

182,025

72,901

137,080

—

322,863

(140,124)

2007

182,025

(30,405)

2012

72,901

(2,517)

2015

161,740

(75,835)

N/A

F-74

2010
2010
2010
2010
1999
2005
2006
2009
2000
2010
2010
2010
2012
2015

1999

2004

2005

2010

2011

2005
2010
1999
2000
2005
2009
2010
2012
1999

2000

2006

2010

SCHEDULE III — SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION − (continued)
DECEMBER 31, 2015
(Dollars in thousands)

EQUINIX INC.

Initial Costs to Company(1)

Costs Capitalized
Subsequent to Acquisition
or Lease

Total Costs

Encumbrances

Land

Buildings and
Improvements(2)

Land

Buildings and
Improvements(2)

Land

Buildings and
Improvements(2)

Accumulated
Depreciation

Date of
Construction

Date of
Acquisition
or Lease(3)

.
.

(METRO)

NY8 NEW YORK CITY
.
NY9 NEW YORK CITY
.
PH1 PHILADELPHIA .
.
SE2 SEATTLE .
SE3 SEATTLE .
.
SV1 SILICON VALLEY
.
SV2 SILICON VALLEY
.
SV3 SILICON VALLEY
.
SV4 SILICON VALLEY
.
SV5 SILICON VALLEY
.
SV6 SILICON VALLEY
.
SV8 SILICON VALLEY
.

(METRO)

.
.
.
.

. . . .

. . . .
. . . .
. . . .
. . . .

. . . .

.
SV12 SILICON VALLEY
.

(METRO)

BRAZIL .

. . . .
.
TR1 TORONTO, CANADA . . .
TR2 TORONTO, CANADA . . .
RJ1 RIO DE JANEIRO,
.
RJ2 RIO DE JANEIRO,
.

. . . .
.
SP1 SÃO PAULO, BRAZIL . . .
SP2 SÃO PAULO, BRAZIL . . .
DC12 AND other future IBX(4). .

BRAZIL .

. . . .

EMEA:
AM1 AMSTERDAM, THE
NETHERLANDS .
.
AM2 AMSTERDAM, THE
NETHERLANDS .
.
AM3 AMSTERDAM, THE
.
NETHERLANDS .

. . . .

DU1 DÜSSELDORF,
.
GERMANY .
DU2 DÜSSELDORF,
.
GERMANY .

. . . .

DX1 DUBAI, UNITED ARAB

EMIRATES .

.
EN1 ENSCHEDE, THE
NETHERLANDS .

. . . .

FR1 FRANKFURT (METRO),

GERMANY .

. . . .

FR2 FRANKFURT (METRO),

GERMANY .

. . . .

FR3 FRANKFURT (METRO),

GERMANY .

. . . .

FR4 FRANKFURT (METRO),

GERMANY .

. . . .

FR5 FRANKFURT (METRO),

—

—
—
—
—

—

—
—
—

—

—
—
—
—

—

—
—
—
—

—

—
—
—
1,760

—

6,238

98,991

—

20,535
—
—

—

—
—
—
24,870

—

15,585

—

—
—
20,499

—

1,654
8,373
—
4,608

—

27,977

—

—
—
—
—

11,515

51,727
47,463
27,359
93,457

—

—
—
—
—

11,515

51,727
47,463
27,359
95,217

(4,979)

N/A

(22,897)
(7,790)
(16,368)
(16,852)

N/A
N/A
N/A
2013

15,545

156,304

15,545

156,304

(100,156)

1999

145,920

42,971

24,231

—

145,920

(60,670)

2003

42,971

(36,280)

2004

24,231

(17,247)

2005

86,932

6,238

185,923

(32,645)

2010

—

20,535
—
—

36,965

(18,663)

44,240

(17,178)

1,892
86,705
90,882

—
(15,450)
(3,007)

N/A

2015
N/A
2015

—

20,845

(12,042)

2011

—
—
—
24,870

29,001
26,219
53,783
18,274

(4,268)
(12,865)
(17,990)
(1,897)

2013
2011
2011
Various

2012
2011
2011
Various

—

45,887

(20,343)

2008

54,298

(15,143)

2010

118,020

(15,734)

2012

21,062

(17,219)

2001

204

(157)

2010

22,478

(3,897)

2012

20,135

(12,188)

2008

6,751

(6,401)

N/A

11,547

183,112

11,547

183,112

(61,215)

2,031

4,666

2,031

4,666

(1,000)

—

—
—
—

—

—
—
—
—

—

21,380

44,240

1,892
86,705
70,383

20,845

27,347
17,846
53,783
13,666

45,887

54,298

90,043

21,062

204

22,478

20,135

6,751

2010

2010
2010
2010
2011

1999

2003

1999

2005

2010

2015
2010
2015

2011

2008

2011

2000

2010

2008

2007

2009

2012

11,953

9,609

—

19,431

11,953

29,040

(11,340)

2009

GERMANY .

. . . .

32,255

—

3,836

106,889

3,836

106,889

(16,122)

2012

F-75

SCHEDULE III — SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION − (continued)
DECEMBER 31, 2015
(Dollars in thousands)

EQUINIX INC.

Initial Costs to Company(1)

Costs Capitalized
Subsequent to Acquisition
or Lease

Total Costs

Encumbrances

Land

Buildings and
Improvements(2)

Land

Buildings and
Improvements(2)

Land

Buildings and
Improvements(2)

Accumulated
Depreciation

Date of
Construction

Date of
Acquisition
or Lease(3)

GV1 GENEVA (METRO),
.
SWITZERLAND .
GV2 GENEVA (METRO),
SWITZERLAND .
.
LD1 LONDON (METRO),
UNITED KINGDOM .
LD3 LONDON (METRO),
UNITED KINGDOM .
LD4 LONDON (METRO),
UNITED KINGDOM .
LD5 LONDON (METRO),
UNITED KINGDOM .
LD6 LONDON (METRO),
UNITED KINGDOM .

. . . .

ITALY .

ML1 MILAN (METRO),
.
.

. . . . .
. .
MU1 MUNICH, GERMANY . .
MU2 MUNICH, GERMANY . .
MU3 MUNICH, GERMANY . .
PA1 PARIS (METRO),
.
PA2 PARIS (METRO),
.
PA3 PARIS (METRO),
.
PA4 PARIS (METRO),
.

FRANCE .

. . . .

FRANCE .

.
ZH1 ZURICH (METRO),
SWITZERLAND .
.
ZH2 ZURICH (METRO),
.
SWITZERLAND .
ZH4 ZURICH (METRO),
SWITZERLAND .
.
ZH5 ZURICH (METRO),
SWITZERLAND .
.
ZW1 ZWOLLE, THE
NETHERLANDS .
.
.

OTHERS .

.
.

. . . .

. . . .
. . . .

Asia-Paciﬁc:
HK1 HONG KONG, CHINA . .
HK2 HONG KONG, CHINA . .
HK3 HONG KONG, CHINA . .
HK4 HONG KONG, CHINA . .
ME1 MELBOURNE,
.
AUSTRALIA .

. . . .
.
. . . .
OS1 OSAKA, JAPAN .
. . . .
OS2 OSAKA, JAPAN .
. . . .
.
SG1 SINGAPORE .
. . . .
.
SG2 SINGAPORE .
SG3 SINGAPORE .
. . . .
.
SH2 SHANGHAI, CHINA . . . .
SH3 SHANGHAI, CHINA . . . .
SH4 SHANGHAI, CHINA . . . .
SH5 SHANGHAI, CHINA . . . .
SY1 SYDNEY, AUSTRALIA . .
SY2 SYDNEY, AUSTRALIA . .

.
.
.
.
.
.

.
.
.

—

—
—
—
—

—

—
—

—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—

—
—
—
—

—

27,575

19,639

—

—
—
—
—

—

30,574

1,756

9,811

—

—
—

—
—
—
—

15,502
—
—
—
—
—
—
—
—
—
—
—

—

11,501

—

—
—

—
—
—
—

—
14,459
100
—
—
35,614
—
7,557
—
12,068
—
3,113

—

—
—
—
—

—

—
—

—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

F-76

5,497

20,757

2,736

17,350

64,854

185,242

91,946

832
11,334
69
4,493

21,338

39,162

85,720

—

—
—
—
—

—

5,497

(4,206)

20,757

(11,210)

2,736

(2,389)

17,350

(10,448)

92,429

(32,697)

204,881

(48,798)

91,946

832
11,334
69
4,493

(2,729)

(549)
(7,679)
(44)
(3,811)

21,338

(16,664)

39,162

(22,006)

116,294

(42,232)

123,424

1,756

133,235

(20,488)

2004

2010

2000

2005

2007

2010

2015

2011
N/A
N/A
2010

N/A

2010

2012

N/A

2003

2010

2013

2004

2009

2000

2007

2010

2013

2011
2007
2006
2010

2007

2008

2011

2007

2002

2009

5,573

4,893

23,062

39,006

7,103
2,112

97,905
181,827
132,765
6,698

61,216
21,861
—
158,755
251,089
90,929
3,315
5,440
1,718
19,571
23,894
32,205

—

—
—

—
—
—
—

15,502
—
—
—
—
—
—
—
—
—
—
—

5,573

4,893

(4,330)

(2,490)

34,563

(13,034)

39,006

(8,011)

7,103
2,112

(3,633)
(1,776)

2008
Various

97,905
181,827
132,765
6,698

61,216
36,320
100
158,755
251,089
126,543
3,315
12,997
1,718
31,639
23,894
35,318

(53,083)
(34,847)
(33,892)
(3,149)

(2,291)
(4,711)
(7)
(83,970)
(78,714)
(3,293)
(743)
(3,064)
(1,164)
(4,292)
(12,181)
(16,660)

N/A
2011
N/A
N/A

2013
2013
N/A
N/A
2008
2013
2012
2012
2012
2012
N/A
2008

2003
2010
2012
2012

2013
2013
2015
2003
2008
2013
2012
2012
2012
2012
2003
2008

SCHEDULE III — SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION − (continued)
DECEMBER 31, 2015
(Dollars in thousands)

EQUINIX INC.

Initial Costs to Company(1)

Encumbrances

Land

Buildings and
Improvements(2)

—
—
—
—
—
—
—
—
—
—
—
—
—
$32,255

—
—
—
—
—
—
—
—
—
—
—
—
7,631
$123,770

8,804
—
—
—
—
—
99
36,877
12,806
52,338
103,718
67,922
—
$965,641

Costs Capitalized
Subsequent to Acquisition
or Lease

Total Costs

Land

—
—
—
—
—
—
—
—
—
—
—
—
—
$60,176

Buildings and
Improvements(2)

130,183
39,113
16,651
61,024
65,673
41,256
14,366
4,652
1,321
6,593
893
329
21,203
$6,722,303

Land

—
—
—
—
—
—
—
—
—
—
—
—
7,631
$183,946

Buildings and
Improvements(2)

138,987
39,113
16,651
61,024
65,673
41,256
14,465
41,529
14,127
58,931
104,611
68,251
21,203
$7,687,944

Accumulated
Depreciation
(34,199)
—
(8,795)
(47,119)
(18,224)
(6,375)
—
(853)
(464)
(1,672)
(2,169)
(791)

Date of
Construction
2010
2015
2000
2007
2010
2012
2014
N/A
N/A
N/A
N/A
N/A

(2,515) Various

$(2,595,648)

Date of
Acquisition
or Lease(3)
2010
2014
2000
2006
2010
2012
2014
2015
2015
2015
2015
2015
Various

SY3 SYDNEY, AUSTRALIA . .
SY4 SYDNEY, AUSTRALIA . .
.
. . . .
TY1 TOKYO, JAPAN .
.
. . . .
TY2 TOKYO, JAPAN .
.
. . . .
TY3 TOKYO, JAPAN .
.
. . . .
TY4 TOKYO, JAPAN .
.
. . . .
TY5 TOKYO, JAPAN .
.
. . . .
TY6 TOKYO, JAPAN .
.
. . . .
TY7 TOKYO, JAPAN .
. . . .
.
TY8 TOKYO, JAPAN .
. . . .
TY9 TOKYO, JAPAN .
.
. . . .
TY10 TOKYO, JAPAN .
. . . .
OTHERS .
.
.
. . . .
TOTAL LOCATIONS .

(1) The initial cost was $0 if the lease of the respective IBX was classiﬁed as an operating lease.
(2) Building and improvements include all ﬁxed assets except for land.
(3) Date of lease or acquisition represents the date the Company leased the facility or acquired the facility

through purchase or acquisition.
Includes IBX DC12 and various other IBXs that are under initial development.

(4)

The aggregate gross cost of the Company’s properties for federal income tax purpose approximated

$7,512,627,000 (unaudited) as of December 31, 2015.

The following table reconciles the historical cost of the Company’s properties for ﬁnancial reporting

purposes for each of the years in the three-year period ended December 31, 2015.

Gross Fixed Assets:

Balance, beginning of period . . . . . . . . . . . . . . . . . .
Additions (acquisitions and improvements) . . . . . . . . .
Disposals
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
Foreign currency transaction adjustments and others
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . .

2015
$7,006,695
1,172,855
(9,295)
(298,365)
$7,871,890

2014
$6,308,992
997,534
(16,444)
(283,387)
$7,006,695

2013
$5,220,450
1,146,126
(14,864)
(42,720)
$6,308,992

Accumulated Depreciation:

Balance, beginning of period . . . . . . . . . . . . . . . . . .
Additions (depreciation expense)
. . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals
Foreign currency transaction adjustments and others
. .
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . .

2015

2014

$(2,242,345) $(1,904,311)
(418,407)
16,038
64,335
$(2,595,648) $(2,242,345)

(440,002)
7,396
79,303

2013
$(1,538,329)
(377,577)
12,804
(1,209)
$(1,904,311)

F-77

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CROSS CONNECTS†170,000+CUSTOMERS8,000+RELIABILITY†99.9999%40MARKETSDATA CENTERS145+Executive Team •Steve Smith Chief Executive Officer & President •Charles Meyers Chief Operating Officer •Keith Taylor Chief Financial Officer •Mark Adams Chief Development Officer •Sara Baack Chief Marketing Officer •Peter Ferris Sr. Vice President, Office of the CEO •Pete Hayes Chief Sales Officer •Sushil (Sam) Kapoor Chief Global Operations Officer •Samuel Lee President, Asia-PacificBoard of Directors •Peter Van Camp Executive Chairman, Equinix •Steve Smith Chief Executive Officer & President, Equinix •Tom Bartlett Executive VP & Chief Financial Officer, American Tower Corporation •Nanci Caldwell Corporate Director and Former CMO, PeopleSoft •Gary Hromadko Venture Partner, Crosslink Capital •John Hughes Corporate Director and former Executive Chairman, Telecity Group •Scott Kriens Chairman of the Board, Juniper Networks, Inc. •William Luby Managing Partner, Seaport Capital •Irving Lyons, III Principal, Lyons Asset Management •Christopher Paisley Dean’s Executive Professor, Leavey School of Business at Santa Clara University •Brian Lillie Chief Information Officer •Debra McCowan Chief Human Resources Officer •Brandi Galvin Morandi Chief Legal Officer, General Counsel and Secretary •Eric Schwartz President, EMEA •Karl Strohmeyer President, Americas •Ihab Tarazi Chief Technology Officer •Brian Thomas Chief of Staff, Office of the CEOThis Annual Report (including the Shareholder Letter) contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that may cause Equinix’s actual results to differ materially from those expressed or implied by these statements. Factors that may affect Equinix’s results are summarized in our Annual Report on Form 10-K filed February 26, 2016 and contained herein. Equinix assumes no obligation and does not intend to update forward-looking statements to reflect subsequent events or circumstances.EQUINIX GLOBAL MAPSEATTLEDENVERATLANTABOSTONPHILADELPHIAMIAMITORONTODUSSELDORFMUNICHHELSINKISTOCKHOLMWARSAWISTANBULSOFIAZURICHMILANGENEVADUBAIPARISLONDONDUBLINRIO DE JANEIROSÃO PAULOAMSTERDAMMANCHESTERFRANKFURTSILICONVALLEYLOS ANGELESCHICAGONEW YORKDALLASWASHINGTON, DCSINGAPOREHONG KONGSHANGHAITOKYOOSAKAJAKARTASYDNEYMELBOURNEEquinix LocationsPartner Data CenterAMERICASEMEAASIA-PACIFICEquinix.comEQUINIX ANNUAL REPORT FY2015Americas Corporate HQEquinix, Inc. One Lagoon Drive Redwood City, CA 94065 USA +1.650.598.6000 info@equinix.comEMEAEquinix (EMEA) BV 7th Floor Rembrandt Tower Amstelplein 1 1096 HA Amsterdam Netherlands +31.20.754.0305 info@eu.equinix.comAsia-PacificEquinix Hong Kong Limited Units 6501-04A & 6507-08, 65/F International Commerce Centre 1 Austin Road West Kowloon, Hong Kong +852.2970.7788 info@ap.equinix.comANNUAL REPORT FY2015“Responding to the demand AquaComms is seeing for high capacity, high reliability connectivity between North America and Europe, we made a strategic decision to deploy with Equinix. Their data centers in New York and London act as major international hubs for network traffic, offering our customers the ability to extend existing networks or expand into new markets.” AquaComms “As video usage continues to grow exponentially on the Internet, its robustness relies on continual improvement of public Internet Exchange Platforms such as the Equinix Internet Exchange. The massive scalability that a 100G-capable platform provides leads to greater efficiency and helps us continue to deliver a great Netflix experience to our members around the world.” Netflix