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Equinix Reports Second Quarter 2013 Results



  Equinix Reports Second Quarter 2013 Results

  * Reported revenues of $525.7 million, a 1% increase over the previous
    quarter and a 15% increase over the same quarter last year, and includes
    the negative impact of a $5.8 million accounting change related to
    non-recurring installation fees
  * Eclipses 120,000 cross-connects on a strong global interconnection quarter
  * Tempers revenue acceleration in second half of 2013

Business Wire

REDWOOD CITY, Calif. -- July 24, 2013

Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, today
reported quarterly results for the quarter ended June 30, 2013. The Company
uses certain non-GAAP financial measures, which are described further below
and reconciled to the most comparable GAAP financial measures after the
presentation of our GAAP financial statements.

Revenues were $525.7 million for the second quarter, a 1% increase over the
previous quarter and a 15% increase over the same quarter last year and
includes a $5.8 million reduction in revenue for the second quarter due to a
change in accounting estimate related to non-recurring installation fees.
Recurring revenues, consisting primarily of colocation, interconnection and
managed services were $502.5 million for the second quarter, a 1% increase
over the previous quarter and a 16% increase over the same quarter last year.
Non-recurring revenues were $23.2 million in the quarter. Churn for the second
quarter was 2.4%, down from 3.7% for the previous quarter and in line with
prior guidance.

Non-recurring installation fees, although generally paid in a lump sum upon
installation, are deferred and recognized ratably over the expected life of
the installation. During the second quarter, the Company reassessed the
estimated period that revenue related to non-recurring installation fees is
recognized due to its determination that its customers were generally
benefitting from their installations longer than originally anticipated. For
example, in North America new customer contracts have generally been
lengthened from one to two years, to three years or more, which the Company
believes extends the overall life of both the installation and the overall
customer relationship. As a result of the Company’s analysis, the estimated
period that revenue related to non-recurring installation fees is recognized
has been lengthened to four years, up from two to three years. This change was
accounted for as a change in accounting estimate on a prospective basis
effective April 1, 2013. The change in the estimated period that revenue
related to non-recurring installation fees is recognized, which has resulted
in less revenue than would have otherwise been recorded, resulted in a $5.8
million reduction in revenue for the second quarter and a total estimated
decrease in non-recurring revenue of $16.0 million for the full year 2013.

“Our strong quarterly results reflect growth in all three regions, with
particular strength in the cloud vertical. We are winning smaller,
interconnection rich deals that enhance our vertical ecosystems while keeping
MRR per cabinet firm through a disciplined approach to pricing and customer
mix,” said Steve Smith, president and CEO of Equinix. “We remain confident in
our long-term strategy and will execute with discipline while balancing top
and bottom line growth.”

Cost of revenues were $267.7 million for the second quarter, a 3% increase
over the previous quarter and a 19% increase over the same quarter last year.
Cost of revenues, excluding depreciation, amortization, accretion and
stock-based compensation of $98.6 million, which we refer to as cash cost of
revenues, were $169.1 million for the second quarter, a 4% increase from the
previous quarter and a 19% increase over the same quarter last year. Gross
margins for the quarter were 49%, down from 50% for the previous quarter and
down from 51% for the same quarter last year. Cash gross margins, defined as
gross profit before depreciation, amortization, accretion and stock-based
compensation, divided by revenues, for the quarter were 68%, down from 69% for
the previous quarter and the same quarter last year.

Selling, general and administrative expenses were $148.1 million for the
second quarter, a slight increase over the previous quarter and a 16% increase
over the same quarter last year. Selling, general and administrative expenses,
excluding depreciation, amortization and stock-based compensation of $35.7
million, which we refer to as cash selling, general and administrative
expenses, were $112.4 million for the second quarter, a 1% decrease over the
previous quarter and a 15% increase over the same quarter last year.

Interest expense was $61.0 million for the second quarter, a 1% increase from
the previous quarter and a 30% increase over the same quarter last year,
primarily attributed to the $1.5 billion senior notes offering in March 2013,
additional financings such as various capital lease and other financing
obligations to support the Company’s expansion projects and less capitalized
interest expense. The Company recorded an income tax benefit of $10.6 million
for the second quarter and income tax expense of $17.1 million in the same
quarter last year.

In April 2013, a portion of the proceeds from the $1.5 billion senior notes
offering were used to redeem the entire principal amount of the $750.0 million
8.125% senior notes, including $80.9 million paid to settle the “make-whole”
payment to the bondholders, which was effectively the interest that would have
been earned to the March 1, 2014 call date plus the applicable premium. The
Company recorded a loss on debt extinguishment of $93.6 million for the second
quarter, which includes the “make-whole” payment, write-off of unamortized
debt issuance costs and other transaction-related fees.

Net loss attributable to Equinix for the second quarter was $28.7 million.
This represents a basic and diluted net loss per share attributable to Equinix
of $0.58 based on a weighted average share count of 49.4 million for the
second quarter of 2013. This includes the one-time charge to the income
statement of $93.6 million for the loss on debt extinguishment related to the
redemption of the $750.0 million 8.125% senior notes.

Income from continuing operations was $112.2 million for the second quarter, a
3% increase from the previous quarter and a 10% increase over the same quarter
last year. Adjusted EBITDA, defined as income or loss from operations before
depreciation, amortization, accretion, stock-based compensation, restructuring
charges and acquisition costs, for the second quarter was $244.2 million, a
slight increase over the previous quarter and a 12% increase over the same
quarter last year.

“We significantly outperformed our adjusted EBITDA targets this quarter and
our operating profits continue to improve, increasing the level of cash
generated from operations after adjusting for the REIT-related cash costs and
taxes,” said Keith Taylor, CFO of Equinix. “We see a clear path to improving
adjusted EBITDA margins to support our long-term model, and are balancing
growth and profitability as we scale the business.”

Capital expenditures, defined as gross capital expenditures less the net
change in accrued property, plant and equipment in the second quarter, were
$122.9 million, of which $82.7 million was attributed to expansion capital
expenditures and $40.2 million was attributed to ongoing capital expenditures.

The Company generated cash from operating activities of $147.2 million for the
second quarter as compared to $84.2 million in the previous quarter and $194.8
million for the same quarter last year. Cash provided by investing activities
was $537.5 million in the second quarter, primarily attributed to the $836.4
million of restricted cash released for the redemption of the $750.0 million
8.125% senior notes, as compared to cash used in investing activities of
$1,142.5 million in the previous quarter, primarily attributed to the $836.4
million that was placed into a restricted cash account for the redemption of
the $750.0 million 8.125% senior notes, and cash provided by investing
activities of $93.9 million for the same quarter last year. Cash used in
financing activities was $850.0 million for the second quarter, primarily
attributed to the redemption of the $750.0 million 8.125% senior notes, as
compared to cash provided by financing activities of $1,496.8 million,
primarily attributed to the issuance of the $1.5 billion senior notes, and
cash used in financing activities of $264.7 million for the same quarter last
year.

As of June 30, 2013, the Company’s cash, cash equivalents and investments were
$1,216.9 million, as compared to $1,212.1 million as of March 31, 2013.

Business Outlook

For the third quarter of 2013, the Company expects revenues to be in the range
of $538.0 to $542.0 million, which includes an approximate $6.0 million impact
from the change in accounting estimate related to non-recurring installation
fees and negative foreign currency headwinds of approximately $4.0 million.
Cash gross margins are expected to approximate 68%. Cash selling, general and
administrative expenses are expected to range between $126.0 and $130.0
million. Adjusted EBITDA is expected to be between $236.0 and $240.0 million,
which includes $11.0 million in professional fees primarily related to the
REIT conversion. This also includes an approximate $6.0 million impact from
the change in accounting estimate related to non-recurring installation fees,
and negative foreign currency headwinds of $2.0 million. Capital expenditures
are expected to be approximately $180.0 to $200.0 million, comprised of
approximately $50.0 million of ongoing capital expenditures and $130.0 to
$150.0 million of expansion capital expenditures.

For the full year of 2013, total revenues are expected to range between
$2,135.0 million to $2,145.0 million, or an as reported 13% year over year
growth rate. This includes an approximate $16.0 million decrease in revenues
due to the change in accounting estimate related to our non-recurring
installation fees. This is a non-cash change only, the result of a longer
estimated life for our customer installations. Full-year guidance is also
adjusted for $11.0 million of negative foreign currency headwinds, when
compared to the rates used from our prior guidance. On a normalized and
constant currency basis, we expect 2013 revenue growth of approximately 15.5%
compared to the prior year. Total year cash gross margins are expected to
approximate 68%. Cash selling, general and administrative expenses are
expected to range between $465.0 and $475.0 million. Adjusted EBITDA for the
year is expected to range between $985.0 and $990.0 million, which includes an
approximate $16.0 million impact due to the change in accounting estimate
related to our non-recurring installation fees, $6.0 million in incremental
professional fees primarily related to the REIT conversion, and adjusting for
$5.0 million of negative currency headwinds when compared to the rates used
from our prior guidance. Capital expenditures for 2013 are expected to be in
the range of $575.0 to $625.0 million, comprised of approximately $165.0
million of ongoing capital expenditures and $410.0 to $460.0 million for
expansion capital expenditures.

The U.S. dollar exchange rates used for 2013 guidance have been updated to
$1.30 to the Euro, $1.52 to the Pound, S$1.27 to the U.S. dollar and R$2.23 to
the U.S. dollar. Updated global revenue breakdown by currency for the Euro,
Pound, Singapore dollar and Brazilian Real is 14%, 8%, 6% and 4%,
respectively.

Company Metrics and Q2 Results Presentation

The Company will discuss its results and guidance on its quarterly conference
call on Wednesday, July 24, 2013, at 5:30 p.m. ET (2:30 p.m. PT). A
simultaneous live Webcast of the call will be available on the Equinix
investors website located at www.equinix.com/investors. To hear the conference
call live, please dial 1-210-234-8004 (domestic and international) and
reference the passcode (EQIX). A presentation to accompany the call as well as
the Company’s Non-Financial Metrics tracking sheet, will also be available on
the website.

A replay of the call will be available beginning on Wednesday, July 24, 2013,
at 7:30 p.m. (ET) through August 23, 2013, by dialing 1-203-369-0250 (domestic
and international) and reference the passcode (2013). In addition, the webcast
will be available on the investors section of the Company’s website over the
same time period. No password is required for the replay or the webcast.

About Equinix

Equinix, Inc. (Nasdaq: EQIX), connects more than 4,000 companies directly to
their customers and partners inside the world’s most networked data centers.
Today, businesses leverage the Equinix interconnection platform in 31
strategic markets across the Americas, EMEA and Asia-Pacific. www.equinix.com.

Non-GAAP Financial Measures

Equinix provides all information required in accordance with generally
accepted accounting principles (GAAP), but it believes that evaluating its
ongoing operating results may be difficult if limited to reviewing only GAAP
financial measures. Accordingly, Equinix uses non-GAAP financial measures,
such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash
operating expenses (also known as cash selling, general and administrative
expenses or cash SG&A), adjusted EBITDA margins, free cash flow, adjusted free
cash flow, discretionary free cash flow and adjusted discretionary free cash
flow to evaluate its operations. In presenting these non-GAAP financial
measures, Equinix excludes certain items that it believes are not good
indicators of the Company's current or future operating performance. These
items are depreciation, amortization, accretion of asset retirement
obligations and accrued restructuring charges, stock-based compensation,
restructuring charges, impairment charges and acquisition costs. Legislative
and regulatory requirements encourage use of and emphasis on GAAP financial
metrics and require companies to explain why non-GAAP financial metrics are
relevant to management and investors. Equinix excludes these items in order
for Equinix's lenders, investors, and industry analysts who review and report
on the Company, to better evaluate the Company's operating performance and
cash spending levels relative to its industry sector and competitors.

Equinix excludes depreciation expense as these charges primarily relate to the
initial construction costs of our IBX centers and do not reflect our current
or future cash spending levels to support our business. Our IBX centers are
long-lived assets, and have an economic life greater than 10 years. The
construction costs of our IBX centers do not recur and future capital
expenditures remain minor relative to our initial investment. This is a trend
we expect to continue. In addition, depreciation is also based on the
estimated useful lives of our IBX centers. These estimates could vary from
actual performance of the asset, are based on historic costs incurred to build
out our IBX centers, and are not indicative of current or expected future
capital expenditures. Therefore, Equinix excludes depreciation from its
operating results when evaluating its operations.

In addition, in presenting the non-GAAP financial measures, Equinix excludes
amortization expense related to certain intangible assets, as it represents a
cost that may not recur and is not a good indicator of the Company's current
or future operating performance. Equinix excludes accretion expense, both as
it relates to its asset retirement obligations as well as its accrued
restructuring charges, as these expenses represent costs which Equinix
believes are not meaningful in evaluating the Company's current operations.
Equinix excludes stock-based compensation expense as it primarily 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. Equinix excludes restructuring charges from its
non-GAAP financial measures. The restructuring charges relate to the Company's
decision to exit leases for excess space adjacent to several of our IBX
centers, which we did not intend to build out, or our decision to reverse such
restructuring charges or severance charges related to the Switch and Data
acquisition. Equinix also excludes 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, Equinix excludes
acquisition costs from its non-GAAP financial measures. The acquisition costs
relate to costs the Company incurs in connection with business combinations.
Management believes such items as restructuring charges, impairment charges
and acquisition costs are non-core transactions; however, these types of costs
will or may occur in future periods.

Our management does not itself, nor does it suggest that investors should,
consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP.
However, we have presented such non-GAAP financial measures to provide
investors with an additional tool to evaluate our operating results in a
manner that focuses on what management believes to be our core, ongoing
business operations. Management believes 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 its ability to perform in subsequent periods. Equinix believes that if it
did not provide such non-GAAP financial information, investors would not have
all the necessary data to analyze Equinix effectively.

Investors should note, however, that the non-GAAP financial measures used by
Equinix may not be the same non-GAAP financial measures, and may not be
calculated in the same manner, as that of other companies. In addition,
whenever Equinix uses such non-GAAP financial measures, it provides a
reconciliation of non-GAAP financial measures to the most closely applicable
GAAP financial measure. Investors are encouraged to review the related GAAP
financial measures and the reconciliation of these non-GAAP financial measures
to their most directly comparable GAAP financial measure.

Equinix does not provide forward-looking guidance for certain financial data,
such as depreciation, amortization, accretion, stock-based compensation, net
income (loss) from operations, cash generated from operating activities and
cash used in investing activities, and as a result, is not able to provide a
reconciliation of GAAP to non-GAAP financial measures for forward-looking
data. Equinix intends to calculate the various non-GAAP financial measures in
future periods consistent with how they were calculated for the periods
presented within this press release.

Forward Looking Statements

This press release contains forward-looking statements that involve risks and
uncertainties. Actual results may differ materially from expectations
discussed in such forward-looking statements. Factors that might cause such
differences include, but are not limited to, the challenges of acquiring,
operating and constructing IBX centers and developing, deploying and
delivering Equinix services; unanticipated costs or difficulties relating to
the integration of companies we have acquired or will acquire into Equinix; a
failure to receive significant revenue from customers in recently built out or
acquired data centers; failure to complete any financing arrangements
contemplated from time to time; competition from existing and new competitors;
the ability to generate sufficient cash flow or otherwise obtain funds to
repay new or outstanding indebtedness; the loss or decline in business from
our key customers; and other risks described from time to time in Equinix's
filings with the Securities and Exchange Commission. In particular, see
Equinix's recent quarterly and annual reports filed with the Securities and
Exchange Commission, copies of which are available upon request from Equinix.
Equinix does not assume any obligation to update the forward-looking
information contained in this press release.

Equinix and IBX are registered trademarks of Equinix, Inc. International
Business Exchange is a trademark of Equinix, Inc.

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                                                                  
                                                                                    
                        Three Months Ended                         Six Months Ended
                        June 30,       March 31,     June 30,      June 30,        June 30,
                        2013           2013          2012          2013            2012
                                                                                    
Recurring revenues      $ 502,470      $ 495,271     $ 433,786     $ 997,741       $ 854,676
Non-recurring             23,199         24,184        23,463        47,383          45,818   
revenues
    Revenues              525,669        519,455       457,249       1,045,124       900,494
                                                                                    
Cost of revenues          267,693        259,268       225,289       526,961         442,387  
         Gross profit     257,976        260,187       231,960       518,163         458,107  
                                                                                    
Operating expenses:
    Sales and             59,478         58,276        47,603        117,754         94,013
    marketing
    General and           88,632         89,685        80,595        178,317         158,911
    administrative
    Restructuring         (4,837   )     -             -             (4,837    )     -
    charges
    Acquisition costs     2,526          3,662         1,666         6,188           2,341    
         Total
         operating        145,799        151,623       129,864       297,422         255,265  
         expenses
                                                                                    
Income from               112,177        108,564       102,096       220,741         202,842  
continuing operations
                                                                                    
Interest and other
income (expense):
    Interest income       917            747           963           1,664           1,654
    Interest expense      (61,001  )     (60,331 )     (46,787 )     (121,332  )     (99,605 )
    Loss on debt          (93,602  )     -             -             (93,602   )     -
    extinguishment
    Other income          2,768          (459    )     (1,844  )     2,309           (1,998  )
    (expense)
         Total
         interest and     (150,918 )     (60,043 )     (47,668 )     (210,961  )     (99,949 )
         other, net
                                                                                    
Income (loss) from
continuing operations     (38,741  )     48,521        54,428        9,780           102,893
before income taxes
                                                                                    
    Income tax            10,612         (12,198 )     (17,138 )     (1,586    )     (30,991 )
    benefit (expense)
                                                                                    
Net income (loss)
from continuing           (28,129  )     36,323        37,290        8,194           71,902
operations
                                                                                    
    Net income from
    discontinued          -              -             350           -               549      
    operations, net
    of tax
                                                                                    
Net income (loss)         (28,129  )     36,323        37,640        8,194           72,451
                                                                                    
Net income
attributable to
redeemable                (529     )     (441    )     (1,193  )     (970      )     (1,481  )
non-controlling
interests
                                                                                    
Net income (loss)
attributable to         $ (28,658  )   $ 35,882      $ 36,447      $ 7,224         $ 70,970   
Equinix
                                                                                    
Net income (loss) per
share attributable to
Equinix:
                                                                                    
    Basic net income
    (loss) per share    $ (0.58    )   $ 0.73        $ 0.75        $ 0.15          $ 1.48
    from continuing
    operations
    Basic net income
    per share from        -              -             0.01          -               0.01     
    discontinued
    operations
    Basic net income
    (loss) per share    $ (0.58    )   $ 0.73        $ 0.76        $ 0.15          $ 1.49     
    (1)
                                                                                    
    Diluted net
    income (loss) per
    share from          $ (0.58    )   $ 0.71        $ 0.72        $ 0.14          $ 1.43
    continuing
    operations
    Diluted net
    income per share      -              -             0.01          -               0.01     
    from discontinued
    operations
    Diluted net
    income (loss) per   $ (0.58    )   $ 0.71        $ 0.73        $ 0.14          $ 1.44     
    share (2)
                                                                                    
    Shares used in
    computing basic       49,379         49,029        48,016        49,205          47,485   
    net income (loss)
    per share
                                                                                    
    Shares used in
    computing diluted     49,379         53,480        52,351        49,976          51,633   
    net income (loss)
    per share
                  
                                                                                    
(1) The net income (loss) used in the computation of basic net income per share attributable
    to Equinix is presented below:
                                                                                    
    Net income (loss)
    from continuing     $ (28,129  )   $ 36,323      $ 37,290      $ 8,194         $ 71,902
    operations
    Net income
    attributable to       (529     )     (441    )     (1,193  )     (970      )     (1,481  )
    non-controlling
    interests
         Net income
         (loss) from
         continuing
         operations       (28,658  )     35,882        36,097        7,224           70,421
         attributable
         to Equinix,
         basic
    Net income from
    discontinued          -              -             350           -               549      
    operations
         Net income
         (loss)
         attributable   $ (28,658  )   $ 35,882      $ 36,447      $ 7,224         $ 70,970   
         to Equinix,
         basic
                                                                                    
(2) The net income (loss) used in the computation of diluted net income per share attributable
    to Equinix is presented below:
                                                                                    
    Net income (loss)
    from continuing
    operations          $ (28,658  )   $ 35,882      $ 36,097      $ 7,224         $ 70,421
    attributable to
    Equinix, basic
    Interest on           -              1,851         1,678         -               3,377    
    convertible debt
         Net income
         (loss) from
         continuing
         operations       (28,658  )     37,733        37,775        7,224           73,798
         attributable
         to Equinix,
         diluted
    Net income from
    discontinued          -              -             350           -               549      
    operations
         Net income
         (loss)
         attributable   $ (28,658  )   $ 37,733      $ 38,125      $ 7,224         $ 74,347   
         to Equinix,
         diluted
                                                                                              

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
                                                                            
                                                                              
                    Three Months Ended                        Six Months Ended
                    June 30,      March 31,     June 30,      June 30,       June 30,
                    2013          2013          2012          2013           2012
                                                                              
Net income (loss)   $ (28,129 )   $ 36,323      $ 37,640      $ 8,194        $ 72,451   
                                                                              
Other
comprehensive
income (loss),
net of tax:
  Foreign
  currency            (30,666 )     (72,554 )     (49,207 )     (103,220 )     (14,895 )
  translation
  loss
  Unrealized gain
  (loss) on           (458    )     98            (177    )     (360     )     (99     )
  available for
  sale securities
Other
comprehensive         (31,124 )     (72,456 )     (49,384 )     (103,580 )     (14,994 )
loss, net of tax:
                                                                              
Comprehensive
income (loss),        (59,253 )     (36,133 )     (11,744 )     (95,386  )     57,457   
net of tax
                                                                              
  Net income
  attributable to
  redeemable          (529    )     (441    )     (1,193  )     (970     )     (1,481  )
  non-controlling
  interests
  Other
  comprehensive
  income (loss)
  attributable to     5,309         (769    )     3,974         4,540          2,915    
  redeemable
  non-controlling
  interests
                                                                              
Comprehensive
income (loss)
attributable to     $ (54,473 )   $ (37,343 )   $ (8,963  )   $ (91,816  )   $ 58,891   
Equinix, net of
tax
                                                                                        

EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                                                                
Assets                                           June 30,        December 31,
                                                 2013            2012
                                                                  
Cash and cash equivalents                        $ 517,496       $ 252,213
Short-term investments                             323,460         166,492
Accounts receivable, net                           201,336         163,840
Other current assets                               55,317          57,206     
   Total current assets                            1,097,609       639,751
Long-term investments                              375,971         127,819
Property, plant and equipment, net                 4,103,344       3,918,999
Goodwill                                           1,012,102       1,042,564
Intangible assets, net                             184,740         201,562
Other assets                                       304,083         202,269    
   Total assets                                  $ 7,077,849     $ 6,132,964  
                                                                  
Liabilities and Stockholders' Equity
                                                                  
Accounts payable and accrued expenses            $ 258,027       $ 268,853
Accrued property and equipment                     101,015         63,509
Current portion of capital lease and other         85,262          15,206
financing obligations
Current portion of loans payable                   40,360          52,160
Other current liabilities                          122,871         139,561    
   Total current liabilities                       607,535         539,289
Capital lease and other financing obligations,     684,873         545,853
less current portion
Loans payable, less current portion                164,919         188,802
Senior notes, less current portion                 2,250,000       1,500,000
Convertible debt                                   716,265         708,726
Other liabilities                                  245,768         230,843    
   Total liabilities                               4,669,360       3,713,513  
                                                                  
Redeemable non-controlling interests               96,614          84,178     
                                                                  
Common stock                                       50              49
Additional paid-in capital                         2,651,396       2,583,371
Treasury stock                                     (36,284   )     (36,676   )
Accumulated other comprehensive loss               (200,082  )     (101,042  )
Accumulated deficit                                (103,205  )     (110,429  )
   Total stockholders' equity                      2,311,875       2,335,273  
                                                                  
   Total liabilities, redeemable
   non-controlling interests and stockholders'   $ 7,077,849     $ 6,132,964  
   equity
                                                                  
                                                                  
                                                                  
Ending headcount by geographic region is as
follows:
                                                                  
   Americas headcount                              1,918           1,821
   EMEA headcount                                  872             811
   Asia-Pacific headcount                          573             521        
                Total headcount                    3,363           3,153      
                                                                  

EQUINIX, INC.
SUMMARY OF DEBT OUTSTANDING
(in thousands)
(unaudited)
                                                             
                                                June 30,      December 31,
                                                2013          2012
                                                               
Capital lease and other financing obligations   $ 770,135     $  561,059
                                                               
U.S. term loan                                    160,000        180,000
ALOG financing                                    44,924         48,807
Paris 4 IBX financing                             317            8,071
Other loans payable                               38             4,084
         Total loans payable                      205,279        240,962
                                                               
Senior notes                                      2,250,000      1,500,000
                                                               
Convertible debt, net of debt discount            716,265        708,726
Plus debt discount                                53,447         60,990
         Total convertible debt principal         769,712        769,716
                                                               
Total debt outstanding                          $ 3,995,126   $  3,071,737
                                                                  

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                                                     
                                                                                       
                       Three Months Ended                             Six Months Ended
                       June 30,       March 31,        June 30,       June 30,        June 30,
                       2013           2013             2012           2013            2012
                                                                                       
Cash flows from
operating
activities:
    Net income         $ (28,129  )   $ 36,323         $ 37,640       $ 8,194         $ 72,451
    (loss)
    Adjustments to
    reconcile net
    income (loss) to
    net cash
    provided by
    operating
    activities:
      Depreciation,
      amortization       110,117        108,531          96,944         218,648         190,866
      and accretion
      Stock-based        24,194         22,703           20,549         46,897          39,652
      compensation
      Debt issuance
      costs and debt     5,884          5,753            4,902          11,637          13,009
      discount
      Loss on debt       93,602         -                -              93,602          -
      extinguishment
      Restructuring      (4,837   )     -                -              (4,837    )     -
      charges
      Excess tax
      benefits from      (3,431   )     (18,990    )     -              (22,421   )     -
      employee
      equity awards
      Other
      reconciling        3,949          3,085            984            7,034           3,841
      items
      Changes in
      operating
      assets and
      liabilities:
        Accounts         (19,098  )     (24,663    )     (14,864  )     (43,761   )     (34,541  )
        receivable
        Income           (74,153  )     (1,609     )     31,985         (75,762   )     23,222
        taxes, net
        Accounts
        payable and      28,392         (27,996    )     30,648         396             (9,887   )
        accrued
        expenses
        Other assets
        and              10,669         (18,956    )     (14,006  )     (8,287    )     22,162    
        liabilities
          Net cash
          provided
          by             147,159        84,181           194,782        231,340         320,775   
          operating
          activities
Cash flows from
investing
activities:
    Purchases, sales
    and maturities       (175,593 )     (232,965   )     279,621        (408,558  )     625,987
    of investments,
    net
    Purchase of New
    York IBX data        (2,960   )     -                -              (2,960    )     -
    center
    Purchase of Asia
    Tone, less cash      -              (107       )     -              (107      )     -
    acquired
    Purchases of
    other property,      (122,863 )     (75,667    )     (196,484 )     (198,530  )     (341,974 )
    plant and
    equipment
    Other investing      838,963        (833,801   )     10,743         5,162           79,300    
    activities
          Net cash
          provided
          by (used       537,547        (1,142,540 )     93,880         (604,993  )     363,313   
          in)
          investing
          activities
Cash flows from
financing
activities:
    Purchases of         -              -                -              -               (13,364  )
    treasury stock
    Proceeds from
    employee equity      1,512          14,368           6,013          15,880          36,473
    awards
    Proceeds from        -              -                -              -               8,909
    loans payable
    Proceeds from        -              1,500,000        -              1,500,000       -
    senior notes
    Repayment of
    capital lease
    and other            (4,157   )     (3,516     )     (3,032   )     (7,673    )     (5,858   )
    financing
    obligations
    Repayment of         (18,139  )     (14,052    )     (10,170  )     (32,191   )     (77,299  )
    loans payable
    Repayment of         (750,000 )     -                -              (750,000  )     -
    senior notes
    Repayment of         -              -                (250,007 )     -               (250,007 )
    convertible debt
    Debt
    extinguishment       (80,925  )     -                -              (80,925   )     -
    costs
    Excess tax
    benefits from        3,431          18,990           -              22,421          -
    employee equity
    awards
    Other financing      (1,756   )     (19,030    )     (7,520   )     (20,786   )     (7,520   )
    activities
          Net cash
          provided
          by (used       (850,034 )     1,496,760        (264,716 )     646,726         (308,666 )
          in)
          financing
          activities
Effect of foreign
currency exchange        (2,195   )     (5,595     )     (2,794   )     (7,790    )     (149     )
rates on cash and
cash equivalents
Net increase
(decrease) in cash       (167,523 )     432,806          21,152         265,283         375,273
and cash equivalents
Cash and cash
equivalents at           685,019        252,213          632,944        252,213         278,823   
beginning of period
Cash and cash
equivalents at end     $ 517,496      $ 685,019        $ 654,096      $ 517,496       $ 654,096   
of period
                                                                                       
    Supplemental
    cash flow
    information:
      Cash paid for    $ 62,818       $ 14,036         $ 5,031        $ 76,854        $ 6,765     
      taxes
      Cash paid for    $ 29,664       $ 67,975         $ 28,965       $ 97,639        $ 92,301    
      interest
                                                                                       
Free cash flow (1)     $ 860,299      $ (825,394   )   $ 9,041        $ 34,905        $ 58,101    
                                                                                       
Adjusted free cash     $ 866,690      $ (806,297   )   $ 9,041        $ 60,393        $ 58,101    
flow (2)
                                                                                       
Ongoing capital        $ 40,210       $ 33,997         $ 37,537       $ 74,207        $ 75,999    
expenditures (3)
                                                                                       
Discretionary free     $ 106,949      $ 50,184         $ 157,245      $ 157,133       $ 244,776   
cash flow (4)
                                                                                       
Adjusted
discretionary free     $ 163,950      $ 72,908         $ 157,245      $ 236,858       $ 244,776   
cash flow (5)
           
                                                                                       
    We define free cash flow as net cash provided by operating activities plus net cash provided
(1) by (used in) investing activities (excluding the net purchases, sales and maturities of
    investments) as presented below:
                                                                                       
    Net cash
    provided by
    operating          $ 147,159      $ 84,181         $ 194,782      $ 231,340       $ 320,775
    activities as
    presented above
    Net cash
    provided by
    (used in)            537,547        (1,142,540 )     93,880         (604,993  )     363,313
    investing
    activities as
    presented above
    Purchases, sales
    and maturities       175,593        232,965          (279,621 )     408,558         (625,987 )
    of investments,
    net
      Free cash flow
      (negative free   $ 860,299      $ (825,394   )   $ 9,041        $ 34,905        $ 58,101    
      cash flow)
                                                                                       
    We define adjusted free cash flow as free cash flow (as defined above) excluding any purchases
(2) of real estate, acquisitions, sales of discontinued operations and any excess tax benefits
    from employee equity awards, as presented below:
                                                                                       
    Free cash flow
    (as defined        $ 860,299      $ (825,394   )   $ 9,041        $ 34,905        $ 58,101
    above)
    Less purchase of
    New York IBX         2,960          -                -              2,960           -
    data center
    Less purchase of
    Asia Tone, less      -              107              -              107             -
    cash acquired
    Less excess tax
    benefits from        3,431          18,990           -              22,421          -         
    employee equity
    awards
      Adjusted free
      cash flow
      (negative        $ 866,690      $ (806,297   )   $ 9,041        $ 60,393        $ 58,101    
      adjusted free
      cash flow)
                                                                                       
    We refer to our purchases of other property, plant and equipment as our capital expenditures
(3) (or capex). We categorize our capital expenditures into expansion and ongoing capex. Expansion
    capex is capex spent to build out our new data centers and data center expansions. Our ongoing
    capex represents all of our other capex spending.
                                                                                       
    Ongoing capital    $ 40,210       $ 33,997         $ 37,537       $ 74,207        $ 75,999
    expenditures
    Expansion
    capital              82,653         41,670           158,947        124,323         265,975   
    expenditures
      Total capital    $ 122,863      $ 75,667         $ 196,484      $ 198,530       $ 341,974   
      expenditures
                                                                                       
(4) We define discretionary free cash flow as net cash provided by operating activities less
    ongoing capital expenditures (as described above), as presented below:
                                                                                       
    Net cash
    provided by
    operating          $ 147,159      $ 84,181         $ 194,782      $ 231,340       $ 320,775
    activities as
    presented above
    Less ongoing
    capital              (40,210  )     (33,997    )     (37,537  )     (74,207   )     (75,999  )
    expenditures
      Discretionary    $ 106,949      $ 50,184         $ 157,245      $ 157,133       $ 244,776   
      free cash flow
                                                                                       
    We define adjusted discretionary free cash flow as discretionary free cash flow (as defined
(5) above), excluding any excess tax benefits from employee equity awards and cash paid for taxes
    associated with reclassifying our assets for tax purposes triggered by our planned conversion
    into a real estate investment trust ("REIT"), as presented below:
                                                                                       
    Discretionary      $ 106,949      $ 50,184         $ 157,245      $ 157,133       $ 244,776
    free cash flow
    Excess tax
    benefits from        3,431          18,990           -              22,421          -
    employee equity
    awards
    Cash paid for
    taxes resulting      53,570         3,734            -              57,304          -         
    from the planned
    REIT conversion
      Adjusted
      discretionary    $ 163,950      $ 72,908         $ 157,245      $ 236,858       $ 244,776   
      free cash flow
                                                                                       
    We categorize our cash paid for taxes into cash paid for taxes resulting from the planned REIT
    conversion (as defined above) and other cash taxes paid.
                                                                                       
    Cash paid for
    taxes resulting    $ 53,570       $ 3,734          $ -            $ 57,304        $ -
    from the planned
    REIT conversion
    Other cash taxes     9,248          10,302           5,031          19,550          6,765     
    paid
      Total cash       $ 62,818       $ 14,036         $ 5,031        $ 76,854        $ 6,765     
      paid for taxes
                                                                                                  

EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP PRESENTATION
(in thousands)
(unaudited)
                                                                                          
                                                                                            
                              Three Months Ended                           Six Months Ended
                              June 30,       March 31,      June 30,       June 30,        June 30,
                              2013           2013           2012           2013            2012
                                                                                            
Recurring revenues            $ 502,470      $ 495,271      $ 433,786      $ 997,741       $ 854,676
Non-recurring revenues          23,199         24,184         23,463         47,383          45,818    
       Revenues (1)             525,669        519,455        457,249        1,045,124       900,494   
                                                                                            
Cash cost of revenues (2)       169,077        162,759        142,011        331,836         278,372   
                  Cash
                  gross         356,592        356,696        315,238        713,288         622,122   
                  profit
                  (3)
                                                                                            
Cash operating expenses
(4):
       Cash sales and
       marketing expenses       46,430         46,280         38,689         92,710          76,808
       (5)
       Cash general and
       administrative           65,985         66,956         59,069         132,941         117,238   
       expenses (6)
                  Total
                  cash
                  operating     112,415        113,236        97,758         225,651         194,046   
                  expenses
                  (7)
                                                                                            
Adjusted EBITDA (8)           $ 244,177      $ 243,460      $ 217,480      $ 487,637       $ 428,076   
                                                                                            
Cash gross margins (9)          68       %     69       %     69       %     68        %     69       %
                                                                                            
Adjusted EBITDA margins         46       %     47       %     48       %     47        %     48       %
(10)
                                                                                            
Adjusted EBITDA                 12       %     32       %     49       %     40        %     68       %
flow-through rate (11)
                   
                                                                                            
(1)    The geographic split of our revenues on a services basis is presented below:
                                                                                            
       Americas Revenues:
                                                                                            
       Colocation             $ 226,536      $ 223,565      $ 209,756      $ 450,101       $ 413,674
       Interconnection          59,800         58,206         53,048         118,006         104,787
       Managed                  13,977         13,616         12,564         27,593          26,500
       infrastructure
       Rental                   445            460            445            905             884       
             Recurring          300,758        295,847        275,813        596,605         545,845
             revenues
       Non-recurring            11,685         12,707         12,308         24,392          21,405    
       revenues
             Revenues           312,443        308,554        288,121        620,997         567,250   
                                                                                            
       EMEA Revenues:
                                                                                            
       Colocation               103,916        100,532        87,820         204,448         171,771
       Interconnection          8,854          8,381          4,192          17,235          8,016
       Managed                  5,734          4,249          3,262          9,983           6,676
       infrastructure
       Rental                   138            120            336            258             680       
             Recurring          118,642        113,282        95,610         231,924         187,143
             revenues
       Non-recurring            6,970          7,012          7,087          13,982          16,890    
       revenues
             Revenues           125,612        120,294        102,697        245,906         204,033   
                                                                                            
       Asia-Pacific
       Revenues:
                                                                                            
       Colocation               67,881         71,014         49,651         138,895         96,768
       Interconnection          9,699          9,404          7,794          19,103          15,114
       Managed                  5,490          5,724          4,918          11,214          9,806     
       infrastructure
             Recurring          83,070         86,142         62,363         169,212         121,688
             revenues
       Non-recurring            4,544          4,465          4,068          9,009           7,523     
       revenues
             Revenues           87,614         90,607         66,431         178,221         129,211   
                                                                                            
       Worldwide Revenues:
                                                                                            
       Colocation               398,333        395,111        347,227        793,444         682,213
       Interconnection          78,353         75,991         65,034         154,344         127,917
       Managed                  25,201         23,589         20,744         48,790          42,982
       infrastructure
       Rental                   583            580            781            1,163           1,564     
             Recurring          502,470        495,271        433,786        997,741         854,676
             revenues
       Non-recurring            23,199         24,184         23,463         47,383          45,818    
       revenues
             Revenues         $ 525,669      $ 519,455      $ 457,249      $ 1,045,124     $ 900,494   
                                                                                            
(2)    We define cash cost of revenues as cost of revenues less depreciation, amortization, accretion
       and stock-based compensation as presented below:
                                                                                            
       Cost of revenues       $ 267,693      $ 259,268      $ 225,289      $ 526,961       $ 442,387
       Depreciation,
       amortization and         (96,822  )     (94,907  )     (81,744  )     (191,729  )     (161,164 )
       accretion expense
       Stock-based              (1,794   )     (1,602   )     (1,534   )     (3,396    )     (2,851   )
       compensation expense
             Cash cost of     $ 169,077      $ 162,759      $ 142,011      $ 331,836       $ 278,372   
             revenues
                                                                                            
       The geographic split of our cash cost of revenues is presented below:
                                                                                            
       Americas cash cost     $ 90,546       $ 88,473       $ 81,465       $ 179,019       $ 160,547
       of revenues
       EMEA cash cost of        47,304         43,629         37,392         90,933          72,745
       revenues
       Asia-Pacific cash        31,227         30,657         23,154         61,884          45,080    
       cost of revenues
             Cash cost of     $ 169,077      $ 162,759      $ 142,011      $ 331,836       $ 278,372   
             revenues
                                                                                            
(3)    We define cash gross profit as revenues less cash cost of revenues (as defined above).
                                                                                            
       We define cash operating expenses as operating expenses less depreciation, amortization,
(4)    stock-based compensation, restructuring charges, impairment charges and acquisition costs. We
       also refer to cash operating expenses as cash selling, general and administrative expenses or
       "cash SG&A".
                                                                                            
(5)    We define cash sales and marketing expenses as sales and marketing expenses less depreciation,
       amortization and stock-based compensation as presented below:
                                                                                            
       Sales and marketing    $ 59,478       $ 58,276       $ 47,603       $ 117,754       $ 94,013
       expenses
       Depreciation and         (6,223   )     (6,275   )     (4,239   )     (12,498   )     (8,495   )
       amortization expense
       Stock-based              (6,825   )     (5,721   )     (4,675   )     (12,546   )     (8,710   )
       compensation expense
             Cash sales and
             marketing        $ 46,430       $ 46,280       $ 38,689       $ 92,710        $ 76,808    
             expenses
                                                                                            
(6)    We define cash general and administrative expenses as general and administrative expenses less
       depreciation, amortization and stock-based compensation as presented below:
                                                                                            
       General and
       administrative         $ 88,632       $ 89,685       $ 80,595       $ 178,317       $ 158,911
       expenses
       Depreciation and         (7,072   )     (7,349   )     (7,291   )     (14,421   )     (13,765  )
       amortization expense
       Stock-based              (15,575  )     (15,380  )     (14,235  )     (30,955   )     (27,908  )
       compensation expense
             Cash general
             and              $ 65,985       $ 66,956       $ 59,069       $ 132,941       $ 117,238   
             administrative
             expenses
                                                                                            
(7)    Our cash operating expenses, or cash SG&A, as defined above, is presented below:
                                                                                            
       Cash sales and         $ 46,430       $ 46,280       $ 38,689       $ 92,710        $ 76,808
       marketing expenses
       Cash general and
       administrative           65,985         66,956         59,069         132,941         117,238   
       expenses
             Cash SG&A        $ 112,415      $ 113,236      $ 97,758       $ 225,651       $ 194,046   
                                                                                            
       The geographic split of our cash operating expenses, or cash SG&A, is presented below:
                                                                                            
       Americas cash SG&A     $ 69,287       $ 73,551       $ 65,774       $ 142,838       $ 132,623
       EMEA cash SG&A           29,016         27,611         20,100         56,627          39,199
       Asia-Pacific cash        14,112         12,074         11,884         26,186          22,224    
       SG&A
             Cash SG&A        $ 112,415      $ 113,236      $ 97,758       $ 225,651       $ 194,046   
                                                                                            
       We define adjusted EBITDA as income from continuing operations plus depreciation, amortization,
(8)    accretion, stock-based compensation expense, restructuring charges, impairment charges and
       acquisition costs as presented below:
                                                                                            
       Income from
       continuing             $ 112,177      $ 108,564      $ 102,096      $ 220,741       $ 202,842
       operations
       Depreciation,
       amortization and         110,117        108,531        93,274         218,648         183,424
       accretion expense
       Stock-based              24,194         22,703         20,444         46,897          39,469
       compensation expense
       Restructuring            (4,837   )     -              -              (4,837    )     -
       charges
       Acquisition costs        2,526          3,662          1,666          6,188           2,341     
             Adjusted         $ 244,177      $ 243,460      $ 217,480      $ 487,637       $ 428,076   
             EBITDA
                                                                                            
       The geographic split of our adjusted EBITDA is presented below:
                                                                                            
       Americas income from
       continuing             $ 72,064       $ 62,597       $ 66,672       $ 134,661       $ 128,238
       operations
       Americas
       depreciation,            65,077         63,224         58,659         128,301         115,308
       amortization and
       accretion expense
       Americas stock-based     18,168         17,311         15,552         35,479          30,625
       compensation expense
       Americas
       restructuring            (4,837   )     -              -              (4,837    )     -
       charges
       Americas acquisition     2,138          3,398          (1       )     5,536           (91      )
       costs
             Americas
             adjusted           152,610        146,530        140,882        299,140         274,080   
             EBITDA
                                                                                            
       EMEA income from
       continuing               22,414         22,863         22,962         45,277          50,241
       operations
       EMEA depreciation,
       amortization and         23,424         23,071         18,329         46,495          35,641
       accretion expense
       EMEA stock-based         3,065          3,038          2,673          6,103           4,837
       compensation expense
       EMEA acquisition         389            82             1,241          471             1,370     
       costs
             EMEA adjusted      49,292         49,054         45,205         98,346          92,089    
             EBITDA
                                                                                            
       Asia-Pacific income
       from continuing          17,699         23,104         12,462         40,803          24,363
       operations
       Asia-Pacific
       depreciation,            21,616         22,236         16,286         43,852          32,475
       amortization and
       accretion expense
       Asia-Pacific
       stock-based              2,961          2,354          2,219          5,315           4,007
       compensation expense
       Asia-Pacific             (1       )     182            426            181             1,062     
       acquisition costs
             Asia-Pacific
             adjusted           42,275         47,876         31,393         90,151          61,907    
             EBITDA
                                                                                            
                  Adjusted    $ 244,177      $ 243,460      $ 217,480      $ 487,637       $ 428,076   
                  EBITDA
                                                                                            
(9)    We define cash gross margins as cash gross profit divided by revenues.
                                                                                            
       Our cash gross margins by geographic region is presented below:
                                                                                            
       Americas cash gross      71       %     71       %     72       %     71        %     72       %
       margins
                                                                                            
       EMEA cash gross          62       %     64       %     64       %     63        %     64       %
       margins
                                                                                            
       Asia-Pacific cash        64       %     66       %     65       %     65        %     65       %
       gross margins
                                                                                            
(10)   We define adjusted EBITDA margins as adjusted EBITDA divided by revenues.
                                                                                            
       Americas adjusted        49       %     47       %     49       %     48        %     48       %
       EBITDA margins
                                                                                            
       EMEA adjusted EBITDA     39       %     41       %     44       %     40        %     45       %
       margins
                                                                                            
       Asia-Pacific
       adjusted EBITDA          48       %     53       %     47       %     51        %     48       %
       margins
                                                                                            
(11)   We define adjusted EBITDA flow-through rate as incremental adjusted EBITDA growth divided by
       incremental revenue growth as follows:
                                                                                            
       Adjusted EBITDA -      $ 244,177      $ 243,460      $ 217,480      $ 487,637       $ 428,076
       current period
       Less adjusted EBITDA     (243,460 )     (239,283 )     (210,596 )     (467,581  )     (380,463 )
       - prior period
             Adjusted         $ 717          $ 4,177        $ 6,884        $ 20,056        $ 47,613    
             EBITDA growth
                                                                                            
       Revenues - current     $ 525,669      $ 519,455      $ 457,249      $ 1,045,124     $ 900,494
       period
       Less revenues -          (519,455 )     (506,520 )     (443,245 )     (995,250  )     (830,324 )
       prior period
             Revenue growth   $ 6,214        $ 12,935       $ 14,004       $ 49,874        $ 70,170    
                                                                                            
       Adjusted EBITDA          12       %     32       %     49       %     40        %     68       %
       flow-through rate

Contact:

Equinix Investor Relations Contacts:
Equinix, Inc.
Katrina Rymill, 650-598-6583
krymill@equinix.com
or
Equinix, Inc.
Samir Patodia, 650-598-6587
spatodia@equinix.com
or
Equinix Media Contacts:
Equinix, Inc.
Melissa Neumann, 650-598-6098
mneumann@equinix.com
or
GolinHarris for Equinix, Inc.
Liam Rose, 415-318-4380
lrose@golinharris.com
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