filings.toolsItem 16. Form 10-K Summary
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Item 16. Form 10-K Summary
Not applicable.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
| EQUINIX, INC. (Registrant) | ||||||||
| February 17, 2023 | By | /s/ CHARLES MEYERS | ||||||
| Charles Meyers | ||||||||
| Chief Executive Officer and President |
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Charles Meyers 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/ CHARLES MEYERS | Chief Executive Officer and President (Principal Executive Officer) | February 17, 2023 | ||||||
| Charles Meyers | ||||||||
| /s/ KEITH D. TAYLOR | Chief Financial Officer (Principal Financial Officer) | February 17, 2023 | ||||||
| Keith D. Taylor | ||||||||
| /s/ SIMON MILLER | Chief Accounting Officer (Principal Accounting Officer) | February 17, 2023 | ||||||
| Simon Miller | ||||||||
| /s/ PETER F. VAN CAMP | Executive Chairman | February 17, 2023 | ||||||
| Peter F. Van Camp | ||||||||
| /s/ NANCI CALDWELL | Director | February 17, 2023 | ||||||
| Nanci Caldwell | ||||||||
| /s/ ADAIRE FOX-MARTIN | Director | February 17, 2023 | ||||||
| Adaire Fox-Martin | ||||||||
| /s/ RON GUERRIER | Director | February 17, 2023 | ||||||
| Ron Guerrier | ||||||||
| /s/ GARY F. HROMADKO | Director | February 17, 2023 | ||||||
| Gary F. Hromadko | ||||||||
| /s/ IRVING F. LYONS, III | Director | February 17, 2023 | ||||||
| Irving F. Lyons, III | ||||||||
| /s/ CHRISTOPHER B. PAISLEY | Director | February 17, 2023 | ||||||
| Christopher B. Paisley | ||||||||
| /s/ SANDRA RIVERA | Director | February 17, 2023 | ||||||
| Sandra Rivera | ||||||||
| /s/ THOMAS OLINGER | Director | February 17, 2023 | ||||||
| Thomas Olinger | ||||||||
| /s/ JEETU PATEL | Director | February 17, 2023 | ||||||
| Jeetu Patel | ||||||||
| /s/ FIDELMA RUSSO | Director | February 17, 2023 | ||||||
| Fidelma Russo |
Index to Exhibits
** Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Equinix, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Equinix, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and December 31, 2021, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders' equity and other comprehensive income (loss) and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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.
F-1
Definition and Limitations of Internal Control over Financial Reporting
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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Income taxes - Real estate investment trust asset tests
As described in Notes 1 and 14 to the consolidated financial statements, the Company recorded income tax expense of $124.8 million for the year ended December 31, 2022. The Company has been operating as a real estate investment trust for federal income tax purposes ("REIT") effective January 1, 2015. As a result, the Company may deduct the dividends made to its stockholders from taxable income generated by the Company and its qualified REIT subsidiaries ("QRSs"). The Company’s qualification and taxation as a REIT depends on its satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. The Company’s ability to satisfy quarterly asset tests depends upon its analysis and the fair market values of its REIT and non-REIT assets. For purposes of the quarterly REIT asset tests, management estimates the fair market value of assets within its QRSs and taxable REIT subsidiaries (“TRSs”) using a discounted cash flow approach, by calculating the present value of forecasted future cash flows. Management applies discount rates based on industry benchmarks relative to the market and forecasting risks. Other significant assumptions used by management to estimate the fair market value of assets in QRSs and TRSs include projected revenue growth, projected operating margins, and projected capital expenditures. Management revisits significant assumptions periodically to reflect any changes due to the business or economic environment.
The principal considerations for our determination that performing procedures relating to income taxes - REIT asset tests is a critical audit matter are (i) the significant judgment by management when determining the fair market value of REIT and non-REIT assets, which in turn led to a high degree of subjectivity in performing procedures relating to the REIT asset tests, (ii) the significant audit effort and judgment in evaluating audit evidence related to the significant assumptions used in the REIT asset tests related to the discount rates, projected revenue growth, projected operating margins, and projected capital expenditures, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the REIT asset tests, including controls over management's determination of the fair market value of REIT and non-REIT assets. These procedures also included, among others, testing management’s process for estimating the fair market value of the REIT and non-REIT assets; evaluating the appropriateness of the
F-2
discounted cash flow approach; testing the completeness and accuracy of underlying data used in the approach; and evaluating the significant assumptions used by management related to the discount rates, projected revenue growth, projected operating margins, and projected capital expenditures. Evaluating management’s assumptions related to projected revenue growth, projected operating margins, and projected capital expenditures involved considering the current and past performance of the Company, economic and industry trends, as well as whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow approach and the discount rate assumptions.
/s/ PricewaterhouseCoopers LLP
San Jose, California
February 17, 2023
We have served as the Company's auditor since 2000.
F-3
EQUINIX, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,906,421 | $ | 1,536,358 | |||||||
| Accounts receivable, net of allowance of $12,225 and $11,635 | 855,380 | 681,809 | |||||||||
| Other current assets | 459,138 | 462,739 | |||||||||
| Assets held for sale | 84,316 | 276,195 | |||||||||
| Total current assets | 3,305,255 | 2,957,101 | |||||||||
| Property, plant and equipment, net | 16,649,534 | 15,445,775 | |||||||||
| Operating lease right-of-use assets | 1,427,950 | 1,282,418 | |||||||||
| Goodwill | 5,654,217 | 5,372,071 | |||||||||
| Intangible assets, net | 1,897,649 | 1,935,267 | |||||||||
| Other assets | 1,376,137 | 926,066 | |||||||||
| Total assets | $ | 30,310,742 | $ | 27,918,698 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | 1,004,800 | $ | 879,144 | |||||||
| Accrued property, plant and equipment | 281,347 | 187,334 | |||||||||
| Current portion of operating lease liabilities | 139,538 | 144,029 | |||||||||
| Current portion of finance lease liabilities | 151,420 | 147,841 | |||||||||
| Current portion of mortgage and loans payable | 9,847 | 33,087 | |||||||||
| Other current liabilities | 251,346 | 214,519 | |||||||||
| Total current liabilities | 1,838,298 | 1,605,954 | |||||||||
| Operating lease liabilities, less current portion | 1,272,812 | 1,107,180 | |||||||||
| Finance lease liabilities, less current portion | 2,143,690 | 1,989,668 | |||||||||
| Mortgage and loans payable, less current portion | 642,708 | 586,577 | |||||||||
| Senior notes, less current portion | 12,109,539 | 10,984,144 | |||||||||
| Other liabilities | 797,863 | 763,411 | |||||||||
| Total liabilities | 18,804,910 | 17,036,934 | |||||||||
| Commitments and contingencies (Note 15) | |||||||||||
| Equinix stockholders' equity: | |||||||||||
| Preferred stock, $0.001 par value per share: 100,000,000 shares authorized in 2022 and 2021; zero shares issued and outstanding | — | — | |||||||||
| Common stock, $0.001 par value per share: 300,000,000 shares authorized in 2022 and 2021; 92,813,976 issued and 92,620,703 outstanding in 2022 and 90,872,826 issued and 90,571,406 outstanding in 2021 | 93 | 91 | |||||||||
| Additional paid-in capital | 17,320,017 | 15,984,597 | |||||||||
| Treasury stock, at cost; 193,273 shares in 2022 and 301,420 shares in 2021 | (71,966) | (112,208) | |||||||||
| Accumulated dividends | (7,317,570) | (6,165,140) | |||||||||
| Accumulated other comprehensive loss | (1,389,446) | (1,085,751) | |||||||||
| Retained earnings | 2,964,838 | 2,260,493 | |||||||||
| Total Equinix stockholders' equity | 11,505,966 | 10,882,082 | |||||||||
| Non-controlling interests | (134) | (318) | |||||||||
| Total stockholders' equity | 11,505,832 | 10,881,764 | |||||||||
| Total liabilities and stockholders' equity | $ | 30,310,742 | $ | 27,918,698 |
See accompanying notes to consolidated financial statements.
F-4
EQUINIX, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
| Years Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Revenues | $ | 7,263,105 | $ | 6,635,537 | $ | 5,998,545 | |||||||||||
| Costs and operating expenses: | |||||||||||||||||
| Cost of revenues | 3,751,501 | 3,472,422 | 3,074,340 | ||||||||||||||
| Sales and marketing | 786,560 | 741,232 | 718,356 | ||||||||||||||
| General and administrative | 1,498,701 | 1,301,797 | 1,090,981 | ||||||||||||||
| Transaction costs | 21,839 | 22,769 | 55,935 | ||||||||||||||
| Impairment charges | — | — | 7,306 | ||||||||||||||
| (Gain) loss on asset sales | 3,976 | (10,845) | (1,301) | ||||||||||||||
| Total costs and operating expenses | 6,062,577 | 5,527,375 | 4,945,617 | ||||||||||||||
| Income from operations | 1,200,528 | 1,108,162 | 1,052,928 | ||||||||||||||
| Interest income | 36,268 | 2,644 | 8,654 | ||||||||||||||
| Interest expense | (356,337) | (336,082) | (406,466) | ||||||||||||||
| Other income (expense) | (51,417) | (50,647) | 6,913 | ||||||||||||||
| Gain (loss) on debt extinguishment | 327 | (115,125) | (145,804) | ||||||||||||||
| Income before income taxes | 829,369 | 608,952 | 516,225 | ||||||||||||||
| Income tax expense | (124,792) | (109,224) | (146,151) | ||||||||||||||
| Net income | 704,577 | 499,728 | 370,074 | ||||||||||||||
| Net (income) loss attributable to non-controlling interests | (232) | 463 | (297) | ||||||||||||||
| Net income attributable to Equinix | $ | 704,345 | $ | 500,191 | $ | 369,777 | |||||||||||
| Earnings per share ("EPS") attributable to Equinix: | |||||||||||||||||
| Basic EPS | $ | 7.69 | $ | 5.57 | $ | 4.22 | |||||||||||
| Weighted-average shares for basic EPS | 91,569 | 89,772 | 87,700 | ||||||||||||||
| Diluted EPS | $ | 7.67 | $ | 5.53 | $ | 4.18 | |||||||||||
| Weighted-average shares for diluted EPS | 91,828 | 90,409 | 88,410 |
See accompanying notes to consolidated financial statements.
F-5
EQUINIX, INC.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
| Years Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Net income | $ | 704,577 | $ | 499,728 | $ | 370,074 | |||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||
| Foreign currency translation adjustment ("CTA") gain (loss), net of tax effects of $0, $0 and $0 | (769,886) | (559,969) | 548,560 | ||||||||||||||
| Net investment hedge CTA gain (loss), net of tax effects of $0, $0 and $0 | 425,701 | 326,982 | (444,553) | ||||||||||||||
| Unrealized gain (loss) on cash flow hedges, net of tax effects of $2,248, $(16,980) and $14,521 | 40,543 | 60,562 | (82,790) | ||||||||||||||
| Net actuarial gain (loss) on defined benefit plans, net of tax effects of $25, $(14) and $(23) | (101) | 57 | 85 | ||||||||||||||
| Total other comprehensive income (loss), net of tax | (303,743) | (172,368) | 21,302 | ||||||||||||||
| Comprehensive income, net of tax | 400,834 | 327,360 | 391,376 | ||||||||||||||
| Net (income) loss attributable to non-controlling interests | (232) | 463 | (297) | ||||||||||||||
| Other comprehensive (income) loss attributable to non-controlling interests | 48 | (15) | (57) | ||||||||||||||
| Comprehensive income attributable to Equinix | $ | 400,650 | $ | 327,808 | $ | 391,022 |
See accompanying notes to consolidated financial statements.
F-6
EQUINIX, INC.
Consolidated Statements of Stockholders' Equity and Other Comprehensive Income (Loss)
For the Three Years Ended December 31, 2022
(in thousands, except share data)
| Common stock | Treasury stock | Additional Paid-in Capital | Accumulated Dividends | AOCI (Loss) | Retained Earnings | Equinix Stockholders' Equity | Non-controlling Interests | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2019 | 85,700,953 | $ | 86 | (392,567) | $ | (144,256) | $ | 12,696,433 | $ | (4,168,469) | $ | (934,613) | $ | 1,391,425 | $ | 8,840,606 | $ | (224) | $ | 8,840,382 | |||||||||||||||||||||||||||||||||||||||||||||
| Adjustment from adoption of new accounting standard | — | — | — | — | — | — | — | (900) | (900) | — | (900) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 369,777 | 369,777 | 297 | 370,074 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | 21,245 | — | 21,245 | 57 | 21,302 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock and release of treasury stock for employee equity awards | 758,339 | — | 64,515 | 22,138 | 39,979 | — | — | — | 62,117 | — | 62,117 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity offering | 2,587,500 | 3 | — | — | 1,683,103 | — | — | — | 1,683,106 | — | 1,683,106 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under ATM Program | 415,512 | — | — | — | 298,269 | — | — | — | 298,269 | — | 298,269 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend distribution on common stock, $10.64 per share | — | — | — | — | — | (936,269) | — | — | (936,269) | — | (936,269) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of accrued dividends on vested equity awards | — | — | — | — | 189 | (770) | — | — | (581) | — | (581) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued dividends on unvested equity awards | — | — | — | — | — | (13,766) | — | — | (13,766) | — | (13,766) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net of estimated forfeitures | — | — | — | — | 310,384 | — | — | — | 310,384 | — | 310,384 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2020 | 89,462,304 | 89 | (328,052) | (122,118) | 15,028,357 | (5,119,274) | (913,368) | 1,760,302 | 10,633,988 | 130 | 10,634,118 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | 500,191 | 500,191 | (463) | 499,728 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | (172,383) | — | (172,383) | 15 | (172,368) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock and release of treasury stock for employee equity awards | 772,905 | 1 | 26,632 | 9,910 | 67,718 | — | — | — | 77,629 | — | 77,629 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under ATM Program | 637,617 | 1 | — | — | 497,869 | — | — | — | 497,870 | — | 497,870 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend distribution on common stock, $11.48 per share | — | — | — | — | — | (1,030,005) | — | — | (1,030,005) | — | (1,030,005) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of accrued dividends on vested equity awards | — | — | — | — | — | (839) | — | — | (839) | — | (839) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued dividends on unvested equity awards | — | — | — | — | — | (15,022) | — | — | (15,022) | — | (15,022) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net of estimated forfeitures | — | — | — | — | 390,653 | — | — | — | 390,653 | — | 390,653 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-7
EQUINIX INC.
Consolidated Statements of Stockholders' Equity and Other Comprehensive Income (Loss) - Continued
For the Three Years Ended December 31, 2022
(in thousands, except share data)
| AOCI (Loss) | Retained Earnings | Equinix Stockholders' Equity | Non-controlling Interests | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock | Treasury stock | Additional Paid-in Capital | Accumulated Dividends | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | 90,872,826 | 91 | (301,420) | (112,208) | 15,984,597 | (6,165,140) | (1,085,751) | 2,260,493 | 10,882,082 | (318) | 10,881,764 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 704,345 | 704,345 | 232 | 704,577 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | (303,695) | — | (303,695) | (48) | (303,743) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock and release of treasury stock | 780,444 | 1 | 108,147 | 40,242 | 90,314 | — | — | — | 130,557 | — | 130,557 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under ATM Program | 1,160,706 | 1 | — | — | 796,017 | — | — | — | 796,018 | — | 796,018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend distribution on common stock, $12.40 per share | — | — | — | — | — | (1,137,203) | — | — | (1,137,203) | — | (1,137,203) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of accrued dividends on vested equity awards | — | — | — | — | — | (927) | — | — | (927) | — | (927) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued dividends on unvested equity awards | — | — | — | — | — | (14,300) | — | — | (14,300) | — | (14,300) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net of estimated forfeitures | — | — | — | — | 449,089 | — | — | — | 449,089 | — | 449,089 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | 92,813,976 | $ | 93 | (193,273) | $ | (71,966) | $ | 17,320,017 | $ | (7,317,570) | $ | (1,389,446) | $ | 2,964,838 | $ | 11,505,966 | $ | (134) | $ | 11,505,832 |
See accompanying notes to consolidated financial statements.
F-8
EQUINIX, INC.
Consolidated Statements of Cash Flows
(in thousands)
| Years Ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net income | $ | 704,577 | $ | 499,728 | $ | 370,074 | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation | 1,531,453 | 1,450,806 | 1,224,322 | ||||||||||||||
| Stock-based compensation | 403,983 | 363,774 | 294,952 | ||||||||||||||
| Amortization of intangible assets | 204,755 | 205,484 | 199,047 | ||||||||||||||
| Amortization of debt issuance costs and debt discounts and premiums | 17,826 | 17,135 | 15,739 | ||||||||||||||
| Provision for credit loss allowance | 7,426 | 10,016 | 5,069 | ||||||||||||||
| Impairment charges | — | — | 7,306 | ||||||||||||||
| (Gain) loss on asset sales | 3,976 | (10,845) | (1,301) | ||||||||||||||
| (Gain) loss on debt extinguishment | (327) | 115,125 | 145,804 | ||||||||||||||
| Other items | 63,038 | 28,717 | 16,643 | ||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable | (153,415) | (1,873) | 25,412 | ||||||||||||||
| Income taxes, net | (7,827) | (16,602) | (22,641) | ||||||||||||||
| Other assets | (52,276) | (114,268) | (129,817) | ||||||||||||||
| Operating lease right-of-use assets | 149,094 | 140,590 | 153,650 | ||||||||||||||
| Operating lease liabilities | (132,831) | (177,533) | (142,863) | ||||||||||||||
| Accounts payable and accrued expenses | 114,600 | 64,596 | 25,801 | ||||||||||||||
| Other liabilities | 109,130 | (27,644) | 122,629 | ||||||||||||||
| Net cash provided by operating activities | 2,963,182 | 2,547,206 | 2,309,826 | ||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Purchases of investments | (144,642) | (107,533) | (127,763) | ||||||||||||||
| Sales of investments | 22,073 | 4,057 | 29,352 | ||||||||||||||
| Business acquisitions, net of cash and restricted cash acquired | (964,010) | (158,498) | (1,180,272) | ||||||||||||||
| Real estate acquisitions | (248,276) | (201,837) | (200,182) | ||||||||||||||
| Purchases of other property, plant and equipment | (2,278,004) | (2,751,512) | (2,282,504) | ||||||||||||||
| Proceeds from sale of assets, net of cash transferred | 249,906 | 208,585 | 334,397 | ||||||||||||||
| Net cash used in investing activities | (3,362,953) | (3,006,738) | (3,426,972) | ||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Proceeds from employee equity awards | 81,543 | 77,628 | 62,118 | ||||||||||||||
| Payment of dividends | (1,151,459) | (1,042,909) | (947,933) | ||||||||||||||
| Proceeds from public offering of common stock, net of issuance costs | 796,018 | 497,870 | 1,981,375 | ||||||||||||||
| Proceeds from senior notes, net of debt discounts | 1,193,688 | 3,878,662 | 4,431,627 | ||||||||||||||
| Proceeds from mortgage and loans payable | 676,850 | — | 750,790 | ||||||||||||||
| Repayment of senior notes | — | (1,990,650) | (4,363,761) | ||||||||||||||
| Repayments of finance lease liabilities | (134,202) | (165,539) | (115,288) | ||||||||||||||
| Repayments of mortgage and loans payable | (587,941) | (717,010) | (829,466) | ||||||||||||||
| Debt extinguishment costs | — | (99,185) | (111,700) | ||||||||||||||
| Debt issuance costs | (17,731) | (25,102) | (42,236) | ||||||||||||||
| Net cash provided by financing activities | 856,766 | 413,765 | 815,526 | ||||||||||||||
| Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | (98,201) | (30,474) | 40,702 | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 358,794 | (76,241) | (260,918) | ||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,549,454 | 1,625,695 | 1,886,613 | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,908,248 | $ | 1,549,454 | $ | 1,625,695 | |||||||||||
| Supplemental cash flow information | |||||||||||||||||
| Cash paid for taxes | $ | 140,312 | $ | 134,411 | $ | 143,934 | |||||||||||
| Cash paid for interest | $ | 430,217 | $ | 426,439 | $ | 498,408 | |||||||||||
| Cash and cash equivalents | $ | 1,906,421 | $ | 1,536,358 | $ | 1,604,869 | |||||||||||
| Current portion of restricted cash included in other current assets | 1,734 | 12,188 | 11,135 | ||||||||||||||
| Non-current portion of restricted cash included in other assets | 93 | 908 | 9,691 | ||||||||||||||
| Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows | $ | 1,908,248 | $ | 1,549,454 | $ | 1,625,695 | |||||||||||
See accompanying notes to consolidated financial statements.
F-9
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Equinix, Inc. ("Equinix," the "Company," "we," "our," or "us") was incorporated in Delaware on June 22, 1998. Equinix provides colocation space and related offerings. 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. We operate International Business ExchangeTM ("IBX®") data centers, or IBX data centers, across the 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 2,000 network service providers offer access to the world's internet routes inside our 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. As of December 31, 2022, we operated 236 IBX data centers in 71 markets around the world.
We have been operating as a real estate investment trust for federal income tax purposes ("REIT") effective January 1, 2015. See "Income Taxes" in Note 14 below for additional information.
Basis of Presentation, Consolidation and Foreign Currency
The accompanying consolidated financial statements include the accounts of Equinix and its subsidiaries, including the acquisitions of:
-
Three data centers in Mexico acquired from Axtel S.A.B. de C.V ("Axtel") from January 8, 2020;
-
Packet Host, Inc. (“Packet”), including its operations and technology, from March 2, 2020;
-
12 data center sites across Canada from BCE Inc. ("Bell") from October 1, 2020 and one additional data center site from November 2, 2020;
-
Two data center sites in Mumbai, India from GPX India ("GPX India Acquisition") from September 1, 2021;
-
Four data centers as well as a subsea cable and terrestrial fiber network in West Africa acquired from MainOne Cable Company ("MainOne") from April 1, 2022; and
-
Four data centers in Chile and a data center in Peru acquired from Empresa Nacional De Telecomunicaciones S.A. ("Entel") from May 2, 2022 and August 1, 2022, respectively.
We consolidate all entities that are wholly owned and those entities in which we own less than 100% of the equity but control, including Variable Interest Entities ("VIEs") for which we are the primary beneficiary. Our investment in consolidated VIEs have not been material to our consolidated financial statements as of and for the periods presented. 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 our accompanying consolidated statements of operations. For additional information on the impact of foreign currencies to our consolidated financial statements, see "Accumulated Other Comprehensive Loss" in Note 12.
Use of Estimates
The preparation of consolidated financial statements in conformity with the accounting principles generally accepted in the United States of America ("GAAP") 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, we evaluate our estimates, including, but not limited to, those related to the allowance for credit losses, fair values of financial and derivative instruments, intangible assets and goodwill, assets acquired and liabilities assumed from acquisitions, useful lives of intangible assets and property, plant and equipment, leases, asset retirement obligations, other accruals, and income taxes.
F-10
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable.
Cash, Cash Equivalents and Short-Term Investments
We consider all highly liquid instruments with an original maturity from the date of purchase of 90 days or less to be cash equivalents. Cash equivalents consist of money market mutual funds and certificates of deposit with original maturities up to 90 days. Short-term investments generally consist of certificates of deposit with original maturities of between 90 days and 1 year. Publicly traded equity securities are measured at fair value with changes in the fair values recognized within other income (expense) in our consolidated statements of operations. We review our 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 Investments
We enter into joint venture or partnership arrangements to invest in certain entities for business development objectives. At the inception of these arrangements and if a reconsideration event has occurred, we assess our interests with such entities to determine whether any of the entities meet the definition of a variable interest entity ("VIE"). A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. We are required to consolidate the assets and liabilities of VIEs when we are deemed to be the primary beneficiary. The primary beneficiary of a VIE is the entity that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. For VIEs where we are not the primary beneficiary, and other joint ventures or partnerships that are not VIEs, where we have the ability to exercise significant influence over the entity, we account for those investments under the equity method of accounting.
Equity method investments are initially measured at cost, or at fair value when the investment represents a retained equity interest in a deconsolidated business or derecognized distinct non-financial assets. Equity investments are subsequently adjusted for cash contributions, distributions and our share of the income and losses of the investees. We record our equity method investments in other assets in the consolidated balance sheet. Our proportionate shares of the income or loss from our equity method investments are recorded in other income in the consolidated statement of operations.
We review our investments quarterly to determine if any investments may be impaired considering both qualitative and quantitative factors that may have a significant impact on the investees' fair value. We did not record any impairment charges related to our equity method investments for the years ended December 31, 2022, 2021 and 2020. For further information on our Equity Method Investments, see Note 6.
Non-marketable Equity Investments
We also have investments in non-marketable equity securities, where we do not have the ability to exercise significant influence over the investees. We elected the measurement alternative under which the securities are measured at cost minus impairment, if any, and adjusted for changes resulting from qualifying observable price changes. We record non-marketable equity investment in other assets in the consolidated balance sheet. We review our non-marketable equity investments quarterly to determine if any investments may be impaired considering both qualitative and quantitative factors that may have a significant impact on the investees' fair value. We did not record any impairment charges related to our non-marketable equity investments for the years ended December 31, 2022, 2021 and 2020.
Financial Instruments and Concentration of Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. Risks associated with cash and cash equivalents and short-term investments are mitigated by our investment policy, which limits our investing to only those marketable securities rated at least A-1/P-1 Short Term Rating or A-/A3 Long Term Rating, as determined by independent credit rating agencies.
F-11
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
A significant portion of our customer base is comprised of businesses throughout the Americas. However, a portion of our revenues are derived from our EMEA and Asia-Pacific operations. The following table sets forth percentages of our revenues by geographic region for the years ended December 31:
| 2022 | 2021 | 2020 | |||||||||||||||
| Americas | 46 | % | 46 | % | 45 | % | |||||||||||
| EMEA | 32 | % | 32 | % | 33 | % | |||||||||||
| Asia-Pacific | 22 | % | 22 | % | 22 | % |
For further information on segment information, see Note 17.
Property, Plant and Equipment
Property, plant and equipment are stated at our original cost or initial fair value for property, plant and equipment acquired through acquisitions, net of depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Buildings under finance leases, Leasehold improvements and integral equipment at leased locations are amortized over the shorter of the lease term or the estimated useful life of the asset or improvement.
We capitalize certain internal and external costs associated with the development and purchase of internal-use software in property, plant and equipment, net on the consolidated balance sheets. This includes costs incurred in cloud computing arrangements ("CCA"), where it is both feasible and contractually permissible without significant penalty for us to take possession of the software. All other CCAs are considered service contracts, and the licensing and implementation costs incurred associated with such contracts are capitalized in other assets on the consolidated balance sheets. Capitalized internal-use software costs and capitalized implementation costs are amortized on a straight-line basis over the estimated useful lives of the software or arrangements.
Our estimated useful lives of property, plant and equipment are generally as follows:
| Core systems | 3 | - | 40 years | ||||||||
| Buildings | 12 | - | 60 years | ||||||||
| Leasehold improvements | 12 | - | 40 years | ||||||||
| Personal Property, including capitalized internal-use software | 3 | - | 10 years |
Our construction in progress includes direct and indirect expenditures for the construction and expansion of IBX data centers and is stated at original cost. We contracted out substantially all of the construction and expansion efforts of our 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, we 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 lives of the underlying assets.
We review our property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or an asset group may not be recoverable, such as a significant decrease in market price of an asset, a significant adverse change in the extent or manner in which an asset or an asset group is being used or its physical condition, a significant adverse change in legal factors or business climate that could affect the value of an asset or an asset group or a continuous deterioration of our financial condition. Recoverability of assets or asset groups to be held and used is assessed by comparing the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or the asset group. If the carrying amount of the asset or the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset or the asset group exceeds the fair value of the asset. We did not record any impairment charges related to our property, plant and equipment during the years ended December 31, 2022, 2021 and 2020.
F-12
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We enter into non-cancellable lease arrangements as the lessee primarily for our data center spaces, office spaces and equipment. Assets acquired through finance leases are included in property, plant and equipment, net on the consolidated balance sheets. In addition, a portion of our property, plant and equipment are used for revenue arrangements which are accounted for as operating leases where we are the lessor.
Assets Held for Sale
Assets and liabilities to be disposed of that meet all of the criteria to be classified as held for sale are reported at the lower of their carrying amounts or fair values less costs to sell. We recorded an impairment charge of $7.3 million relating to assets held for sale for the year ended December 31, 2020. Assets are not depreciated or amortized while they are classified as held for sale. For further information on our assets held for sale, see Note 5.
Asset Retirement Costs and Asset Retirement Obligations
Our asset retirement obligations are primarily related to our IBX data centers, of which the majority are leased under long-term arrangements and are required to be returned to the landlords in their original condition. The majority of our IBX data center leases have been subject to significant development by us in order to convert them from, in most cases, vacant buildings or warehouses into IBX data centers. 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, we accrete the liability in relation to the asset retirement obligations over time and the accretion expense is recorded as a cost of revenue. For further information on our asset retirement obligations, see Note 7.
Goodwill and Other Intangible Assets
We have three reportable segments comprised of the 1) Americas, 2) EMEA and 3) Asia-Pacific geographic regions, which we also determined are our reporting units. Goodwill is not amortized and is tested for impairment at least annually or more often if and when circumstances indicate that goodwill is not recoverable.
We 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. Qualitative factors considered in the assessment include industry and market conditions, overall financial performance, and other relevant events and factors affecting the reporting unit. If, after assessing the qualitative factors, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then performing a quantitative impairment test is unnecessary. However, if we conclude otherwise, then we are required to perform a quantitative goodwill impairment test. The quantitative impairment test, which is used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying value of the reporting unit exceeds its fair value, any excess of the reporting unit goodwill carrying value over the respective implied fair value is recognized as an impairment loss.
As of December 31, 2022, 2021 and 2020, we concluded that it was more likely than not that goodwill attributed to our 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.
Substantially all of our intangible assets are subject to amortization and are amortized using the straight-line method over their estimated period of benefit. We perform a review of intangible assets for impairment by assessing events or changes in circumstances that indicate the carrying amount of an asset may not be recoverable. 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 undiscounted 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. We did not record any impairment charges related to our other intangible assets during the years ended December 31, 2022, 2021 and 2020. For further information on goodwill and other intangible assets, see Note 3 and Note 7 below.
F-13
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Debt Issuance Costs
Costs and fees incurred upon debt issuances are capitalized and are amortized over the life of the related debt based on the effective interest method. Such amortization is included as a component of interest expense. Debt issuance costs related to outstanding debt are presented as a reduction of the carrying amount of the debt obligation and debt issuance costs related to the revolving credit facility are presented as other assets. For further information on debt facilities, see Note 11 below.
Derivatives and Hedging Activities
We utilize foreign currency and interest rate derivative instruments as part of our risk management strategy. Foreign currency derivatives help to mitigate the effects of foreign exchange rate fluctuations on (i) our expected revenues and expenses in the EMEA region, (ii) investments in our foreign operations and (iii) certain monetary assets and liabilities denominated in foreign currencies. Interest rate derivatives, on the other hand, are used to manage the interest rate risk associated with anticipated fixed-rate debt issuances.
These measures allow us to effectively control our financial exposure and are not used for speculative purposes. We recognize all derivatives on our consolidated balance sheets at fair value. The accounting for changes in the value of a derivative depends on whether the contract qualifies and has been designated 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 and 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 the effectiveness assessment methodology. Hedge designations are reviewed on a quarterly basis to assess whether circumstances have changed that would disrupt the hedge instrument's relationship to the forecasted transactions or net investment.
Cash Flow Hedges
The instruments we designate as cash flow hedges include foreign currency forwards and options, cross-currency swaps as well as interest rate locks. For cash flow hedges, we use a regression analysis at the time they are designated to assess their effectiveness.
We use foreign currency forwards and options to hedge our foreign currency transaction exposure for forecasted revenues and expenses in our EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona, and Swiss Franc. We use the forward method to assess effectiveness of qualifying foreign currency forwards that are designated as cash flow hedges, whereby, the change in the fair value of the derivative is recorded in other comprehensive income (loss) and reclassified to the same line item in the consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings. We use the spot method to assess effectiveness of qualifying foreign currency exchange options that are designated as cash flow hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and reclassified to the same line item in the consolidated statement of operations that is used to present the earnings effect of the hedged item when the hedged item affects earnings, and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized on a straight-line basis to the same line item in the consolidated statement of operations that is used to present the earnings effect of the hedged item. When two or more derivative instruments in combination are jointly designated as a cash flow hedging instrument, as with foreign currency exchange option collars, they are treated as a single instrument. If the hedge relationship is terminated for any derivatives designated as cash flow hedges, then the change in fair value of the derivative recorded in other comprehensive income (loss) is recognized in earnings when the previously hedged item affects earnings, consistent with the original hedge strategy.
We also utilize cross-currency interest rate swaps, which we designate as cash flow hedges, to manage the foreign currency exposure associated with a portion of our foreign currency-denominated debt. We assess the effectiveness of cross-currency interest rate swaps that are designated as cash flow hedges using the spot method. The fair value changes are recorded in other comprehensive income (loss), and when the hedged item impacts earnings, the change in fair value due to foreign currency exchange spot rates is reclassified to the corresponding line item in the consolidated statement of operations.
We use interest rate derivative instruments such as treasury locks and swap locks, collectively referred to as "interest rate locks", to manage interest rate exposure created by anticipated fixed rate debt issuances. An interest
F-14
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
rate lock is a synthetic forward sale of a benchmark interest rate, which is settled in cash based upon the difference between an agreed upon rate at inception and the prevailing benchmark rate at settlement. It effectively fixes the benchmark rate component of an upcoming debt issuance. The interest rate lock transactions are designated as cash flow hedges, with all changes in value reported in other comprehensive income (loss). Subsequent to settlement, amounts in other comprehensive income are amortized to interest expense over the term of the interest rate locks.
For hedge relationships that are 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.
Net Investment Hedges
We employ cross-currency swaps, which we designate as net investment hedges, to hedge the currency exposure associated with our net investment in our foreign subsidiaries. We use the spot method to assess effectiveness of cross-currency interest rate swaps that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis.
Occasionally, we also use foreign exchange forward contracts, which we designate as net investment hedges, to hedge against the effect of foreign exchange rate fluctuations on a portion of our net investment in the foreign subsidiaries. We use the spot method to assess effectiveness of qualifying foreign currency forwards that are designated as net investment hedges, whereby, the change in fair value due to foreign currency exchange spot rates is recorded in other comprehensive income (loss) and the change in fair value of the excluded component is recorded in other comprehensive income (loss) and amortized to interest expense on a straight-line basis.
Non-designated Hedges
Foreign currency gains or losses associated with derivatives that are not designated as hedging instruments for accounting purposes are recorded within other income (expense) in our consolidated statements of operations, with the exception of (i) foreign currency embedded derivatives contained in certain of our customer contracts and (ii) foreign exchange forward contracts that are entered into to hedge the accounting impact of the foreign currency embedded derivatives, which are recorded within revenues in our consolidated statements of operations. For further information on derivatives and hedging activities, see Note 8 below.
Fair Value of Financial Instruments
The carrying value of our cash and cash equivalents, short-term investments and derivative instruments represent their fair value, while our accounts receivable, accounts payable and accrued expenses and accrued property, plant and equipment approximate their fair value due primarily to the short-term maturity of the related instruments. The fair value of our debt, which is traded in the public debt market, is based on quoted market prices. The fair value of our debt, which is not publicly traded, is estimated by considering our credit rating, current rates available to us for debt of the same remaining maturities and terms of the debt.
Fair Value Measurements
We measure and report certain financial assets and liabilities at fair value on a recurring basis, including our investments in money market funds, certificates of deposit, publicly traded equity securities and derivatives.
We also follow 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;
F-15
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
-
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
-
Assets and liabilities classified as held for sale are measured at fair value less costs to sell and reported at the lower of the carrying amounts or the fair values less costs to sell.
For further information on fair value measurements, see Note 5 and Note 9 below.
Leases
We enter into lease arrangements primarily for land, data center spaces, office spaces and equipment. At its inception, we determine whether an arrangement is or contains a lease. We recognize a right-of-use ("ROU") asset and lease liability on the consolidated balance sheet for all leases with a term longer than 12 months, including renewals options that we are reasonably certain to exercise.
ROU assets represent our right to use an underlying asset for the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are classified and recognized at the commencement date. When there is a lease modification, including a change in lease term, we reassess its classification and remeasure the ROU asset and lease liability.
ROU lease liabilities are measured based on the present value of fixed lease payments over the lease term. ROU assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by us. Lease payments may vary because of changes in facts or circumstances occurring after the commencement, including changes in inflation indices. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate) are included in the measurement of ROU assets and lease liabilities using the index or rate at the commencement date. Subsequent changes to lease payments based on changes to the index and rate are accounted for as variable lease payments and recognized in the period they are incurred. Variable lease payments that do not depend on an index or a rate are excluded from the measurement of ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Since most of our leases do not provide an implicit rate, we use our own incremental borrowing rate ("IBR") on a collateralized basis in determining the present value of lease payments. We utilize a market-based approach to estimate the IBR. The approach requires significant judgment. Therefore, we utilize different data sets to estimate IBRs via an analysis of (i) sovereign rates; (ii) yields on our outstanding public debt; and (iii) indicative pricing on both secured and unsecured debt received from banking partners. We also apply adjustments to account for considerations related to (i) tenor; and (ii) country credit rating that may not be fully incorporated by the aforementioned data sets.
The majority of our lease arrangements include options to extend the lease. If we are reasonably certain to exercise such options, the periods covered by the options are included in the lease term. The depreciable lives of certain fixed assets and leasehold improvements are limited by the expected lease term. We have certain leases with a term of 12 months or less. For such leases, we elected not to recognize any ROU asset or lease liability on the consolidated balance sheet. We have lease agreements with lease and non-lease components. We elected to account for the lease and non-lease components as a single lease component for all classes of underlying assets for which we have identified as lease arrangements. For further information on leases, see Note 10 below.
Revenue
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; (3) managed infrastructure solutions and (4) other revenues consisting of rental income from tenants or subtenants. The remainder of our revenues are from non-recurring revenue streams, such as installation revenues, professional services, contract settlements and equipment sales. Revenues by service lines and geographic areas are included in segment information. For further information on segment information, see Note 17 below.
Revenues are recognized when control of these products and services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for the products and services. Revenues from recurring revenue streams are generally billed monthly and recognized ratably over the term of the
F-16
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
contract, generally 1 to 3 years for IBX data center colocation customers. Non-recurring installation fees, although generally paid upfront upon installation, are deferred and recognized ratably over the contract term. Professional service fees and equipment sales are recognized in the period when the services were provided. For the contracts with customers that contain multiple performance obligations, we account for individual performance obligations separately if they are distinct or as a series of distinct obligations if the individual performance obligations meet the series criteria. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The transaction price is allocated to the separate performance obligation on a relative standalone selling price basis. The standalone selling price is determined based on overall pricing objectives, taking into consideration market conditions, geographic locations and other factors. Other judgments include determining if any variable consideration should be included in the total contract value of the arrangement such as price increases.
Revenue is generally recognized on a gross basis as a principal versus on a net basis as an agent, as we are primarily responsible for fulfilling the contract, bear inventory risk and have discretion in establishing the price when selling to the customer. To the extent we do not meet the criteria for recognizing revenue on a gross basis, we record the revenue on a net basis. Revenue from contract settlements, when a customer wishes to terminate their contract early, is treated as a contract modification and recognized ratably over the remaining term of the contract, if any.
We guarantee certain service levels, such as uptime, as outlined in individual customer contracts. If these service levels are not achieved due to any failure of the physical infrastructure or offerings, or in the event of certain instances of damage to customer infrastructure within our IBX data centers, we would reduce revenue for any credits or cash payments given to the customer. Historically, these credits and cash payments have not been significant.
We enter into revenue contracts with customers for data centers and office spaces, which contain both lease and non-lease components. We elected to adopt the practical expedient which allows lessors to combine lease and non-lease components, by underlying class of asset, and account for them as one component if they have the same timing and pattern of transfer. The combined component is accounted for in accordance with the current lease accounting guidance ("Topic 842") if the lease component is predominant, and in accordance with Topic 606 if the non-lease component is predominant. In general, customer contracts for data centers are accounted for under Topic 606 and customer contracts for the use of office space are accounted for under Topic 842, which are generally classified as operating leases and are recognized on a straight-line basis over the lease term.
Certain customer agreements are denominated in currencies other than the functional currencies of the parties involved. Under applicable accounting rules, we are deemed to have foreign currency forward contracts embedded in these contracts. We assessed these embedded contracts and concluded them to be foreign currency embedded derivatives (see Note 8). These instruments are separated from their host contracts and held on our consolidated balance sheet at their fair value. The majority of these foreign currency embedded derivatives arise in certain of our 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 our consolidated statements of operations.
Contract Balances
The timing of revenue recognition, billings and cash collections result in accounts receivables, contract assets and deferred revenues. A receivable is recorded at the invoice amount, net of an allowance for credit losses and is recognized in the period when we have transferred products or provided services to our customers and when its right to consideration is unconditional. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 45 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts generally do not include a significant financing component. We assess collectability based on a number of factors, including past transaction history with the customer and the credit-worthiness of the customer. We generally do not request collateral from our customers although in certain cases we obtain a security interest in a customer's equipment placed in our IBX data centers or obtain a deposit. We also maintain an allowance for estimated losses on a lifetime loss basis resulting from the inability of our customers to make required payments for which we had expected to collect the revenues in accordance with the credit loss guidance accounting guidance ("Topic 326"). If the financial condition of our customers were to deteriorate or if they became insolvent, resulting in an impairment of their ability to make payments, greater allowances for credit losses may be required. Management specifically analyzes current
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economic news, conditions and trends, historical loss rates, customer concentrations, customer credit-worthiness, changes in customer payment terms and any applicable long term forecast when evaluating revenue recognition and the adequacy of our reserves for our accounts receivable. Any amounts that were previously recognized as revenue and subsequently determined to be uncollectable are charged to bad debt expense included in sales and marketing 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 additional reserve is established for all other accounts based on an analysis of historical credits issued. Delinquent account balances are written off after management has determined that the likelihood of collection is not probable.
A contract asset exists when we have transferred products or provided services to our customers but customer payment is conditioned on reasons other than the passage of time, such as upon the satisfaction of additional performance obligations. Certain contracts include terms related to price arrangements such as price increases and free months. We recognize revenues ratably over the contract term, which could potentially give rise to contract assets during certain periods of the contract term. Contract assets are recorded in other current assets and other assets in the consolidated balance sheet.
Deferred revenue (a contract liability) is recognized when we have an unconditional right to a payment before we transfer the products or services to customers. Deferred revenue is included in other current liabilities and other liabilities, respectively, in the consolidated balance sheet.
Contract Costs
Direct and indirect incremental costs solely related to obtaining revenue contracts are capitalized as costs of obtaining a contract, when they are incremental and if they are expected to be recovered. Such costs consist primarily of commission fees and sales bonuses, as well as indirect related payroll costs. In 2022, contract costs were amortized over the estimated period of 5.5 years on a straight-line basis. We elected to apply the practical expedient which allows us to expense contract costs when incurred, if the amortization period is one year or less.
For further information on revenue recognition, see Note 2 below.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the future tax consequences attributable to differences that exist between the financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as tax attributes such as operating loss, capital loss and tax credits carryforwards on a taxing jurisdiction basis. 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. Recognized income tax positions are measured at the largest amount that has a greater than 50 percent likelihood of being realized. Any subsequent changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
We elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our 2015 taxable year. As a result, we may deduct the dividends made to our stockholders from taxable income generated by us and that of our qualified REIT subsidiaries ("QRSs"). Our dividends paid deduction generally eliminates the U.S. federal taxable income of our REIT and QRSs, resulting in no U.S. federal income tax due. However, our domestic taxable REIT subsidiaries ("TRSs") are subject to the U.S. corporate income taxes on any taxable income generated by them. In addition, our foreign operations are subject to local income taxes regardless of whether the foreign operations are operated as QRSs or TRSs.
Our qualification and taxation as a REIT depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Our ability to satisfy quarterly asset tests depends upon our analysis and the fair market values of our REIT and non-REIT assets. For purposes of the quarterly REIT asset tests, we estimate the fair market value of assets within our QRSs and TRSs using a
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discounted cash flow approach, by calculating the present value of forecasted future cash flows. We apply discount rates based on industry benchmarks relative to the market and forecasting risks. Other significant assumptions used to estimate the fair market value of assets in QRSs and TRSs include projected revenue growth, projected operating margins, and projected capital expenditures. We revisit significant assumptions periodically to reflect any changes due to business or economic environment.
For further information on income taxes, see Note 14 below.
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. We generally recognize stock-based compensation expense on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. 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. We elected to estimate forfeitures based on historical forfeiture rates.
We grant restricted stock units ("RSUs") or restricted stock awards ("RSAs") to our employees and these equity awards generally have only a service condition. We grant RSUs to our executives that generally have a service and performance condition or a service and market condition. Performance conditions contained in an equity award are generally tied to our financial performance. We assess the probability of meeting these performance conditions on a quarterly basis. The majority of our RSUs vest over four years, although certain equity awards for executives vest over a range of two to four years. Our RSAs vest over three years. The valuation of RSUs and RSAs 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 our stock price on the date of grant. We use a Monte Carlo simulation option-pricing model to determine the fair value of RSUs with a service and market condition.
We use the Black-Scholes option-pricing model to determine the fair value of our employee stock purchase plan ("ESPP"). The determination of the fair value of shares purchased under the ESPP is affected by assumptions regarding a number of complex and subjective variables including our expected stock price volatility over the term of the awards and actual and projected employee stock purchase behaviors. We 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 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 was based on average dividend yields and 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). We record the excess tax benefits from stock-based compensation as income tax expense through the statement of operations. For further information on stock-based compensation, see Note 13 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 exchange rates 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 in the period incurred and recorded within other income (expense). Certain inter-company balances are designated as loans of a long-term investment-type nature. 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.
Earnings Per Share
We compute basic and diluted EPS for net income. Basic EPS is computed using net income and the weighted-average number of common shares outstanding. Diluted EPS is computed using net income and the weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding. Dilutive
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potential common shares include the assumed exercise, vesting and issuance activity of employee equity awards using the treasury stock method. For further information on earnings per share, see Note 4 below.
Treasury Stock
We account 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 retained earnings.
Recent Accounting Pronouncements
Accounting Standards Not Yet Adopted
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, "Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations". This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. We do not expect the adoption of this standard to have a significant impact on our consolidated financial statements.
Accounting Standards Recently Adopted
Financial Instruments - Credit Losses
In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses ("Topic 326"): Measurement of Credit Losses on Financial Instruments. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced qualitative and quantitative disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We adopted this new ASU on January 1, 2020 using the modified retrospective approach and recorded a net decrease to retained earnings of $0.9 million and a corresponding increase to allowance for credit losses. The adoption did not have a significant impact on other financial assets within the scope of Topic 326, such as contract assets.
Reference Rate Reform
In March 2020, FASB issued ASU 2020-04, Reference Rate Reform ("Topic 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In addition, FASB issued ASU 2021-01, Reference Rate Reform ("Topic 848"), which clarifies the scope of Topic 848. Collectively, the guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2021-01 is effective upon issuance and ASU 2020-04 was effective for all entities as of March 12, 2020, and together remained effective through December 31, 2022. In December 2022, FASB issued ASU 2022-06, Reference Rate Reform ("Topic 848"): Deferral of the Sunset Date of Topic 848. Because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this Update defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. We adopted these ASUs upon their respective issuances and there was no impact on our consolidated financial statements as a result of adopting the guidance. We will evaluate our debt, derivative and lease contracts that may become eligible for modification relief and may apply the elections prospectively as needed.
Income Taxes
In December 2019, FASB issued ASU 2019-12, Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes. The ASU simplifies accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also improves consistent application of and simplifies generally accepted
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accounting principles ("GAAP") for other areas of Topic 740 by clarifying and amending existing guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted including adoption in any interim period for periods for which financial statements have not yet been issued. On January 1, 2021, we adopted this ASU on a prospective basis and the adoption of this standard did not have an impact on our consolidated financial statements.
Debt with Conversion and Other Options
In August 2020, FASB issued ASU 2020-06: Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock and modifies the disclosure requirement for the convertible instruments. Additionally, this ASU improves the consistency of EPS calculations by eliminating the use of the treasury stock method to calculate diluted EPS for convertible instruments and clarifies certain areas under the current EPS guidance. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted at the beginning of the fiscal year after December 15, 2020. On January 1, 2022, we adopted this ASU on a prospective basis and the adoption of this standard did not have a material impact on our consolidated financial statements.
Business Combinations
In October 2021, FASB issued ASU 2021-08 Business Combinations ("Topic 805"): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. On April 1, 2022, we early adopted this ASU and the adoption of this standard did not have a material impact on our consolidated financial statements.
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2. Revenue
Contract Balances
The following table summarizes the opening and closing balances of our accounts receivable, net; contract assets, current; contract assets, non-current; deferred revenue, current; and deferred revenue, non-current (in thousands):
| Accounts receivable, net (1) | Contract assets, current | Contract assets, non-current | Deferred revenue, current | Deferred revenue, non-current | |||||||||||||||||||||||||
| Beginning balances as of January 1, 2022 | $ | 681,809 | $ | 65,392 | $ | 55,486 | $ | 109,736 | $ | 87,495 | |||||||||||||||||||
| Closing balances as of December 31, 2022 | 855,380 | 27,608 | 55,405 | 132,090 | 155,334 | ||||||||||||||||||||||||
| Increase (Decrease) | $ | 173,571 | $ | (37,784) | $ | (81) | $ | 22,354 | $ | 67,839 | |||||||||||||||||||
| Beginning balances as of January 1, 2021 | $ | 676,738 | $ | 13,534 | $ | 54,050 | $ | 101,258 | $ | 71,242 | |||||||||||||||||||
| Closing balances as of December 31, 2021 | 681,809 | 65,392 | 55,486 | 109,736 | 87,495 | ||||||||||||||||||||||||
| Increase | $ | 5,071 | $ | 51,858 | $ | 1,436 | $ | 8,478 | $ | 16,253 |
(1) The net change in our allowance for credit losses was insignificant during the year ended December 31, 2022.
The difference between the opening and closing balances of our accounts receivable, net, contract assets and deferred revenues primarily results from revenue growth and the timing difference between the satisfaction of our performance obligation and the customer's payment, as well as business combinations closed during the years ended December 31, 2022 and 2021. The amounts of revenue recognized during the years ended December 31, 2022, 2021 and 2020 from the opening deferred revenue balance were $82.8 million, $93.1 million and $87.0 million, respectively. For the years ended December 31, 2022, 2021 and 2020, no impairment loss related to contract balances was recognized in the consolidated statement of operations.
Contract Costs
The ending balances of net capitalized contract costs as of December 31, 2022 and 2021 were $371.3 million and $325.5 million, respectively, which were included in other assets in the consolidated balance sheet. $96.0 million, $87.6 million, and $85.4 million of contract costs were amortized during years ended December 31, 2022, 2021, and 2020, respectively, which were included in sales and marketing expense in the consolidated statement of operations.
Remaining performance obligations
As of December 31, 2022, approximately $10.1 billion of total revenues, including deferred installation revenues, are expected to be recognized in future periods. Most of our revenue contracts have an initial term varying from one to three years, and thereafter, automatically renew in one-year increments. Included in the remaining performance obligations are contracts that are either under the initial term or under one-year renewal periods. We expect to recognize approximately 70% of our remaining performance obligations as revenues over the next two years, with more revenues expected to be recognized in the first year due to the impact of contracts renewal. The remainder of the balance is generally expected to be recognized over the next three to five years. We estimate our remaining performance obligations at a point in time. Actual amounts and timing of revenue recognition may differ from these estimates due to changes in actual deployments dates, contract modifications, renewals and/or terminations.
The remaining performance obligations do not include variable consideration related to unsatisfied performance obligations such as the usage of metered power, service fees from xScaleTM data centers, which are calculated based on future events or actual costs incurred in the future, or any contracts that could be terminated without any significant penalties such as the majority of interconnection revenues. The remaining performance obligations above include revenues to be recognized in the future related to arrangements where we are considered the lessor.
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3. Acquisitions
2022 Acquisitions
Acquisition of Entel Chile Data Centers (the "Entel Chile Acquisition") and Entel Peru Data Center (the "Entel Peru Acquisition")
On May 2, 2022, we further expanded in Latin America through an acquisition of four data centers in Chile from Entel, a leading Chilean telecommunications provider, for a total purchase consideration of $638.3 million at the exchange rate in effect on that date. On August 1, 2022, we completed the acquisition of a data center in Peru from Entel for a total purchase consideration of $80.3 million at the exchange rate in effect on that date. The Entel Chile Acquisition and Entel Peru Acquisition support our ongoing expansion to meet customer demand in the Latin American market.
Acquisition of MainOne (the "MainOne Acquisition")
On April 1, 2022, we completed the acquisition of all outstanding shares of MainOne, consisting of four data centers as well as a subsea cable and terrestrial fiber network. We acquired MainOne and its assets for a total purchase consideration of $278.4 million. The MainOne Acquisition supports our ongoing expansion to meet customer demand in the West African market.
2021 Acquisition
Acquisition of GPX India (the "GPX India Acquisition")
On September 1, 2021, we completed the acquisition of GPX India, representing two data centers in Mumbai, India, for a total purchase consideration of approximately INR12.5 billion, or $170.5 million at the exchange rate in effect on that date. The GPX India Acquisition supports our ongoing expansion to meet customer demand in the Indian market.
Purchase price allocation
Each of the acquisitions noted above constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under this method, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition, except where alternative measurement is required under GAAP.
As of December 31, 2022, we had not completed the detailed valuation analysis to derive the fair value of assets acquired and liabilities assumed from the Entel Peru Acquisition, Entel Chile Acquisition and MainOne Acquisition as it relates to the related tax impacts; therefore, the purchase price allocation is based on provisional estimates and subject to continuing management analysis.
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A summary of the final allocation of total purchase consideration is presented as follows (in thousands):
| GPX India | Entel Peru | Entel Chile | MainOne | ||||||||||||||||||||
| Final | Provisional | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 9,406 | $ | — | $ | — | $ | 33,026 | |||||||||||||||
| Accounts receivable | 4,399 | — | — | 9,431 | |||||||||||||||||||
| Other current assets | 8,883 | — | 12,424 | 21,988 | |||||||||||||||||||
| Property, plant and equipment | 88,130 | 13,423 | 81,132 | 239,583 | |||||||||||||||||||
| Operating lease right-of-use assets | 62 | — | — | — | |||||||||||||||||||
| Intangible assets | 15,408 | 10,000 | 153,489 | 54,800 | |||||||||||||||||||
| Goodwill | 77,145 | 46,285 | 380,867 | 110,648 | |||||||||||||||||||
| Deferred tax and other assets | 20 | 10,801 | 12,090 | 6,731 | |||||||||||||||||||
| Total assets acquired | 203,453 | 80,509 | 640,002 | 476,207 | |||||||||||||||||||
| Accounts payable and accrued liabilities | (1,566) | — | (195) | (19,790) | |||||||||||||||||||
| Other current liabilities (1) | (478) | — | — | (13,061) | |||||||||||||||||||
| Operating lease liabilities | (62) | — | — | — | |||||||||||||||||||
| Finance lease liabilities | (20,565) | — | — | — | |||||||||||||||||||
| Mortgage and loans payable | — | — | — | (25,944) | |||||||||||||||||||
| Deferred tax and other liabilities (1) | (10,317) | (167) | (1,463) | (139,062) | |||||||||||||||||||
| Net assets acquired | $ | 170,465 | $ | 80,342 | $ | 638,344 | $ | 278,350 |
(1)For the MainOne Acquisition, other current liabilities includes $9.9 million of deferred revenue - current and the other liabilities includes $95.4 million of deferred revenue - non-current.
Property, plant and equipment - The fair values of property, plant and equipment acquired from these four acquisitions were estimated by applying the cost approach, with the exception of land, which we estimated by applying the market approach. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age.
Intangible assets - The following table presents certain information on the acquired intangible assets (in thousands):
| Intangible Assets | Fair Value | Estimated Useful Lives (Years) | Weighted-average Estimated Useful Lives (Years) | Discount Rate | ||||||||||||||||||||||
| GPX India: | ||||||||||||||||||||||||||
| Customer relationships (1) | $ | 15,408 | 15.0 | 15.0 | 11.0 | % | ||||||||||||||||||||
| Entel Peru: | ||||||||||||||||||||||||||
| Customer relationships (1) | 10,000 | 15.0 | 15.0 | 7.0 | % | |||||||||||||||||||||
| Entel Chile: | ||||||||||||||||||||||||||
| Customer relationships (1) | 153,489 | 12.0 - 15.0 | 14.0 | 8.5% - 9.5% | ||||||||||||||||||||||
| MainOne: | ||||||||||||||||||||||||||
| Customer relationships (1) | 51,500 | 10.0 - 15.0 | 14.0 | 11.5 | % | |||||||||||||||||||||
| Trade names (2) | 3,300 | 5.0 | 5.0 | 11.5 | % |
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(1)The fair value was estimated by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue and/or by using benchmarking. The rates reflect the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows, as well as the risk of the country within which the acquired business operates.
(2)The fair value of the MainOne trade name was estimated using the relief from royalty method under the income approach. We applied a relief from royalty rate of 1.0%.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after the acquisition. Goodwill from the GPX India Acquisition is attributable to the Asia-Pacific region and is not deductible for local tax purposes. Goodwill from the Entel Peru and Entel Chile acquisitions are attributable to the Americas region and are not expected to be amortizable for local tax purposes. Goodwill from the MainOne Acquisition is attributable to the EMEA region and is generally not deductible for local tax purposes.
Revenues and net income from operations
The operating results of the Entel Peru and Entel Chile acquisitions are reported in the Americas region and the operating results of the MainOne Acquisition are reported in the EMEA region following the date of acquisition. During the year ended December 31, 2022, our results of operations from these acquisitions included $89.9 million of revenues and $8.2 million net income from operations.
Transaction costs
During the year ended December 31, 2022, the transaction costs for the Entel Chile and Entel Peru acquisitions were $7.2 million and the transaction costs for the MainOne acquisition were not significant.
2020 Acquisitions
Acquisition of Bell Data Centers (the "Bell Acquisition")
On October 1, 2020, we completed the acquisition of 12 data center sites across Canada from Bell, with one additional data center in Ottawa Canada acquired on November 2, 2020, for a total combined purchase consideration of approximately C$934.3 million, or $704.0 million at the exchange rates in effect on those dates. The acquisition supports our ongoing expansion to meet customer demand in Canada.
Acquisition of Packet (the "Packet Acquisition")
On March 2, 2020, we acquired all outstanding shares and equity awards of Packet, a leading bare metal automation platform for a total purchase consideration of approximately $290.3 million in cash. In addition, we paid $16.1 million in cash to accelerate the vesting of unvested Packet equity awards for certain Packet employees, which was recorded as stock-based compensation expense during the three months ended March 31, 2020. In connection with the acquisition, we also issued restricted stock awards with an aggregated fair value of $30.2 million and a three-year vesting period, which will be recognized as stock-based compensation costs over the vesting period. The acquisition, combined with Equinix MetalTM, is expected to accelerate our strategy to help enterprises deploy hybrid multicloud architectures on our data center platform.
Acquisition of data centers from Axtel (the "Axtel Acquisition")
On January 8, 2020, we completed the acquisition of three data centers in Mexico from Axtel for a total purchase consideration of approximately $189.0 million, including $175.0 million in cash and $14.0 million we paid to the seller for recoverable value-added taxes ("VAT") incurred prior to the acquisition, which related to a corresponding VAT receivable acquired upon acquisition. The acquisition supports our ongoing expansion to meet customer demand in our Americas region.
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4. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the years ended December 31 (in thousands, except per share amounts):
| 2022 | 2021 | 2020 | |||||||||||||||
| Net income | $ | 704,577 | $ | 499,728 | $ | 370,074 | |||||||||||
| Net (income) loss attributable to non-controlling interests | (232) | 463 | (297) | ||||||||||||||
| Net income attributable to Equinix | $ | 704,345 | $ | 500,191 | $ | 369,777 | |||||||||||
| Weighted-average shares used to calculate basic EPS | 91,569 | 89,772 | 87,700 | ||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||
| Employee equity awards | 259 | 637 | 710 | ||||||||||||||
| Weighted-average shares used to calculate diluted EPS | 91,828 | 90,409 | 88,410 | ||||||||||||||
| EPS attributable to Equinix: | |||||||||||||||||
| Basic EPS | $ | 7.69 | $ | 5.57 | $ | 4.22 | |||||||||||
| Diluted EPS | $ | 7.67 | $ | 5.53 | $ | 4.18 |
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):
| 2022 | 2021 | 2020 | |||||||||||||||
| Common stock related to employee equity awards and other | 582 | 206 | 19 | ||||||||||||||
| Total | 582 | 206 | 19 |
5. Assets Held for Sale
In June 2021, we entered into an agreement to form a joint venture in the form of a limited liability partnership with GIC Private Limited, Singapore's sovereign wealth fund ("GIC"), to develop and operate additional xScaleTM data centers in Europe and the Americas (the “EMEA 2 Joint Venture”). xScale data centers are engineered to meet the technical and operational requirements and price points of core hyperscale workload deployments and also offer access to our comprehensive suite of interconnection and edge solutions. The transaction was structured to close in phases over the course of two years, pending regulatory approval and other closing conditions. The assets and liabilities of the Warsaw 4 ("WA4") data center site, which were included within our EMEA region, were classified as held for sale as of June 30, 2021. In June 2022, we sold the WA4 data center in exchange for a total consideration of $61.5 million. During the year ended December 31, 2022, we recognized an insignificant gain on the sale of the WA4 data center.
In October 2021, we entered into an agreement to form a joint venture in the form of a limited liability partnership with PGIM Real Estate ("PGIM"), to develop and operate xScale data centers in Asia-Pacific (the "Asia-Pacific 2 Joint Venture"). The assets and liabilities of the Sydney 9 ("SY9") data center site, which were included within our Asia-Pacific region, were classified as held for sale as of September 30, 2021. Upon closing the joint venture in March 2022, we sold the SY9 data center in exchange for a total consideration of $201.3 million, which was comprised of $165.6 million of net cash proceeds, a 20% partnership interest in the Asia-Pacific 2 Joint Venture with a fair value of $29.8 million, and $5.9 million of receivables. During the year ended December 31, 2022, we recognized an insignificant loss on the sale of the SY9 data center.
In March 2022, we entered into an agreement to sell the Mexico 3 ("MX3") data center site in connection with the formation of a new joint venture with GIC (the "AMER 1 Joint Venture") to develop and operate xScale data centers in the Americas. Given that the key terms of the sale had been substantially agreed upon as of September 30, 2021, the assets and liabilities of the MX3 data center, which are currently included within our Americas region, were classified as held for sale as of September 30, 2021 and remained held for sale as of December 31, 2022.
F-26
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
All assets and liabilities classified as held for sale are reported at the lower of their carrying amounts or fair values less costs to sell. The following table summarizes the assets and liabilities that were classified as assets and liabilities held for sale in the consolidated balance sheets as of December 31, 2022 and 2021 (in thousands):
| December 31, 2022 | December 31, 2021 | ||||||||||
| Operating lease right-of-use assets | $ | — | $ | 12,835 | |||||||
| Property, plant and equipment | 81,368 | 260,182 | |||||||||
| Other assets | 2,948 | 3,178 | |||||||||
| Total assets held for sale | $ | 84,316 | $ | 276,195 | |||||||
| Accounts payable and accrued expenses | $ | — | $ | 510 | |||||||
| Current portion of operating lease liabilities | — | 2,039 | |||||||||
| Operating lease liabilities, less current portion | — | 348 | |||||||||
| Accrued property, plant and equipment | 10,480 | 18,127 | |||||||||
| Total liabilities held for sale (1) | $ | 10,480 | $ | 21,024 |
(1)Liabilities held for sale were included within other current liabilities on the consolidated balance sheet.
Sale of xScale****TM data center facilities in 2021
As noted above, in June 2021, we entered into an agreement to form the EMEA 2 Joint Venture with GIC. The assets and liabilities of the data center sites that were expected to be sold to the EMEA 2 Joint Venture within a year were classified as held for sale as of June 30, 2021. The first phase of the transaction, comprised of data center sites located in Frankfurt, Helsinki, Madrid, Milan and Paris, closed in September 2021. Upon closing, we sold these data center sites in exchange for a total consideration of $144.0 million, which was comprised of $106.4 million of net cash proceeds, a 20% partnership interest in the EMEA 2 Joint Venture with a fair value of $30.4 million, and $7.2 million of receivables. During the year ended December 31, 2021, we recognized an insignificant gain on the sale of these xScale data center facilities. In October 2021, we completed the sale of the Sao Paulo 5 ("SP5") data center to the EMEA 2 Joint Venture in exchange for a total consideration of $34.3 million. During the year ended December 31, 2021, we recognized an insignificant loss on the sale of the SP5 data center.
In May 2021, we entered into an agreement to sell the Dublin 5 ("DB5") data center site to the EMEA 1 Joint Venture (as defined in Note 6 below). The assets and liabilities of the DB5 data center, which were included within our EMEA region, were classified as held for sale as of June 30, 2021. In July 2021, we sold the DB5 data center in exchange for a total consideration of $77.9 million. During the year ended December 31, 2021, we recognized a total gain of $15.8 million on the sale of the DB5 data center.
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. Equity Method Investments
We hold various equity method investments, primarily joint venture or partnership arrangements, in order to invest in certain entities that are in line with our business development objectives, including the development and operation of xScale data centers. Some of these xScale joint ventures are classified as VIEs, as discussed further below. The Asia-Pacific 1, Asia-Pacific 2, Asia-Pacific 3 and EMEA 2 Joint Ventures (the "VIE Joint Ventures") share a similar purpose, design and nature of assets. The following table summarizes our equity method investments (in thousands), which were included in other assets on the consolidated balance sheets as of December 31 (in thousands):
| Investee | Ownership Percentage | 2022 | 2021 | |||||||||||||||||
| EMEA 1 Joint Venture with GIC | 20 | % | $ | 148,895 | $ | 131,516 | ||||||||||||||
| VIE Joint Ventures | 20 | % | 191,680 | 95,052 | ||||||||||||||||
| Other | Various | 7,570 | 18,481 | |||||||||||||||||
| Total | $ | 348,145 | $ | 245,049 | ||||||||||||||||
Non - VIE Joint Venture
EMEA 1 Joint Venture
In 2019, we entered into a joint venture in the form of a limited liability partnership with GIC (the "EMEA 1 Joint Venture"), to develop and operate xScale data centers in Europe. The EMEA 1 Joint Venture is not a VIE given that both equity investors' interests have the characteristics of a controlling financial interest and it is sufficiently capitalized to sustain its operations, requiring additional funding from its partners only when expanding operations. Our share of income and losses of equity method investments from this joint venture was insignificant for the years ended December 31, 2022 and 2021 and was included in other income (expense) on the consolidated statement of operations.
We committed to make future equity contributions to the EMEA 1 Joint Venture for funding its future development. As of December 31, 2022, we had future equity contribution commitments of $11.3 million.
VIE Joint Ventures
In 2020, we entered into a second joint venture in the form of a limited liability partnership with GIC (the "Asia-Pacific 1 Joint Venture") to develop and operate xScale data centers in Asia-Pacific.
In 2021, we entered into the EMEA 2 Joint Venture with GIC to develop and operate additional xScale data centers in Europe and the Americas (see Note 5 above).
On March 11, 2022, we entered into the Asia-Pacific 2 Joint Venture with PGIM to develop and operate additional xScale data centers in Asia-Pacific (see Note 5 above).
On April 6, 2022, we entered into a joint venture in the form of a limited liability partnership with GIC (the "Asia-Pacific 3 Joint Venture") to develop and operate additional xScale data centers in Seoul, Korea. Upon closing, we contributed $17.0 million in exchange for a 20% partnership interest in the joint venture.
The VIE Joint Ventures are considered VIEs because they do not have sufficient funds from operations to be self-sustaining. While we provide certain management services to their operations and earn fees for the performance of such services, the power to direct the activities of these joint ventures that most significantly impact economic performance is shared equally between us and either GIC or PGIM, as applicable. These activities include data center construction and operations, sales and marketing, financing, and real estate purchases or sales. Decisions about these activities require the consent of both Equinix and either GIC or PGIM, as applicable. We concluded that neither party is deemed to have predominant control over the VIE Joint Ventures and neither party is considered to be the primary beneficiary. Our share of income of equity method investments from these joint ventures was $8.6 million for the year ended December 31, 2022 and was not significant for the year ended December 31, 2021 and was included in other income (expense) on the consolidated statement of operations.
F-28
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table summarizes our maximum exposure to loss related to the VIE Joint Ventures as of December 31, 2022 (in thousands):
| VIE Joint Ventures | ||||||||
| Equity Investment | $ | 191,680 | ||||||
| Outstanding Receivables | 19,935 | |||||||
| Future Equity Contribution Commitments (1) | 49,993 | |||||||
| Maximum Future Payments under Debt Guarantees (2) | 89,308 | |||||||
| Total | $ | 350,916 |
(1)The joint ventures' partners are required to make additional equity contributions proportionately upon certain occurrences, such as a shortfall in capital necessary to complete certain construction phases or make interest payments on their outstanding debt.
(2)In connection with our 20% equity investment in the EMEA 2 Joint Venture, we provided the lenders with our guarantees covering 20% of all payments of principal and interest due under EMEA 2 Joint Venture's credit facility agreements (see Note 15).
7. Balance Sheet Components
Cash, and Cash Equivalents
Cash and cash equivalents consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Cash and cash equivalents: | |||||||||||
| Cash | $ | 1,141,793 | $ | 950,677 | |||||||
| Cash equivalents: | |||||||||||
| Money market funds | 764,628 | 585,681 | |||||||||
| Total cash and cash equivalents | $ | 1,906,421 | $ | 1,536,358 | |||||||
As of December 31, 2022 and 2021, cash and cash equivalents included investments which were readily convertible to cash and had original maturity dates of 90 days or less.
Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and generally do not bear interest. Accounts receivable, net, consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Accounts receivable | $ | 867,605 | $ | 693,444 | |||||||
| Allowance for credit losses | (12,225) | (11,635) | |||||||||
| Accounts receivable, net | $ | 855,380 | $ | 681,809 |
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table summarizes the activity of our allowance for credit losses (in thousands):
| Balance as of December 31, 2019 | $ | 13,026 | |||
| Adjustments due to adoption of ASU 2016-13 | 900 | ||||
| Provision for credit losses | 5,069 | ||||
| Net write-offs | (10,050) | ||||
| Impact of foreign currency exchange | 1,732 | ||||
| Balance as of December 31, 2020 | 10,677 | ||||
| Provision for credit losses | 10,016 | ||||
| Net write-offs | (8,295) | ||||
| Impact of foreign currency exchange | (763) | ||||
| Balance as of December 31, 2021 | 11,635 | ||||
| Provision for credit losses | 7,426 | ||||
| Net write-offs | (6,356) | ||||
| Impact of foreign currency exchange | (480) | ||||
| Balance as of December 31, 2022 | $ | 12,225 |
Other Current Assets
Other current assets consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Prepaid expenses | $ | 79,191 | $ | 65,224 | |||||||
| Taxes receivable | 122,166 | 128,123 | |||||||||
| Restricted cash, current | 1,734 | 12,188 | |||||||||
| Other receivables | 109,948 | 59,224 | |||||||||
| Derivative instruments | 105,693 | 117,432 | |||||||||
| Contract assets, current | 27,608 | 65,392 | |||||||||
| Other current assets | 12,798 | 15,156 | |||||||||
| Total other current assets | $ | 459,138 | $ | 462,739 |
Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Core systems | $ | 11,616,863 | $ | 10,808,417 | |||||||
| Buildings | 8,013,672 | 7,381,644 | |||||||||
| Leasehold improvements | 1,991,060 | 2,022,617 | |||||||||
| Construction in progress | 1,195,042 | 967,562 | |||||||||
| Personal property (1) | 1,912,861 | 1,551,642 | |||||||||
| Land | 1,252,993 | 970,982 | |||||||||
| 25,982,491 | 23,702,864 | ||||||||||
| Less accumulated depreciation | (9,332,957) | (8,257,089) | |||||||||
| Property, plant and equipment, net | $ | 16,649,534 | $ | 15,445,775 |
F-30
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(1)Personal property included $1.6 billion and $1.2 billion of capitalized internal-use software as of December 31, 2022 and 2021, respectively.
Goodwill and Other Intangibles
The following table presents goodwill and other intangible assets, net, for the years ended December 31, 2022 and 2021 (in thousands):
| 2022 | 2021 | ||||||||||
| Goodwill: | |||||||||||
| Americas | $ | 2,630,752 | $ | 2,210,009 | |||||||
| EMEA | 2,377,921 | 2,472,586 | |||||||||
| Asia-Pacific | 645,544 | 689,476 | |||||||||
| $ | 5,654,217 | $ | 5,372,071 | ||||||||
| Intangible assets, net: | |||||||||||
| Intangible assets - customer relationships | $ | 2,885,152 | $ | 2,841,372 | |||||||
| Intangible assets - trade names | 14,719 | 11,471 | |||||||||
| Intangible assets - in-place leases | 22,183 | 32,760 | |||||||||
| Intangible assets - licenses | 9,697 | 9,697 | |||||||||
| Intangible assets - at-the-money lease contracts | 56,822 | 60,455 | |||||||||
| Intangible assets - other | 8,029 | 12,546 | |||||||||
| 2,996,602 | 2,968,301 | ||||||||||
| Accumulated amortization - customer relationships | (1,056,844) | (987,462) | |||||||||
| Accumulated amortization - trade names | (4,561) | (3,207) | |||||||||
| Accumulated amortization - in-place leases | (15,797) | (22,847) | |||||||||
| Accumulated amortization - licenses | (6,467) | (5,821) | |||||||||
| Accumulated amortization - at the money lease contracts | (10,056) | (5,553) | |||||||||
| Accumulated amortization - other | (5,228) | (8,144) | |||||||||
| (1,098,953) | (1,033,034) | ||||||||||
| Total intangible assets, net | $ | 1,897,649 | $ | 1,935,267 |
Changes in the carrying amount of goodwill by geographic regions are as follows (in thousands):
| Americas | EMEA | Asia-Pacific | Total | ||||||||||||||||||||
| Balance as of December 31, 2020 | $ | 2,212,782 | $ | 2,611,166 | $ | 648,605 | $ | 5,472,553 | |||||||||||||||
| Purchase of GPX | — | — | 77,162 | 77,162 | |||||||||||||||||||
| Impact of foreign currency exchange | (2,773) | (138,580) | (36,291) | (177,644) | |||||||||||||||||||
| Balance as of December 31, 2021 | $ | 2,210,009 | $ | 2,472,586 | $ | 689,476 | $ | 5,372,071 | |||||||||||||||
| Purchase of MainOne | — | 110,648 | — | 110,648 | |||||||||||||||||||
| Purchase of Entel Chile | 380,867 | — | — | 380,867 | |||||||||||||||||||
| Purchase of Entel Peru | 46,285 | — | — | 46,285 | |||||||||||||||||||
| Impact of foreign currency exchange | (6,409) | (205,313) | (43,932) | (255,654) | |||||||||||||||||||
| Balance as of December 31, 2022 | $ | 2,630,752 | $ | 2,377,921 | $ | 645,544 | $ | 5,654,217 |
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Changes in the net book value of intangible assets by geographic regions are as follows (in thousands):
| Americas | EMEA | Asia-Pacific | Total | ||||||||||||||||||||
| Balance as of December 31, 2019 | $ | 1,443,292 | $ | 466,564 | $ | 192,533 | $ | 2,102,389 | |||||||||||||||
| Axtel acquisition | 22,750 | — | — | 22,750 | |||||||||||||||||||
| Packet acquisition | 58,500 | — | — | 58,500 | |||||||||||||||||||
| Bell acquisition | 75,631 | — | — | 75,631 | |||||||||||||||||||
| Other asset acquisition | — | 64,905 | — | 64,905 | |||||||||||||||||||
| Amortization of intangibles | (133,608) | (49,417) | (16,022) | (199,047) | |||||||||||||||||||
| Impact of foreign currency exchange | (3,476) | 35,975 | 13,318 | 45,817 | |||||||||||||||||||
| Balance as of December 31, 2020 | 1,463,089 | 518,027 | 189,829 | 2,170,945 | |||||||||||||||||||
| GPX acquisition | — | — | 15,472 | 15,472 | |||||||||||||||||||
| Amortization of intangibles | (133,289) | (55,807) | (16,388) | (205,484) | |||||||||||||||||||
| Impact of foreign currency exchange | (2,047) | (30,278) | (13,341) | (45,666) | |||||||||||||||||||
| Balance as of December 31, 2021 | 1,327,753 | 431,942 | 175,572 | 1,935,267 | |||||||||||||||||||
| Entel Chile acquisition | 153,489 | — | — | 153,489 | |||||||||||||||||||
| Entel Peru acquisition | 10,000 | — | — | 10,000 | |||||||||||||||||||
| MainOne acquisition | — | 54,800 | — | 54,800 | |||||||||||||||||||
| Amortization of intangibles | (137,358) | (52,283) | (15,114) | (204,755) | |||||||||||||||||||
| Impact of foreign currency exchange | (3,570) | (33,052) | (14,530) | (51,152) | |||||||||||||||||||
| Balance as of December 31, 2022 | $ | 1,350,314 | $ | 401,407 | $ | 145,928 | $ | 1,897,649 |
Goodwill and intangible assets which are denominated in currencies other than the U.S. Dollar are subject to foreign currency fluctuations. Our 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):
| Years ending: | |||||
| 2023 | $ | 206,596 | |||
| 2024 | 205,550 | ||||
| 2025 | 203,259 | ||||
| 2026 | 202,658 | ||||
| 2027 | 201,711 | ||||
| Thereafter | 877,875 | ||||
| Total | $ | 1,897,649 |
F-32
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Other Assets
Other assets consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Deferred tax assets, net | $ | 44,628 | $ | 59,816 | |||||||
| Prepaid expenses (1) | 150,617 | 87,758 | |||||||||
| Debt issuance costs, net | 6,831 | 2,130 | |||||||||
| Deposits | 64,337 | 70,548 | |||||||||
| Restricted cash | 93 | 908 | |||||||||
| Derivative instruments | 298,899 | 59,917 | |||||||||
| Contract assets, non-current | 55,405 | 55,486 | |||||||||
| Contract costs | 371,306 | 325,510 | |||||||||
| Equity method investments | 348,145 | 245,049 | |||||||||
| Other assets | 35,876 | 18,944 | |||||||||
| Total other assets | $ | 1,376,137 | $ | 926,066 |
(1)Prepaid expenses included $84.2 million and $46.0 million of capitalized CCA implementation costs, net as of December 31, 2022 and 2021, respectively.
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Accounts payable | $ | 115,953 | $ | 84,084 | |||||||
| Accrued compensation and benefits | 413,135 | 364,783 | |||||||||
| Accrued interest | 85,052 | 81,893 | |||||||||
| Accrued taxes (1) | 131,376 | 117,061 | |||||||||
| Accrued utilities and security | 115,119 | 94,251 | |||||||||
| Accrued other | 144,165 | 137,072 | |||||||||
| Total accounts payable and accrued expenses | $ | 1,004,800 | $ | 879,144 |
(1)Accrued taxes included income taxes payable of $55.2 million and $51.3 million as of December 31, 2022 and 2021, respectively.
Other Current Liabilities
Other current liabilities consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Deferred revenue, current | $ | 132,090 | $ | 109,736 | |||||||
| Customer deposits | 15,896 | 16,380 | |||||||||
| Derivative instruments | 24,868 | 13,373 | |||||||||
| Dividends payable, current | 12,302 | 12,027 | |||||||||
| Asset retirement obligations | 8,657 | 8,756 | |||||||||
| Other current liabilities | 57,533 | 54,247 | |||||||||
| Total other current liabilities | $ | 251,346 | $ | 214,519 |
F-33
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Other Liabilities
Other liabilities consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Asset retirement obligations | $ | 109,508 | $ | 108,800 | |||||||
| Deferred tax liabilities, net | 383,359 | 340,287 | |||||||||
| Deferred revenue, non-current | 155,334 | 87,495 | |||||||||
| Accrued taxes | 59,806 | 124,032 | |||||||||
| Dividends payable, non-current | 10,446 | 9,750 | |||||||||
| Customer deposits | 4,998 | 1,534 | |||||||||
| Derivative instruments | 8,820 | 20,899 | |||||||||
| Other liabilities | 65,592 | 70,614 | |||||||||
| Total other liabilities | $ | 797,863 | $ | 763,411 |
The following table summarizes the activities of our asset retirement obligation ("ARO") (in thousands):
| Asset retirement obligations as of December 31, 2019 | $ | 102,415 | |||
| Additions | 5,909 | ||||
| Adjustments (1) | (4,241) | ||||
| Accretion expense | 6,331 | ||||
| Impact of foreign currency exchange | 3,355 | ||||
| Asset retirement obligations as of December 31, 2020 | 113,769 | ||||
| Additions | 7,483 | ||||
| Adjustments (1) | (6,591) | ||||
| Accretion expense | 6,518 | ||||
| Impact of foreign currency exchange | (3,623) | ||||
| Asset retirement obligations as of December 31, 2021 | 117,556 | ||||
| Additions | 2,951 | ||||
| Adjustments (1) | (4,281) | ||||
| Accretion expense | 6,431 | ||||
| Impact of foreign currency exchange | (4,492) | ||||
| Asset retirement obligations as of December 31, 2022 | $ | 118,165 |
(1)The ARO adjustments are primarily due to lease amendments and acquisition of real estate assets, as well as other adjustments.
8. Derivatives and Hedging Instruments
Derivatives Designated as Hedging Instruments
Net Investment Hedges. We are exposed to the impact of foreign exchange rate fluctuations on the value of investments in our foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, we have entered into various foreign currency debt obligations, which are designated as hedges against our net investments in foreign subsidiaries. As of both December 31, 2022 and 2021, the total principal amounts of foreign currency debt obligations designated as net investment hedges was $1.5 billion.
We also utilize cross-currency interest rate swaps, designated as net investment hedges, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt, to hedge the currency exposure associated with our net investment in our foreign subsidiaries. As of December 31,
F-34
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2022 and 2021, the total notional amount of cross-currency interest rate swaps, designated as net investment hedges, were $3.9 billion and $4.0 billion respectively, with maturity dates ranging through 2026.
From time to time, we use foreign currency forward contracts, which are designated as net investment hedges, to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries. As of December 31, 2022 and 2021, the total notional amount of foreign currency forward contracts designated as net investment hedges were $373.4 million and $375.7 million, respectively.
Certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved are deemed to have foreign currency forward contracts embedded in them. These embedded derivatives are separated from their host contracts and carried on our balance sheet at their fair value. The majority of these embedded derivatives arise as a result of our foreign subsidiaries pricing their customer contracts in U.S. Dollars. We use these forward contracts embedded within our customer agreements to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries.
The effect of net investment hedges on accumulated other comprehensive income and the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 was as follows (in thousands):
| Amount of gain or (loss) recognized in accumulated other comprehensive income: | |||||||||||||||||||||||
| Years Ended December 31, | |||||||||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||||||||
| Foreign currency debt | $ | 160,286 | $ | 93,945 | $ | (208,281) | |||||||||||||||||
| Cross-currency interest rate swaps (included component) (1) | 276,350 | 282,935 | (218,843) | ||||||||||||||||||||
| Cross-currency interest rate swaps (excluded component) (2) | (35,723) | (52,517) | (347) | ||||||||||||||||||||
| Foreign currency forward contracts (included component) (1) | 27,323 | 2,621 | (17,115) | ||||||||||||||||||||
| Foreign currency forward contracts (excluded component) (3) | (2,535) | (2) | 32 | ||||||||||||||||||||
| Total | $ | 425,701 | $ | 326,982 | $ | (444,554) | |||||||||||||||||
| Amount of gain or (loss) recognized in earnings: | |||||||||||||||||||||||
| Location of gain or (loss) | Years Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||||||||
| Cross-currency interest rate swaps (excluded component) (2) | Interest expense | $ | 50,188 | $ | 44,933 | $ | 27,196 | ||||||||||||||||
| Foreign currency forward contracts (excluded component) (3) | Interest expense | (469) | 242 | 42 | |||||||||||||||||||
| Total | $ | 49,719 | $ | 45,175 | $ | 27,238 | |||||||||||||||||
(1)Included component represents foreign exchange spot rates.
(2)Excluded component represents cross-currency basis spread and interest rates.
(3)Excluded component represents foreign currency forward points.
Cash Flow Hedges. We hedge our foreign currency transaction exposure for forecasted revenues and expenses in our EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward and option contracts that we use to hedge this exposure are designated as cash flow hedges. As of December 31, 2022 and 2021, the total notional amounts of these foreign exchange contracts were $490.8 million and $831.2 million, respectively.
As of December 31, 2022, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2023 to February 2024 and we had a net gain of $8.2 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses relating to these cash flow hedges as they mature in the next 12 months. As of December 31, 2021, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2022 to December 2023 and we had a net gain of $13.3 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses relating to these cash flow hedges as they mature in the next 12 months.
F-35
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We enter into intercompany hedging instruments ("intercompany derivatives") with our wholly-owned subsidiaries in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, we enter into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives.
We hedge the interest rate exposure created by anticipated fixed rate debt issuances through the use of treasury locks and swap locks (collectively, interest rate locks), which are designated as cash flow hedges. As of December 31, 2022, we had no interest rate locks outstanding. As of December 31, 2021, the total notional amount of interest rate locks outstanding was $800.0 million. During the year ended December 31, 2022, interest rate locks with a combined aggregate notional amount of $800.0 million were settled related to the issuance of senior notes during the year. When interest rate locks are settled, any gain or loss from the transactions is deferred and included as a component of other comprehensive income (loss) and is amortized to interest expense over the term of the forecasted hedged transaction which is equivalent to the term of the interest rate locks. As of December 31, 2022 and 2021, we had a net gain of $1.4 million and a net loss of $3.9 million, respectively, recorded within accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks.
We also use cross-currency swaps, which are designated as cash flow hedges, to manage the foreign currency exposure associated with a portion of our foreign currency-denominated debt. As of December 31, 2022 and 2021, the total notional amount of cross-currency interest rate swaps, designated as cash flow hedges, were $280.3 million and $0, respectively.
The effect of cash flow hedges on accumulated other comprehensive income and the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 was as follows (in thousands):
| Amount of gain or (loss) recognized in accumulated other comprehensive income: | |||||||||||||||||||||||
| Years Ended December 31, | |||||||||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||||||||
| Foreign currency forward and option contracts (included component) (1) | $ | (8,711) | $ | 67,767 | $ | (68,573) | |||||||||||||||||
| Foreign currency option contracts (excluded component) (2) | — | 151 | 1,655 | ||||||||||||||||||||
| Cross-currency interest rate swaps | (2,386) | — | — | ||||||||||||||||||||
| Interest rate locks | 49,392 | 9,624 | (30,393) | ||||||||||||||||||||
| Total | $ | 38,295 | $ | 77,542 | $ | (97,311) | |||||||||||||||||
| Amount of gain or (loss) reclassified from accumulated other comprehensive income to income: | |||||||||||||||||||||||
| Years Ended December 31, | |||||||||||||||||||||||
| Location of gain or (loss) | 2022 | 2021 | 2020 | ||||||||||||||||||||
| Foreign currency forward contracts | Revenues | $ | 148,100 | $ | (39,297) | $ | 37,198 | ||||||||||||||||
| Foreign currency forward contracts | Costs and operating expenses | (71,968) | 20,496 | (19,890) | |||||||||||||||||||
| Interest rate locks | Interest Expense | (26) | (4,056) | (1,204) | |||||||||||||||||||
| Total | $ | 76,106 | $ | (22,857) | $ | 16,104 | |||||||||||||||||
| Amount of gain or (loss) excluded from effectiveness testing and included in income: | |||||||||||||||||||||||
| Years Ended December 31, | |||||||||||||||||||||||
| Location of gain or (loss) | 2022 | 2021 | 2020 | ||||||||||||||||||||
| Foreign currency option contracts (excluded component) (2) | Revenues | $ | — | $ | (244) | $ | (1,761) | ||||||||||||||||
| Total | $ | — | $ | (244) | $ | (1,761) |
(1)Included component represents foreign exchange spot rates.
(2)Excluded component represents option's time value.
F-36
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Derivatives Not Designated as Hedging Instruments
Embedded Derivatives. As described above, certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved are deemed to have foreign currency forward contracts embedded in them..
Economic Hedges of Embedded Derivatives. We use foreign currency forward contracts to manage the foreign exchange risk associated with our 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.
Foreign Currency Forward Contracts. We also use foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of our foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts. As of December 31, 2022 and 2021, the total notional amounts of these foreign currency contracts were $3.0 billion and $3.3 billion, respectively.
The following table presents the effect of derivatives not designated as hedging instruments in our consolidated statements of operations (in thousands):
| Amount of gain or (loss) recognized in earnings: | |||||||||||||||||||||||
| Years Ended December 31, | |||||||||||||||||||||||
| Location of gain or (loss) | 2022 | 2021 | 2020 | ||||||||||||||||||||
| Embedded derivatives | Revenues | $ | (568) | $ | 3,503 | $ | (3,043) | ||||||||||||||||
| Economic hedge of embedded derivatives | Revenues | (984) | (5,937) | 2,142 | |||||||||||||||||||
| Foreign currency forward contracts | Other income (expense) | 137,633 | 129,496 | (127,648) | |||||||||||||||||||
| Total | $ | 136,081 | $ | 127,062 | $ | (128,549) |
F-37
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Fair Value of Derivative Instruments
The following table presents the fair value of derivative instruments recognized in our consolidated balance sheets as of December 31, 2022 and 2021 (in thousands):
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Assets (1) | Liabilities (2) | Assets (1) | Liabilities (2) | ||||||||||||||||||||
| Designated as hedging instruments: | |||||||||||||||||||||||
| Cash flow hedges | |||||||||||||||||||||||
| Foreign currency forward and option contracts | $ | 27,812 | $ | 21,352 | $ | 22,866 | $ | 7,618 | |||||||||||||||
| Cross-currency interest rate swaps | 19,239 | — | — | — | |||||||||||||||||||
| Interest rate locks | — | — | 8,662 | — | |||||||||||||||||||
| Net investment hedges | |||||||||||||||||||||||
| Cross-currency interest rate swaps | 274,234 | — | 56,921 | 19,441 | |||||||||||||||||||
| Foreign currency forward contracts | 25,077 | 4,805 | 156 | 70 | |||||||||||||||||||
| Total designated as hedging | 346,362 | 26,157 | 88,605 | 27,129 | |||||||||||||||||||
| Not designated as hedging instruments: | |||||||||||||||||||||||
| Embedded derivatives | — | — | 3,247 | 652 | |||||||||||||||||||
| Economic hedges of embedded derivatives | — | — | 2,232 | 637 | |||||||||||||||||||
| Foreign currency forward contracts | 58,230 | 7,531 | 83,265 | 5,854 | |||||||||||||||||||
| Total not designated as hedging | 58,230 | 7,531 | 88,744 | 7,143 | |||||||||||||||||||
| Total Derivatives | $ | 404,592 | $ | 33,688 | $ | 177,349 | $ | 34,272 |
(1)As presented in our consolidated balance sheets within other current assets and other assets.
(2)As presented in our consolidated balance sheets within other current liabilities and other liabilities.
Offsetting Derivative Assets and Liabilities
We enter into master netting agreements with our 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. For presentation on the consolidated balance sheets, we do not offset fair value amounts recognized for derivative instruments or the accrued interest related to cross-currency interest rate swaps under master netting arrangements. The following table presents information related to these offsetting arrangements as of December 31, 2022 and 2021 (in thousands):
| Gross Amounts Offset in Consolidated Balance Sheet | |||||||||||||||||||||||||||||
| Gross Amounts | Gross Amounts Offset in the Balance Sheet | Net Amounts | Gross Amounts not Offset in the Balance Sheet | Net | |||||||||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||||||||
| Derivative assets | $ | 424,516 | $ | — | $ | 424,516 | $ | (34,429) | $ | 390,087 | |||||||||||||||||||
| Derivative liabilities | 39,234 | — | 39,234 | (34,429) | 4,805 | ||||||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||||||||
| Derivative assets | $ | 207,037 | $ | — | $ | 207,037 | $ | (47,538) | $ | 159,499 | |||||||||||||||||||
| Derivative liabilities | 49,326 | — | 49,326 | (47,538) | 1,788 |
F-38
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
9. Fair Value Measurements
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 Equivalents. The fair value of our investments in money market funds approximates their face value. Such instruments are included in cash equivalents. Our money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices for identical instruments in active markets. The fair value of our other investments, including certificates of deposit, approximates their face value. 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. We determine the fair values of our 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. We use such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of our investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. We are responsible for our consolidated financial statements and underlying estimates.
We use the specific identification method in computing realized gains and losses. Realized gains and losses from the sale of investments are included within other income (expense) in our consolidated statements of operations. Our investments in publicly traded equity securities are carried at fair value. Unrealized gains and losses on publicly traded equity securities are reported within other income (expense) in our consolidated statements of operations.
Derivative Assets and Liabilities. Inputs used for valuations of derivatives are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data. The significant inputs used include spot currency rates and forward points, interest rate curves, and published credit default swap rates of its foreign exchange trading counterparties and other comparable companies. We have 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.
Other than the assets and liabilities that were classified as held for sale as described in Note 5 above, we did not have any nonfinancial assets or liabilities measured at fair value on a recurring basis during the years ended December 31, 2022 and 2021.
Our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 were as follows (in thousands):
| Fair Value at December 31, 2022 | Fair Value Measurement Using | ||||||||||||||||
| Level 1 | Level 2 | ||||||||||||||||
| Assets: | |||||||||||||||||
| Money market and deposit accounts | $ | 764,628 | $ | 764,628 | $ | — | |||||||||||
| Derivative instruments (1) | 404,592 | — | 404,592 | ||||||||||||||
| $ | 1,169,220 | $ | 764,628 | $ | 404,592 | ||||||||||||
| Liabilities: | |||||||||||||||||
| Derivative instruments (1) | $ | 33,688 | $ | — | $ | 33,688 |
(1)Amounts are included within other current assets, other assets, other current liabilities and other liabilities in the consolidated balance sheets.
F-39
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Our financial assets and liabilities measured at fair value on a recurring basis at December 31, 2021 were as follows (in thousands):
| Fair Value at December 31, | Fair Value Measurement Using | ||||||||||||||||
| 2021 | Level 1 | Level 2 | |||||||||||||||
| Assets: | |||||||||||||||||
| Money market and deposit accounts | $ | 585,681 | $ | 585,681 | $ | — | |||||||||||
| Derivative instruments (1) | 177,349 | — | 177,349 | ||||||||||||||
| $ | 763,030 | $ | 585,681 | $ | 177,349 | ||||||||||||
| Liabilities: | |||||||||||||||||
| Derivative instruments (1) | $ | 34,272 | $ | — | $ | 34,272 |
(1)Amounts are included within other current assets, other assets, other current liabilities and other liabilities in the consolidated balance sheets.
We did not have any Level 3 financial assets or financial liabilities during the years ended December 31, 2022 and 2021.
10. Leases
Significant Lease Transactions
The following table summarizes the significant lease transactions during the year ended December 31, 2022 (in thousands):
| Renewal/Termination Options Excluded (1) | Net Incremental (1) | |||||||||||||||||||||||||||||||||||||||||||
| Lease | Quarter | Transaction | Lease Classification | ROU assets | ROU liabilities | |||||||||||||||||||||||||||||||||||||||
| Atlanta 1 ("AT1") data center lease extended & expansion (2) | Q1 | Extended lease term by 12 years with additional three 10-year renewal options | Two 10-year renewal options | Finance Lease | $71,994 | $72,549 | ||||||||||||||||||||||||||||||||||||||
| Operating Lease | (1,836) | (2,391) | ||||||||||||||||||||||||||||||||||||||||||
| Hong Kong 6 ("HK6") new land and building construction site | Q2 | New lease with a 15 year term | 5-year renewal option | Operating Lease | 195,245 | 195,245 | ||||||||||||||||||||||||||||||||||||||
| Hong Kong 2 ("HK2") data center lease renewal | Q2 | Exercised the 3-year renewal option for Phase 1 & 2 (3) | Two 3-year renewal option | Operating Lease | 81,504 | 81,504 | ||||||||||||||||||||||||||||||||||||||
| New York 3 ("NY3") data center lease amendment | Q4 | 26 year lease term after modification to remove early termination option | One 20-year renewal option and one 5-year renewal option | Finance Lease | 140,215 | 140,215 |
(1) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered.
(2) This lease had components previously classified as operating leases.
(3) The incremental balance includes the impact of reassessing lease terms of complementary leases within HK2, resulting in new lease end dates ranging from June 2030 to October 2031 from including renewal options that are reasonably certain to be exercised.
F-40
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Lease Expenses
The components of lease expenses are as follows (in thousands):
| Years Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Finance lease cost | |||||||||||
| Amortization of right-of-use assets (1) | $ | 161,061 | $ | 157,057 | |||||||
| Interest on lease liabilities | 112,518 | 117,896 | |||||||||
| Total finance lease cost | 273,579 | 274,953 | |||||||||
| Operating lease cost | 213,619 | 221,776 | |||||||||
| Variable lease cost | 41,237 | 33,066 | |||||||||
| Total lease cost | $ | 528,435 | $ | 529,795 |
(1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the consolidated statements of operations.
Other Information
Other information related to leases is as follows (in thousands, except years and percent):
| Years Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from finance leases | $ | 109,514 | $ | 113,571 | |||||||
| Operating cash flows from operating leases | 197,356 | 258,719 | |||||||||
| Financing cash flows from finance leases | 134,202 | 165,539 | |||||||||
| Right-of-use assets obtained in exchange for lease obligations: (1) | |||||||||||
| Finance leases | $ | 293,858 | $ | 412,214 | |||||||
| Operating leases | 355,040 | 10,446 | |||||||||
| As of December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Weighted-average remaining lease term - finance leases (2) | 15 years | 14 years | |||||||||
| Weighted-average remaining lease term - operating leases (2) | 12 years | 12 years | |||||||||
| Weighted-average discount rate - finance leases | 6 | % | 7 | % | |||||||
| Weighted-average discount rate - operating leases | 4 | % | 4 | % | |||||||
| Finance lease ROU assets (3) | $ | 2,018,070 | $ | 1,875,696 |
(1) Represents all non-cash changes in ROU assets.
(2) Includes lease renewal options that are reasonably certain to be exercised.
(3) As of December 31, 2022 and 2021, we recorded accumulated amortization of finance lease assets of $840.0 million and $726.4 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the consolidated balance sheets.
F-41
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Maturities of Lease Liabilities
Maturities of lease liabilities as of December 31, 2022 are as follows (in thousands):
| Year ended December 31, | Operating Leases | Finance Leases | Total | |||||||||||||||||
| 2023 | $ | 181,461 | $ | 263,052 | $ | 444,513 | ||||||||||||||
| 2024 | 190,939 | 257,457 | 448,396 | |||||||||||||||||
| 2025 | 185,430 | 276,825 | 462,255 | |||||||||||||||||
| 2026 | 182,117 | 245,798 | 427,915 | |||||||||||||||||
| 2027 | 158,465 | 248,767 | 407,232 | |||||||||||||||||
| Thereafter | 1,010,606 | 2,191,044 | 3,201,650 | |||||||||||||||||
| Total lease payments | 1,909,018 | 3,482,943 | 5,391,961 | |||||||||||||||||
| Less imputed interest | (496,668) | (1,187,833) | (1,684,501) | |||||||||||||||||
| Total | $ | 1,412,350 | $ | 2,295,110 | $ | 3,707,460 |
We entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of December 31, 2022. These leases will commence between year 2023 and 2025, with lease terms of 2 to 26 years and total lease commitments of approximately $424.7 million.
11. Debt Facilities
Mortgage and Loans Payable
As of December 31, 2022 and 2021, our mortgage and loans payable consisted of the following (in thousands):
| 2022 | 2021 | ||||||||||
| Term loans | $ | 619,090 | $ | 549,697 | |||||||
| Mortgage payable and loans payable | 34,527 | 68,691 | |||||||||
| 653,617 | 618,388 | ||||||||||
| Less amount representing unamortized debt discount and debt issuance cost | (1,062) | (354) | |||||||||
| Add amount representing unamortized mortgage premium | — | 1,630 | |||||||||
| 652,555 | 619,664 | ||||||||||
| Less current portion | (9,847) | (33,087) | |||||||||
| $ | 642,708 | $ | 586,577 |
Senior Credit Facility and Refinancing
In 2017, we entered into a credit agreement (the "2017 Credit Agreement") with a group of lenders for a $3.0 billion credit facility (the "2017 Credit Facilities"), comprised of a $2.0 billion senior unsecured multicurrency revolving credit facility (the "2017 Revolving Facility") and an approximately $1.0 billion senior unsecured multicurrency term loan facility (the "2017 Term Loan Facility"). The credit agreement was subsequently amended to provide an additional senior unsecured term loan in Japanese Yen for approximately $424.7 million at the exchange rate effective on the transaction date.
F-42
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
On May 17, 2021, we repaid our outstanding term loans in Swedish Krona and Japanese Yen under the 2017 Term Loan Facility for $285.4 million and $374.5 million in U.S. Dollars, respectively, at the exchange rates in effect on May 17, 2021 using a portion of the cash proceeds from the 2026 Notes, 2028 Notes, 2031 Notes, and 2052 Notes issuances as described below.
On January 7, 2022, we entered into a credit agreement (the "2022 Credit Agreement") with a group of lenders for a senior unsecured credit facility, comprised of a $4.0 billion senior unsecured multicurrency revolving credit facility (the "2022 Revolving Facility") and a £500.0 million senior unsecured term loan facility (the "2022 Term Loan Facility" and, together with the 2022 Revolving Facility, collectively, the "2022 Credit Facilities"). The total debt issuance costs for the 2022 Revolving Facility and 2022 Term Loan Facility are $6.5 million and $0.8 million, respectively. We borrowed the full £500.0 million available under the 2022 Term Loan Facility, or approximately $676.9 million at the exchange rates in effect on that date. On that same day, using a portion of the proceeds from the 2022 Term Loan Facility, we prepaid in full all of the $549.6 million of indebtedness outstanding under the 2017 Term Loan Facility, at the exchange rates in effect on January 7, 2022 and terminated the 2017 Credit Agreement. In connection with the repayment and termination, we incurred an insignificant amount of loss on debt extinguishment. The remaining unamortized debt issuance costs of the 2017 Credit Facilities will continue to be amortized over the contract terms of the 2022 Credit Facilities.
The 2022 Credit Facilities have a maturity date of January 7, 2027. We may borrow, repay and reborrow amounts under the 2022 Revolving Facility until the Maturity Date, at which time all amounts outstanding under the 2022 Revolving Facility must be repaid in full. The term loan made under the 2022 Term Loan Facility has no scheduled principal amortization and must be repaid in full on the maturity date. The 2022 Revolving Credit Facility provides for extensions of credit in U.S. Dollars as well as certain other foreign currencies. Borrowings under the 2022 Revolving Facility bear interest at a rate based on the daily Secured Overnight Financing Rate ("SOFR"), term SOFR, an alternative currency daily rate, or an alternative currency term rate plus a spread adjustment, plus a margin that can vary from 0.555% to 1.200%. Borrowings under the 2022 Term Loan Facility bear interest at a rate based on the daily Sterling Overnight Index Average ("SONIA"), plus a spread adjustment, plus a margin that can vary from 0.625% to 1.450%. We are also 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 SOFR-indexed borrowings under the revolving credit line. The margin is dependent on either our consolidated net leverage ratio or our credit ratings. We are also required to pay a quarterly facility fee ranging from 0.07% to 0.25% per annum. The 2022 Credit Agreement contains customary covenants, including financial ratio covenants that are required to be maintained as of each quarter end.
As of December 31, 2022 and 2021, the total amounts outstanding under the 2022 Term Loan Facility and 2017 Term Loan Facility, net of debt issuance costs, were $603.0 million and $549.3 million, respectively.
As of December 31, 2022, we had 60 irrevocable letters of credit totaling $84.7 million issued and outstanding under the 2022 Revolving Facility, with approximately $3.9 billion remaining available to borrow under the 2022 Revolving Facility.
F-43
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Senior Notes
Our senior notes consisted of the following as of December 31 (in thousands):
| 2022 | 2021 | |||||||||||||||||||||||||||||||||||||
| Senior Notes | Issuance Date | Maturity Date | Amount | Effective Rate | Amount | Effective Rate | ||||||||||||||||||||||||||||||||
| 2.625% Senior Notes due 2024 | November 2019 | November 2024 | $ | 1,000,000 | 2.79 | % | $ | 1,000,000 | 2.79 | % | ||||||||||||||||||||||||||||
| 1.250% Senior Notes due 2025 | June 2020 | July 2025 | 500,000 | 1.46 | % | 500,000 | 1.46 | % | ||||||||||||||||||||||||||||||
| 1.000% Senior Notes due 2025 | October 2020 | September 2025 | 700,000 | 1.18 | % | 700,000 | 1.18 | % | ||||||||||||||||||||||||||||||
| 2.900% Senior Notes due 2026 | November 2019 | November 2026 | 600,000 | 3.04 | % | 600,000 | 3.04 | % | ||||||||||||||||||||||||||||||
| 1.450% Senior Notes due 2026 | May 2021 | May 2026 | 700,000 | 1.64 | % | 700,000 | 1.64 | % | ||||||||||||||||||||||||||||||
| 0.250% Euro Senior Notes due 2027 | March 2021 | March 2027 | 534,950 | 0.45 | % | 569,150 | 0.45 | % | ||||||||||||||||||||||||||||||
| 1.800% Senior Notes due 2027 | June 2020 | July 2027 | 500,000 | 1.96 | % | 500,000 | 1.96 | % | ||||||||||||||||||||||||||||||
| 1.550% Senior Notes due 2028 | October 2020 | March 2028 | 650,000 | 1.67 | % | 650,000 | 1.67 | % | ||||||||||||||||||||||||||||||
| 2.000% Senior Notes due 2028 | May 2021 | May 2028 | 400,000 | 2.21 | % | 400,000 | 2.21 | % | ||||||||||||||||||||||||||||||
| 3.200% Senior Notes due 2029 | November 2019 | November 2029 | 1,200,000 | 3.30 | % | 1,200,000 | 3.30 | % | ||||||||||||||||||||||||||||||
| 2.150% Senior Notes due 2030 | June 2020 | July 2030 | 1,100,000 | 2.27 | % | 1,100,000 | 2.27 | % | ||||||||||||||||||||||||||||||
| 2.500% Senior Notes due 2031 | May 2021 | May 2031 | 1,000,000 | 2.65 | % | 1,000,000 | 2.65 | % | ||||||||||||||||||||||||||||||
| 3.900% Senior Notes due 2032 | April 2022 | April 2032 | 1,200,000 | 4.07 | % | — | — | % | ||||||||||||||||||||||||||||||
| 1.000% Euro Senior Notes due 2033 | March 2021 | March 2033 | 641,940 | 1.18 | % | 682,980 | 1.18 | % | ||||||||||||||||||||||||||||||
| 3.000% Senior Notes due 2050 | June 2020 | July 2050 | 500,000 | 3.09 | % | 500,000 | 3.09 | % | ||||||||||||||||||||||||||||||
| 2.950% Senior Notes due 2051 | October 2020 | September 2051 | 500,000 | 3.00 | % | 500,000 | 3.00 | % | ||||||||||||||||||||||||||||||
| 3.400% Senior Notes due 2052 | May 2021 | February 2052 | 500,000 | 3.50 | % | 500,000 | 3.50 | % | ||||||||||||||||||||||||||||||
| 12,226,890 | 11,102,130 | |||||||||||||||||||||||||||||||||||||
| Less amount representing unamortized debt discount and debt issuance cost | (117,351) | (117,986) | ||||||||||||||||||||||||||||||||||||
| 12,109,539 | 10,984,144 | |||||||||||||||||||||||||||||||||||||
| Less current portion | — | — | ||||||||||||||||||||||||||||||||||||
| $ | 12,109,539 | $ | 10,984,144 |
0.250% Euro Senior Notes due 2027 and 1.000% Euro Senior Notes due 2033
On March 10, 2021, we issued €500.0 million, or approximately $594.9 million in U.S. dollars, at the exchange rate in effect on March 10, 2021, aggregate principal amount of 0.250% senior notes due March 15, 2027 (the "2027 Euro Notes") and €600.0 million, or approximately $713.8 million in U.S. dollars, at the exchange rate in effect on March 10, 2021, aggregate principal amount of 1.000% senior notes due March 15, 2033 (the "2033 Euro Notes").
Interest on the notes is payable annually in arrears on March 15 of each year, commencing on March 15, 2022. Total debt issuance costs and debt discounts related to the 2027 Euro Notes and the 2033 Euro Notes were $7.0 million and $14.1 million, respectively.
Redemption of 2.875% Euro Senior Notes due 2026
On March 24, 2021, using a portion of the net cash proceeds from the 2027 Euro Senior Notes and 2033 Euro Senior Notes, we redeemed the remaining outstanding 2.875% Euro Senior Notes due 2026 for $590.7 million in U.S. dollars, at the exchange rate in effect on March 24, 2021. In connection with the redemption, we incurred $13.2 million of loss on debt extinguishment, including $8.5 million in redemption premium that was paid in cash and $4.7 million related to the write-off of unamortized debt issuance costs, during the year ended December 31, 2021.
1.450% Senior Notes due 2026, 2.000% Senior Notes due 2028, 2.500% Senior Notes due 2031 and 3.400% Senior Notes due 2052
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
On May 17, 2021, we issued $700.0 million aggregate principal amount of 1.450% senior notes due 2026 (the "2026 Notes"), $400.0 million aggregate principal amount of 2.000% senior notes due 2028 (the "2028 Notes"), $1.0 billion aggregate principal amount of 2.500% senior notes due 2031 (the "2031 Notes"), and $500.0 million aggregate principal amount of 3.400% senior notes due 2052 (the "2052 Notes").
Interest on the 2026, 2028 and 2031 notes are payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2021. Interest on the 2052 notes are payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2022. Total debt issuance costs and debt discounts related to the 2026 Notes, 2028 Notes, 2031 Notes and 2052 Notes were $6.4 million, $5.3 million, $13.0 million and $9.3 million, respectively.
Redemption of 5.375% Senior Notes due 2027
On June 2, 2021, we redeemed all outstanding principal amount under the 5.375% Senior Notes due 2027 with a portion of the net cash proceeds from the issuance of the 2026 Notes, 2028 Notes, 2031 Notes, and 2052 Notes as described above. In connection with the redemption, we incurred $100.6 million of loss on debt extinguishment, including $90.7 million redemption premium that was paid in cash and $9.9 million related to the write-off of unamortized debt issuance costs.
3.900% Senior Notes due 2032
On April 5, 2022, we issued $1.2 billion aggregate principal amount of 3.900% Senior Notes due 2032 (the "2032 Notes"). Interest on the 2032 Notes is payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2022. Debt issuance costs and debt discounts related to the 2032 Notes were $16.3 million.
All of our senior notes are unsecured and rank equal in right of payment to our existing or future senior indebtedness and senior in right of payment to our existing and future subordinated indebtedness. Interest on the senior notes is paid semi-annually in arrears, with the exception of our Euro senior notes which is paid annually in arrears. 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 our subsidiaries.
Each series of senior notes is governed by an indenture and a supplemental indenture between us and U.S. Bank National Association, as trustee. These supplemental indentures contain covenants that limit our ability and the ability of our subsidiaries to, among other things:
-
incur liens;
-
enter into sale-leaseback transactions; and
-
merge or consolidate with any other person.
As of December 31, 2022, we are in compliance with all covenants. Subject to compliance with the limitations described above, we may issue an unlimited principal amount of additional notes at later dates under the same indenture as the senior notes.
We are not required to make any mandatory redemption with respect to the senior notes; however, upon the event of a change in control, we may be required to offer to purchase the senior notes.
Optional Redemption
With respect to the rest of the Notes listed below, we may redeem at our election, at any time or from time to time, some or all of the notes of any series before they mature. The redemption price will equal the sum of (1) an amount equal to one hundred percent (100%) of the principal amount of the notes being redeemed plus accrued and unpaid interest up to, but not including, the redemption date and (2) a make-whole premium. If the Notes are
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
redeemed on or after the First Par Call Date listed in the table below, the redemption price will not include a make-whole premium for the applicable notes.
| Senior Notes Description | First Par Call Date | ||||||||||
| 2.625% Senior Notes due 2024 | October 18, 2024 | ||||||||||
| 1.250% Senior Notes due 2025 | June 15, 2025 | ||||||||||
| 1.000% Senior Notes due 2025 | August 15, 2025 | ||||||||||
| 1.450% Senior Notes due 2026 | April 15, 2026 | ||||||||||
| 2.900% Senior Notes due 2026 | September 18, 2026 | ||||||||||
| 0.250% Euro Senior Notes due 2027 | January 15, 2027 | ||||||||||
| 1.800% Senior Notes due 2027 | May 15, 2027 | ||||||||||
| 1.550% Senior Notes due 2028 | January 15, 2028 | ||||||||||
| 2.000% Senior Notes due 2028 | March 15, 2028 | ||||||||||
| 3.200% Senior Notes due 2029 | August 18, 2029 | ||||||||||
| 2.150% Senior Notes due 2030 | April 15, 2030 | ||||||||||
| 2.500% Senior Notes due 2031 | February 15, 2031 | ||||||||||
| 3.900% Senior Notes due 2032 | January 15, 2032 | ||||||||||
| 1.000% Euro Senior Notes due 2033 | December 15, 2032 | ||||||||||
| 3.000% Senior Notes due 2050 | January 15, 2050 | ||||||||||
| 2.950% Senior Notes due 2051 | March 15, 2051 | ||||||||||
| 3.400% Senior Notes due 2052 | August 15, 2051 |
Maturities of Debt Instruments
The following table sets forth maturities of our debt, including mortgage and loans payable, and senior notes, gross of debt issuance costs, debt discounts and debt premiums, as of December 31, 2022 (in thousands):
| Years ending: | |||||
| 2023 | $ | 9,847 | |||
| 2024 | 1,009,469 | ||||
| 2025 | 1,208,077 | ||||
| 2026 | 1,307,656 | ||||
| 2027 | 1,644,202 | ||||
| Thereafter | 7,701,256 | ||||
| $ | 12,880,507 |
Fair Value of Debt Instruments
The following table sets forth the estimated fair values of our mortgage and loans payable and senior notes, including current maturities, as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Mortgage and loans payable | $ | 666,387 | $ | 621,051 | |||||||
| Senior notes | 10,196,933 | 11,049,834 | |||||||||
The fair values of the mortgage and loans payable, which are not publicly traded, were estimated by considering our credit rating, current rates available to us for debt of the same remaining maturities and terms of the debt (Level
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2). The fair value of the senior notes, which are traded in the public debt market, was based on quoted market prices (Level 1).
Interest Charges
The following table sets forth total interest costs incurred, and total interest costs capitalized for the years ended December 31 (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Interest expense | $ | 356,337 | $ | 336,082 | $ | 406,466 | |||||||||||
| Interest capitalized | 18,152 | 24,505 | 26,750 | ||||||||||||||
| Interest charges incurred | $ | 374,489 | $ | 360,587 | $ | 433,216 |
Total interest paid in cash, net of capitalized interest, during the years ended December 31, 2022, 2021 and 2020 was $412.1 million, $401.9 million and $471.7 million, respectively.
12. Stockholders' Equity
Our 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, 2022 and 2021, we had no preferred stock issued and outstanding.
Common Stock
In May 2020, we issued and sold 2,587,500 shares of common stock in a public offering pursuant to a registration statement and a related prospectus and prospectus supplement. We received net proceeds of approximately $1.7 billion, net of underwriting discounts, commissions and offering expenses.
In October 2020, we established an "at the market" equity offering program (the "2020 ATM Program"), under which we could, from time to time, offer and sell shares of our common stock to or through sales agents up to an aggregate of $1.5 billion. In February 2022, we entered into a forward sale amendment to the 2020 ATM Program, under which we could, from time to time, offer and sell shares under the equity distribution agreement pursuant to forward sale transactions (the "Equity Forward Amendment"). In November 2022, we established a successor ATM program, also with substantially the same terms as the Equity Forward Amendment noted above, under which we may, from time to time, offer and sell on a spot or forward basis up to an aggregate of $1.5 billion of our common stock to or through sales agents in "at the market" transactions (the "2022 ATM Program"). The forward sale agreements provide three settlement alternatives to us: physical settlement, cash settlement or net share settlement. In accordance with ASC 815, the forward sale agreements are classified as equity for balance sheet purposes. During the first half of the year, we executed five forward sale agreements under the 2020 ATM Program to sell 579,873 shares of our common stock. On August 3, 2022, we physically settled these forward sale shares for approximately $393.6 million, net of payment of commissions to sales agents and other offering expenses, at an aggregate weighted-average forward sale price of $678.72 per share. In the fourth quarter of 2022, we executed three additional forward sale agreements to sell 458,459 shares of our common stock with maturity dates ranging from February 2023 to November 2023. Of this amount, 308,875 shares were executed under the 2020 ATM Program and the remaining 149,584 shares were executed under the 2022 ATM Program. The future net settlement value for these forward sale agreements is approximately $301.6 million at an aggregate weighted-average forward sale price of $657.75 per share.
For the year ended December 31, 2022, we sold an additional 580,833 shares, excluding the forward sale transactions noted above, for approximately $403.6 million, net of payment of commissions to sales agents and other offering expenses, under the 2020 ATM Program. As of December 31, 2022, after giving effect to the unsettled forward sale transactions noted above, no shares remained available for sale under the 2020 ATM Program. For the year ended December 31, 2021, we sold 637,617 shares for approximately $497.9 million, net of payment of commissions to sales agents and other offering expenses, under the 2020 ATM Program. For the year ended December 31, 2020, we sold 415,512 shares for approximately $298.3 million, net of payment of commissions to sales agents and other offering expenses under the 2018 ATM Program.
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As of December 31, 2022, we had $1.4 billion of common stock available for sale under the 2022 ATM Program, which amount gives effect to the unsettled forward sale transaction noted above. For the year ended December 31, 2022, no shares were issued under the 2022 ATM Program.
As of December 31, 2022, we had reserved the following authorized but unissued shares of common stock for future issuances:
| Common stock options and restricted stock units | 4,658,781 | ||||
| Common stock employee purchase plans | 2,497,134 | ||||
| Total | 7,155,915 |
Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):
| December 31, 2019 | Net Change | December 31, 2020 | Net Change | December 31, 2021 | Net Change | December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment ("CTA") gain (loss) | $ | (1,056,918) | $ | 548,503 | $ | (508,415) | $ | (559,984) | $ | (1,068,399) | $ | (769,838) | $ | (1,838,237) | |||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on cash flow hedges (1) | 15,638 | (82,790) | (67,152) | 60,562 | (6,590) | 40,543 | 33,953 | ||||||||||||||||||||||||||||||||||||||||
| Net investment hedge CTA gain (loss) (1) | 107,619 | (444,553) | (336,934) | 326,982 | (9,952) | 425,701 | 415,749 | ||||||||||||||||||||||||||||||||||||||||
| Net actuarial gain (loss) on defined benefit plans (2) | (952) | 85 | (867) | 57 | (810) | (101) | (911) | ||||||||||||||||||||||||||||||||||||||||
| $ | (934,613) | $ | 21,245 | $ | (913,368) | $ | (172,383) | $ | (1,085,751) | $ | (303,695) | $ | (1,389,446) |
(1)Refer to Note 8 for a discussion of the amounts reclassified from accumulated other comprehensive loss to net income.
(2)We have a defined benefit pension plan covering all employees in two countries where such plans are mandated by law. We do 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 our consolidated balance sheets (as evidenced above in our foreign currency translation loss), as well as its consolidated results of operations, as amounts in foreign currencies are generally translated into more U.S. dollars when the U.S. dollar weakens or less U.S. dollars when the U.S. dollar strengthens. As of December 31, 2022, the U.S. dollar was generally stronger relative to certain of the currencies of the foreign countries in which we operate as compared to December 31, 2021. Because of this, the U.S. dollar had an overall unfavorable impact on our consolidated financial position because the foreign denominations translated into fewer U.S. dollars as evidenced by an increase in foreign currency translation loss for the year ended December 31, 2022 as reflected in the above table. The volatility of the U.S. dollar as compared to the other currencies in which we operate 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.
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Dividends
During the years ended December 31, 2022, 2021 and 2020, our Board of Directors declared quarterly dividends whose treatment for federal income tax purposes were as follows:
| Declaration Date | Record Date | Payment Date | Total Distribution (1) | Nonqualified Ordinary Dividend (2) | Total Distribution Amount | |||||||||||||||||||||||||||||||||||||||
| (per share) | (in thousands) | |||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2022 | ||||||||||||||||||||||||||||||||||||||||||||
| 2/16/2022 | 3/7/2022 | 3/23/2022 | $ | 3.100000 | $ | 3.100000 | $ | 282,031 | ||||||||||||||||||||||||||||||||||||
| 4/27/2022 | 5/18/2022 | 6/15/2022 | 3.100000 | 3.100000 | 282,168 | |||||||||||||||||||||||||||||||||||||||
| 7/27/2022 | 8/17/2022 | 9/21/2022 | 3.100000 | 3.100000 | 286,136 | |||||||||||||||||||||||||||||||||||||||
| 11/2/2022 | 11/16/2022 | 12/14/2022 | 3.100000 | 3.100000 | 286,868 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 12.400000 | $ | 12.400000 | $ | 1,137,203 | ||||||||||||||||||||||||||||||||||||||
| Fiscal 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| 2/10/2021 | 2/24/2021 | 3/17/2021 | $ | 2.870000 | $ | 2.870000 | $ | 256,321 | ||||||||||||||||||||||||||||||||||||
| 4/28/2021 | 5/19/2021 | 6/16/2021 | 2.870000 | 2.870000 | 257,199 | |||||||||||||||||||||||||||||||||||||||
| 7/28/2021 | 8/18/2021 | 9/22/2021 | 2.870000 | 2.870000 | 257,769 | |||||||||||||||||||||||||||||||||||||||
| 11/3/2021 | 11/17/2021 | 12/15/2021 | 2.870000 | 2.870000 | 258,716 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 11.480000 | $ | 11.480000 | $ | 1,030,005 | ||||||||||||||||||||||||||||||||||||||
| Fiscal 2020 | ||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2020 | 2/26/2020 | 3/18/2020 | $ | 2.660000 | $ | 2.660000 | $ | 227,386 | ||||||||||||||||||||||||||||||||||||
| 5/6/2020 | 5/20/2020 | 6/17/2020 | 2.660000 | 2.660000 | 235,449 | |||||||||||||||||||||||||||||||||||||||
| 7/29/2020 | 8/19/2020 | 9/23/2020 | 2.660000 | 2.660000 | 236,424 | |||||||||||||||||||||||||||||||||||||||
| 10/28/2020 | 11/18/2020 | 12/9/2020 | 2.660000 | 2.660000 | 237,010 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 10.640000 | $ | 10.640000 | $ | 936,269 |
(1)Common stock dividends are characterized for federal income tax purposes as nonqualified ordinary dividend, qualified ordinary dividend, capital gains or return of capital. During the years ended December 31, 2022, 2021 and 2020, we did not classify any portion of the distributions as qualified ordinary dividend, capital gains or return of capital.
(2)All nonqualified ordinary dividends are eligible for the 20% deduction generally allowable to non-corporate shareholders under Internal Revenue Code Section 199A.
In addition, as of December 31, 2022, for dividends and special distributions attributed to the RSUs, we recorded a short-term dividend payable of $12.3 million and a long-term dividend payable of $10.4 million for the RSUs that have not yet vested. As of December 31, 2021, for dividends and special distributions attributed to the RSUs, we recorded a short-term dividend payable of $12.0 million and a long-term dividend payable of $9.7 million for the RSUs that have not yet vested.
13. Stock-Based Compensation
Equity Compensation Plans
As of December 31, 2022, our equity compensation plans included:
- 2004 Employee Stock Purchase Plan (the "2004 Purchase Plan")**: The 2004 Purchase Plan permits eligible employees to purchase common stock on favorable terms via payroll deductions of up to 15% of the employee's cash compensation, subject to certain share and statutory dollar limits. Two overlapping offering periods commence during each calendar year, on each February 15 and August 15 or such other periods or dates as determined by the Compensation Committee from time to time, and the offering periods last up to 24 months with a purchase date every 6 months. The price of each share purchased is 85% of the lower of
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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.
- 2020 Equity Incentive Plan: In 2020, both our Board of Directors and our stockholders approved the 2020 Equity Plan, which provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, RSAs, RSUs, other stock-based incentive awards, dividend equivalents, and cash-based incentive awards. The 2020 Equity Plan's awards may be granted to employees, non-employee members of the Board and consultants. Equity awards granted under the 2020 Equity Incentive Plan generally vest over four years. The maximum numbers of shares of our common stock available for issuance under the 2020 Equity Plan is equal to the sum of 4.0 million shares and the shares transferred from the 2000 Equity Incentive Plan.
The Equity compensation plans are administered by the Talent, Culture and Compensation Committee of the Board of Directors (the "Compensation Committee"), and the Compensation Committee may terminate or amend these plans, with approval of the stockholders as may be required by applicable law, at any time. As of December 31, 2022, shares reserved and available for issuance under the equity compensation plans are as follows:
| Shares reserved | Shares available for grant | ||||||||||
| 2004 Purchase Plan | 5,392,206 | 2,497,134 | |||||||||
| 2020 Equity Incentive Plan | 4,403,832 | 3,213,089 |
Restricted Stock Units
Since 2008, we primarily grant RSUs to our employees, including executives and non-employee directors, in lieu of stock options. We generally grant RSUs that have a service condition only or have both a service and performance condition. Each RSU is not considered issued and outstanding and does not have voting rights until it is converted into one share of our common stock upon vesting. RSUs activity is summarized as follows:
| Number of Shares Outstanding | Weighted Average Grant Date Fair Value per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (1) (Dollars in Thousands) | ||||||||||||||||||||
| RSUs outstanding, December 31, 2019 | 1,312,725 | $ | 411.99 | ||||||||||||||||||||
| RSUs granted | 695,383 | 596.80 | |||||||||||||||||||||
| RSUs released, vested | (606,250) | 426.03 | |||||||||||||||||||||
| Special distribution shares released | (722) | 264.57 | |||||||||||||||||||||
| RSUs canceled | (63,502) | 457.91 | |||||||||||||||||||||
| RSUs outstanding, December 31, 2020 | 1,337,634 | 499.60 | |||||||||||||||||||||
| RSUs granted | 776,628 | 679.59 | |||||||||||||||||||||
| RSUs released, vested | (633,466) | 505.40 | |||||||||||||||||||||
| Special distribution shares released | (34) | 297.03 | |||||||||||||||||||||
| RSUs canceled | (123,168) | 561.34 | |||||||||||||||||||||
| RSUs outstanding, December 31, 2021 | 1,357,594 | 594.27 | |||||||||||||||||||||
| RSUs granted | 912,249 | 661.43 | |||||||||||||||||||||
| RSUs released, vested | (668,733) | 576.62 | |||||||||||||||||||||
| RSUs canceled | (155,418) | 624.98 | |||||||||||||||||||||
| RSUs outstanding, December 31, 2022 | 1,445,692 | $ | 641.51 | 1.26 | $ | 946,971 |
(1)The intrinsic value is calculated based on the market value of the stock as of December 31, 2022.
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The total fair value of RSUs vested and released during the years ended December 31, 2022, 2021 and 2020 was $462.0 million, $472.9 million and $417.0 million, respectively.
Employee Stock Purchase Plan
We provide the following disclosures for the 2004 Purchase Plan as of December 31 (dollars, except shares):
| 2022 | 2021 | 2020 | |||||||||||||||
| Weighted-average purchase price per share | $ | 568.29 | $ | 467.59 | $ | 371.71 | |||||||||||
| Weighted average grant-date fair value per share of shares purchased | $ | 202.61 | $ | 138.80 | $ | 114.08 | |||||||||||
| Number of shares purchased | 143,515 | 166,023 | 167,113 |
We use the Black-Scholes option-pricing model to determine the fair value of shares under the 2004 Purchase Plan with the following assumptions during the years ended December 31:
| 2022 | 2021 | 2020 | |||||||||||||||
| Range of dividend yield | 1.48% - 1.55% | 1.58 - 1.77% | 1.94 - 2.08% | ||||||||||||||
| Range of risk-free interest rate | 0.72% - 3.06% | 0.01 - 0.21% | 0.10 - 1.55% | ||||||||||||||
| Range of expected volatility | 25.73% - 37.20% | 25.54 - 41.24% | 19.28 - 51.93% | ||||||||||||||
| Weighted-average expected volatility | 30.34 | % | 34.08 | % | 32.94 | % | |||||||||||
| Weighted average expected life (in years) | 1.06 | 1.18 | 1.36 |
Stock-Based Compensation
The following table presents, by operating expense, our stock-based compensation expense recognized in our consolidated statement of operations for the years ended December 31 (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Cost of revenues | $ | 45,028 | $ | 38,438 | $ | 32,893 | |||||||||||
| Sales and marketing | 82,794 | 79,144 | 72,895 | ||||||||||||||
| General and administrative | 276,161 | 246,192 | 205,232 | ||||||||||||||
| Total | $ | 403,983 | $ | 363,774 | $ | 311,020 |
Our 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):
| 2022 | 2021 | 2020 | |||||||||||||||
| RSUs | $ | 359,952 | $ | 330,077 | $ | 289,426 | |||||||||||
| RSAs(1) | 9,793 | 10,067 | 8,289 | ||||||||||||||
| Employee stock purchase plan | 34,238 | 23,630 | 13,305 | ||||||||||||||
| Total | $ | 403,983 | $ | 363,774 | $ | 311,020 |
(1) During the year ended December 31, 2020, we awarded 48,799 shares of RSAs. See Note 1 for further discussion.
During the years ended December 31, 2022, 2021 and 2020, we capitalized $46.3 million, $27.7 million and $20.3 million, respectively, of stock-based compensation expense as construction in progress in property, plant and equipment.
As of December 31, 2022, the total stock-based compensation cost related to unvested equity awards not yet recognized, net of estimated forfeitures, totaled $694.7 million which is expected to be recognized over a weighted-average period of 2.18 years.
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
14. Income Taxes
Income before income taxes is attributable to the following geographic locations for the years ended December 31, (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Domestic | $ | 334,486 | $ | 137,492 | $ | 18,395 | |||||||||||
| Foreign | 494,883 | 471,460 | 497,830 | ||||||||||||||
| Income before income taxes | $ | 829,369 | $ | 608,952 | $ | 516,225 |
The tax benefit (expenses) for income taxes consisted of the following components for the years ended December 31, (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 1,679 | $ | 7,753 | $ | 4,552 | |||||||||||
| State and local | (892) | (156) | 1,597 | ||||||||||||||
| Foreign | (83,210) | (76,450) | (171,092) | ||||||||||||||
| Subtotal | (82,423) | (68,853) | (164,943) | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (16,284) | 11,060 | 16,553 | ||||||||||||||
| State and local | (5,024) | (1,411) | 704 | ||||||||||||||
| Foreign | (21,061) | (50,020) | 1,535 | ||||||||||||||
| Subtotal | (42,369) | (40,371) | 18,792 | ||||||||||||||
| Income tax expense | $ | (124,792) | $ | (109,224) | $ | (146,151) |
State and foreign taxes not based on income are included in general and administrative expenses and the aggregate amounts were not significant for the years ended December 31, 2022, 2021 and 2020.
The fiscal 2022, 2021, and 2020 income tax benefit (expenses) differed from the amounts computed by applying the U.S. federal income tax rate of 21% to pre-tax income as a result of the following for the years ended December 31 (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Federal tax at statutory rate | $ | (174,168) | $ | (127,880) | $ | (109,906) | |||||||||||
| State and local tax (expense) benefit | (5,916) | (1,513) | 2,071 | ||||||||||||||
| Deferred tax assets generated in current year not benefited | (39,196) | (19,703) | (12,852) | ||||||||||||||
| Foreign income tax rate differential | (12,379) | (18,918) | (16,364) | ||||||||||||||
| Non-deductible expenses | (5,995) | (10,579) | (4,427) | ||||||||||||||
| Stock-based compensation expense | (8,321) | (1,385) | (954) | ||||||||||||||
| Change in valuation allowance | (19,793) | (595) | 390 | ||||||||||||||
| Foreign financing activities | (5,519) | (4,805) | (11,743) | ||||||||||||||
| Uncertain tax positions reserve | 45,317 | 50,059 | (38,014) | ||||||||||||||
| Tax adjustments related to REIT | 107,312 | 39,164 | 50,107 | ||||||||||||||
| Change in deferred tax adjustments | (239) | (1,251) | (136) | ||||||||||||||
| Effect of tax rate change on deferred tax assets | (3,126) | (12,297) | — | ||||||||||||||
| Other, net | (2,769) | 479 | (4,323) | ||||||||||||||
| Total income tax expense | $ | (124,792) | $ | (109,224) | $ | (146,151) |
Of the unrecognized tax benefits being realized in the years ended December 31, 2022 and 2021, approximately $2.0 million and $32.0 million, respectively, are related to the uncertain tax position inherited from the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
acquisition of Metronode in 2018. The uncertain tax position was covered by an indemnification agreement with the Seller. As such, the realization of the unrecognized tax benefit resulted in an impairment of the indemnification asset for the same amount, which has been included in Other Income (Expense) on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021.
Our accounting policy is to treat any tax on Global Intangible Low-Taxed Income ("GILTI") inclusions as a current period cost included in the tax expense in the year incurred. We believe the GILTI inclusion provision will result in no material financial statement impact provided we satisfy our REIT distribution requirement with respect to the GILTI inclusions.
As a result of our conversion to a REIT effective January 1, 2015, it is no longer our intent to indefinitely reinvest undistributed foreign earnings. 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 material U.S. taxes in the post-REIT conversion periods due to the fact that the majority of our foreign subsidiaries are either QRSs or owned directly by our REIT and QRSs, and the foreign withholding tax effect would be immaterial. We continue to assess the foreign withholding tax impact of our current policy and do not believe the distribution of our foreign earnings would trigger any significant foreign withholding taxes, as the majority of the foreign jurisdictions where we operate do not impose withholding taxes on dividend distributions to a corporate U.S. parent.
The types of temporary differences that give rise to significant portions of our deferred tax assets and liabilities are set out below as of December 31 (in thousands):
| 2022 | 2021**(1)** | ||||||||||
| Deferred tax assets: | |||||||||||
| Stock-based compensation expense | $ | 9,002 | $ | 9,057 | |||||||
| Net unrealized losses | 3,988 | — | |||||||||
| Operating lease liabilities | 253,005 | 225,261 | |||||||||
| Capital lease liabilities | — | 13,927 | |||||||||
| Deferred revenue | 13,887 | 14,429 | |||||||||
| Goodwill | 20,511 | 30,842 | |||||||||
| Loss carryforwards and tax credits | 142,270 | 201,132 | |||||||||
| Others, net | 32,543 | 7,257 | |||||||||
| Gross deferred tax assets | 475,206 | 501,905 | |||||||||
| Valuation allowance | (166,594) | (100,746) | |||||||||
| Total deferred tax assets, net | 308,612 | 401,159 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Net unrealized gains | — | (1,462) | |||||||||
| Capital lease liabilities | (8,033) | — | |||||||||
| Property, plant and equipment | (221,343) | (262,532) | |||||||||
| Right-of-use assets | (256,837) | (233,199) | |||||||||
| Deferred income | (28,314) | (33,052) | |||||||||
| Intangible assets | (132,816) | (151,385) | |||||||||
| Total deferred tax liabilities | (647,343) | (681,630) | |||||||||
| Net deferred tax liabilities | $ | (338,731) | $ | (280,471) |
(1) The prior year amounts presented in the table above have been reclassified to conform with the current year presentation.
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 $2.5 billion as of December 31, 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Our accounting for deferred taxes involves weighing positive and negative evidence concerning the realizability of our deferred tax assets in each taxing jurisdiction. After considering evidence such as the nature, frequency and severity of current and cumulative financial reporting losses, the sources of future taxable income, taxable income in carryback years permitted by the tax laws and tax planning strategies, we concluded that valuation allowances were required in certain jurisdictions. The operations in most of the jurisdictions for which a valuation allowance has been established have a history of significant losses as of December 31, 2022. As such, we do not believe these operations have established a sustained history of profitability and that a valuation allowance is, therefore, necessary. We also provided a valuation allowance against certain gross deferred tax assets in certain taxing jurisdictions as these deferred tax assets are not expected to be realizable in the foreseeable future.
Changes in the valuation allowance for deferred tax assets for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Beginning balance | $ | 100,746 | $ | 82,344 | $ | 57,812 | |||||||||||
| Amounts from acquisitions | 13,458 | 964 | 5,777 | ||||||||||||||
| Amounts recognized into income | 22,905 | 595 | (390) | ||||||||||||||
| Current increase | 36,513 | 19,539 | 15,044 | ||||||||||||||
| Impact of foreign currency exchange | (7,028) | (2,696) | 4,101 | ||||||||||||||
| Ending balance | $ | 166,594 | $ | 100,746 | $ | 82,344 |
Our NOL carryforwards for federal, state and foreign tax purposes which expire, if not utilized, at various intervals from 2023, are outlined below (in thousands):
| Expiration Date | Federal (1) | State (1) | Foreign (2) (3) | Total | ||||||||||||||||||||||
| 2023 | $ | 17,395 | $ | — | $ | 2,083 | $ | 19,478 | ||||||||||||||||||
| 2024 to 2026 | 15,564 | — | 33,722 | 49,286 | ||||||||||||||||||||||
| 2027 to 2029 | 6,065 | — | 28,046 | 34,111 | ||||||||||||||||||||||
| 2030 to 2032 | — | 767 | 5,457 | 6,224 | ||||||||||||||||||||||
| 2033 to 2035 | 1,838 | 1,339 | 11,692 | 14,869 | ||||||||||||||||||||||
| 2036 to 2038 | 5,294 | 3,636 | 20,143 | 29,073 | ||||||||||||||||||||||
| Thereafter | 147,010 | 74,416 | 452,303 | 673,729 | ||||||||||||||||||||||
| $ | 193,166 | $ | 80,158 | $ | 553,446 | $ | 826,770 |
(1)The total amount of NOL carryforwards that will not be available to offset our future taxable income after the dividends paid deduction due to Section 382 limitations was $36.7 million for federal and $22.7 million for state.
(2)In certain jurisdictions, the net operating loss carryforwards can only be used to offset a percentage of taxable income in a given year.
(3)If certain substantial changes in the entity's ownership occur or have determined to have occurred, there may be a limitation on the amount of the carryforwards that can be utilized.
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As of December 31, 2022, we had tax credit carryforwards of $6.2 million, which expire, if not utilized, from 2023 to 2031. We also had capital losses of $7.2 million, which can be carried forward indefinitely.
The beginning and ending balances of our unrecognized tax benefits are reconciled below for the years ended December 31 (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Beginning balance | $ | 148,300 | $ | 207,759 | $ | 173,726 | |||||||||||
| Gross increases related to prior year tax positions | 1,401 | 4,547 | 14,732 | ||||||||||||||
| Gross decreases related to prior year tax positions | (43,575) | (58,356) | — | ||||||||||||||
| Gross increases related to current year tax positions | 7,004 | 10,000 | 29,149 | ||||||||||||||
| Decreases resulting from expiration of statute of limitation | (11,969) | (10,561) | (6,518) | ||||||||||||||
| Decreases resulting from settlements | (11,924) | (5,089) | (3,330) | ||||||||||||||
| Ending balance | $ | 89,237 | $ | 148,300 | $ | 207,759 |
We recognize interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. We accrued $6.5 million, $13.6 million, and $21.3 million for interest and penalties as of December 31, 2022, 2021 and 2020, respectively.
The unrecognized tax benefits of $89.2 million as of December 31, 2022, if subsequently recognized, will affect our effective tax rate favorably at the time when such a benefit is recognized.
Due to various tax years open for examination and the ongoing tax audits and inquiries by the tax authorities in different jurisdictions, it is reasonably possible that the balance of unrecognized tax benefits could significantly increase or decrease over the next 12 months as we may be subject to either examination by tax authorities, tax audit settlements, or a lapse in statute of limitations. We are currently unable to estimate the range of possible adjustments to the balance of unrecognized tax benefits.
In general, our income tax returns for the years from 2019 through the current year remain open to examination by federal and state taxing authorities. In addition, our tax years of 2005 through current year remain open and subject to examination by local tax authorities in certain foreign jurisdictions in which we have major operations.
15. Commitments and Contingencies
Purchase Commitments
As a result of our various IBX data center expansion projects, as of December 31, 2022, we were contractually committed for approximately $1.6 billion of unaccrued capital expenditures, primarily for IBX infrastructure 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 our customers for installation. We also had numerous other, non-capital purchase commitments in place as of December 31, 2022, such as commitments to purchase power in select locations through 2023 and thereafter, and other open purchase orders for goods, or services to be delivered or provided during 2023 and thereafter. Such other miscellaneous purchase commitments totaled approximately $1.8 billion as of December 31, 2022. For further information on our equity method investments contribution commitments and lease commitments, see Notes 6 and Note 10, respectively, above.
Contingent Liabilities
We estimate our exposure on certain liabilities, such as indirect and property taxes, based on the best information available at the time of determination. With respect to real and personal property taxes, we record what we can reasonably estimate based on prior payment history, assessed value by the assessor's office, current landlord estimates or estimates based on current or changing fixed asset values in each specific municipality, as applicable. However, there are circumstances beyond our 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 our IBX data center leases or a municipality changing the assessment value in a jurisdiction and, as a result, our property tax obligations may vary from period to period. Based upon the most current facts and circumstances, we make the necessary property tax accruals for each of our reporting periods. However, revisions
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
in our estimates of the potential or actual liability could materially impact our financial position, results of operations or cash flows.
Our indirect and property tax filings in various jurisdictions are subject to examination by local tax authorities. 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 further changes to the tax laws and interpretations thereof. For example, we are currently undergoing an audit and appealing the tentative assessment in Brazil. The final settlement of the audit and the outcomes of the appeal are uncertain and may not be resolved in our favor. We regularly assess the likelihood of adverse outcomes resulting from these examinations and appeals that would affect the adequacy of our tax accruals for each of the reporting periods. If any issues arising from the tax examinations and appeals are resolved in a manner inconsistent with our expectations, the revision of the estimates of the potential or actual liabilities could materially impact our financial position, results of operations, or cash flows.
From time to time, we may have certain contingent liabilities that arise in the ordinary course of our business activities. Contingent liabilities are accrued 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.
Employment Agreements
We have entered into a severance agreement with certain of our executive officers that provides for a severance payment equal to 100% of 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, or 200% of the executive officer's annual base salary and maximum bonus in the event this occurs after a change-in-control of our company. For certain other executive officers, these benefits are only triggered after a change-in-control of our company, in which case the officer is entitled to 200% of the executive officer's annual base salary and maximum bonus. In addition, under these agreements, 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 24 months.
Indemnification and Guarantor Arrangements
As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was serving, at our 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 we could be required to make under these indemnification agreements is unlimited; however, we have a director and officer insurance policy that could limit our exposure and enable us to recover a portion of any future amounts paid. As a result of our insurance policy that could limit our exposure and enable us to recover some or all of amounts paid, our estimated fair value of these indemnification agreements is minimal. We have no liabilities recorded for these agreements as of December 31, 2022.
We enter into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, we may agree to indemnify, hold harmless, and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally a business partner or a customer, in connection matters such as any U.S. patent, or any copyright or other intellectual property infringement claim by any third party with respect to our offerings; a breach of confidentiality obligations and certain other contractual warranties; our gross negligence, willful misconduct, fraud, misrepresentation, or violation of law; and/or if we cause tangible property damage, personal injury or death. The term of any such indemnification agreement is generally perpetual after execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have never incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, our estimated fair value of these agreements is minimal. We do not have significant liabilities recorded for these agreements as of December 31, 2022.
We enter into arrangements with certain business partners, whereby the business partner agrees to provide services as a subcontractor for our installations. Accordingly, we enter into standard indemnification agreements
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
with our customers, whereby we indemnify them for certain acts, such as personal property damage, by our subcontractors. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have general and umbrella insurance policies that could enable us to recover a portion of any amounts paid. We have never incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, our estimated fair value of these agreements is minimal. We do not have significant liabilities recorded for these agreements as of December 31, 2022.
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, whether or not within our control, could result in obligations to these customers. Our liability insurance may not be adequate to cover those expenses. In addition, any loss of service, equipment damage or inability to meet our service level commitment obligations could reduce the confidence our customers have in us, and could consequently impair our ability to obtain and retain customers, which would adversely affect both our ability to generate revenues and our operating results. We generally have the ability to determine such service level credits prior to the associated revenue being recognized. We do not have significant liabilities in connection with service level credits as of December 31, 2022.
Concurrent with the closing of the EMEA 2 Joint Venture, the EMEA 2 Joint Venture entered into credit facility agreements with a group of lenders under which it could borrow up to approximately $1.4 billion in total at the exchange rate in effect on December 31, 2022, with such facilities maturing in 2025 and 2026. In connection with our 20% equity investment in the EMEA 2 Joint Venture, we provided the lenders with guarantees covering 20% of all payments of principal and interest due and payable by the EMEA 2 Joint Venture under these credit facilities, up to a limit of $292.1 million in total at the exchange rate in effect on December 31, 2022. As of December 31, 2022, the maximum potential amount of our future payments under these guarantees was approximately $89.3 million, at the exchange rates in effect on that date. Our estimated fair value of these guarantees is minimal as the likelihood of making a payout under the guarantees is low.
16. Related Party Transactions
Joint Venture Related Party Transactions
We have lease arrangements and provide various services to the EMEA 1 Joint Venture and the VIE Joint Ventures (the "Joint Ventures") through multiple agreements, including sales and marketing, development management, facilities management, and asset management services. These transactions are generally considered to have been negotiated at arm's length. The following table presents the revenues and expenses from these arrangements with the Joint Ventures in our consolidated statements of operations (in thousands):
| Years Ended December 31, | ||||||||||||||||||||||||||
| Related Party | Nature of Transaction | 2022 | 2021 | 2020 | ||||||||||||||||||||||
| EMEA 1 Joint Venture | Revenues | $ | 39,065 | $ | 42,387 | $ | 21,306 | |||||||||||||||||||
| EMEA 1 Joint Venture | Expenses (1) | 7,686 | 8,303 | 14,935 | ||||||||||||||||||||||
| VIE Joint Ventures | Revenues | 40,284 | 28,320 | 588 |
(1)Balances primarily consist of rent expenses for a 15 year sub-lease agreement with the EMEA 1 Joint Venture for a London data center.
The following table presents the assets and liabilities from related party transactions with the Joint Ventures in our consolidated balance sheets (in thousands):
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
| As of December 31, | ||||||||||||||||||||||||||||||||
| Related Party | Balance Sheet Line Item | 2022 | 2021 | |||||||||||||||||||||||||||||
| EMEA 1 Joint Venture | Receivables | $ | 73,929 | $ | 32,077 | |||||||||||||||||||||||||||
| Contract Assets (1) | 7,261 | 54,503 | ||||||||||||||||||||||||||||||
| Finance Lease Right of Use Assets | 100,968 | 118,817 | ||||||||||||||||||||||||||||||
| Other Liabilities and Payables | 1,193 | 2,483 | ||||||||||||||||||||||||||||||
| Other Liabilities and Payables - Construction Obligation (2) | 18,967 | 39,382 | ||||||||||||||||||||||||||||||
| Deferred Revenue | 15,470 | 16,886 | ||||||||||||||||||||||||||||||
| Finance Lease Right of Use Liabilities | 108,603 | 124,918 | ||||||||||||||||||||||||||||||
| VIE Joint Ventures | Receivables | 19,935 | 29,077 | |||||||||||||||||||||||||||||
| Contract Assets | 5,281 | 1,492 | ||||||||||||||||||||||||||||||
| Payables | — | 1,876 |
(1)A portion of the contract asset balance relates to commitments to complete a residual portion of the Paris 9 data center sold to the EMEA 1 Joint Venture, which is reimbursable in full upon completion.
(2)The balance primarily relates to the obligation to pay for future construction for certain sites sold as a part of the EMEA 1 Joint Venture transaction.
We have also sold certain data center facilities to our Joint Ventures and recognized gains or losses on asset sales; for more information refer to Note 5 above.
Other Related Party Transactions
We have several significant stockholders and other related parties that are also customers and/or vendors. Our activity of other related party transactions was as follows (in thousands):
| Years ended December 31, | |||||||||||||||||
| 2022 | 2021 | 2020 | |||||||||||||||
| Revenues | $ | 236,464 | $ | 140,947 | $ | 95,264 | |||||||||||
| Costs and services | 58,932 | 5,337 | 10,849 |
| As of December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Accounts receivable | $ | 25,990 | $ | 27,997 | |||||||
| Accounts payable | 665 | 20 |
17. Segment Information
While we have one primary line of business, which is the design, build-out and operation of IBX data centers, we have determined that we have three reportable segments comprised of our Americas, EMEA and Asia-Pacific geographic regions. Our chief operating decision-maker evaluates performance, makes operating decisions and allocates resources based on our revenues and adjusted EBITDA performance both on a consolidated basis and based on these three reportable segments. Intercompany transactions between segments are excluded for management reporting purposes.
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EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following tables present revenue information disaggregated by product lines and geographic areas (in thousands):
| Year Ended December 31, 2022 | |||||||||||||||||||||||
| Americas | EMEA | Asia-Pacific | Total | ||||||||||||||||||||
| Colocation (1) | $ | 2,187,751 | $ | 1,744,121 | $ | 1,150,738 | $ | 5,082,610 | |||||||||||||||
| Interconnection | 756,214 | 268,398 | 243,664 | 1,268,276 | |||||||||||||||||||
| Managed infrastructure | 218,499 | 119,361 | 77,646 | 415,506 | |||||||||||||||||||
| Other (1) | 20,727 | 75,449 | 8,719 | 104,895 | |||||||||||||||||||
| Recurring revenues | 3,183,191 | 2,207,329 | 1,480,767 | 6,871,287 | |||||||||||||||||||
| Non-recurring revenues | 166,026 | 135,875 | 89,917 | 391,818 | |||||||||||||||||||
| Total | $ | 3,349,217 | $ | 2,343,204 | $ | 1,570,684 | $ | 7,263,105 |
(1) Includes some leasing and hedging activities.
| Year Ended December 31, 2021 | |||||||||||||||||||||||
| Americas | EMEA | Asia-Pacific | Total | ||||||||||||||||||||
| Colocation (1) | $ | 2,002,253 | $ | 1,597,830 | $ | 1,042,131 | $ | 4,642,214 | |||||||||||||||
| Interconnection | 678,677 | 259,538 | 223,287 | 1,161,502 | |||||||||||||||||||
| Managed infrastructure | 168,577 | 124,937 | 87,343 | 380,857 | |||||||||||||||||||
| Other (1) | 12,430 | 19,626 | 3,856 | 35,912 | |||||||||||||||||||
| Recurring revenues | 2,861,937 | 2,001,931 | 1,356,617 | 6,220,485 | |||||||||||||||||||
| Non-recurring revenues | 159,814 | 153,285 | 101,953 | 415,052 | |||||||||||||||||||
| Total | $ | 3,021,751 | $ | 2,155,216 | $ | 1,458,570 | $ | 6,635,537 |
(1) Includes some leasing and hedging activities.
| Year Ended December 31, 2020 | |||||||||||||||||||||||
| Americas | EMEA | Asia-Pacific | Total | ||||||||||||||||||||
| Colocation (1) | $ | 1,820,709 | $ | 1,504,770 | $ | 933,522 | $ | 4,259,001 | |||||||||||||||
| Interconnection | 622,327 | 213,490 | 187,441 | 1,023,258 | |||||||||||||||||||
| Managed infrastructure | 120,159 | 127,722 | 89,464 | 337,345 | |||||||||||||||||||
| Other (1) | 19,605 | 18,738 | 83 | 38,426 | |||||||||||||||||||
| Recurring revenues | 2,582,800 | 1,864,720 | 1,210,510 | 5,658,030 | |||||||||||||||||||
| Non-recurring revenues | 124,958 | 131,669 | 83,888 | 340,515 | |||||||||||||||||||
| Total | $ | 2,707,758 | $ | 1,996,389 | $ | 1,294,398 | $ | 5,998,545 |
(1) Includes some leasing and hedging activities.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Total revenues attributed to the U.S. were $2.9 billion, $2.6 billion and $2.5 billion for the year ended December 31, 2022, 2021, and 2020, respectively. There is no country outside of the U.S. from which we derived revenues that exceeded 10% of our total revenues during any of these periods. No single customer accounted for 10% or greater of our accounts receivable or revenues for the years ended December 31, 2022, 2021, and 2020.
We define adjusted EBITDA as net income excluding income tax expense, interest income, interest expense, other income or expense, gain or loss on debt extinguishment, depreciation, amortization, accretion, stock-based compensation expense, restructuring charges, impairment charges, transaction costs and gain or loss on asset sales as presented below for the years ended December 31 (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Adjusted EBITDA: | |||||||||||||||||
| Americas | $ | 1,521,775 | $ | 1,326,460 | $ | 1,186,022 | |||||||||||
| EMEA | 1,109,502 | 1,033,333 | 974,246 | ||||||||||||||
| Asia-Pacific | 738,423 | 784,591 | 692,630 | ||||||||||||||
| Total adjusted EBITDA | 3,369,700 | 3,144,384 | 2,852,898 | ||||||||||||||
| Depreciation, amortization and accretion expense | (1,739,374) | (1,660,524) | (1,427,010) | ||||||||||||||
| Stock-based compensation expense | (403,983) | (363,774) | (311,020) | ||||||||||||||
| Transaction costs | (21,839) | (22,769) | (55,935) | ||||||||||||||
| Impairment charges | — | — | (7,306) | ||||||||||||||
| Gain (loss) on asset sales | (3,976) | 10,845 | 1,301 | ||||||||||||||
| Interest income | 36,268 | 2,644 | 8,654 | ||||||||||||||
| Interest expense | (356,337) | (336,082) | (406,466) | ||||||||||||||
| Other income (expense) | (51,417) | (50,647) | 6,913 | ||||||||||||||
| Gain (loss) on debt extinguishment | 327 | (115,125) | (145,804) | ||||||||||||||
| Income before income taxes | $ | 829,369 | $ | 608,952 | $ | 516,225 |
We also provide the following segment disclosures related to our operations as follows for the years ended December 31 (in thousands):
| 2022 | 2021 | 2020 | |||||||||||||||
| Depreciation and amortization: | |||||||||||||||||
| Americas | $ | 931,357 | $ | 865,910 | $ | 729,611 | |||||||||||
| EMEA | 458,156 | 455,651 | 389,332 | ||||||||||||||
| Asia-Pacific | 346,695 | 334,729 | 304,426 | ||||||||||||||
| Total | $ | 1,736,208 | $ | 1,656,290 | $ | 1,423,369 | |||||||||||
| Capital expenditures: | |||||||||||||||||
| Americas | $ | 1,139,309 | $ | 970,217 | $ | 866,989 | |||||||||||
| EMEA | 750,569 | 1,049,279 | 888,239 | ||||||||||||||
| Asia-Pacific | 388,126 | 732,016 | 527,276 | ||||||||||||||
| Total | $ | 2,278,004 | $ | 2,751,512 | $ | 2,282,504 |
F-60
EQUINIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Our long-lived assets, including property, plant and equipment, net and operating lease right-of-use assets, are located in the following geographic areas as of December 31 (in thousands):
| 2022 | 2021 | ||||||||||
| Americas (1) | $ | 7,532,125 | $ | 6,777,174 | |||||||
| EMEA | 5,577,498 | 5,125,341 | |||||||||
| Asia-Pacific | 3,539,911 | 3,543,260 | |||||||||
| Total Property, plant and equipment, net | $ | 16,649,534 | $ | 15,445,775 |
(1)Includes $6.0 billion and $5.4 billion, respectively, of property, plant and equipment, net attributed to the U.S. as of December 31, 2022 and 2021.
| 2022 | 2021 | ||||||||||
| Americas (1) | $ | 263,148 | $ | 297,300 | |||||||
| EMEA | 440,139 | 470,330 | |||||||||
| Asia-Pacific | 724,663 | 514,788 | |||||||||
| Total Operating lease right-of-use assets | $ | 1,427,950 | $ | 1,282,418 |
(1)Includes $244.7 million and $271.0 million of operating lease ROU assets attributed to the U.S. as of December 31, 2022 and 2021, respectively.
18. Subsequent Events
Declaration of dividends
On February 15, 2023, we declared a quarterly cash dividend of $3.41 per share, which is payable on March 22, 2023 to our common stockholders of record as of the close of business on March 7, 2023.
Issuance of JPY Senior Notes
On February 7, 2023, we entered into an agreement to sell ¥77.28 billion in principal amount of new unsecured senior notes. On February 16, 2023, we settled ¥10.0 billion of such notes, or approximately $74.7 million based on the exchange rate on that date, with the remainder of the notes expected to be settled later in the first quarter of 2023.
F-61
EQUINIX INC.
SCHEDULE III - SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2022
(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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AT1 ATLANTA (METRO) | $— | $— | $— | $— | $283,927 | $— | $283,927 | $(92,710) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AT2 ATLANTA (METRO) | — | — | — | — | 38,767 | — | 38,767 | (32,030) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AT3 ATLANTA (METRO) | — | — | — | — | 4,388 | — | 4,388 | (3,692) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AT4 ATLANTA (METRO) | — | 5,400 | 20,209 | — | 25,690 | 5,400 | 45,899 | (15,817) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AT5 ATLANTA (METRO) | — | — | 5,011 | — | 2,028 | — | 7,039 | (5,802) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BG1 BOGOTÁ (METRO), COLOMBIA | — | — | 8,779 | 617 | 3,673 | 617 | 12,452 | (5,167) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BG2 BOGOTÁ (METRO), COLOMBIA | — | 3,970 | — | — | 25,210 | 3,970 | 25,210 | (7) | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BO2 BOSTON (METRO) | — | 2,500 | 30,383 | — | 37,485 | 2,500 | 67,868 | (19,283) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CH1 CHICAGO (METRO) | — | — | — | — | 166,595 | — | 166,595 | (115,407) | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CH2 CHICAGO (METRO) | — | — | — | — | 120,460 | — | 120,460 | (69,470) | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CH3 CHICAGO (METRO) | — | 9,759 | — | 351 | 344,529 | 10,110 | 344,529 | (156,159) | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CH4 CHICAGO (METRO) | — | — | — | — | 22,924 | — | 22,924 | (16,086) | 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CH7 CHICAGO (METRO) | — | 670 | 10,564 | — | 9,215 | 670 | 19,779 | (6,936) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CL1 CALGARY (METRO), CANADA | — | — | 11,572 | — | 2,901 | — | 14,473 | (5,639) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CL2 CALGARY (METRO), CANADA | — | — | 14,145 | — | 5,494 | — | 19,639 | (6,782) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CL3 CALGARY (METRO), CANADA | — | 7,747 | 69,334 | — | 40,574 | 7,747 | 109,908 | (13,069) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CU1 CULPEPER (METRO) | — | 1,019 | 37,581 | — | 5,708 | 1,019 | 43,289 | (20,420) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CU2 CULPEPER (METRO) | — | 1,244 | 48,000 | — | 12,433 | 1,244 | 60,433 | (21,599) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CU3 CULPEPER (METRO) | — | 1,088 | 37,387 | — | 15,016 | 1,088 | 52,403 | (16,157) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CU4 CULPEPER (METRO) | — | 1,372 | 27,832 | — | 35,273 | 1,372 | 63,105 | (15,482) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA1 DALLAS (METRO) | — | — | — | — | 70,827 | — | 70,827 | (43,070) | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA2 DALLAS (METRO) | — | — | — | — | 82,118 | — | 82,118 | (37,387) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA3 DALLAS (METRO) | — | — | — | — | 97,579 | — | 97,579 | (47,698) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA4 DALLAS (METRO) | — | — | — | — | 16,840 | — | 16,840 | (10,500) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA6 DALLAS (METRO) | — | — | 20,522 | — | 179,640 | — | 200,162 | (58,551) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA7 DALLAS (METRO) | — | — | — | — | 31,742 | — | 31,742 | (19,321) | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA9 DALLAS (METRO) | — | 610 | 15,398 | — | 7,497 | 610 | 22,895 | (8,599) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DA11 DALLAS (METRO) | — | — | — | — | 207,407 | — | 207,407 | (26,487) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| INFOMART BUILDING DALLAS (METRO) | — | 24,380 | 337,643 | 3,293 | 27,438 | 27,673 | 365,081 | (52,990) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC1 WASHINGTON, DC (METRO) | — | — | — | — | 5,780 | — | 5,780 | (2,765) | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC2 WASHINGTON, DC (METRO) | — | — | — | 5,047 | 128,494 | 5,047 | 128,494 | (98,592) | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC3 WASHINGTON, DC (METRO) | — | — | 37,451 | — | 52,183 | — | 89,634 | (57,467) | 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC4 WASHINGTON, DC (METRO) | — | 1,906 | 7,272 | — | 60,164 | 1,906 | 67,436 | (46,836) | 2005 |
F-62
| 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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| DC5 WASHINGTON, DC (METRO) | — | 1,429 | 4,983 | — | 94,941 | 1,429 | 99,924 | (73,905) | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC6 WASHINGTON, DC (METRO) | — | 1,429 | 5,082 | — | 94,521 | 1,429 | 99,603 | (59,605) | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC7 WASHINGTON, DC (METRO) | — | — | — | — | 19,152 | — | 19,152 | (15,565) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC10 WASHINGTON, DC (METRO) | — | — | 44,601 | — | 90,071 | — | 134,672 | (114,185) | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC11 WASHINGTON, DC (METRO) | — | 1,429 | 5,082 | — | 190,744 | 1,429 | 195,826 | (82,458) | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC12 WASHINGTON, DC (METRO) | — | — | 101,783 | — | 82,863 | — | 184,646 | (47,708) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC13 WASHINGTON, DC (METRO) | — | 5,500 | 25,423 | — | 28,280 | 5,500 | 53,703 | (19,950) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC14 WASHINGTON, DC (METRO) | — | 2,560 | 33,511 | — | 15,026 | 2,560 | 48,537 | (15,739) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC15 WASHINGTON, DC (METRO) | — | 1,965 | — | 1,964 | 186,190 | 3,929 | 186,190 | (23,019) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC16 WASHINGTON, DC (METRO) | — | — | — | — | 139,800 | — | 139,800 | — | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC21 WASHINGTON, DC (METRO) | — | 1,507 | — | — | 146,045 | 1,507 | 146,045 | (13,291) | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DC97 WASHINGTON, DC (METRO) | — | — | 2,021 | — | 1,944 | — | 3,965 | (1,858) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DE1 DENVER (METRO) | — | — | — | — | 9,897 | — | 9,897 | (9,002) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DE2 DENVER (METRO) | — | 5,240 | 23,053 | — | 32,706 | 5,240 | 55,759 | (20,195) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HO1 HOUSTON (METRO) | — | 1,440 | 23,780 | — | 33,390 | 1,440 | 57,170 | (20,311) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| KA1 KAMLOOPS (METRO), CANADA | — | 2,929 | 46,983 | — | 16,510 | 2,929 | 63,493 | (8,325) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LA1 LOS ANGELES (METRO) | — | — | — | — | 111,522 | — | 111,522 | (79,280) | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LA2 LOS ANGELES (METRO) | — | — | — | — | 10,610 | — | 10,610 | (9,633) | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LA3 LOS ANGELES (METRO) | — | — | 34,727 | 3,959 | 18,240 | 3,959 | 52,967 | (43,819) | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LA4 LOS ANGELES (METRO) | — | 19,333 | 137,630 | — | 80,458 | 19,333 | 218,088 | (111,121) | 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LA7 LOS ANGELES (METRO) | — | 7,800 | 33,621 | — | 56,645 | 7,800 | 90,266 | (20,968) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LM1 LIMA (METRO), PERU | — | 4,589 | 8,835 | 106 | 204 | 4,695 | 9,039 | (347) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MI1 MIAMI (METRO) | — | 18,920 | 127,194 | — | 143,088 | 18,920 | 270,282 | (89,270) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MI2 MIAMI (METRO) | — | — | — | — | 22,766 | — | 22,766 | (16,253) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MI3 MIAMI (METRO) | — | — | — | — | 34,149 | — | 34,149 | (22,588) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MI6 MIAMI (METRO) | — | 4,750 | 23,017 | — | 9,926 | 4,750 | 32,943 | (14,906) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MO1 MONTERREY (METRO), MEXICO | — | — | 2,572 | — | 8,350 | — | 10,922 | (1,673) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MT1 MONTREAL (METRO), CANADA | — | — | 76,932 | — | 17,721 | — | 94,653 | (20,049) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MT2 MONTREAL (METRO), CANADA | — | 2,800 | 58,183 | — | — | 2,800 | 58,183 | (4,457) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MX1 MEXICO CITY (METRO), MEXICO | — | 1,090 | 53,980 | — | 35,934 | 1,090 | 89,914 | (13,119) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MX2 MEXICO CITY (METRO), MEXICO | — | 1,090 | 16,061 | — | 73,338 | 1,090 | 89,399 | (4,446) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY1 NEW YORK (METRO) | — | — | — | — | 71,417 | — | 71,417 | (50,233) | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY2 NEW YORK (METRO) | — | — | — | 17,859 | 205,266 | 17,859 | 205,266 | (136,262) | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY3 NEW YORK (METRO) | — | — | 38,484 | 146,996 | 38,484 | 146,996 | (459) | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| NY4 NEW YORK (METRO) | — | — | — | — | 370,970 | — | 370,970 | (222,348) | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY5 NEW YORK (METRO) | — | — | — | — | 300,831 | — | 300,831 | (113,510) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY6 NEW YORK (METRO) | — | — | — | — | 99,163 | — | 99,163 | (23,004) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY7 NEW YORK (METRO) | — | — | 24,660 | — | 175,830 | — | 200,490 | (152,800) | 2010 |
F-63
| 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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| NY9 NEW YORK (METRO) | — | — | — | — | 50,512 | — | 50,512 | (40,850) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY11 NEW YORK (METRO) | — | 2,050 | 58,717 | — | 40,862 | 2,050 | 99,579 | (30,847) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NY13 NEW YORK (METRO) | — | — | 31,603 | 8,300 | 6,327 | 8,300 | 37,930 | (20,446) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OT1 OTTAWA (METRO), CANADA | — | 1,549 | 39,128 | — | 1,931 | 1,549 | 41,059 | (7,455) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PH1 PHILADELPHIA (METRO) | — | — | — | — | 44,543 | — | 44,543 | (23,583) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| RJ1 RIO DE JANEIRO (METRO), BRAZIL | — | — | — | — | 20,402 | — | 20,402 | (16,387) | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| RJ2 RIO DE JANEIRO (METRO), BRAZIL | — | — | 2,012 | 1,245 | 68,500 | 1,245 | 70,512 | (25,574) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SE2 SEATTLE (METRO) | — | — | — | — | 31,910 | — | 31,910 | (26,961) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SE3 SEATTLE (METRO) | — | — | 1,760 | — | 101,820 | — | 103,580 | (71,056) | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SE4 SEATTLE (METRO) | — | 4,000 | 12,903 | — | 43,562 | 4,000 | 56,465 | (14,506) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SJ1 SAINT JOHN (METRO), CANADA | — | 159 | 14,276 | — | 1,320 | 159 | 15,596 | (2,612) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SP1 SÃO PAULO (METRO), BRAZIL | — | — | 10,188 | — | 23,290 | — | 33,478 | (21,640) | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SP2 SÃO PAULO (METRO), BRAZIL | — | — | — | 3,030 | 53,089 | 3,030 | 53,089 | (38,500) | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SP3 SÃO PAULO (METRO), BRAZIL | — | 7,222 | 72,997 | 391 | 78,637 | 7,613 | 151,634 | (52,795) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SP4 SÃO PAULO (METRO), BRAZIL | — | — | 22,027 | 6,720 | 87,709 | 6,720 | 109,736 | (26,415) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ST1 SANTIAGO (METRO), CHILE | — | 2,101 | 24,552 | — | 5,621 | 2,101 | 30,173 | (1,471) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ST2 SANTIAGO (METRO), CHILE | — | 2,101 | 11,736 | — | 7,597 | 2,101 | 19,333 | (694) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ST3 SANTIAGO (METRO), CHILE | — | 1,520 | 10,341 | — | 3,328 | 1,520 | 13,669 | (834) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ST4 SANTIAGO (METRO), CHILE | — | 81 | 4,679 | — | 1,782 | 81 | 6,461 | (375) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV1 SILICON VALLEY (METRO) | — | — | — | 15,545 | 146,020 | 15,545 | 146,020 | (104,313) | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV2 SILICON VALLEY (METRO) | — | — | — | — | 162,072 | — | 162,072 | (110,329) | 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV3 SILICON VALLEY (METRO) | — | — | — | — | 77,475 | — | 77,475 | (45,246) | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV4 SILICON VALLEY (METRO) | — | — | — | — | 106,282 | — | 106,282 | (31,327) | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV5 SILICON VALLEY (METRO) | — | 6,238 | 98,991 | — | 106,952 | 6,238 | 205,943 | (99,928) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV6 SILICON VALLEY (METRO) | — | — | 1,296 | — | — | — | 1,296 | (1) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV8 SILICON VALLEY (METRO) | — | — | — | — | 156,878 | — | 156,878 | (48,495) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV10 SILICON VALLEY (METRO) | — | 12,646 | 123,594 | — | 96,321 | 12,646 | 219,915 | (54,124) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV11 SILICON VALLEY (METRO) | — | — | — | — | 160,990 | — | 160,990 | (9,621) | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV12 SILICON VALLEY (METRO) | — | 20,313 | — | — | 82,237 | 20,313 | 82,237 | — | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV13 SILICON VALLEY (METRO) | — | — | 3,638 | — | — | — | 3,638 | (3,426) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV14 SILICON VALLEY (METRO) | — | 3,638 | 5,503 | — | 3,791 | 3,638 | 9,294 | (3,654) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV15 SILICON VALLEY (METRO) | — | 7,651 | 23,060 | — | 16,054 | 7,651 | 39,114 | (14,181) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV16 SILICON VALLEY (METRO) | — | 4,271 | 15,018 | — | 6,261 | 4,271 | 21,279 | (8,075) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SV17 SILICON VALLEY (METRO) | — | — | 17,493 | — | 2,899 | — | 20,392 | (16,090) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TR1 TORONTO (METRO), CANADA | — | — | — | — | 87,434 | — | 87,434 | (39,215) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TR2 TORONTO (METRO), CANADA | — | — | 21,113 | 99,857 | 150,427 | 99,857 | 171,540 | (37,700) | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TR4 TORONTO (METRO), CANADA | — | — | 13,985 | — | 4,668 | — | 18,653 | (8,360) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TR5 MARKHAM (METRO), CANADA | — | — | 24,913 | — | 1,660 | — | 26,573 | (9,512) | 2020 |
F-64
| 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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| TR6 BRAMPTON (METRO), CANADA | — | 9,386 | 58,704 | 2,463 | 2,682 | 11,849 | 61,386 | (9,036) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TR7 BRAMPTON (METRO), CANADA | — | 9,193 | 71,966 | — | 21,999 | 9,193 | 93,965 | (18,848) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| VA1 BURNABY (METRO), CANADA | — | — | 4,668 | — | 5,562 | — | 10,230 | (1,960) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| WI1 WINNIPEG (METRO), CANADA | — | — | 57,234 | — | 3,141 | — | 60,375 | (4,284) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHERS (5) | — | 88,430 | 50,135 | 1,743 | 66,789 | 90,173 | 116,924 | (29,432) | Various | ||||||||||||||||||||||||||||||||||||||||||||||||||
| EMEA: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AD1 ABU DHABI (METRO), UNITED ARAB EMIRATES | — | — | — | — | 75,852 | — | 75,852 | (19,448) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM1 AMSTERDAM (METRO), THE NETHERLANDS | — | — | — | — | 90,330 | — | 90,330 | (53,551) | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM2 AMSTERDAM (METRO), THE NETHERLANDS | — | — | — | — | 77,337 | — | 77,337 | (35,060) | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM3 AMSTERDAM (METRO), THE NETHERLANDS | — | — | 27,099 | — | 125,357 | — | 152,456 | (72,449) | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM4 AMSTERDAM (METRO), THE NETHERLANDS | — | — | — | — | 210,596 | — | 210,596 | (45,083) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM5 AMSTERDAM (METRO), THE NETHERLANDS | — | — | 92,199 | — | 13,183 | — | 105,382 | (40,602) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM6 AMSTERDAM (METRO), THE NETHERLANDS | — | 6,616 | 50,876 | 109 | 99,554 | 6,725 | 150,430 | (39,066) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM7 AMSTERDAM (METRO), THE NETHERLANDS | — | — | 7,397 | — | 136,812 | — | 144,209 | (34,628) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM8 AMSTERDAM (METRO), THE NETHERLANDS | — | — | — | — | 12,367 | — | 12,367 | (6,686) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AM11 AMSTERDAM (METRO), THE NETHERLANDS | — | — | 6,405 | 391 | 12,328 | 391 | 18,733 | (4,057) | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BA1 BARCELONA (METRO), SPAIN | — | — | 9,443 | — | 22,555 | — | 31,998 | (13,323) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BA2 BARCELONA (METRO), SPAIN | — | 7,808 | — | — | 2,575 | 7,808 | 2,575 | — | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BX1 BORDEAUX (METRO), FRANCE | — | 1,912 | 3,507 | — | 67,388 | 1,912 | 70,895 | (1,980) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DB1 DUBLIN (METRO), IRELAND | — | — | — | — | 5,260 | — | 5,260 | (4,512) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DB2 DUBLIN (METRO), IRELAND | — | — | 12,460 | — | 10,785 | — | 23,245 | (12,457) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DB3 DUBLIN (METRO), IRELAND | — | 3,334 | 54,387 | 55 | 20,401 | 3,389 | 74,788 | (27,038) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DB4 DUBLIN (METRO), IRELAND | — | — | 26,875 | — | 17,875 | — | 44,750 | (12,402) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DU1 DÜSSELDORF (METRO), GERMANY | — | — | — | 7,740 | 32,870 | 7,740 | 32,870 | (18,822) | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DX1 DUBAI (METRO), UNITED ARAB EMIRATES | — | — | — | — | 117,994 | — | 117,994 | (50,368) | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DX2 DUBAI (METRO), UNITED ARAB EMIRATES | — | — | — | — | 699 | — | 699 | (426) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DX3 DUBAI (METRO), UNITED ARAB EMIRATES | — | 6,738 | — | — | 12,839 | 6,738 | 12,839 | (602) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| EN1 ENSCHEDE (METRO), THE NETHERLANDS | — | — | — | — | 36,040 | — | 36,040 | (25,126) | 2008 |
F-65
| 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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| FR2 FRANKFURT (METRO), GERMANY | — | — | — | 18,629 | 587,688 | 18,629 | 587,688 | (182,900) | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FR4 FRANKFURT (METRO), GERMANY | — | 11,578 | 9,307 | 191 | 99,825 | 11,769 | 109,132 | (42,990) | 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FR5 FRANKFURT (METRO), GERMANY | 30,310 | — | — | 13,356 | 247,177 | 13,356 | 247,177 | (64,932) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FR6 FRANKFURT (METRO), GERMANY | — | — | — | — | 134,128 | — | 134,128 | (39,491) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FR7 FRANKFURT (METRO), GERMANY | — | — | 43,634 | — | 42,576 | — | 86,210 | (35,508) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FR8 FRANKFURT (METRO), GERMANY | — | 19,202 | 58,199 | — | 66,707 | 19,202 | 124,906 | (6,260) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FR13 FRANKFURT (METRO), GERMANY | — | — | — | — | 6,319 | — | 6,319 | — | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| GN1 GENOA (METRO), ITALY | — | — | 1,988 | — | 20,367 | — | 22,355 | (757) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| GV1 GENEVA (METRO), SWITZERLAND | — | — | — | — | 26,855 | — | 26,855 | (13,565) | 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| GV2 GENEVA (METRO), SWITZERLAND | — | — | — | — | 54,968 | — | 54,968 | (24,168) | 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HE3 HELSINKI (METRO), FINLAND | — | — | — | — | 14,226 | — | 14,226 | (9,835) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HE4 HELSINKI (METRO), FINLAND | — | — | 29,092 | — | 6,096 | — | 35,188 | (22,383) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HE5 HELSINKI (METRO), FINLAND | — | — | 7,564 | — | 18,921 | — | 26,485 | (8,621) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HE6 HELSINKI (METRO), FINLAND | — | — | 17,204 | 1,498 | 33,763 | 1,498 | 50,967 | (17,833) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HE7 HELSINKI (METRO), FINLAND | — | 7,348 | 6,946 | 630 | 60,952 | 7,978 | 67,898 | (8,497) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HH1 HAMBURG (METRO), GERMANY | 3,612 | 5,360 | 356 | 47,517 | 3,968 | 52,877 | (6,896) | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| IL2 ISTANBUL (METRO), TURKEY | — | 14,460 | 39,289 | — | 66,384 | 14,460 | 105,673 | (14,167) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD3 LONDON (METRO), UNITED KINGDOM | — | — | — | — | 17,307 | — | 17,307 | (15,285) | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD4 LONDON (METRO), UNITED KINGDOM | — | — | 23,044 | — | 139,253 | — | 162,297 | (65,609) | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD5 LONDON (METRO), UNITED KINGDOM | — | — | 16,412 | — | 174,138 | — | 190,550 | (103,475) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD6 LONDON (METRO), UNITED KINGDOM | — | — | — | — | 140,024 | — | 140,024 | (48,378) | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD7 LONDON (METRO), UNITED KINGDOM | — | — | — | 189,922 | 267,217 | 189,922 | 267,217 | (26,142) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD8 LONDON (METRO), UNITED KINGDOM | — | — | 107,544 | — | 80,927 | — | 188,471 | (61,761) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD9 LONDON (METRO), UNITED KINGDOM | — | — | 181,431 | — | 170,539 | — | 351,970 | (107,492) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LD10 LONDON (METRO), UNITED KINGDOM | — | — | 40,251 | — | 114,520 | — | 154,771 | (29,023) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LS1 LISBON (METRO), PORTUGAL | — | — | 7,374 | 3,306 | 20,075 | 3,306 | 27,449 | (5,714) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| LAGOS 1 (METRO), PORTUGAL | — | 1,515 | 12,470 | 3,432 | 116,045 | 4,947 | 128,515 | (6,436) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MA1 MANCHESTER (METRO), UNITED KINGDOM | — | — | — | — | 17,337 | — | 17,337 | (9,286) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MA2 MANCHESTER (METRO), UNITED KINGDOM | — | — | — | — | 9,629 | — | 9,629 | (8,655) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MA3 MANCHESTER (METRO), UNITED KINGDOM | — | — | 44,931 | — | 18,012 | — | 62,943 | (31,669) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MA4 MANCHESTER (METRO), UNITED KINGDOM | — | — | 6,697 | — | 7,954 | — | 14,651 | (8,161) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MA5 MANCHESTER (METRO), UNITED KINGDOM | — | 3,671 | 6,874 | — | 80,923 | 3,671 | 87,797 | (2,124) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MD1 MADRID (METRO), SPAIN | — | — | 7,917 | — | 7,488 | — | 15,405 | (6,637) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MD2 MADRID (METRO), SPAIN | — | — | 40,952 | — | 84,822 | — | 125,774 | (43,837) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MD6 MADRID (METRO), SPAIN | — | — | — | — | 1,226 | — | 1,226 | (2) | 2022 |
F-66
| 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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| ML2 MILAN (METRO), ITALY | — | — | — | — | 23,477 | — | 23,477 | (18,642) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ML3 MILAN (METRO), ITALY | — | — | — | 3,399 | 43,778 | 3,399 | 43,778 | (16,477) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ML5 MILAN (METRO), ITALY | — | 6,479 | 20,952 | — | 86,130 | 6,479 | 107,082 | (5,244) | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MU1 MUNICH (METRO), GERMANY | — | — | — | — | 35,906 | — | 35,906 | (18,726) | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MU3 MUNICH (METRO), GERMANY | — | — | — | — | 6,100 | — | 6,100 | (3,048) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MU4 MUNICH (METRO), GERMANY | 11,399 | 35,120 | — | 54,651 | 11,399 | 89,771 | (3,558) | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| PA2 & PA3 PARIS (METRO), FRANCE | — | — | 29,615 | 22,190 | 316,306 | 22,190 | 345,921 | (149,239) | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PA4 PARIS (METRO), FRANCE | — | 1,524 | 9,503 | — | 232,040 | 1,524 | 241,543 | (92,574) | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PA5 PARIS (METRO), FRANCE | — | — | 16,554 | — | 10,310 | — | 26,864 | (9,499) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PA6 PARIS (METRO), FRANCE | — | — | — | — | 83,383 | — | 83,383 | (40,643) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PA7 PARIS (METRO), FRANCE | — | — | — | — | 24,547 | — | 24,547 | (13,869) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PA10 PARIS (METRO), FRANCE | — | — | — | — | 132,736 | — | 132,736 | (1,382) | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SA1 SEVILLE (METRO), SPAIN | — | — | 1,567 | — | 1,472 | — | 3,039 | (2,300) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SK1 STOCKHOLM, (METRO), SWEDEN | — | — | 15,495 | — | 67,721 | — | 83,216 | (13,626) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SK2 STOCKHOLM, (METRO), SWEDEN | — | — | 80,148 | 3,391 | 65,837 | 3,391 | 145,985 | (43,237) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SK3 STOCKHOLM, (METRO), SWEDEN | — | — | — | — | 24,507 | — | 24,507 | (7,424) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SO1 SOFIA (METRO), BULGARIA | — | — | 5,236 | — | 4,401 | — | 9,637 | (3,736) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SO2 SOFIA (METRO), BULGARIA | — | 2,592 | — | — | 22,529 | 2,592 | 22,529 | (2,804) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| WA1 WARSAW (METRO), POLAND | — | — | 5,950 | — | 23,184 | — | 29,134 | (11,358) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| WA2 WARSAW (METRO), POLAND | — | — | 4,709 | — | 8,588 | — | 13,297 | (6,165) | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| WA3 WARSAW (METRO), POLAND | — | 2,443 | — | — | 60,513 | 2,443 | 60,513 | (5,344) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ZH2 ZURICH (METRO), SWITZERLAND | — | — | — | — | 5,938 | — | 5,938 | (4,609) | 2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ZH4 ZURICH (METRO), SWITZERLAND | — | — | 11,284 | — | 46,864 | — | 58,148 | (30,276) | 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ZH5 ZURICH (METRO), SWITZERLAND | — | — | — | 7,971 | 242,681 | 7,971 | 242,681 | (45,823) | 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ZW1 ZWOLLE (METRO), THE NETHERLANDS | — | — | — | — | 10,186 | — | 10,186 | (9,527) | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHERS (5) | — | 56,430 | 18,309 | 35,479 | 206,800 | 91,909 | 225,109 | (53,220) | Various | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia-Pacific: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AE1 ADELAIDE (METRO), AUSTRALIA | — | 2,574 | 1,015 | — | 2,393 | 2,574 | 3,408 | (1,152) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BR1 BRISBANE (METRO), AUSTRALIA | — | 3,064 | 1,053 | — | 3,342 | 3,064 | 4,395 | (1,112) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CA1 CANBERRA (METRO), AUSTRALIA | — | — | 18,410 | — | 7,195 | — | 25,605 | (4,237) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CN1 CHENNAI (METRO), INDIA | — | — | — | 8,003 | 5,415 | 8,003 | 5,415 | (65) | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HK1 HONG KONG (METRO), CHINA | — | — | — | — | 300,810 | — | 300,810 | (130,874) | 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HK2 HONG KONG (METRO), CHINA | — | — | — | — | 242,921 | — | 242,921 | (189,170) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HK3 HONG KONG (METRO), CHINA | — | — | — | — | 183,050 | — | 183,050 | (101,415) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HK4 HONG KONG (METRO), CHINA | — | — | — | — | 97,919 | — | 97,919 | (32,004) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HK5 HONG KONG (METRO), CHINA | — | — | 70,002 | — | 43,089 | — | 113,091 | (33,571) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MB1 MUMBAI (METRO), INDIA | — | 515 | 28,457 | — | 2,761 | 515 | 31,218 | (3,293) | 2021 |
F-67
| 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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| MB2 MUMBAI (METRO), INDIA | — | — | 54,494 | — | — | — | 54,494 | (6,746) | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MB3 MUMBAI (METRO), INDIA | — | — | — | 28,948 | 6,362 | 28,948 | 6,362 | — | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ME1 MELBOURNE (METRO), AUSTRALIA | — | 14,478 | — | — | 91,595 | 14,478 | 91,595 | (32,366) | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ME2 MELBOURNE (METRO), AUSTRALIA | — | — | — | — | 102,634 | — | 102,634 | (11,468) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ME4 MELBOURNE (METRO), AUSTRALIA | — | 3,323 | 84,175 | — | 10,472 | 3,323 | 94,647 | (28,739) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ME5 MELBOURNE (METRO), AUSTRALIA | — | 6,455 | 4,094 | — | 4,606 | 6,455 | 8,700 | (3,412) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OS1 OSAKA (METRO), JAPAN | — | — | 14,876 | — | 94,581 | — | 109,457 | (45,839) | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OS3 OSAKA (METRO), JAPAN | — | — | — | — | 199,004 | — | 199,004 | (19,415) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PE1 PERTH (METRO), AUSTRALIA | — | 1,307 | 1,337 | — | 2,136 | 1,307 | 3,473 | (759) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PE2 PERTH (METRO), AUSTRALIA | — | — | 16,327 | — | 15,983 | — | 32,310 | (10,059) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PE3 PERTH (METRO), AUSTRALIA | — | — | — | — | 56,947 | — | 56,947 | (3,636) | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SG1 SINGAPORE (METRO) | — | — | — | — | 302,976 | — | 302,976 | (147,603) | 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SG2 SINGAPORE (METRO) | — | — | — | — | 346,957 | — | 346,957 | (247,585) | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SG3 SINGAPORE (METRO) | — | — | 34,844 | — | 246,729 | — | 281,573 | (88,991) | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SG4 SINGAPORE (METRO) | — | — | 54,602 | — | 160,563 | — | 215,165 | (31,593) | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SG5 SINGAPORE (METRO) | — | — | — | — | 327,608 | — | 327,608 | (18,523) | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SH2 SHANGHAI (METRO), CHINA | — | — | — | — | 7,420 | — | 7,420 | (4,366) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SH3 SHANGHAI (METRO), CHINA | — | — | 7,066 | — | 13,555 | — | 20,621 | (8,267) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SH5 SHANGHAI (METRO), CHINA | — | — | 11,284 | — | 23,558 | — | 34,842 | (18,366) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SH6 SHANGHAI (METRO), CHINA | — | — | 16,545 | — | 34,902 | — | 51,447 | (8,810) | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SL1 SEOUL (METRO), SOUTH KOREA | — | — | 29,236 | — | 35,968 | — | 65,204 | (19,149) | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SY1 SYDNEY (METRO), AUSTRALIA | — | — | — | 80,706 | 38,161 | 80,706 | 38,161 | (24,626) | 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SY2 SYDNEY (METRO), AUSTRALIA | — | — | 3,080 | — | 26,629 | — | 29,709 | (23,913) | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SY3 SYDNEY (METRO), AUSTRALIA | — | — | 8,712 | — | 143,068 | — | 151,780 | (93,293) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SY4 SYDNEY (METRO), AUSTRALIA | — | — | — | — | 177,003 | — | 177,003 | (64,763) | 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SY5 SYDNEY (METRO), AUSTRALIA | — | 79,613 | — | — | 246,176 | 79,613 | 246,176 | (24,747) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SY6 SYDNEY (METRO), AUSTRALIA | — | 8,593 | 64,197 | — | 19,230 | 8,593 | 83,427 | (15,713) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SY7 SYDNEY (METRO), AUSTRALIA | — | 2,662 | 47,350 | — | 4,531 | 2,662 | 51,881 | (10,917) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY1 TOKYO (METRO), JAPAN | — | — | — | — | 32,784 | — | 32,784 | (21,073) | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY2 TOKYO (METRO), JAPAN | — | — | — | — | 89,367 | — | 89,367 | (59,814) | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY3 TOKYO (METRO), JAPAN | — | — | — | — | 67,404 | — | 67,404 | (41,572) | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY4 TOKYO (METRO), JAPAN | — | — | — | — | 72,430 | — | 72,430 | (37,356) | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY5 TOKYO (METRO), JAPAN | — | — | 102 | — | 55,213 | — | 55,315 | (21,862) | 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY6 TOKYO (METRO), JAPAN | — | — | 37,941 | — | 12,852 | — | 50,793 | (43,370) | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY7 TOKYO (METRO), JAPAN | — | — | 13,175 | — | 6,109 | — | 19,284 | (14,325) | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY8 TOKYO (METRO), JAPAN | — | — | 53,848 | — | 8,638 | — | 62,486 | (30,732) | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY9 TOKYO (METRO), JAPAN | — | — | 106,710 | — | 11,416 | — | 118,126 | (82,849) | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY10 TOKYO (METRO), JAPAN | — | — | 69,881 | — | 7,226 | — | 77,107 | (29,456) | 2015 |
F-68
| 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 (3) | Date of Acquisition or Lease (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| TY11 TOKYO (METRO), JAPAN | — | — | 22,099 | — | 225,851 | — | 247,950 | (28,436) | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TY15 TOKYO (METRO), JAPAN | — | — | — | — | 25,741 | — | 25,741 | — | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHERS (5) | — | — | 1,733 | — | 70,572 | — | 72,305 | (11,175) | Various | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TOTAL LOCATIONS | $30,310 | $621,259 | $4,697,242 | $640,676 | $17,844,178 | $1,261,935 | $22,541,420 | $(8,094,898) |
(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) Buildings and improvements are depreciated on a straight-line basis over estimated useful live as described under described in Note 1 within the Consolidated Financial Statements.
(4) Date of lease or acquisition represents the date we leased the facility or acquired the facility through purchase or acquisition.
(5) Includes various IBXs that are under initial development and costs incurred at certain central locations supporting various IBX functions.
The aggregate gross cost of our properties for federal income tax purpose approximated $31.6 billion (unaudited) as of December 31, 2022.
The following table reconciles the historical cost of our properties for financial reporting purposes for each of the years in the three-year period ended December 31, 2022 (in thousands).
Gross Fixed Assets:
| 2022 | 2021 | 2020 | |||||||||||||||
| Balance, beginning of period | $ | 21,906,055 | $ | 20,161,785 | $ | 16,927,332 | |||||||||||
| Additions (including acquisitions and improvements) | 3,250,576 | 2,977,992 | 3,110,907 | ||||||||||||||
| Disposals | (543,545) | (648,516) | (446,864) | ||||||||||||||
| Foreign currency transaction adjustments and others | (809,731) | (585,206) | 570,410 | ||||||||||||||
| Balance, end of year | $ | 23,803,355 | $ | 21,906,055 | $ | 20,161,785 |
Accumulated Depreciation:
| 2022 | 2021 | 2020 | |||||||||||||||
| Balance, beginning of period | $ | (7,274,860) | $ | (6,399,477) | $ | (5,329,182) | |||||||||||
| Additions (depreciation expense) | (1,268,177) | (1,224,874) | (1,036,452) | ||||||||||||||
| Disposals | 230,268 | 149,231 | 109,230 | ||||||||||||||
| Foreign currency transaction adjustments and others | 217,871 | 200,260 | (143,073) | ||||||||||||||
| Balance, end of year | $ | (8,094,898) | $ | (7,274,860) | $ | (6,399,477) |
F-69
Previous: Item 15. Exhibits, Financial Statement Schedules