EQUINIX INC - Annual Report: 2019 (Form 10-K)

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ITEM 1.	Business

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•	Equinix formed the Joint Venture with GIC to develop and operate xScale data centers in Europe.

•	Data center expansions included five new IBX sites in the following metros: Seoul, Singapore, Sydney, Tokyo and Helsinki, with an additional new market entry announced in Muscat, Oman.

•	Equinix closed transactions that will broaden its Europe and Latin America markets:

•	One data center in Amsterdam acquired from Switch Datacenters (closed in April 2019), bringing Equinix's Amsterdam footprint to a total of eight Amsterdam facilities to serve European markets.

•	Three data centers in Mexico acquired from Axtel S.A.B. de C.V. on January 8, 2020, bringing Equinix’s Latin America footprint to ten data centers.

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Equinix announced an agreement to acquire leading bare metal automation company Packet Host, Inc. on January 14, 2020. After the closing of this acquisition, which is expected in 2020, bare metal as a service will allow enterprises and services providers to avoid the capital expenditures and operational requirements of owning hardware by accessing bare metal servers on demand in Equinix’s global data centers.

•	Digital business transformation: Real-time interactions between people, things, locations, clouds and data require proximity and direct connections.

•	Urbanization: This is creating large, global population centers which require companies to locate digital services close to users to deliver great user experiences. These same concentrations of people provide an economy of scale which makes distributing applications, data, content and networking to serve these locations cost effective.

•	Cybersecurity: A cybersecurity breach is one of the most serious risks facing companies today, and many of the most serious breaches actually occur via a penetration of a company’s business partners’ networks. To protect against this, businesses need to distribute their security controls out to the edge where most traffic exchange is happening.

•	Data compliance: To meet new regulations, companies need to deploy data storage, analytics and clouds within the same jurisdiction, and then replicate this across multiple global locations.

•	Business ecosystems: Digital trade flows involve an increasing variety of customers, partners and employees. To enable this, companies deploy a digital presence in close physical proximity to an industry exchange point and then connect to it directly. In the aggregate, these form a business ecosystem. These ecosystems are expanding in depth and number.

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IBX Data Centers - The more than 200 IBX vendor-neutral colocation data centers worldwide provide our customers with secure, reliable and robust environments that are necessary to aggregate and distribute information and connect digital and business ecosystems globally. IBX data centers provide access to vital ecosystems where enterprises, network, cloud and SaaS providers, and business partners directly and securely interconnect to each other.

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xScale Data Centers - xScale data centers are designed to serve the unique core workload deployment needs of a targeted group of hyperscale companies, which include the world's largest cloud service providers. With xScale data centers, hyperscale customers add to their core hyperscale data center deployments and existing customer access points at Equinix, allowing streamlined expansion with a single global vendor.

•	Cross Connects - Provide a point-to-point cable link between two customers in the same IBX data center. They deliver fast, convenient, affordable and highly reliable connectivity and data exchange with business partners and service providers within the Equinix ecosystem.

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Equinix Cloud Exchange Fabric™ ("ECX Fabric™") - Directly, securely and dynamically connects distributed infrastructure and ecosystems across Equinix data centers globally using software-defined interconnection. Customers can establish data center-to-data center network connections on demand between any two ECX Fabric locations within a metro or globally and move information within a dense digital and business ecosystem.

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Equinix Internet Exchange™ - Enables networks, content providers and large enterprises to exchange internet traffic through the largest global peering solution. Service providers can aggregate traffic to multiple counterparties, called peers, on one physical port and handle multiple small peers while moving high-traffic peers to private interconnections. This reduces latency for end-users when accessing content and applications.

•	Network Edge - Allows customers to modernize networks quickly, by deploying network functions virtualization ("NFV") from multiple vendors across Equinix metros. Companies can select, deploy and connect virtual network services at the edge quickly, with no additional hardware requirements.

•	Equinix SmartKey™ - Helps customers simplify data protection across any cloud architecture via a global SaaS-based, hardware security module management and cryptography service that provides on-premises and hybrid multicloud cloud encryption key management.

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Bare Metal - Equinix’s announced acquisition of Packet on January 14, 2020, once completed, and our own organic bare metal service also in development, are expected to help enterprises more seamlessly deploy hybrid multicloud architectures on Platform Equinix. Enterprises and services providers will be able to avoid the capital expenditures and operational requirements of owning hardware by accessing bare metal servers on demand in Equinix’s global data centers.

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•	Equinix Infrastructure Services - Combines Equinix data center expertise with the skills and scale of certified technology partners worldwide. Our colocation expertise helps customers achieve an efficient data center deployment design that optimizes space and enables easy service access.

•	Equinix Professional Services - Helps enterprises and service providers design and deploy IT solutions. Our global teams of network transformation, hybrid multicloud and digital edge solution experts help companies design and manage technology solutions which are deployed on our global platform.

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ITEM 1A.	Risk Factors

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

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

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

•	the possibility that announced acquisitions may not be completed, due to failure to satisfy the conditions to closing as a result of:

◦	an injunction, law or order that makes unlawful the consummation of the acquisition;

◦	inaccuracy or breach of the representations and warranties of, or the non-compliance with covenants by, either party;

◦	the nonreceipt of closing documents; or

◦	for other reasons;

•	the possibility that there could be a delay in the completion of an acquisition, which could, among other things, result in additional transaction costs, loss of revenue or other negative effects resulting from uncertainty about completion of the respective acquisition;

•	the dilution of our existing stockholders as a result of our issuing stock as consideration in a transaction or selling stock in order to fund the transaction;

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

•	the possibility that we will be unable to retain relationships with key customers, landlords and/or suppliers of the acquired businesses, some of which may terminate their contracts with the acquired business as a result of the acquisition or which may attempt to negotiate changes in their current or future business relationships with us;

•	the possibility that we could lose key employees from the acquired businesses before integrating them;

•	the possibility that we may be unable to integrate or migrate IT systems, which could create a risk of errors or performance problems and could affect our ability to meet customer service level obligations;

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

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

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

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

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

•	the possible loss or reduction in value of acquired businesses;

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

•	the possibility that we may not be able to prepare and issue our financial statements and other public filings in a timely and accurate manner, and/or maintain an effective control environment, due to the strain on the finance organization when multiple acquisitions and integrations are occurring at the same time;

•	the possibility that future acquisitions may trigger property tax reassessments resulting in a substantial increase to our property taxes beyond that which we anticipated;

•	the possibility that future acquisitions may be in geographies and regulatory environments to which we are unaccustomed and we may become subject to complex requirements and risks with which we have limited experience;

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

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

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

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

•	the possibility that we receive limited or incorrect information about the acquired business in the diligence process. For example, we sometimes do not receive all of the customer contracts associated with our acquisitions in the diligence process, which affects our visibility into customer termination rights and could expose us to additional liabilities.

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•	we may not have the right to exercise sole decision-making authority regarding the properties, partnership, joint venture or other entity;

•	if our partners become bankrupt or fail to fund their share of required capital contributions, we may choose to or be required to contribute such capital;

•	our partners may have economic, tax or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives;

•	our joint venture partners may take actions that are not within our control, which could require us to dispose of the joint venture asset, transfer it to a taxable REIT subsidiary ("TRS") in order for Equinix to maintain its qualification for taxation as a REIT, or purchase the partner's interests or assets at an above-market price;

•	our joint venture partners may take actions unrelated to our business agreement but which reflect poorly on Equinix because of our joint venture;

•	disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our management from focusing their time and effort on our day-to-day business; and

•	we may in certain circumstances be liable for the actions of our third-party partners or guarantee all or a portion of the joint venture's liabilities, which may require the company to pay an amount greater than its investment in the joint venture.

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

•	increase the likelihood of negative outlook from our credit rating agencies, or of a downgrade to our current rating;

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

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

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

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

•	limit our operating flexibility through covenants with which we must comply;

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

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•	make us more vulnerable to increases in interest rates because of the variable interest rates on some of our borrowings to the extent we have not entirely hedged such variable rate debt.

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•	the costs of customizing IBX data centers for foreign countries;

•	protectionist laws and business practices favoring local competition;

•	greater difficulty or delay in accounts receivable collection;

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

•	difficulties in managing across cultures and in foreign languages;

•	political and economic instability;

•	fluctuations in currency exchange rates;

•	difficulties in repatriating funds from certain countries;

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

•	unexpected changes in regulatory, tax and political environments such as the United Kingdom's withdrawal from the European Union ("Brexit");

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

•	compliance with anti-bribery and corruption laws;

•	compliance with economic and trade sanctions enforced by the Office of Foreign Assets Control of the U.S. Department of Treasury; and

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

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•	our operating results or forecasts;

•	new issuances of equity, debt or convertible debt by us, including issuances through our ATM Program;

•	increases in market interest rates and changes in other general market and economic conditions, including inflationary concerns;

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

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

•	changes in U.S. or foreign tax laws;

•	changes in management or key personnel;

•	developments in our relationships with customers;

•	announcements by our customers or competitors;

•	changes in regulatory policy or interpretation;

•	governmental investigations;

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

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

•	our acquisitions of complementary businesses; or

•	the operational performance of our IBX data centers.

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•	human error;

•	equipment failure;

•	physical, electronic and cyber security breaches;

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

•	extreme temperatures;

•	water damage;

•	fiber cuts;

•	power loss;

•	terrorist acts;

•	sabotage and vandalism;

•	global pandemics or health emergencies, such as the coronavirus; and

•	failure of business partners who provide our resale products.

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•	construction delays;

•	lack of availability and delays for data center equipment, including items such as generators and switchgear;

•	unexpected budget changes;

•	increased prices for building supplies, raw materials and data center equipment;

•	labor availability, labor disputes and work stoppages with contractors, subcontractors and other third parties;

•	unanticipated environmental issues and geological problems;

•	delays related to permitting from public agencies and utility companies; and

•	delays in site readiness leading to our failure to meet commitments made to customers planning to expand into a new build.

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

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

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

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

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

•	the duration of the sales cycle for our offerings and our ability to ramp our newly-hired sales persons to full productivity within the time period we have forecasted;

•	additions and changes in product offerings and our ability to ramp up and integrate new products within the time period we have forecasted;

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

•	acquisitions or dispositions we may make;

•	the financial condition and credit risk of our customers;

•	the provision of customer discounts and credits;

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

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

•	competition in the markets in which we operate;

•	conditions related to international operations;

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

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

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

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

•	the cost and availability of adequate public utilities, including electricity;

•	changes in employee stock-based compensation;

•	overall inflation;

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

•	changes in our tax planning strategies or failure to realize anticipated benefits from such strategies;

•	changes in income tax benefit or expense; and

•	changes in or new GAAP as periodically released by the Financial Accounting Standards Board ("FASB").

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

•	authorization for the issuance of "blank check" preferred stock;

•	the prohibition of cumulative voting in the election of directors;

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

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•	limits on stockholder action by written consent; and

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

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

•	we will be subject to federal and state income tax on our taxable income at regular corporate income tax rates; and

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

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ITEM 1B.	Unresolved Staff Comments

ITEM 2.	Properties

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(1)	"●" denotes locations with one or more data centers.

(2)	Owned sites include IBX data centers subject to long-term ground leases.

(1)	Excludes three data centers held by unconsolidated entities (i.e. two xScale data centers and the JK1 IBX data center) and three Mexico data centers acquired in January 2020.

(2)	Cabinets represent a specific amount of space within an IBX data center. Customers can combine and use multiple adjacent cabinets within an IBX data center, depending on their space requirements.

(3)	The cabinet utilization rate represents the percentage of cabinet space billed versus total cabinet capacity, taking into consideration power limitations.

(4)	MRR per cabinet represents average monthly recurring revenue recognized divided by the average number of cabinets billing during the fourth quarter of the year. Americas MRR per cabinet excludes Brazil, Colombia and Infomart non-IBX tenant income and Asia-Pacific MRR per Cabinet excludes Bit-isle MIS.

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(1)	Capital expenditures are approximate and may change based on final construction details.

ITEM 3.	Legal Proceedings

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ITEM 4.	Mine Safety Disclosure

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ITEM 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

•	the S&P 500 Index;

•	the NASDAQ Composite Index; and

•	the FTSE NAREIT All REITs Index.

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ITEM 6.	Selected Financial Data

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

•	Overview

•	Results of Operations

•	Non-GAAP Financial Measures

•	Liquidity and Capital Resources

•	Contractual Obligations and Off-Balance-Sheet Arrangements

•	Critical Accounting Policies and Estimates

•	Recent Accounting Pronouncements

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•	premium data center colocation;

•	interconnection and data exchange solutions;

•	edge services for deploying networking, security and hardware; and

•	remote expert support and professional services.

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•	In March, we issued and sold 2,985,575 shares of common stock for net proceeds of approximately $1,213.4 million, after underwriting discounts, commissions and offering expenses. See Note 12 within the Consolidated Financial Statements.

•	In April, we completed the acquisition of Switch Datacenters' AMS1 data center business in Amsterdam, Netherlands (the "AM11 data center"), for a cash purchase price of approximately €30.6 million, or approximately $34.3 million. See Note 3 within the Consolidated Financial Statements.

•	In October, we closed our Joint Venture with GIC to develop and operate xScale data centers in Europe. Upon closing, we sold certain data center facilities in Europe to the Joint Venture. See Note 5 and Note 6 within the Consolidated Financial Statements.

•	In November, we issued $2.8 billion in Senior Notes due 2024, 2026 and 2029 with a weighted average interest rate of 2.93% and redeemed $1.9 billion in Senior Notes due 2022, 2023 and 2025 with a weighted average interest rate of 5.47% in November and December 2019. See Note 11 within the Consolidated Financial Statements.

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•	By the end of December, we had sold 903,555 shares of our common stock for approximately $447.7 million in proceeds, net of payment of commissions and other offering expenses, under our current ATM program. See Note 12 within the Consolidated Financial Statements.

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•	approximately $10.6 million of incremental revenues from the Infomart Dallas acquisition;

•	$52.6 million of incremental revenues generated from our recently-opened IBX data centers or IBX data center expansions; and

•	an increase in orders from both our existing customers and new customers during the period.

•	approximately $76.0 million of incremental revenues generated from our recently-opened IBX data centers or IBX data center expansions;

•	an increase in orders from both our existing customers and new customers during the period; and

•	a net increase of $110.6 million of realized cash flow hedge gains from foreign currency forward contracts.

•	approximately $16.6 million of incremental revenues from the Metronode acquisition;

•	approximately $35.4 million of incremental revenues generated from our recently-opened IBX data centers or IBX data center expansions; and

•	an increase in orders from both our existing customers and new customers during the period.

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•	$11.3 million of higher utilities costs driven by IBX data center expansions, increased utility usage and utility price increases;

•	$10.0 million of higher bandwidth costs in support of our business growth;

•	approximately $9.9 million of incremental cost of revenues from the Infomart Dallas acquisition;

•	$8.6 million of higher compensation costs, including salaries, bonuses, and stock-based compensation; and

•	$7.2 million of higher depreciation expense primarily due to IBX expansion activity.

•	$8.9 million of reduced property tax expenses, primarily due to accrual releases based on tax appeal settlements; and

•	$6.9 million of reduced office expenses.

•	a net increase of $40.6 million of realized cash flow hedge losses from foreign currency forward contracts;

•	$30.5 million of higher utilities costs driven by increased utility usage to support IBX data center expansions and utility price increases, primarily in Germany, the Netherlands and the United Kingdom;

•	$21.3 million of higher costs from increased equipment resale activities, primarily in Germany and the United Kingdom;

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•	$7.9 million of higher depreciation expenses driven by IBX data center expansions in London, Frankfurt and Amsterdam; and

•	$7.2 million of higher compensation costs, including salaries, bonuses, stock-based compensation and headcount growth.

•	$5.9 million of reduced outside services consulting expenses.

•	$45.3 million of higher rent and facility costs and utilities costs, primarily driven by expansions and higher utility usage in Hong Kong, Singapore, Australia and Japan;

•	$20.5 million of higher depreciation expense, primarily from IBX data center expansions in Singapore, Japan, Australia and Hong Kong;

•	approximately $11.2 million of incremental cost of revenues from the Metronode acquisition; and

•	$4.3 million of higher outside services consulting expenses.

•	$12.8 million of reduced costs due to lower equipment resale activities in the current period as compared to the prior year.

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•	$7.4 million of higher compensation costs, including sales compensation, salaries and stock-based compensation and headcount growth; and

•	$3.7 million of higher travel and entertainment expenses.

•	a net increase of $7.2 million of realized cash flow hedge losses from foreign currency forward contracts; and

•	$5.6 million increase in compensation costs, including sales compensation, salaries and stock-based compensation and headcount growth.

•	$6.2 million of reduced amortization expense driven by certain intangibles being fully amortized in the current year.

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•	$51.1 million of higher compensation costs, including salaries, bonuses, stock-based compensation, and headcount growth;

•	$22.3 million of higher depreciation expense associated with the implementation of certain systems to support the integration and growth of our business; and

•	$10.7 million of higher consulting expenses in support of our business growth.

•	a net increase of $8.8 million of realized cash flow hedge losses from foreign currency forward contracts; and

•	$3.9 million of higher compensation costs, including salaries, bonuses, stock-based compensation and headcount growth.

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•	$3.8 million of higher compensation costs, including salaries, bonuses, stock-based compensation and headcount growth.

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•	$17.1 million of loss on debt extinguishment as a result of amendments to leases impacting the related financing obligations;

•	$19.5 million of loss on debt extinguishment from the settlement of financing obligations as a result of the Infomart Dallas acquisition;

•	$12.6 million of loss on debt extinguishment as a result of the settlement of financing obligations for properties purchased; and

•	$2.2 million of loss on debt extinguishment as a result of the redemption of the Japanese Yen Term Loan.

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•	approximately $9,029.2 million of principal from our senior notes;

•	approximately $1,506.1 million from our finance lease liabilities; and

•	$1,371.9 million of principal from our loans payable and mortgage.

•	issued $2,800.0 million in Senior Notes due 2024, 2026 and 2029;

•	redeemed $1,906.3 million of Senior Notes due 2022, 2023 and 2025;

•	repaid $300.0 million of 5.0% Infomart Senior Notes according to their repayment terms;

•	issued and sold 2,985,575 shares of common stock in a public equity offering and received net proceeds of approximately $1,213.4 million, net of underwriting discounts, commissions and offering expenses; and

•	issued and sold 903,555 shares of common stock under our ATM Program, for proceeds of approximately $447.5 million, net of payment of commissions to sales agents and other offering expenses.

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•	the issuance of $2,800.0 million in Senior Notes due 2024, 2026 and 2029;

•	the sale and issuance of 2,985,575 shares of common stock in a public equity offering and receipt of net proceeds of approximately $1,213.4 million, net of underwriting discounts, commissions and offering expenses;

•	the sale of 903,555 shares under our ATM Program, for net proceeds of $447.5 million; and

•	proceeds from employee awards of $52.0 million.

•	the redemption of $1,906.3 million in Senior Notes due 2022, 2023 and 2025;

•	the repayment of $300.0 million of 5.0% Infomart Senior Notes according to the repayment terms;

•	dividend distributions of $836.2 million;

•	repayments of capital lease and other financing obligations totaling $126.5 million;

•	repayments of mortgage and loans payable totaling $73.2 million;

•	payments of debt extinguishment costs of $43.3 million, primarily related to redemption premium paid related to the redemption of Senior Notes due 2022, 2023 and 2025; and

•	payments of debt issuance costs of $23.3 million.

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•	the issuance of €750.0 million 2.875% Euro Senior Notes due 2024, or approximately $929.9 million in U.S. dollars, at the exchange rate in effect on March 14, 2018;

•	borrowing of the JPY Term Loan of ¥47.5 billion, or approximately $424.7 million at the exchange rate effective on July 31, 2018;

•	the sale of 930,934 shares under our ATM Program, for net proceeds of $388.2 million; and

•	proceeds from employee awards of $50.1 million.

•	dividend distributions of $738.6 million;

•	repayments of capital lease and other financing obligations of $103.8 million;

•	repayments of mortgage and loans payable of $447.5 million, primarily related to the prepayment of the remaining principal of our existing Japanese Yen Term Loan;

•	payments of debt extinguishment costs of $20.6 million; and

•	payments of debt issuance costs of $12.2 million.

(1)	Represents principal of senior notes, term loans and other loans payable, as well as premium on mortgage payable.

(2)	Represents interest on mortgage payable, senior notes, term loan facilities and other loans payable based on their approximate interest rates as of December 31, 2019, as well as the credit facility fee for the revolving credit facility.

(3)	Represents lease payments under finance and operating lease arrangements, including renewal options that are certain to be exercised.

(4)	Represents unaccrued contractual commitments. Other contractual commitments are described below.

(5)	Represents liability, net of future accretion expense.

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•	Accounting for income taxes;

•	Accounting for business combinations;

•	Accounting for impairment of goodwill;

•	Accounting for property, plant and equipment; and

•	Accounting for leases.

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ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk

(1)	The carrying value is gross of debt issuance cost, debt discount and debt premium.

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•	a cash flow hedging program to hedge the forecasted revenues and expenses in our EMEA region;

•	a balance sheet hedging program to hedge the remeasurement of monetary assets and liabilities denominated in foreign currencies; and

•	a net investment hedging program to hedge the long term investments in our foreign subsidiaries.

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ITEM 8.	Financial Statements and Supplementary Data

ITEM 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

ITEM 9A.	Controls and Procedures

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ITEM 9B.	Other Information

ITEM 10.	Directors, Executive Officers and Corporate Governance

ITEM 11.	Executive Compensation

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

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

ITEM 14.	Principal Accountant Fees and Services

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ITEM 15.	Exhibits, Financial Statement Schedules

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(b)	Exhibits.

(c)	Financial Statement Schedule.

ITEM 16.	Form 10-K Summary

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•	Switch Datacenters' AMS1 data center business in Amsterdam, Netherlands from April 18, 2019;

•	Metronode from the Ontario Teachers' Pension Plan Board (the "Metronode Acquisition") from April 18, 2018;

•	Infomart Dallas, including its operations and tenants, from ASB Real Estate Investments (the "Infomart Dallas Acquisition") from April 2, 2018;

•	Itconic, a data center business in Spain and Portugal from October 9, 2017;

•	Zenium's data center business in Istanbul from October 6, 2017;

•	certain colocation business from Verizon Communications Inc. ("Verizon") consisting of 29 data center buildings located in the United States ("U.S."), Brazil and Colombia (the "Verizon Data Center Acquisition") from May 1, 2017;

•	IO UK's data center operating business in Slough, United Kingdom ("IO Acquisition") from February 3, 2017.

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•	Non-financial assets and non-financial liabilities initially measured at fair value in a business combination or other new basis event, but not measured at fair value in subsequent reporting periods;

•	Reporting units and non-financial assets and non-financial liabilities measured at fair value for goodwill impairment tests;

•	Indefinite-lived intangible assets measured at fair value for impairment assessments;

•	Non-financial long-lived assets or asset groups measured at fair value for impairment assessments or disposal; and

•	Asset retirement obligations initially measured at fair value but not subsequently measured at fair value.

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2.	Revenue Recognition

(1)	Includes cumulative adjustments made to these accounts on January 1, 2018 from the adoption of Topic 606.

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3.	Acquisitions

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(1)	In connection with the Metronode Acquisition, the Company recorded indemnification assets of $44.4 million, which represented the seller's obligation under the purchase agreement to reimburse pre-acquisition tax liabilities settled after the acquisition.

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(1)	The nature of the intangible assets acquired is customer relationships with an estimated useful life of 15 years. Included in this amount is a customer relationship intangible asset for Verizon totaling $245.3 million. Pursuant to the acquisition agreement, the Company formalized agreements to provide pre-existing space and services to Verizon at the acquired data centers.

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4.	Earnings Per Share

5.	Assets Held for Sale

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6.	Equity Method Investments

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7.	Balance Sheet Components

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(1)	The December 31, 2019 balance included $34.3 million representing the current portion of the fair value of the contingent consideration from the sale of xScale data center facilities to the Joint Venture. See Note 5 for further discussion.

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(1)	Includes income taxes payable of $57.7 million and $67.9 million, respectively, as of December 31, 2019 and 2018.

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(1)	The balance as of December 31, 2019 includes $41.4 million of liabilities recorded upon the closing of the Joint Venture, which represents the Company’s obligation to pay for future construction that was not completed at the close of the transaction. See Note 5 for further discussion.

(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

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(1)	Included component represents foreign exchange spot rates.

(2)	Excluded component represents cross-currency basis spread and interest rates.

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(1)	Included component represents foreign exchange spot rates.

(2)	Excluded component represents option's time value.

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(1)	As presented in the Company's condensed consolidated balance sheets within other current assets and other assets.

(2)	As presented in the Company's condensed consolidated balance sheets within other current liabilities and other liabilities.

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9.	Fair Value Measurements

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10.	Leases

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11.	Debt Facilities

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•	purchase, redeem or retire capital stock or subordinated debt;

•	incur liens (1);

•	enter into sale-leaseback transactions (1);

•	make investments; and

•	merge or consolidate with any other person (1).

(1)	The supplemental indentures for the 5.000% Infomart Senior Notes, 2.875% Euro Senior Notes due 2024, 2.625% Senior Notes due 2024, 2.875% Euro Senior Notes due 2026, 2.900% Senior Notes due 2026, and 3.200% Senior Notes due 2029 only contain covenants footnoted with (1).

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(1)

Within 90 days of the closing of one or more equity offerings and at any time prior to the first scheduled redemption date, the Company may redeem up to 35% of the aggregate principal amount of any series of senior notes outstanding, at the respective early equity redemption price, plus accrued and unpaid interest to the redemption date, provided that at least 65% of the aggregate principal amount of the senior notes issued in such series remains outstanding immediately after such redemption(s).

(2)

On or after the first scheduled redemption date, the Company may redeem all or a part of a series of senior notes at the first scheduled redemption price plus accrued and unpaid interest thereon, if redeemed during the 12 month period beginning on the first scheduled redemption date and at reduced scheduled redemption prices during the 12 or 18 month periods beginning on the anniversaries of the first scheduled redemption date.

•	$52.9 million of loss on debt extinguishment from the tender and subsequent redemption of the 2022, 2023 and 2025 Notes, which included $43.3 million tender and redemption premium that was paid in cash and $9.6 million related to the write-off of unamortized debt issuance costs.

•	$17.1 million of loss on debt extinguishment as a result of amendments to leases impacting the related financing obligations;

•	$19.5 million of loss on debt extinguishment from the settlement of financing obligations as a result of the Infomart Dallas Acquisition;

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•	$12.6 million of loss on debt extinguishment as a result of the settlement of financing obligations for properties purchased; and

•	$2.2 million of loss on debt extinguishment as a result of the redemption of the Japanese Yen Term Loan.

•	$14.6 million of loss on debt extinguishment from the redemption of senior notes, which included $12.2 million redemption premium that was paid in cash and $2.4 million related to the write-off of unamortized debt issuance costs;

•	$22.5 million of loss on debt extinguishment from the redemption of term loans;

•	$16.7 million of loss on debt extinguishment as a result of amendments to leases and financing obligations; and

•	$12.0 million of loss on debt extinguishment from the settlement of financing obligations as a result of properties purchased.

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12.	Stockholders' Equity

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(1)	Refer to Note 8 for a discussion of the amounts reclassified from accumulated other comprehensive loss to net income.

(2)

Upon adoption of ASU 2016-01 during the three months ended March 31, 2018, the Company recorded a net cumulative effect adjustment of $2.1 million from accumulated other comprehensive loss to retained earnings. The realized gains and losses reclassified from accumulated other comprehensive loss to net income as a result of sale of available for sale securities were not significant for the years ended December 31, 2017 and 2016.

(3)

The Company has a defined benefit pension plan covering all employees in one country where such plans are mandated by law. The Company does not have any defined benefit plans in any other countries. The unamortized gain (loss) on defined benefit plans includes gains or losses resulting from a change in the value of either the projected benefit obligation or the plan assets resulting from a change in an actuarial assumption, net of amortization.

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(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, 2019, 2018 and 2017, the Company did not classify any portion of the distributions as qualified ordinary dividend, capital gains or return of capital.

(2)	All 2019 and 2018 nonqualified ordinary dividends are eligible for the 20% deduction generally allowable to non-corporate shareholders under Internal Revenue Code Section 199A.

13.	Stock-Based Compensation

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2000 Equity Incentive Plan: Under the 2000 Equity Incentive Plan, nonstatutory stock options, restricted shares, restricted stock units and stock appreciation rights may be granted to employees, outside directors and consultants at not less than 85% of the fair value on the date of grant, and incentive stock options may be granted to employees at not less than 100% of the fair value on the date of grant. Equity awards granted under the 2000 Equity Incentive Plan generally vest over 4 years.

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2000 Director Option Plan: Under the 2000 Director Option Plan, each non-employee board member who was not previously an employee of the Company would receive an automatic initial nonstatutory stock option grant as well as an annual non-statutory stock option grant on the date of the Company's regular Annual Meeting of Stockholders. On December 18, 2008, the Company's Board of Directors passed resolutions eliminating all automatic stock option grant mechanisms under the 2000 Director Option Plan and replaced them with an automatic restricted stock unit grant mechanism under the 2000 Equity Incentive Plan.

•	2001 Supplemental Stock Plan: Under the 2001 Supplemental Stock Plan, non-statutory stock options and restricted shares/restricted stock units may be granted to consultants and employees who are not executive officers or board members, at not less than 85% of the fair value on the date of grant. Current stock options granted under the 2001 Supplemental Stock Plan generally vest over 4 years.

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2004 Employee Stock Purchase Plan (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 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.

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(1)	The intrinsic value is calculated based on the market value of the stock as of December 31, 2019.

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14.	Income Taxes

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(1)	The total amount of NOL carryforwards that will not be available to offset the Company's future taxable income after dividend paid deduction due to Section 382 limitations was $241.8 million for federal.

(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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15.	Commitments and Contingencies

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16.	Related Party Transactions

17.	Segment Information

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(1)	Includes some leasing and hedging activities. For further information on revenue recognition, see Note 1 and Note 2 above.

(2)	Includes revenues of $2.4 billion attributed to the U.S.

(1)	Includes some leasing and hedging activities. For further information on revenue recognition, see Note 1 and Note 2 above.

(2)	Includes revenues of $2.3 billion attributed to the U.S.

(1)	Includes some leasing and hedging activities. For further information on revenue recognition, see Note 1 and Note 2 above.

(2)	Includes revenues of $2.0 billion attributed to the U.S.

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(1)	Includes $4.8 billion and $4.6 billion, respectively, of property, plant and equipment, net attributed to the U.S. as of December 31, 2019 and 2018.

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(1)	Includes $373.7 million of operating lease right-of-use assets attributed to the U.S. as of December 31, 2019.

18.	Subsequent Events

19.	Quarterly Financial Information (Unaudited)

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(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 the Company 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.

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(1)	Upon the adoption of Topic 842 on January 1, 2019, the Company de-recognized certain fixed assets under built-to-suite leases due to the conversion of certain build-to-suit leases to operating leases. See Note 1 within the Consolidated Financial Statements.