|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
|
|
000-31293
|
|
77-0487526
|
(State or Other Jurisdiction of Incorporation)
|
|
(Commission File Number)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
|
|
|
|
Item 8.01
|
Other Events.
|
Item 9.01.
|
Financial Statements and Exhibits
|
|
|
|
EQUINIX, INC.
|
||
|
|
|
By:
|
|
/s/ Keith D. Taylor
|
Name:
|
|
Keith D. Taylor
|
Title:
|
|
Chief Financial Officer
|
Exhibit No.
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
Statements of Assets Acquired and Liabilities Assumed at March 31, 2017 and December 31, 2016
|
|
3
|
|
|
|
|
|
|
|
Statements of Net Revenues and Direct Expenses for the three months ended March 31, 2017 and 2016
|
|
4
|
|
|
|
|
|
|
|
Notes to Abbreviated Financial Statements
|
|
5
|
|
|
|
|
At March 31,
2017
|
|
|
At December 31,
2016
|
|
||
|
|
|
|
|
||||
Assets acquired
|
|
|
|
|
||||
Accounts receivable, net of allowance for uncollectibles of $665 and $648, respectively
|
|
$
|
12,500
|
|
|
$
|
12,196
|
|
Prepaid customer installations
|
|
2,094
|
|
|
2,378
|
|
||
Other current assets
|
|
53
|
|
|
53
|
|
||
Total current assets
|
|
14,647
|
|
|
14,627
|
|
||
Plant, property and equipment, net
|
|
817,939
|
|
|
834,084
|
|
||
Prepaid customer installations
|
|
1,372
|
|
|
1,471
|
|
||
Lease deposits
|
|
—
|
|
|
648
|
|
||
Other non-current assets
|
|
436
|
|
|
458
|
|
||
Total assets acquired
|
|
$
|
834,394
|
|
|
$
|
851,288
|
|
|
|
|
|
|
||||
Liabilities assumed
|
|
|
|
|
||||
Accrued property taxes
|
|
$
|
3,834
|
|
|
$
|
3,877
|
|
Deferred rent
|
|
332
|
|
|
297
|
|
||
Lease obligation
|
|
376
|
|
|
372
|
|
||
Advanced billings
|
|
19,321
|
|
|
20,038
|
|
||
Total current liabilities
|
|
23,863
|
|
|
24,584
|
|
||
|
|
|
|
|
||||
Deferred rent
|
|
1,118
|
|
|
1,009
|
|
||
Lease obligation
|
|
6,705
|
|
|
6,801
|
|
||
Advanced billings
|
|
1,621
|
|
|
1,723
|
|
||
Asset retirement obligations
|
|
6,743
|
|
|
6,753
|
|
||
Total liabilities assumed
|
|
40,050
|
|
|
40,870
|
|
||
|
|
|
|
|
||||
Net assets acquired
|
|
$
|
794,344
|
|
|
$
|
810,418
|
|
Three Months Ended March 31,
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
Net Revenues
(including $3,615 and $4,530 from affiliates, respectively)
|
|
$
|
108,245
|
|
|
$
|
111,249
|
|
Direct expenses:
|
|
|
|
|
||||
Cost of services (exclusive of items shown below)
|
|
34,911
|
|
|
32,257
|
|
||
Selling, general and administrative expense
|
|
11,042
|
|
|
10,099
|
|
||
Depreciation expense
|
|
17,283
|
|
|
18,151
|
|
||
Total direct expenses
|
|
63,236
|
|
|
60,507
|
|
||
Net revenues less direct expenses
|
|
$
|
45,009
|
|
|
$
|
50,742
|
|
•
|
Ashburn, VA
|
|
•
|
Herndon, VA
|
|
•
|
Richardson (Alma), TX
|
|
|
|
|
||||
•
|
Atlanta, GA
|
|
•
|
Houston, TX
|
|
•
|
Richardson (Parkway), TX*
|
|
|
|
|
||||
•
|
Billerica, MA
|
|
•
|
Irving, TX
|
|
•
|
Santa Clara, CA (Three buildings total)
|
|
|
|
|
||||
•
|
Carteret, NJ
|
|
•
|
Kent, WA
|
|
•
|
San Jose, CA
|
|
|
|
|
||||
•
|
Culpeper, VA (four buildings total)*
|
|
•
|
Manassas, VA
|
|
•
|
Torrance, CA
|
|
|
|
|
||||
•
|
Doral, FL
|
|
•
|
Miami, FL
|
|
•
|
Westmont, IL
|
|
|
|
|
||||
•
|
Elmsford, NY
|
|
•
|
Norcross, GA
|
|
|
|
|
|
|
|
||||
•
|
Englewood, CO
|
|
•
|
Piscataway, NJ*
|
|
|
|
•
|
Sao Paolo, Brazil
|
|
|
•
|
Bogota, Colombia
|
(a)
|
Verizon leased space from the Acquirer at the Selected Sites under separate agreements.
|
(b)
|
Based on the terms of the TA, the land and building assets for the Richardson (Parkway), TX site are defined as excluded assets; however, the remaining assets and operations for this site are included assets. Prior to the transaction closing, Verizon and the Acquirer failed to negotiate the terms of the Richardson site lease terms. As a result of the Richardson lease not being finalized by the transaction closing, (i) the Richardson leasehold site was not considered a transferred site under the terms of the TA or any ancillary agreements, (ii) all transferred customer contracts, shared customer contracts, transferred tenant leases, as defined in the TA, and associated revenues, expenses, assets and liabilities, to the extent pertaining to the Richardson site, were deemed excluded without any further action by Verizon or the Acquirer, and (iii) the purchase price was adjusted, accordingly. The adjustment to the assets, liabilities and income statement activity associated with the Richardson site are not material to the Group.
|
(c)
|
Verizon and the Acquirer entered into a transaction service agreement (“TSA”), pending novation or consent, pursuant to which the Acquirer will act as a subcontractor to Verizon for performance of all obligations of Verizon under certain of the government contracts, as defined in the TA, and other customer contracts (“Contracts”). The terms of the TSA will continue until the earlier of the novation or assignment of the Contracts subject to the TSA, or the satisfaction of all obligations of Verizon under the Contracts subject to the TSA. For Contracts, Verizon and the Acquirer will use reasonable best efforts to provide all notices and obtain all consents and approvals needed from the customers in connection with performance under the TSA and, if not received, to cooperate to set up alternative arrangements and cause the applicable contracts to be novated.
|
At March 31,
|
|
Useful Lives
|
|
2017
|
|||
|
|
(in years)
|
|
|
|||
Network equipment
|
|
5-15
|
|
|
$
|
325,875
|
|
Outside plant and equipment
|
|
25-30
|
|
|
1,868
|
|
|
Data processing hardware
|
|
3-5
|
|
|
16,008
|
|
|
Furniture and fixtures
|
|
5-10
|
|
|
43,680
|
|
|
Leasehold improvements
|
|
7-15
|
|
|
97,344
|
|
|
Buildings and building equipment
|
|
7-45
|
|
|
844,148
|
|
|
Land
|
|
—
|
|
|
48,868
|
|
|
|
|
|
|
$
|
1,377,791
|
|
|
Accumulated depreciation
|
|
|
|
(559,852
|
)
|
||
Plant, property and equipment, net
|
|
|
|
$
|
817,939
|
|
•
|
Equinix’s Current Report on Form 8-K filed on December 6, 2016 including exhibits thereto, which describes the proposed acquisition of the Selected Verizon Data Center Business;
|
•
|
Equinix’s Current Report on Form 8-K/A filed on March 7, 2017 including exhibits thereto, which provides additional information and exhibits concerning the proposed acquisition of the Selected Verizon Data Center Business;
|
•
|
The section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Equinix’s Annual Report on Form 10-K for the year ended December 31, 2016 filed on February 27, 2017;
|
•
|
Equinix's Current Report on Form 8-K filed on August 3, 2017 including exhibits thereto, present the Company's recast consolidated financial statements, which include the recast consolidated statements of cash flows for the three years ended December 31, 2016 resulting from the retrospective application of accounting pronouncements adopted in the first quarter of fiscal 2017;
|
•
|
Unaudited condensed consolidated financial statements of Equinix as of and for the nine months ended September 30, 2017, which are included in Equinix’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017;
|
•
|
The section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Equinix’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2017;
|
•
|
Audited statements of assets acquired and liabilities assumed of the Selected Sites of Verizon's Colocation and Data Center Interconnect Operations as of December 31, 2016 and 2015 and the related statements of net revenues and direct expenses for each of the three years in the period ended December 31, 2016, which are attached as Exhibit 99.1 to Equinix's Current Report on Form 8-K/A filed on March 7, 2017;
|
•
|
Unaudited statements of assets acquired and liabilities assumed of the Selected Sites of Verizon's Colocation and Data Center Interconnect Operations at March 31, 2017 and the related statements of net revenues and direct expenses for the three months ended March 31, 2017 and 2016, which are attached as Exhibit 99.1 to this Current Report on Form 8-K/A; and
|
•
|
Audited consolidated balance sheets of Telecity Group Limited (formerly Telecity Group plc) as of December 31, 2015 and 2014 and the related consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flow for each of the three years in the
|
|
Historical
|
|
Pro Forma
|
||||||||||||
|
Equinix
|
|
Selected Verizon Data Center Business
|
|
Pro Forma Adjustments
|
|
Combined
|
||||||||
|
|
|
(Note 2)
|
|
(Note 5)
|
|
|
||||||||
Revenues
|
$
|
3,611,989
|
|
|
$
|
451,962
|
|
|
$
|
5,995
|
|
(a)
|
$
|
4,069,946
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
1,820,870
|
|
|
207,477
|
|
|
38,286
|
|
(b)
|
2,066,633
|
|
||||
Sales and marketing
|
438,742
|
|
|
16,302
|
|
|
115,689
|
|
(c)
|
570,733
|
|
||||
General and administrative
|
694,561
|
|
|
24,453
|
|
|
3,299
|
|
(d)
|
722,313
|
|
||||
Acquisition costs
|
64,195
|
|
|
—
|
|
|
(49,519
|
)
|
(e)
|
14,676
|
|
||||
Impairment charges
|
7,698
|
|
|
—
|
|
|
—
|
|
|
7,698
|
|
||||
Gain on asset sales
|
(32,816
|
)
|
|
—
|
|
|
—
|
|
|
(32,816
|
)
|
||||
Total costs and operating expenses
|
2,993,250
|
|
|
248,232
|
|
|
107,755
|
|
|
3,349,237
|
|
||||
Income from operations
|
618,739
|
|
|
$
|
203,730
|
|
|
(101,760
|
)
|
|
720,709
|
|
|||
Interest income
|
3,476
|
|
|
|
|
|
—
|
|
|
3,476
|
|
||||
Interest expense
|
(392,156
|
)
|
|
|
|
|
(105,931
|
)
|
(f)
|
(498,087
|
)
|
||||
Other expense
|
(57,924
|
)
|
|
|
|
|
—
|
|
|
(57,924
|
)
|
||||
Loss on debt extinguishment
|
(12,276
|
)
|
|
|
|
|
—
|
|
|
(12,276
|
)
|
||||
Income from continuing operations before income taxes
|
159,859
|
|
|
|
|
(207,691
|
)
|
|
155,898
|
|
|||||
Income tax expense
|
(45,451
|
)
|
|
|
|
|
(4,583
|
)
|
(g)
|
(50,034
|
)
|
||||
Net income from continuing operations
|
114,408
|
|
|
|
|
(212,274
|
)
|
|
105,864
|
|
|||||
Net income from discontinued operations, net of tax
|
12,392
|
|
|
|
|
|
—
|
|
|
12,392
|
|
||||
Net income
|
$
|
126,800
|
|
|
|
|
$
|
(212,274
|
)
|
|
$
|
118,256
|
|
||
|
|
|
|
|
|
|
|
||||||||
Earnings per share ("EPS"):
|
|
|
|
|
|
|
|
||||||||
Basic EPS from continuing operations
|
$
|
1.63
|
|
|
|
|
|
|
$
|
1.39
|
|
||||
Basic EPS from discontinued operations
|
0.18
|
|
|
|
|
|
|
0.16
|
|
||||||
Basic EPS
|
$
|
1.81
|
|
|
|
|
|
|
$
|
1.55
|
|
||||
Weighted-average shares -basic
|
70,117
|
|
|
|
|
6,069
|
|
(h)
|
76,186
|
|
|||||
Diluted EPS from continuing operations
|
$
|
1.62
|
|
|
|
|
|
|
$
|
1.38
|
|
||||
Diluted EPS from discontinued operations
|
0.17
|
|
|
|
|
|
|
0.16
|
|
||||||
Diluted EPS
|
$
|
1.79
|
|
|
|
|
|
|
$
|
1.54
|
|
||||
Weighted-average shares -diluted
|
70,816
|
|
|
|
|
6,069
|
|
(h)
|
76,885
|
|
|
Historical
|
|
Pro Forma
|
||||||||||||
|
Equinix
|
|
Selected Verizon Data Center Business
|
|
Pro Forma Adjustments
|
|
Combined
|
||||||||
|
|
|
(Note 2)
|
|
(Note 5)
|
|
|
||||||||
Revenues
|
$
|
3,168,207
|
|
|
$
|
143,794
|
|
|
$
|
(2,620
|
)
|
(a)
|
$
|
3,309,381
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
1,573,524
|
|
|
68,988
|
|
|
9,361
|
|
(b)
|
1,651,873
|
|
||||
Sales and marketing
|
428,112
|
|
|
5,868
|
|
|
37,840
|
|
(c)
|
471,820
|
|
||||
General and administrative
|
558,090
|
|
|
8,801
|
|
|
(111
|
)
|
(d)
|
566,780
|
|
||||
Acquisition costs
|
31,510
|
|
|
—
|
|
|
(27,602
|
)
|
(e)
|
3,908
|
|
||||
Total costs and operating expenses
|
2,591,236
|
|
|
83,657
|
|
|
19,488
|
|
|
2,694,381
|
|
||||
Income from operations
|
576,971
|
|
|
$
|
60,137
|
|
|
(22,108
|
)
|
|
615,000
|
|
|||
Interest income
|
9,820
|
|
|
|
|
—
|
|
|
9,820
|
|
|||||
Interest expense
|
(352,554
|
)
|
|
|
|
(9,528
|
)
|
(f)
|
(362,082
|
)
|
|||||
Other income
|
545
|
|
|
|
|
—
|
|
|
545
|
|
|||||
Loss on debt extinguishment
|
(42,103
|
)
|
|
|
|
—
|
|
|
(42,103
|
)
|
|||||
Income from operations before income taxes
|
192,679
|
|
|
|
|
(31,636
|
)
|
|
221,180
|
|
|||||
Income tax expense
|
(24,912
|
)
|
|
|
|
(1,764
|
)
|
(g)
|
(26,676
|
)
|
|||||
Net income
|
$
|
167,767
|
|
|
|
|
$
|
(33,400
|
)
|
|
$
|
194,504
|
|
||
|
|
|
|
|
|
|
|
||||||||
Earnings per share ("EPS"):
|
|
|
|
|
|
|
|
||||||||
Basic EPS
|
$
|
2.20
|
|
|
|
|
|
|
$
|
2.50
|
|
||||
Weighted-average shares -basic
|
76,283
|
|
|
|
|
1,601
|
|
(h)
|
77,884
|
|
|||||
Diluted EPS
|
$
|
2.18
|
|
|
|
|
|
|
$
|
2.48
|
|
||||
Weighted-average shares -diluted
|
76,948
|
|
|
|
|
1,601
|
|
(h)
|
78,549
|
|
1.
|
Description of the transaction and basis of pro forma presentation
|
2.
|
Selected Sites of Verizon's Colocation and Data Center Interconnect Operations' Statement of Net Revenues and Direct Expenses
|
|
Selected Verizon Data Center Business
|
|
ReclassificationAdjustments
|
|
Selected Verizon Data Center Business after Adjustments
|
||||||
|
|
|
|
|
|
||||||
Net revenues
|
$
|
451,962
|
|
|
$
|
—
|
|
|
$
|
451,962
|
|
Direct expenses:
|
|
|
|
|
|
||||||
Cost of services (exclusive of items shown below)
|
135,764
|
|
|
71,713
|
|
(i)
|
207,477
|
|
|||
Selling, general and administrative expense
|
40,755
|
|
|
(40,755
|
)
|
(j)
|
—
|
|
|||
Depreciation expense
|
71,713
|
|
|
(71,713
|
)
|
(i)
|
—
|
|
|||
Sales and marketing
|
—
|
|
|
16,302
|
|
(j)
|
16,302
|
|
|||
General and administrative
|
—
|
|
|
24,453
|
|
(j)
|
24,453
|
|
|||
Total direct expenses
|
248,232
|
|
|
—
|
|
|
248,232
|
|
|||
|
|
|
|
|
|
||||||
Net revenues less direct expenses
|
$
|
203,730
|
|
|
$
|
—
|
|
|
$
|
203,730
|
|
|
Selected Verizon Data Center Business for the Three Months Ended
March 31, 2017
|
|
Adjustments for the month of
April 2017 (k)
|
|
Reclassification Adjustments
|
|
Selected Verizon Data Center Business after Adjustments
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
108,245
|
|
|
$
|
35,549
|
|
|
$
|
—
|
|
|
$
|
143,794
|
|
Direct expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of items shown below)
|
34,911
|
|
|
11,033
|
|
|
23,044
|
|
(l)
|
68,988
|
|
||||
Selling, general and administrative expense
|
11,042
|
|
|
3,627
|
|
|
(14,669
|
)
|
(m)
|
—
|
|
||||
Depreciation expense
|
17,283
|
|
|
5,761
|
|
|
(23,044
|
)
|
(l)
|
—
|
|
||||
Sales and marketing
|
—
|
|
|
—
|
|
|
5,868
|
|
(m)
|
5,868
|
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
8,801
|
|
(m)
|
8,801
|
|
||||
Total direct expenses
|
63,236
|
|
|
20,421
|
|
|
—
|
|
|
83,657
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net revenues less direct expenses
|
$
|
45,009
|
|
|
$
|
15,128
|
|
|
$
|
—
|
|
|
$
|
60,137
|
|
3.
|
Purchase Price - Selected Verizon Data Center Business
|
Preliminary Purchase Price Allocation
|
|
|
||
Cash and cash equivalents
|
$
|
1,073
|
|
|
Accounts receivable
|
319
|
|
|
|
Other current assets
|
7,319
|
|
|
|
Property, plant and equipment
|
841,401
|
|
|
|
Intangible assets:
|
|
|
||
Customer relationships
|
1,706,100
|
|
(n)
|
|
Goodwill
|
1,083,789
|
|
|
|
Total assets acquired
|
3,640,001
|
|
|
|
Accounts payable and accrued liabilities
|
(1,725
|
)
|
|
|
Other current liabilities
|
(320
|
)
|
|
|
Capital lease and other financing obligations
|
(17,659
|
)
|
|
|
Deferred tax liabilities
|
(19,544
|
)
|
|
|
Other liabilities
|
(6,067
|
)
|
|
|
|
$
|
3,594,686
|
|
|
(n)
|
A provisional amount of $1.7 billion has been allocated to customer relationships with an estimated useful life of 15 years. Included in this amount is a customer relationship intangible asset for Verizon totaling $246.1 million. Pursuant to the acquisition agreement, the Company formalized agreements to provide pre-existing space and services to Verizon at the acquired data centers.
|
4.
|
Verizon Data Center Acquisition Financings
|
•
|
The full amount of the €1.0 billion Term B-2 Loan was borrowed on January 6, 2017 which translated to US $1.0598 billion. The Term B-2 Loan bore interest at an index rate based on LIBOR plus a margin of 3.25%. The Term B-2 Loan was issued at par. The Term B-2 Loan must be repaid in equal quarterly installments of 0.25% of the original principal amount of the Term B-2 Loan, with the remaining amount outstanding to be repaid in full on the seventh anniversary of the funding date of the Term B-2 Loan.
|
•
|
The issuance of $1.25 billion aggregate principal amount of 10-year fixed rate senior notes with an interest rate of 5.375%. For the purpose of these unaudited pro forma condensed combined financial statements, the debt issuance costs related to the senior notes were approximately $16.8 million and will be amortized to interest expense using the effective interest method over the 10-year terms of the notes.
|
•
|
The sale of 6.1 million shares of Equinix common stock at a price of $360.00 per share resulting in estimated proceeds of $2,185.0 million before deducting estimated discounts and commissions and offering expenses of $58.7 million.
|
5.
|
Pro Forma Adjustments
|
|
Year ended
December 31, 2016
|
|
Nine months ended
September 30, 2017
|
||||
Revenue adjustment in connection with TelecityGroup acquisition
|
$
|
16,666
|
|
|
$
|
—
|
|
Revenue adjustment for Richardson Parkway
|
(7,277
|
)
|
|
(1,827
|
)
|
||
Revenue adjustment related to deferred installation revenues
|
(3,394
|
)
|
|
(793
|
)
|
||
Total revenue adjustments
|
$
|
5,995
|
|
|
$
|
(2,620
|
)
|
|
Year ended
December 31, 2016
|
|
Nine months ended
September 30, 2017
|
||||
Depreciation adjustment in connection with fair value of property, plant and equipment
|
$
|
30,638
|
|
|
$
|
11,073
|
|
Cost of revenues adjustment in connection with TelecityGroup acquisition
|
11,969
|
|
|
—
|
|
||
Cost of revenues adjustment for Richardson Parkway
|
(2,572
|
)
|
|
(1,120
|
)
|
||
Lease expense adjustments relating to capital lease and financing obligations
|
(1,749
|
)
|
|
(592
|
)
|
||
Total cost of revenues adjustments
|
$
|
38,286
|
|
|
$
|
9,361
|
|
|
Year ended
December 31, 2016
|
|
Nine months ended
September 30, 2017
|
||||
Amortization adjustment in connection with fair value of intangible assets
|
$
|
113,740
|
|
|
$
|
37,913
|
|
Sales and marketing adjustment in connection with TelecityGroup acquisition
|
2,225
|
|
|
—
|
|
||
Sales and marketing adjustment for Richardson Parkway
|
(276
|
)
|
|
(73
|
)
|
||
Total sales and marketing adjustments
|
$
|
115,689
|
|
|
$
|
37,840
|
|
|
Year ended
December 31, 2016
|
|
Nine months ended
September 30, 2017
|
||||
General and administrative adjustment in connection with TelecityGroup acquisition
|
$
|
3,713
|
|
|
$
|
—
|
|
General and administrative adjustment for Richardson Parkway
|
(414
|
)
|
|
(111
|
)
|
||
Total general and administrative adjustments
|
$
|
3,299
|
|
|
$
|
(111
|
)
|