Date of report (Date of earliest event reported): September 13, 2012


(Exact Name of Registrant as Specified in Its Charter)

(State or Other Jurisdiction of Incorporation)




(Commission File Number)

(IRS Employer Identification No.)

One Lagoon Drive, 4th Floor

Redwood City, California



(Addresses of Principal Executive Offices)

(Zip Code)

(650) 598-6000
(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01.          Regulation FD Disclosure.

On September 13, 2012, Equinix, Inc. (“Equinix”) issued a press release regarding its pursuit of conversion to a real estate investment trust (“REIT”) under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The press release is furnished herewith as Exhibit 99.1.

Item 8.01.          Other Events.

On September 13, 2012, Equinix announced that its Board of Directors, following a thorough analysis of alternatives and careful consideration of the topic, approved a plan for Equinix to pursue conversion to a REIT (the “Conversion Plan”). Equinix believes the REIT structure has the potential to create new opportunities for value creation while supporting Equinix’s growth strategies. The anticipated benefits to shareholders include significant tax savings for Equinix and increases in income distributable to shareholders. Equinix has begun to implement the Conversion Plan, pursuant to which Equinix would elect REIT status for the taxable year beginning January 1, 2015.   Any REIT election to be made by Equinix must be effective as of the beginning of a taxable year; therefore, as a calendar year taxpayer, if Equinix is unable to convert to a REIT by January 1, 2015, the next possible conversion date would be January 1, 2016.

If Equinix is able to convert to, and qualify as, a REIT, it will generally be permitted to deduct from U.S. federal income taxes dividends paid to its shareholders. The income represented by such dividends would not be subject to U.S. federal taxation at the entity level but would be taxed, if at all, at the shareholder level. Nevertheless, the income of Equinix’s U.S. taxable REIT subsidiaries (“TRS”), which will hold Equinix’s U.S. operations that may not be REIT-compliant, will be subject, as applicable, to U.S. federal and state corporate income tax, and Equinix and its subsidiaries will continue to be subject to foreign income taxes in jurisdictions in which they hold assets or conduct operations, regardless of whether held or conducted through qualified REIT subsidiaries (“QRS”) or TRS. Equinix will also be subject to a separate corporate income tax on any gains recognized during a specified period (generally 10 years) following the REIT conversion that are attributable to “built-in” gains with respect to the assets that Equinix owns on the date it converts to a REIT. Equinix’s ability to qualify as a REIT will depend upon its continuing compliance following the REIT conversion with various requirements, including requirements related to the nature of Equinix’s assets, the sources of Equinix’s income and the distributions to Equinix’s shareholders. If Equinix fails to qualify as a REIT, it will be subject to federal income tax at regular corporate rates. Even if Equinix qualifies for taxation as a REIT, it may be subject to some federal, state, local and foreign taxes on its income and property. In particular, while state income tax regimes often parallel the U.S. federal income tax regime for REITs described above, many states do not completely follow U.S. federal rules and some do not follow them at all.

The Conversion Plan currently includes seeking a private letter ruling (a “PLR”) from the U.S. Internal Revenue Service (the “IRS”). Equinix expects that its PLR request will have multiple components, and the conversion to a REIT will require favorable rulings from the IRS on numerous technical tax issues, including classification of Equinix’s data center assets as qualified real estate assets. Equinix anticipates submitting its PLR request to the IRS by the end of 2012, but the IRS may not provide a PLR until late in 2013 or at all.

In addition, in accordance with tax rules applicable to REIT conversions, Equinix expects to issue special distributions to Equinix shareholders of undistributed accumulated earnings and profits of approximately $700 to $1,100 million (collectively, the “E&P Distribution”), which Equinix expects to pay  out in a combination of up to 20% in cash and at least 80% in the form of Equinix common stock. Equinix expects to make the E&P Distribution only after receiving a favorable PLR from the IRS and anticipates making a significant portion of its E&P Distribution before 2015, with the balance distributed in 2015.  In addition, following the completion of the REIT conversion, Equinix intends to declare regular distributions to its shareholders.  Generally, Equinix expects the E&P Distribution and other distributions to be taxable as dividends to its shareholders, whether paid in cash or a combination of cash and common stock, and not as a tax-free return of capital or a capital gain. Equinix urges shareholders to consult their tax advisors regarding the specific tax consequences regarding these distributions.

Also, in order to effect the Conversion Plan, Equinix will need to complete certain internal reorganization actions, including requesting shareholder approval to impose typical ownership limitations required by the REIT structure. These include providing that, subject to various exceptions, no person may beneficially or constructively own more than 9.8% in value of the aggregate of Equinix’s outstanding shares of stock, including Equinix’s common stock and preferred stock (if any), or more than 9.8% in value or number (whichever is more restrictive) of the outstanding shares of any class or series of Equinix’s stock. Equinix anticipates that its Board of Directors will have the authority, in its sole discretion, to exempt a person from the foregoing ownership limits and may establish a different limit on ownership for any such person, if such exemption and different limit would not result in Equinix’s failing to qualify as a REIT.

The internal reorganization also will include a separation of Equinix’s operations between its TRS and QRS. Equinix anticipates that the QRS will include its domestic operations and a portion of its international subsidiaries and operations. In addition, Equinix must undertake major modifications to its internal accounting, information technology and real estate systems. Given the complexities associated with the reorganization of international operations and the modification to Equinix’s internal systems, all of which must be addressed prior to conversion, Equinix anticipates electing to convert to a REIT effective January 1, 2015.

There are significant taxes and other costs associated with implementing the Conversion Plan, and certain tax liabilities may be incurred regardless of whether Equinix ultimately succeeds in converting to a REIT. Equinix currently estimates that it will incur approximately $50 to $80 million in costs to support the Conversion Plan, in addition to related tax liabilities associated with a change in Equinix’s method of depreciating and amortizing various data center assets for tax purposes from its current method to methods that are more consistent with the characterization of such assets as real property for REIT purposes. The total recapture of depreciation and amortization expenses across all relevant assets is expected to result in U.S. tax liabilities of approximately $340 to $420 million, which are already recorded on Equinix’s balance sheet as income tax liabilities.  These amounts may still be payable in the four-year period starting 2012 even if Equinix abandons the Conversion Plan for, among other reasons, failing to receive the PLR it is seeking. As Equinix will use its net operating loss carryforwards (“NOLs”) to offset a portion of these tax liabilities, it anticipates that it will utilize all of its NOLs in 2012.  If the Conversion Plan is successful, Equinix also expects to incur an additional $5 to $10 million in annual compliance costs in future years.

Equinix will continue to review its capital structure to optimize its balance sheet. Equinix will consider the restructure or issuance of debt or the issuance of equity to support projected conversion-related cash requirements, including shareholder distributions, tax payments and other conversion costs discussed herein. Equinix may also incur costs and record non-cash charges in connection with certain potential modifications to its employee equity compensation plans.


This Current Report on Form 8-K (the “Current Report”) contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. The forward-looking statements involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements.  Although Equinix believes that its forward-looking statements are based on reasonable assumptions, its expected results may not be achieved, and actual results may differ materially from its expectations. For example:

Equinix’s forward-looking statements should not be relied upon except as statements of Equinix’s present intentions and of Equinix’s present expectations, which may or may not occur. Cautionary statements should be read as being applicable to all forward-looking statements wherever they appear. Except as required by law, Equinix undertakes no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures Equinix has made in this Current Report, as well as Equinix’s other filings with the Securities and Exchange Commission (the “SEC”). In particular, see Equinix’s recent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K filed with the SEC, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this Current Report.

Item 9.01.          Financial Statements and Exhibits.

(d)                Exhibits.

Equinix hereby furnishes the following exhibit described above in Item 7.01:

99.1      Press Release of Equinix, Inc., dated September 13, 2012 (furnished herewith).


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.








    /s/ Keith D. Taylor                       

Keith D. Taylor

Chief Financial Officer



September 13, 2012


Exhibit Number




Press Release of Equinix, Inc., dated September 13, 2012