Equinix, Inc. has reported quarterly and year-end results for the period ended December 31, 2012. The company uses certain non-GAAP financial measures, which are described further below and reconciled to the most comparable GAAP financial measures after the presentation of our GAAP financial statements.

The quarterly and year-end results for the period ended December 31, 2012 include the results of Asia Tone Limited and ancotel GmbH from July 2012, the date that both of these data center providers were acquired by the company. Due to the Company’s sale of 16 International Business Exchange data centers located throughout the United States to an investment group consisting of 365 Main, Crosslink Capital and Housatonic Partners in a transaction for net proceeds of $76.5 million, the financial results derived from these 16 data centers are excluded from Equinix’s continuing operations and are reported as discontinued operations. As a result, the company has retroactively adjusted its financial results for all applicable prior periods beginning April 30, 2010, the date the company acquired these assets, through November 1, 2012, the date the sale was closed, to reflect them as discontinued operations as required under accounting principles generally accepted in the United States of America.

Revenues from continuing operations were $506.5 million for the fourth quarter, a 4% increase over the previous quarter and a 20% increase over the same quarter last year. This result included $18.4 million in revenues from the Company’s Asia Tone and ancotel acquisitions for the quarter and excluded $2.8 million of revenues from discontinued operations. Revenues from continuing operations for the year ended December 31, 2012, were $1,895.7 million, a 21% increase over 2011 revenues. This result included $34.6 million in revenues from the Company’s Asia Tone and ancotel acquisitions and excluded $29.6 million of revenues from discontinued operations. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $481.7 million for the fourth quarter, a 4% increase over the previous quarter and $1,799.2 million for the year ended December 31, 2012, a 21% increase over 2011. Non-recurring revenues were $24.8 million in the quarter and $96.5 million for the year ended December 31, 2012.

“2012 was a milestone year for Equinix. We delivered half a billion dollars of revenue in the fourth quarter, underscoring the scale and reach of our business,” said Steve Smith, CEO of Equinix. “With our entry into Mainland China, Jakarta and Dubai as well as our continued investment in existing markets, we now have over 7 million of gross square feet of capacity, making us the largest retail colocation provider in the world. We believe the value of our global interconnection platform and the strength of our business ecosystems puts us in a strong position to deliver exceptional value to our customers.”

Cost of revenues were $250.1 million for the fourth quarter, a 1% decrease from the previous quarter, and $944.0 million for the year ended December 31, 2012, a 13% increase over 2011. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $91.1 million for the fourth quarter and $348.6 million for the year, were $159.0 million for the fourth quarter, a 1% increase over the previous quarter, and $595.4 million for the year ended December 31, 2012, a 12% increase over 2011. Gross margins for the quarter were 51%, up from 49% for the previous quarter and up from 48% for the same quarter last year. Gross margins were 50% for the year ended December 31, 2012, up from 47% for the prior year. Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter, were 69%, up from 68% for the previous quarter and up from 67% for the same quarter last year. Cash gross margins were 69% for the year ended December 31, 2012, up from 66% for the prior year.

Selling, general and administrative expenses were $142.6 million for the fourth quarter, a 4% increase over the previous quarter and $532.3 million for the year ended December 31, 2012, a 26% increase over 2011. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $34.3 million for the fourth quarter and $127.6 million for the year, were $108.3 million for the fourth quarter, a 6% increase over the previous quarter, and $404.7 million for 2012, a 27% increase over 2011.

Impairment charges were $9.9 million for the fourth quarter and the year ended December 31, 2012, which were primarily related to the write-off of certain long-lived assets in the Los Angeles and Sydney metro areas. Acquisition costs were $1.9 million for the fourth quarter and $8.8 million for the year ended December 31, 2012, which were primarily related to the Asia Tone, ancotel and Dubai IBX data center acquisitions.

Interest expense was $50.5 million for the fourth quarter, a 1% increase over the last quarter, and $200.3 million for the year ended December 31, 2012. The Company recorded income tax expense of $17.3 million for the fourth quarter as compared to income tax expense of $13.5 million in the prior quarter and income tax expense of $61.8 million for the year ended December 31, 2012 as compared to income tax expense of $37.5 million in the prior year.

Income from continuing operations was $102.0 million for the fourth quarter, a 6% increase over the previous quarter and $400.8 million for the year ended December 31, 2012, a 31% increase over 2011. Adjusted EBITDA, defined as income or loss from continuing operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges, impairment charges and acquisition costs, for the fourth quarter was $239.3 million, an increase of 5% over the previous quarter and $895.7 million for the year ended December 31, 2012, a 24% increase over 2011. These results included adjusted EBITDA from the Company’s Asia Tone and ancotel acquisitions of $7.8 million and $14.5 million, respectively, and excluded adjusted EBITDA from discontinued operations for the fourth quarter and the year ended December 31, 2012 of $1.3 million and $14.7 million, respectively.

Net income attributable to Equinix for the fourth quarter was $44.9 million. This represents a basic net income per share attributable to Equinix of $0.92 and diluted net income per share attributable to Equinix of $0.88 based on a weighted average share count of 48.7 million and 52.9 million, respectively, for the fourth quarter of 2012. Net income attributable to Equinix for the year ended December 31, 2012 was $144.7 million. This represents a basic net income per share attributable to Equinix of $3.01 and diluted net income per share attributable to Equinix of $2.92 based on a weighted share count of 48.0 million and 51.8 million, respectively, for the year ended December 31, 2012.

Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the fourth quarter were $210.4 million, of which $166.9 million was attributed to expansion capital expenditures and $43.5 million was attributed to ongoing capital expenditures. Capital expenditures for the year ended December 31, 2012 were $764.5 million, of which $607.4 million was attributed to expansion capital expenditures and $157.1 million was attributed to ongoing capital expenditures. In addition, the company purchased real estate for cash in the year ended December 31, 2012 totaling $24.7 million primarily located in the Washington, D.C. metro area.

The company generated cash from operating activities of $209.1 million for the fourth quarter as compared to $102.2 million in the previous quarter. Cash generated from operating activities for the year ended December 31, 2012 was $632.0 million as compared to $587.6 million in the previous year. Cash used in investing activities was $209.3 million in the fourth quarter as compared to cash used in investing activities of $596.9 million in the previous quarter, primarily attributed to cash consideration paid for the acquisitions of Asia Tone and ancotel during the previous quarter. Cash used in investing activities for the year ended December 31, 2012 was $442.9 million as compared to cash used in investing activities of $1,499.4 million in the previous year, primarily attributed to net purchases of investments in marketable securities during the previous year. Cash provided by financing activities was $12.2 million for the fourth quarter, as compared to cash provided by financing activities of $73.7 million in the previous quarter, primarily attributed to the net proceeds from drawdowns of loans payable during the previous quarter. Cash used in financing activities was $222.7 million for the year ended December 31, 2012, primarily attributed to the settlement on the 2.50% convertible subordinated notes upon maturity during the year, as compared to cash provided by financing activities of $748.7 million in the previous year, primarily attributed to the issuance of the 7.00% senior notes during the previous year.

As of December 31, 2012, the company’s cash, cash equivalents and investments were $546.5 million, as compared to $1,076.3 million as of December 31, 2011.