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Summary of Significant Accounting Policies | 6 Months Ended
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Jun. 30, 2020
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | This Note 2 to Notes to Condensed Consolidated Financial Statements provides information and disclosure regarding certain of our significant accounting policies and should be read in conjunction with Note 2 to Notes to Consolidated Financial Statements included in our Annual Report, which may provide additional information with regard to the accounting policies set forth herein and other of our significant accounting policies. a. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash on hand and cash invested in highly liquid short-term securities, which have remaining maturities at the date of purchase of less than 90 days. Cash and cash equivalents are carried at cost, which approximates fair value. At June 30, 2020 and December 31, 2019, we had $6,429 and $4,865, respectively, of restricted cash held by certain financial institutions related to bank guarantees and required cash collateral. b. Goodwill and Other Intangible Assets and Liabilities Goodwill Our reporting units as of December 31, 2019 are described in detail in Note 2.h. to Notes to Consolidated Financial Statements included in our Annual Report. The goodwill associated with acquisitions completed during the first six months of 2020 (which are described in Note 4) has been incorporated into our reporting units as they existed as of December 31, 2019. There were no other changes to the composition of our reporting units for the six months ended June 30, 2020. Since December 31, 2019, there have been no changes to our accounting polices related to the accounting for goodwill. As of December 31, 2019, no factors were identified that would alter our October 1, 2019 goodwill impairment analysis. During the first quarter of 2020, we concluded that we had a triggering event related to our Fine Arts reporting unit, requiring us to perform an interim goodwill impairment test. The primary factor contributing to our conclusion was the expected impact of the COVID-19 pandemic to this particular business and its customers and revenue sources, which caused us to believe it was more likely than not that the carrying value of our Fine Arts reporting unit exceeded its fair value. During the first quarter of 2020, we performed an interim goodwill impairment test for our Fine Arts reporting unit utilizing a discounted cash flow model, with updated assumptions on future revenues, operating expenditures and capital expenditures. As a result of the interim goodwill impairment test, we concluded that the fair value of our Fine Arts reporting unit was less than its carrying value, and, therefore, we recorded a $23,000 impairment charge on the goodwill associated with this reporting unit during the first quarter of 2020. The remaining goodwill for this reporting unit subsequent to the impairment charge was approximately $15,000. Factors that may impact these assumptions include, but are not limited to: (i) our ability to maintain, or grow, storage rental and service revenues in line with current expectations and (ii) our ability to manage our fixed and variable costs in line with potential future revenue declines. Additionally, we concluded that, as of March 31, 2020, we did not have a triggering event requiring an interim impairment test on the goodwill associated with our other reporting units. During the second quarter of 2020, no factors were identified that would alter our interim goodwill impairment analysis performed during the first quarter of 2020, or change the conclusions reached at that time. However, the duration and severity of the COVID-19 pandemic, as well as the related economic impact on both our business and the businesses of our customers, remain uncertain as of the filing of this Quarterly Report. Any material adverse changes to our businesses that negatively impact their fair values could result in future goodwill impairments. The changes in the carrying value of goodwill attributable to each reportable operating segment for the six months ended June 30, 2020 are as follows:
| Global RIM Business |  | Global Data Center Business |  | Corporate and Other Business |  | Total Consolidated
Goodwill balance, net of accumulated amortization as of December 31, 2019 | $ | 3,942,901 |  |  | $ | 424,568 |  |  | $ | 117,740 |  |  | $ | 4,485,209 |
Non-deductible goodwill acquired during the year | 48,775 |  |  | — |  |  | — |  |  | 48,775 |
Goodwill impairment | — |  |  | — |  |  | (23,000 | ) |  | (23,000 | )
Fair value and other adjustments(1) | (3,885 | ) |  | — |  |  | 403 |  |  | (3,482 | )
Currency effects | (85,887 | ) |  | 158 |  |  | (711 | ) |  | (86,440 | )
Goodwill balance, net accumulated amortization as of June 30, 2020 | $ | 3,901,904 |  |  | $ | 424,726 |  |  | $ | 94,432 |  |  | $ | 4,421,062 |
Accumulated Goodwill Impairment Balance as of December 31, 2019 | $ | 132,409 |  |  | $ | — |  |  | $ | 3,011 |  |  | $ | 135,420 |
Accumulated Goodwill Impairment Balance as of June 30, 2020 | $ | 132,409 |  |  | $ | — |  |  | $ | 26,011 |  |  | $ | 158,420 |
________________________________________________________________
(1) | Total fair value and other adjustments include $(3,925) in net adjustments primarily related to customer relationships and racking and cash paid for acquisitions completed in 2019 of $443.
Finite-lived Intangible Assets and Liabilities Finite-lived intangible assets and liabilities are primarily comprised of customer relationship intangible assets, customer inducements and data center intangible assets and liabilities. Since December 31, 2019, there have been no changes to our accounting policies related to the accounting for any of our finite-lived intangible assets and liabilities as disclosed in Note 2.i. to Notes to Consolidated Financial Statements included in our Annual Report. The gross carrying amount and accumulated amortization of our finite-lived intangible assets as of June 30, 2020 and December 31, 2019 are as follows:
| June 30, 2020 |  | December 31, 2019
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Assets: |  |  |  |  |  |  |  |  |  |  |
Customer relationship intangible assets | $ | 1,764,106 |  |  | $ | (582,954 | ) |  | $ | 1,181,152 |  |  | $ | 1,751,848 |  |  | $ | (544,721 | ) |  | $ | 1,207,127 |
Customer inducements | 54,485 |  |  | (28,706 | ) |  | 25,779 |  |  | 52,718 |  |  | (29,397 | ) |  | 23,321 |
Data center lease-based intangible assets(1) | 265,491 |  |  | (126,140 | ) |  | 139,351 |  |  | 265,945 |  |  | (103,210 | ) |  | 162,735 |
Third-party commissions asset(2) | 36,030 |  |  | (6,460 | ) |  | 29,570 |  |  | 31,708 |  |  | (4,134 | ) |  | 27,574 |
| $ | 2,120,112 |  |  | $ | (744,260 | ) |  | $ | 1,375,852 |  |  | $ | 2,102,219 |  |  | $ | (681,462 | ) |  | $ | 1,420,757 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Data center below-market leases | $ | 12,751 |  |  | $ | (4,884 | ) |  | $ | 7,867 |  |  | $ | 12,750 |  |  | $ | (3,937 | ) |  | $ | 8,813 |
_______________________________________________________________
(1) | Includes data center in-place lease intangible assets, data center tenant relationship intangible assets and data center above-market in-place lease intangible assets.
(2) | Third-party commissions asset is included in Other, a component of Other assets, net in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019. The third-party commissions asset is primarily comprised of additional payments associated with the execution of future customer contracts through the one-year anniversary of the acquisition of IO Data Centers, LLC ("IODC").
Amortization expense associated with finite-lived intangible assets, revenue reduction associated with the amortization of customer inducements and revenue reduction associated with the amortization of data center above-market leases and data center below-market leases for the three and six months ended June 30, 2020 and 2019 are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Amortization expense included in depreciation and amortization associated with: |  |  |  |  |  |  |
Customer relationship and customer inducement intangible assets | $ | 29,966 |  |  | $ | 28,283 |  |  | $ | 56,730 |  |  | $ | 56,164 |
Data center in-place leases and tenant relationships | 10,379 |  |  | 11,372 |  |  | 21,732 |  |  | 23,981 |
Third-party commissions asset and other finite-lived intangible assets | 1,758 |  |  | 2,184 |  |  | 4,121 |  |  | 2,941 |
Revenue reduction associated with amortization of: |  |  |  |  |  |  |
Permanent withdrawal fees | $ | 2,348 |  |  | $ | 2,598 |  |  | $ | 4,813 |  |  | $ | 5,338 |
Data center above-market leases and data center below-market leases | 218 |  |  | 935 |  |  | 435 |  |  | 1,840 |
c. Revenues Since December 31, 2019, there have been no changes to our accounting policies related to the accounting for revenues as disclosed in Note 2.l. to Notes to Consolidated Financial Statements included in our Annual Report. The costs of the initial intake of customer records into physical storage ("Intake Costs") and capitalized commissions asset (collectively, "Contract Fulfillment Costs") as of June 30, 2020 and December 31, 2019 are as follows:
|  |  |  | June 30, 2020 |  | December 31, 2019
Description |  | Location in Balance Sheet |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Intake Costs asset |  | Other (within Other Assets, Net) |  | $ | 39,798 |  |  | $ | (23,467 | ) |  | $ | 16,331 |  |  | $ | 41,224 |  |  | $ | (23,579 | ) |  | $ | 17,645 |
Capitalized commissions asset |  | Other (within Other Assets, Net) |  | 67,752 |  |  | (25,828 | ) |  | 41,924 |  |  | 68,008 |  |  | (27,178 | ) |  | 40,830 |
Amortization expense associated with the Intake Costs asset and capitalized commissions asset for the three and six months ended June 30, 2020 and 2019 are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Intake Costs asset | $ | 2,802 |  |  | $ | 2,835 |  |  | $ | 5,581 |  |  | $ | 5,514 |
Capitalized commissions asset | 6,017 |  |  | 5,935 |  |  | 11,642 |  |  | 9,881 |
Deferred revenue liabilities are reflected in our Condensed Consolidated Balance Sheets as follows:
Description |  | Location in Balance Sheet |  | June 30, 2020 |  | December 31, 2019
Deferred revenue - Current |  | Deferred revenue |  | $ | 252,034 |  |  | $ | 274,036 |
Deferred revenue - Long-term |  | Other Long-term Liabilities |  | 34,813 |  |  | 36,029 |
Data Center Lessor Considerations Our Global Data Center Business features storage rental provided to customers at contractually specified rates over a fixed contractual period, which are accounted for in accordance with ASU 2016-02. Since December 31, 2019, there have been no changes to our accounting policies related to the accounting for our lessor revenue as disclosed in Note 2.l. to Notes to Consolidated Financial Statements included in our Annual Report. Storage rental revenue, including revenue associated with power and connectivity, associated with our Global Data Center Business for the three and six months ended June 30, 2020 and 2019 are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Storage rental revenue(1) | $ | 63,812 |  |  | $ | 60,582 |  |  | $ | 128,407 |  |  | $ | 120,300 |
______________________________________________________________ (1) Revenue associated with power and connectivity included within storage rental revenue was $11,540 and $22,953 for the three and six months ended June 30, 2020, respectively, and $9,912 and $19,030 for the three and six months ended June 30, 2019, respectively. d. Accounts Receivable In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses on most financial assets. The standard eliminates the probable initial recognition of estimated losses and provides a forward-looking expected credit loss model for accounts receivable, loans and other financial instruments. Prior to our adoption of ASU 2016-13, we maintained an allowance for doubtful accounts for estimated losses resulting from the potential inability of our customers to make required payments and potential disputes regarding billing and service issues. When calculating the allowance, we considered our past loss experience, current and prior trends in our aged receivables and credit memo activity, current economic conditions, and specific circumstances of individual receivable balances. If the financial condition of our customers were to significantly change, resulting in a significant improvement or impairment of their ability to make payments, an adjustment of the allowance might have been required. Additionally, we write off uncollectible balances as circumstances warrant, generally, no later than one year past due. On January 1, 2020 we adopted ASU 2016-13 on a modified retrospective basis for all financial assets measured at amortized cost. The adoption of ASU 2016-13 did not result in a material impact on our consolidated financial statements. In accordance with the guidance in ASU 2016-13, we now calculate and monitor our allowance considering future potential economic and macroeconomic conditions and reasonable and supportable forecasts for expected future collectability of our outstanding receivables, in addition to the factors identified above. Our considerations when calculating our allowance include, but are not limited to, the following: the location of our businesses, the composition of our customer base, our product and service lines, potential future economic unrest, and potential future macroeconomic factors, including natural disasters and any impacts associated with the COVID-19 pandemic, such as bankruptcy of, and increased collectability risk from, some of our customers. Continued adjustments will be made should there be any material change to reasonable and supportable forecasts that may impact our likelihood of collection, as it becomes evident, including the effects of the COVID-19 pandemic. Our financial assets measured at amortized cost that potentially subject us to credit risk consist predominantly of our accounts receivable. Our highly diverse global customer base, with no single customer accounting for more than 1% of revenue during the six months ended June 30, 2020, limits our exposure to concentration of credit risk. However, the COVID-19 pandemic is impacting numerous industries and geographies globally. We continue to monitor the credit worthiness of our customers, customer payment trends and the adequacy of our bad debt allowance as the pandemic continues. The rollforward of allowance for doubtful accounts and credit memo reserves for the six months ended June 30, 2020 is as follows:
|  | Allowance for Doubtful Accounts and Credit Memo Reserves
Balance at December 31, 2019 |  | $ | 42,856 |
Credit memos charged to revenue |  | 28,320 |
Allowance for bad debts charged to expense |  | 21,176 |
Deductions and other(1) |  | (38,958 | )
Balance at June 30, 2020 |  | $ | 53,394 |
______________________________________________________________ (1) Primarily consists of the issuance of credit memos, the write-off of accounts receivable and the impact associated with currency translation adjustments. e. Leases We lease facilities for certain of our warehouses, data centers and office space. We also have land leases, including those on which certain of our facilities are located. Since December 31, 2019 there have been no changes to our accounting policies related to the accounting for leases as disclosed in Note 2.m. to Notes to Consolidated Financial Statements included in our Annual Report. Operating and financing lease right-of-use assets and lease liabilities as of June 30, 2020 and December 31, 2019 are as follows:
Description |  | Location in Balance Sheet |  | June 30, 2020 |  | December 31, 2019
Assets: |  |  |  |  |  |
Operating lease right-of-use assets(1) |  | Operating lease right-of-use assets |  | $ | 1,947,665 |  |  | $ | 1,869,101 |
Financing lease right-of-use assets, net of accumulated depreciation(2) |  | Property, Plant and Equipment, Net |  | 310,964 |  |  | 327,215 |
Total |  |  |  | $ | 2,258,629 |  |  | $ | 2,196,316 |
Liabilities: |  |  |  |  |  |
Current |  |  |  |  |  |
Operating lease liabilities |  | Accrued expenses and other current liabilities |  | $ | 232,926 |  |  | $ | 223,249 |
Financing lease liabilities |  | Current portion of long-term debt |  | 43,582 |  |  | 46,582 |
Total current lease liabilities |  |  |  | 276,508 |  |  | 269,831 |
Long-term |  |  |  |  |  |
Operating lease liabilities |  | Long-term Operating Lease Liabilities, net of current portion |  | 1,802,494 |  |  | 1,728,686 |
Financing lease liabilities |  | Long-term Debt, net of current portion |  | 313,418 |  |  | 320,600 |
Total long-term lease liabilities |  |  |  | 2,115,912 |  |  | 2,049,286 |
Total |  |  |  | $ | 2,392,420 |  |  | $ | 2,319,117 |
_______________________________________________________________
(1) | At June 30, 2020 and December 31, 2019, these assets are comprised of approximately 99% real estate related assets (which include land, buildings and racking) and 1% non-real estate related assets (which include warehouse equipment, vehicles, furniture and fixtures and computer hardware and software).
(2) | At June 30, 2020, these assets are comprised of approximately 70% real estate related assets and 30% non-real estate related assets. At December 31, 2019, these assets are comprised of approximately 69% real estate related assets and 31% non-real estate related assets.
The components of the lease expense for the three and six months ended June 30, 2020 and 2019 are as follows:
|  |  |  | Three Months Ended June 30, |  | Six Months Ended June 30,
Description |  | Location in Statement of Operations |  | 2020 |  | 2019 |  | 2020 |  | 2019
Operating lease cost: |  | Cost of sales |  | $ | 116,448 |  |  | $ | 110,441 |  |  | $ | 236,763 |  |  | $ | 216,335 |
|  | Selling, general and administrative |  | 2,829 |  |  | 2,951 |  |  | 5,803 |  |  | 6,236 |
Total operating lease cost(1) |  |  |  | $ | 119,277 |  |  | $ | 113,392 |  |  | $ | 242,566 |  |  | $ | 222,571 |
Financing lease cost: |  |  |  |  |  |  |  |  |  |
Depreciation of financing lease right-of-use assets |  | Depreciation and amortization |  | $ | 12,567 |  |  | $ | 14,942 |  |  | $ | 25,522 |  |  | $ | 31,271 |
Interest expense for financing lease liabilities |  | Interest Expense, Net |  | 4,929 |  |  | 4,925 |  |  | 9,773 |  |  | 11,067 |
Total financing lease cost |  |  |  | $ | 17,496 |  |  | $ | 19,867 |  |  | $ | 35,295 |  |  | $ | 42,338 |
_______________________________________________________________
(1) | Total operating lease cost includes variable lease costs of $26,996 and $54,801 for the three and six months ended June 30, 2020, respectively, and $23,847 and $46,610 for the three and six months ended June 30, 2019, respectively.
Other than the lease agreement entered into during the fourth quarter of 2019 in the United Kingdom for a facility that is currently under construction, as disclosed in Note 2.m. to Notes to Consolidated Financial Statement included in our Annual Report, we do not have any material operating or financing leases that are signed but have not yet commenced as of June 30, 2020. In addition, as of June 30, 2020, we do not have any operating or financing leases with related parties that are material to our consolidated financial statements. Other information: Supplemental cash flow information relating to our leases for the six months ended June 30, 2020 and 2019 is as follows:
|  | Six Months Ended June 30,
Cash paid for amounts included in measurement of lease liabilities: |  | 2020 |  | 2019
Operating cash flows used in operating leases |  | $ | 178,011 |  |  | $ | 167,426 |
Operating cash flows used in financing leases (interest) |  | 9,773 |  |  | 11,067 |
Financing cash flows used in financing leases |  | 23,953 |  |  | 31,146 |
Non-cash items: |  |  |  |
Operating lease modifications and reassessments |  | $ | 76,764 |  |  | $ | 14,024 |
New operating leases (including acquisitions) |  | 123,860 |  |  | 87,482 |
New financing leases, modifications and reassessments |  | 26,546 |  |  | 13,662 |
f. Stock-Based Compensation We record stock-based compensation expense, utilizing the straight-line method, for the cost of stock options, restricted stock units ("RSUs"), performance units ("PUs") and shares of stock issued under our employee stock purchase plan (collectively, "Employee Stock-Based Awards"). There have been no significant changes to our accounting policies, assumptions and valuation methodologies related to the accounting for our Employee Stock-Based Awards as disclosed in Note 2.n. to Notes to Consolidated Financial Statements included in our Annual Report. Stock-based compensation expense for Employee Stock-Based Awards for the three and six months ended June 30, 2020 and 2019 is as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Stock-based compensation expense | $ | 20,145 |  |  | $ | 12,501 |  |  | $ | 26,672 |  |  | $ | 21,020 |
Stock-based compensation expense, after tax | $ | 18,716 |  |  | $ | 11,649 |  |  | $ | 24,781 |  |  | $ | 19,585 |
Stock-based compensation expense, after tax (per basic share) | $ | 0.06 |  |  | $ | 0.04 |  |  | $ | 0.09 |  |  | $ | 0.07 |
Stock-based compensation expense, after tax (per diluted share) | $ | 0.06 |  |  | $ | 0.04 |  |  | $ | 0.09 |  |  | $ | 0.07 |
The substantial majority of the stock-based compensation expense for Employee Stock-Based Awards is included in Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of June 30, 2020, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $57,955 and is expected to be recognized over a weighted-average period of 2.0 years. Stock Options A summary of stock option activity for the six months ended June 30, 2020 is as follows:
| Stock Options
Outstanding at December 31, 2019 | 4,835,721 |
Granted | 589,993 |
Exercised | (199,627 | )
Forfeited | (127,266 | )
Expired | (185,677 | )
Outstanding at June 30, 2020 | 4,913,144 |
Options exercisable at June 30, 2020 | 3,579,301 |
Options expected to vest | 1,275,624 |
Restricted Stock Units The fair value of RSUs vested during the three and six months ended June 30, 2020 and 2019 is as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Fair value of RSUs vested | $ | 3,266 |  |  | $ | 2,375 |  |  | $ | 21,645 |  |  | $ | 17,710 |
A summary of RSU activity for the six months ended June 30, 2020 is as follows:
| RSUs
Non-vested at December 31, 2019 | 1,203,599 |
Granted | 1,017,849 |
Vested | (648,321 | )
Forfeited | (123,680 | )
Non-vested at June 30, 2020 | 1,449,447 |
RSUs expected to vest | 1,439,946 |
Performance Units The fair value of earned PUs that vested during the three and six months ended June 30, 2020 and 2019 is as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Fair value of earned PUs that vested | $ | 161 |  |  | $ | — |  |  | $ | 11,051 |  |  | $ | 6,503 |
A summary of PU activity for the six months ended June 30, 2020 is as follows:
| Original PU Awards |  | PU Adjustment(1) |  | Total PU Awards
Non-vested at December 31, 2019 | 1,113,691 |  |  | (314,798 | ) |  | 798,893 |
Granted | 425,777 |  |  | — |  |  | 425,777 |
Vested | (275,972 | ) |  | — |  |  | (275,972 | )
Forfeited/Performance or Market Conditions Not Achieved | (113,867 | ) |  | (4,710 | ) |  | (118,577 | )
Non-vested at June 30, 2020 | 1,149,629 |  |  | (319,508 | ) |  | 830,121 |
________________________________________________________________
(1) | Represents an increase or decrease in the number of original PUs awarded based on either the final performance criteria or market condition achievement at the end of the performance period of such PUs.
As of June 30, 2020, we expected 100% achievement of each of the predefined revenue, return on invested capital and Adjusted EBITDA (as defined in Note 6) targets associated with the awards of PUs made in 2020, 2019 and 2018. g. Income (Loss) Per Share—Basic and Diluted Basic income (loss) per common share is calculated by dividing income (loss) by the weighted average number of common shares outstanding. The calculation of diluted income (loss) per share is consistent with that of basic income (loss) per share but gives effect to all potential common shares (that is, securities such as stock options, RSUs, PUs, warrants or convertible securities) that were outstanding during the period, unless the effect is antidilutive. The calculation of basic and diluted income (loss) per share for the three and six months ended June 30, 2020 and 2019 are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
(Loss) income from continuing operations | $ | (7,113 | ) |  | $ | 92,347 |  |  | $ | 57,779 |  |  | $ | 122,823 |
Less: Net (loss) income attributable to noncontrolling interests | (27 | ) |  | 34 |  |  | 890 |  |  | 925 |
(Loss) income from continuing operations (utilized in numerator of Earnings Per Share calculation) | (7,086 | ) |  | 92,313 |  |  | 56,889 |  |  | 121,898 |
Income (loss) from discontinued operations, net of tax | — |  |  | 128 |  |  | — |  |  | 104 |
Net (loss) income attributable to Iron Mountain Incorporated | $ | (7,086 | ) |  | $ | 92,441 |  |  | $ | 56,889 |  |  | $ | 122,002 |
Weighted-average shares—basic | 288,071,000 |  |  | 286,925,000 |  |  | 287,955,000 |  |  | 286,727,000 |
Effect of dilutive potential stock options | — |  |  | 148,629 |  |  | 35,706 |  |  | 190,016 |
Effect of dilutive potential RSUs and PUs | — |  |  | 407,659 |  |  | 309,911 |  |  | 570,040 |
Weighted-average shares—diluted | 288,071,000 |  |  | 287,481,288 |  |  | 288,300,617 |  |  | 287,487,056 |
(Losses) earnings per share—basic: |  |  |  |  |  |  |  |  |  |  |
(Loss) income from continuing operations | $ | (0.02 | ) |  | $ | 0.32 |  |  | $ | 0.20 |  |  | $ | 0.43 |
Income (loss) from discontinued operations, net of tax | — |  |  | — |  |  | — |  |  | — |
Net (loss) income attributable to Iron Mountain Incorporated(1) | $ | (0.02 | ) |  | $ | 0.32 |  |  | $ | 0.20 |  |  | $ | 0.43 |
(Losses) earnings per share—diluted: |  |  |  |  |  |  |  |  |
(Loss) income from continuing operations | $ | (0.02 | ) |  | $ | 0.32 |  |  | $ | 0.20 |  |  | $ | 0.42 |
Income (loss) from discontinued operations, net of tax | — |  |  | — |  |  | — |  |  | — |
Net (loss) income attributable to Iron Mountain Incorporated(1) | $ | (0.02 | ) |  | $ | 0.32 |  |  | $ | 0.20 |  |  | $ | 0.42 |
Antidilutive stock options, RSUs and PUs, excluded from the calculation | 6,836,239 |  |  | 5,004,112 |  |  | 6,174,977 |  |  | 4,494,637 |
_______________________________________________________________ (1) Columns may not foot due to rounding. h. Income Taxes We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Discrete items and changes in our estimate of the annual effective tax rate are recorded in the period they occur. Our effective tax rate is subject to variability in the future due to, among other items: (1) changes in the mix of income between our qualified REIT subsidiaries ("QRSs") and our domestic taxable REIT subsidiaries ("TRSs"), as well as among the jurisdictions in which we operate; (2) tax law changes; (3) volatility in foreign exchange gains and losses; (4) the timing of the establishment and reversal of tax reserves; and (5) our ability to utilize net operating losses that we generate. Our effective tax rates for the three and six months ended June 30, 2020 and 2019 are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020(1) |  | 2019(2) |  | 2020(2) |  | 2019(2)
Effective Tax Rate | — | % |  | 10.3 | % |  | 25.1 | % |  | 14.7 | %
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(1) | For the three months ended June 30, 2020, we had a provision for income taxes of $9,683 and income from continuing operations before provision for income taxes of $2,570; as such, our effective tax rate is not meaningful.
(2) The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the six months ended June 30, 2020 and for the three and six months ended June 30, 2019 were the benefit derived from the dividends paid deduction and the impact of differences in the tax rates at which our foreign earnings are subject, including foreign exchange gains and losses in different jurisdictions with different tax rates. i. Fair Value Measurements Our financial assets or liabilities that are carried at fair value are required to be measured using inputs from the three levels of the fair value hierarchy as disclosed in Note 2.s. to Notes to Consolidated Financial Statements included in our Annual Report. The assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2020 and December 31, 2019 are as follows:
|  |  |  | Fair Value Measurements at June 30, 2020 Using
Description |  | Total Carrying Value at June 30, 2020 |  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Money Market Funds(1) |  | $ | 763,780 |  |  | $ | — |  |  | $ | 763,780 |  |  | $ | — |
Trading Securities |  | 10,988 |  |  | 10,504 |  | (2) | 484 |  | (3) | — |
Derivative Assets(4) |  | 3,326 |  |  | — |  |  | 3,326 |  |  | — |
Derivative Liabilities(4) |  | 24,404 |  |  | — |  |  | 24,404 |  |  | — |
|  |  |  | Fair Value Measurements at December 31, 2019 Using
Description |  | Total Carrying Value at December 31, 2019 |  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Money Market Funds(1) |  | $ | 13,653 |  |  | $ | — |  |  | $ | 13,653 |  |  | $ | — |
Trading Securities |  | 10,732 |  |  | 10,168 |  | (2) | 564 |  | (3) | — |
Derivative Liabilities(4) |  | 9,756 |  |  | — |  |  | 9,756 |  |  | — |
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(1) | Money market funds are measured based on quoted prices for similar assets and/or subsequent transactions. See Note 5 for additional information regarding our temporary investment in money market funds as of June 30, 2020.
(2) | These trading securities are measured at fair value using unadjusted quoted market prices in active markets for identical assets that we have the ability to access at the measurement date.
(3) | These trading securities are measured based on inputs that are observable, other than quoted market prices.
(4) | Derivative assets and liabilities include (i) interest rate swap agreements, including forward-starting interest rate swap agreements, to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness and (ii) cross-currency swap agreements to hedge the variability of exchange rates impacts between the United States dollar and the Euro and certain of our Euro denominated subsidiaries. Our derivative financial instruments are measured using industry standard valuation models using market-based observable inputs, including interest rate curves, forward and spot prices for currencies and implied volatilities. Credit risk is also factored into the determination of the fair value of our derivative financial instruments. See Note 3 for additional information on our derivative financial instruments.
Disclosures are required in the financial statements for items measured at fair value on a non-recurring basis. There were no material items that are measured at fair value on a non-recurring basis at June 30, 2020 and December 31, 2019, other than (i) those disclosed in Note 2.s. to Notes to Consolidated Financial Statements included in our Annual Report, (ii) those acquired in acquisitions that occurred during the six months ended June 30, 2020, as described in Note 4, and (iii) the Fine Arts reporting unit, as described in Note 2.b., all of which are based on Level 3 inputs. The fair value of our long-term debt, which is determined based on either Level 1 inputs or Level 3 inputs, is disclosed in Note 5 and is measured at cost in our Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.Investments During 2019, we contributed our customer contracts and certain intellectual property and other assets, including $20,000 in cash consideration (gross of certain transaction expenses), to MakeSpace Labs, Inc. to form a joint venture entity (the “MakeSpace JV”), a consumer storage services provider (the “Consumer Storage Transaction”). We account for our investment in the MakeSpace JV as an equity method investment, which is presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019. In the second quarter of 2020, we committed to participate in a round of equity funding for the MakeSpace JV whereby we will contribute $36,000 of the $45,000 being raised (the “Additional Investment”). Our first contribution of the Additional Investment of $7,000 was made in May 2020 (the “First Installment”). We will make the remaining contributions in quarterly installments through October 2021. After the First Installment, our equity interest in the MakeSpace JV increased to approximately 37%. After completion of the Additional Investment, we expect our equity interest in the MakeSpace JV will be approximately 46%. The carrying value of our investment in the MakeSpace JV at June 30, 2020 and December 31, 2019 was $17,674 and $18,570, respectively. Accumulated Other Comprehensive Items, Net The changes in accumulated other comprehensive items, net for the three and six months ended June 30, 2020 and 2019 are as follows:
| Three Months Ended June 30, 2020 |  | Six Months Ended June 30, 2020
| Foreign Currency Translation Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total |  | Foreign Currency Translation Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total
Beginning of Period | $ | (475,130 | ) |  | $ | (18,118 | ) |  | $ | (493,248 | ) |  | $ | (252,825 | ) |  | $ | (9,756 | ) |  | $ | (262,581 | )
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustment | 68,686 |  |  | — |  |  | 68,686 |  |  | (153,619 | ) |  | — |  |  | (153,619 | )
Change in fair value of derivative instruments | — |  |  | (2,961 | ) |  | (2,961 | ) |  | — |  |  | (11,323 | ) |  | (11,323 | )
Total other comprehensive income (loss) | 68,686 |  |  | (2,961 | ) |  | 65,725 |  |  | (153,619 | ) |  | (11,323 | ) |  | (164,942 | )
End of Period | $ | (406,444 | ) |  | $ | (21,079 | ) |  | $ | (427,523 | ) |  | $ | (406,444 | ) |  | $ | (21,079 | ) |  | $ | (427,523 | )
| Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
| Foreign Currency Translation Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total |  | Foreign Currency Translation Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total
Beginning of Period | $ | (247,313 | ) |  | $ | (3,647 | ) |  | $ | (250,960 | ) |  | $ | (264,691 | ) |  | $ | (973 | ) |  | $ | (265,664 | )
Other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustment | (5,930 | ) |  | — |  |  | (5,930 | ) |  | 11,448 |  |  | — |  |  | 11,448 |
Change in fair value of derivative instruments | — |  |  | (4,931 | ) |  | (4,931 | ) |  | — |  |  | (7,605 | ) |  | (7,605 | )
Total other comprehensive (loss) income | (5,930 | ) |  | (4,931 | ) |  | (10,861 | ) |  | 11,448 |  |  | (7,605 | ) |  | 3,843 |
End of Period | $ | (253,243 | ) |  | $ | (8,578 | ) |  | $ | (261,821 | ) |  | $ | (253,243 | ) |  | $ | (8,578 | ) |  | $ | (261,821 | )
l. Gain on Disposal/Write-Down of Property, Plant and Equipment, Net Consolidated gain on disposal/write-down of property, plant and equipment, net, for the six months ended June 30, 2019 was $7,803. The gain for the six months ended June 30, 2019 primarily consisted of gains associated with the sale of certain land and buildings in the United Kingdom of approximately $36,000 in the second quarter of 2019. These gains were partially offset by losses primarily associated with (i) an impairment charge on the assets associated with the select offerings within our Iron Mountain Iron Cloud portfolio of approximately $24,000 and (ii) the write-down of certain property, plant and equipment in our Global RIM (as defined in Note 6) Business segment of approximately $3,100.Other Expense (Income), Net Other expense (income), net for the three and six months ended June 30, 2020 and 2019 consists of the following:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Foreign currency transaction losses (gains), net(1) | $ | 1,471 |  |  | $ | (19,331 | ) |  | $ | (35,928 | ) |  | $ | (1,634 | )
Debt extinguishment expense(2) | 17,040 |  |  | — |  |  | 17,040 |  |  | — |
Other, net(3) | 7,189 |  |  | 4,139 |  |  | 1,862 |  |  | 1,652 |
Other Expense (Income), Net | $ | 25,700 |  |  | $ | (15,192 | ) |  | $ | (17,026 | ) |  | $ | 18 |
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(1) | The gain or loss on foreign currency transactions, calculated as the difference between the historical exchange rate and the exchange rate at the applicable measurement date, includes gains or losses related to (i) borrowings in certain foreign currencies under our Revolving Credit Facility (as defined and discussed more fully in Note 5), (ii) our Euro Notes (as defined in Note 5) and (iii) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered permanently invested (as more fully discussed in Note 3).
(2) | Debt extinguishment expense relates to the call premium associated with the early redemption of the 6% Notes due 2023, as well as the write-off of unamortized deferred financing costs associated with the early redemption of the 4 3/8% Notes and the 6% Notes due 2023 (both as defined and described in Note 5).
(3) Other, net for the six months ended June 30, 2020 is primarily comprised of losses on certain of our equity method investments, partially offset by a gain on our previously held 25% equity investment in OSG Records Management (Europe) Limited ("OSG"), as more fully discussed in Note 4. New Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement of our financial assets and liabilities among the three levels of the fair value hierarchy. We adopted ASU 2018-13 on January 1, 2020. ASU 2018-13 did not have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13. We adopted ASU 2016-13 on January 1, 2020 on a modified retrospective basis. See Note 2.d. for information regarding the impact of the adoption of ASU 2016-13 on our consolidated financial statements. . Change in Presentation We have historically classified our significant acquisition costs which represent operating expenditures associated with (1) the acquisition of Recall Holdings Limited ("Recall") that we completed on May 2, 2016 (the "Recall Transaction"), including: (i) advisory and professional fees to complete the Recall Transaction; (ii) costs associated with the divestments required in connection with receipt of regulatory approvals (including transitional services); and (iii) costs to integrate Recall with our existing operations, including moving, severance, facility upgrade, REIT integration and system upgrade costs, as well as certain costs associated with our shared service center initiative for our finance, human resources and information technology functions; and (2) the advisory and professional fees to complete the acquisition of IODC (collectively, "Significant Acquisition Costs"), as components of Selling, general and administrative expenses and Cost of sales. Beginning in the fourth quarter of 2019, we present Significant Acquisition Costs as its own line item within Operating Expenses in our Condensed Consolidated Statements of Operations. The prior periods have been conformed to this presentation. The following table sets forth the effect of the change in presentation of Significant Acquisition Costs to certain line items of our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019:
| Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Cost of sales (excluding depreciation and amortization) | $ | (1,293 | ) |  | $ | (2,191 | )
Selling, general and administrative | $ | (608 | ) |  | $ | (2,456 | )
Significant Acquisition Costs | $ | 1,901 |  |  | $ | 4,647 |
There were no Significant Acquisition Costs for the three and six months ended June 30, 2020 as all of the costs associated with the Recall Transaction and IODC were incurred as of December 31, 2019. Significant Acquisition Costs included in the accompanying Condensed Consolidated Statements of Operations by segment for the three and six months ended June 30, 2019 is as follows:
| Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Global RIM Business | $ | 1,032 |  |  | $ | 1,912 |
Global Data Center Business | 124 |  |  | 267 |
Corporate and Other Business | 745 |  |  | 2,468 |
Total Significant Acquisition Costs | $ | 1,901 |  |  | $ | 4,647 |

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