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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2020
Accounting Policies [Abstract] |
Summary of 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. Restricted cash was less than $5,000 at both September 30, 2020 and December 31, 2019. b. 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 nine months of 2020 (described in Note 4) has been incorporated into our reporting units as they existed as of December 31, 2019. 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. 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. 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. During the second and third quarters of 2020, for each of our reporting units, 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. 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 nine months ended September 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 period | 51,319 |  |  | — |  |  | — |  |  | 51,319 |
Goodwill impairment | — |  |  | — |  |  | (23,000) |  |  | (23,000) |
Fair value and other adjustments | (4,131) |  |  | — |  |  | 403 |  |  | (3,728) |
Currency effects | (54,428) |  |  | 6,026 |  |  | 131 |  |  | (48,271) |
Goodwill balance, net accumulated amortization as of September 30, 2020 | $ | 3,935,661 |  |  | $ | 430,594 |  |  | $ | 95,274 |  |  | $ | 4,461,529 |
Accumulated goodwill impairment balance as of September 30, 2020 | $ | 132,409 |  |  | $ | — |  |  | $ | 26,011 |  |  | $ | 158,420 |
c. Revenues Contract fulfillment costs consist of the costs of the initial intake of customer records into physical storage and capitalized commissions asset (collectively, "Contract Fulfillment Costs"), which as of September 30, 2020 and December 31, 2019, are as follows:
|  | September 30, 2020 |  | December 31, 2019
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Contract Fulfillment Costs |  | $ | 123,795 |  |  | $ | (57,538) |  |  | $ | 66,257 |  |  | $ | 109,232 |  |  | $ | (50,757) |  |  | $ | 58,475 |
Deferred revenue liabilities are reflected in our Condensed Consolidated Balance Sheets as follows:
Description |  | September 30, 2020 |  | December 31, 2019
Deferred revenue - Current |  | $ | 244,430 |  |  | $ | 274,036 |
Deferred revenue - Long-term |  | 35,187 |  |  | 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. Storage rental revenue, including revenue associated with power and connectivity, associated with our Global Data Center Business for the three and nine months ended September 30, 2020 and 2019 are as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Storage rental revenue(1) | $ | 68,416 |  |  | $ | 62,001 |  |  | $ | 196,823 |  |  | $ | 182,301 |
______________________________________________________________ (1)Revenue associated with power and connectivity included within storage rental revenue was $12,033 and $34,986 for the three and nine months ended September 30, 2020, respectively, and $12,001 and $31,031 for the three and nine months ended September 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. 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. 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 considering our past loss experience, current and prior trends in our aged receivables and credit memo activity. 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. 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. Our highly diverse global customer base, with no single customer accounting for more than 1% of revenue during the nine months ended September 30, 2020, limits our exposure to concentration of credit risk. The rollforward of allowance for doubtful accounts and credit memo reserves for the nine months ended September 30, 2020 is as follows:
Balance at December 31, 2019 |  |  |  | $ | 42,856 |
Credit memos charged to revenue |  |  |  | 42,713 |
Allowance for bad debts charged to expense |  |  |  | 25,715 |
Deductions and other(1) |  |  |  | (57,496) |
Balance at September 30, 2020 |  |  |  | $ | 53,788 |
_______________________________________________________________ (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. Operating and financing lease right-of-use assets and lease liabilities as of September 30, 2020 and December 31, 2019 are as follows:
Description |  | September 30, 2020 |  | December 31, 2019
Assets: |  |  |  |
Operating lease right-of-use assets |  | $ | 1,963,019 |  |  | $ | 1,869,101 |
Financing lease right-of-use assets, net of accumulated depreciation(1) |  | 306,640 |  |  | 327,215 |
Liabilities: |  |  |  |
Current |  |  |  |
Operating lease liabilities |  | $ | 236,019 |  |  | $ | 223,249 |
Financing lease liabilities(1) |  | 42,620 |  |  | 46,582 |
Long-term |  |  |  |
Operating lease liabilities |  | 1,818,844 |  |  | 1,728,686 |
Financing lease liabilities(1) |  | 311,387 |  |  | 320,600 |
_______________________________________________________________ (1)Financing lease right-of-use assets, current financing lease liabilities and long-term financing lease liabilities are included within Property, Plant and Equipment, Net, Current portion of long-term debt and Long-term Debt, net of current portion, respectively, within our Condensed Consolidated Balance Sheets. The components of the lease expense for the three and nine months ended September 30, 2020 and 2019 are as follows:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Description |  | 2020 |  | 2019 |  | 2020 |  | 2019
Operating lease cost(1) |  | $ | 122,737 |  |  | $ | 114,727 |  |  | $ | 365,303 |  |  | $ | 343,282 |
Financing lease cost: |  |  |  |  |  |  |  |
Depreciation of financing lease right-of-use assets |  | $ | 12,973 |  |  | $ | 14,679 |  |  | $ | 38,495 |  |  | $ | 45,950 |
Interest expense for financing lease liabilities |  | 4,891 |  |  | 4,905 |  |  | 14,664 |  |  | 15,972 |
_______________________________________________________________ (1) Operating lease cost, the majority of which is in Cost of sales, includes variable lease costs of $27,486 and $82,287 for the three and nine months ended September 30, 2020, respectively, and $26,121 and $78,712 for the three and nine months ended September 30, 2019, respectively. Other information: Supplemental cash flow information relating to our leases for the nine months ended September 30, 2020 and 2019 is as follows:
|  | Nine Months Ended September 30,
Cash paid for amounts included in measurement of lease liabilities: |  | 2020 |  | 2019
Operating cash flows used in operating leases |  | $ | 266,619 |  |  | $ | 252,277 |
Operating cash flows used in financing leases (interest) |  | 14,664 |  |  | 15,972 |
Financing cash flows used in financing leases |  | 36,008 |  |  | 44,808 |
Operating Lease Non-cash items: |  |  |  |
Operating lease modifications and reassessments |  | $ | 89,727 |  |  | $ | 42,418 |
New operating leases (including acquisitions) |  | 173,635 |  |  | 117,193 |
f. Stock-Based Compensation Stock-based compensation expense 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") for the three and nine months ended September 30, 2020 and 2019 is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Stock-based compensation expense | $ | 8,946 |  |  | $ | 7,120 |  |  | $ | 35,618 |  |  | $ | 28,140 |
As of September 30, 2020, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $49,492. Restricted Stock Units and Performance Units The fair value of RSUs and earned PUs that vested during the three and nine months ended September 30, 2020 and 2019 is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Fair value of RSUs vested | $ | 2,766 |  |  | $ | 3,092 |  |  | $ | 24,411 |  |  | $ | 20,802 |
Fair value of earned PUs that vested | 1,370 |  |  | 1,176 |  |  | 12,421 |  |  | 7,679 |
As of September 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 The calculation of basic and diluted income (loss) per share for the three and nine months ended September 30, 2020 and 2019 are as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Income (loss) from continuing operations | $ | 38,562 |  |  | $ | 108,284 |  |  | $ | 96,341 |  |  | $ | 231,107 |
Less: Net income (loss) attributable to noncontrolling interests | 168 |  |  | 609 |  |  | 1,058 |  |  | 1,534 |
Income (loss) from continuing operations (utilized in numerator of Earnings Per Share calculation) | 38,394 |  |  | 107,675 |  |  | 95,283 |  |  | 229,573 |
Income (loss) from discontinued operations, net of tax | — |  |  | — |  |  | — |  |  | 104 |
Net income (loss) attributable to Iron Mountain Incorporated | $ | 38,394 |  |  | $ | 107,675 |  |  | $ | 95,283 |  |  | $ | 229,677 |
Weighted-average shares—basic | 288,403,000 |  |  | 287,152,000 |  |  | 288,105,000 |  |  | 286,869,000 |
Effect of dilutive potential stock options | 14,758 |  |  | 93,752 |  |  | 28,723 |  |  | 157,928 |
Effect of dilutive potential RSUs and PUs | 392,943 |  |  | 445,081 |  |  | 337,588 |  |  | 528,387 |
Weighted-average shares—diluted | 288,810,701 |  |  | 287,690,833 |  |  | 288,471,311 |  |  | 287,555,315 |
Earnings (losses) per share—basic: |  |  |  |  |  |  |
Income (loss) from continuing operations | $ | 0.13 |  |  | $ | 0.37 |  |  | $ | 0.33 |  |  | $ | 0.80 |
Income (loss) from discontinued operations, net of tax | — |  |  | — |  |  | — |  |  | — |
Net income (loss) attributable to Iron Mountain Incorporated | $ | 0.13 |  |  | $ | 0.37 |  |  | $ | 0.33 |  |  | $ | 0.80 |
Earnings (losses) per share—diluted: |  |  |  |  |  |  |
Income (loss) from continuing operations | $ | 0.13 |  |  | $ | 0.37 |  |  | $ | 0.33 |  |  | $ | 0.80 |
Income (loss) from discontinued operations, net of tax | — |  |  | — |  |  | — |  |  | — |
Net income (loss) attributable to Iron Mountain Incorporated | $ | 0.13 |  |  | $ | 0.37 |  |  | $ | 0.33 |  |  | $ | 0.80 |
Antidilutive stock options, RSUs and PUs, excluded from the calculation | 5,529,126 |  |  | 4,782,661 |  |  | 5,959,693 |  |  | 4,590,645 |
h. Income Taxes We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our effective tax rates for the three and nine months ended September 30, 2020 and 2019 are as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Effective Tax Rate(1) | 26.5 | % |  | 16.8 | % |  | 25.7 | % |  | 15.7 | %
_______________________________________________________________ (1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and nine months ended September 30, 2020 and 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. In addition, for the three and nine months ended September 30, 2020, the costs associated with Project Summit (as defined in Note 10) are more heavily weighted to our United States qualified REIT subsidiaries, and, therefore, provide no tax benefit. i. Fair Value Measurements The assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2020 and December 31, 2019 are as follows:
|  |  |  | Fair Value Measurements at September 30, 2020 Using
Description |  | Total Carrying Value at September 30, 2020 |  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Money Market Funds |  | $ | 15,030 |  |  | $ | — |  |  | $ | 15,030 |  |  | $ | — |
Trading Securities |  | 11,452 |  |  | 11,095 |  |  | 357 |  |  | — |
Derivative Assets |  | 4,346 |  |  | — |  |  | 4,346 |  |  | — |
Derivative Liabilities |  | 25,609 |  |  | — |  |  | 25,609 |  |  | — |
|  |  |  | 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 |  | $ | 13,653 |  |  | $ | — |  |  | $ | 13,653 |  |  | $ | — |
Trading Securities |  | 10,732 |  |  | 10,168 |  |  | 564 |  |  | — |
Derivative Liabilities |  | 9,756 |  |  | — |  |  | 9,756 |  |  | — |
There were no material items that are measured at fair value on a non-recurring basis at September 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 nine months ended September 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. InvestmentsDuring 2019, we formed a joint venture entity with MakeSpace Labs, Inc. (the "MakeSpace JV"). In the second quarter of 2020, we committed to participate in a round of equity funding for the MakeSpace JV whereby we agreed to contribute $36,000 of the $45,000 being raised in installments beginning in May 2020 through October 2021. Our equity interest in the MakeSpace JV at September 30, 2020 and December 31, 2019 was 37% and 34%, respectively, and the carrying value of our investment in the MakeSpace JV at September 30, 2020 and December 31, 2019 was $15,801 and $18,570, respectivelyAccumulated Other Comprehensive Items, Net The changes in accumulated other comprehensive items, net for the three and nine months ended September 30, 2020 and 2019 are as follows:
| Three Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2020
| Foreign Currency Translation and Other Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total |  | Foreign Currency Translation and Other Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total
Beginning of Period | $ | (406,444) |  |  | $ | (21,079) |  |  | $ | (427,523) |  |  | $ | (252,825) |  |  | $ | (9,756) |  |  | $ | (262,581) |
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation and other adjustments | 44,529 |  |  | — |  |  | 44,529 |  |  | (109,090) |  |  | — |  |  | (109,090) |
Change in fair value of derivative instruments | — |  |  | (184) |  |  | (184) |  |  | — |  |  | (11,507) |  |  | (11,507) |
Total other comprehensive income (loss) | 44,529 |  |  | (184) |  |  | 44,345 |  |  | (109,090) |  |  | (11,507) |  |  | (120,597) |
End of Period | $ | (361,915) |  |  | $ | (21,263) |  |  | $ | (383,178) |  |  | $ | (361,915) |  |  | $ | (21,263) |  |  | $ | (383,178) |
| Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
| Foreign Currency Translation and Other Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total |  | Foreign Currency Translation and Other Adjustments |  | Change in Fair Value of Derivative Instruments |  | Total
Beginning of Period | $ | (253,243) |  |  | $ | (8,578) |  |  | $ | (261,821) |  |  | $ | (264,691) |  |  | $ | (973) |  |  | $ | (265,664) |
Other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation and other adjustments | (82,886) |  |  | — |  |  | (82,886) |  |  | (71,438) |  |  | — |  |  | (71,438) |
Change in fair value of derivative instruments | — |  |  | (1,496) |  |  | (1,496) |  |  | — |  |  | (9,101) |  |  | (9,101) |
Total other comprehensive (loss) income | (82,886) |  |  | (1,496) |  |  | (84,382) |  |  | (71,438) |  |  | (9,101) |  |  | (80,539) |
End of Period | $ | (336,129) |  |  | $ | (10,074) |  |  | $ | (346,203) |  |  | $ | (336,129) |  |  | $ | (10,074) |  |  | $ | (346,203) |
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 three and nine months ended September 30, 2020 was approximately $75,800 and $78,200, respectively. These amounts primarily consisted of gains of approximately $76,400 associated with the sale-leaseback transactions of two facilities during the third quarter of 2020. Consolidated gain on disposal/write-down of property, plant and equipment, net, for the three and nine months ended September 30, 2019 was approximately $9,300 and $17,100, respectively. These amounts consisted of (i) a gain of approximately $36,000 associated with the sale of certain land and buildings during the second quarter of 2019 and (ii) a gain of approximately $9,800 associated with a sale-leaseback transaction of five facilities during the third quarter of 2019, and were partially offset by losses incurred during the second quarter of 2019 primarily associated with an impairment charge on the assets associated with the select offerings within our Iron Mountain Iron Cloud portfolio of approximately $24,800. Other Expense (Income), Net Consolidated other expense (income), net for the three and nine months ended September 30, 2020 and 2019 consists of the following:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Description |  | 2020 |  | 2019 |  | 2020 |  | 2019
Foreign currency transaction losses (gains), net |  | $ | 29,635 |  |  | $ | (18,251) |  |  | $ | (6,293) |  |  | $ | (19,885) |
Debt extinguishment expense |  | 51,260 |  |  | — |  |  | 68,300 |  |  | — |
Other, net(1) |  | 2,570 |  |  | 4,836 |  |  | 4,432 |  |  | 6,488 |
Other Expense (Income), Net |  | $ | 83,465 |  |  | $ | (13,415) |  |  | $ | 66,439 |  |  | $ | (13,397) |
_______________________________________________________________ (1) Other, net for the nine months ended September 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. Recent 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 (as defined in Note 2.x. to Notes to Consolidated Financial Statements included in our Annual Report) 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 nine months ended September 30, 2019:
| Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Cost of sales (excluding depreciation and amortization) | $ | (1,945) |  |  | $ | (4,136) |
Selling, general and administrative | $ | (2,005) |  |  | $ | (4,461) |
Significant Acquisition Costs | $ | 3,950 |  |  | $ | 8,597 |
All Significant Acquisition Costs were incurred by December 31, 2019.

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