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Summary of Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2021
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. Cash and cash equivalents are carried at cost, which approximates fair value. B. ACCOUNTS RECEIVABLE We maintain an allowance for doubtful accounts and a credit memo reserve for estimated losses resulting from the potential inability of our customers to make required payments and potential disputes regarding billing and service issues. Rollforward of allowance for doubtful accounts and credit memo reserves for the three months ended March 31, 2021 is as follows:
|  | Balance as of December 31, 2020 |  | $ | 56,981 |  |  |  |  |  |
|  | Credit memos charged to revenue |  | 13,026 |  |  |  |  |  |
|  | Allowance for bad debts charged to expense |  | 9,850 |  |  |  |  |  |
|  | Deductions and other(1) |  | (19,114) |  |  |  |  |  |
|  | Balance as of March 31, 2021 |  | $ | 60,743 |  |  |  |  |  |
(1)Primarily consists of the issuance of credit memos, the write-off of accounts receivable and the impact associated with currency translation adjustments. C. LEASES We lease facilities for certain warehouses, data centers and office space. We also have land leases, including those on which certain facilities are located. Operating and financing lease right-of-use assets and lease liabilities as of March 31, 2021 and December 31, 2020 are as follows:
DESCRIPTION |  | MARCH 31, 2021 |  | DECEMBER 31, 2020
Assets: |  |  |  |
Operating lease right-of-use assets |  | $ | 2,205,299 |  |  | $ | 2,196,502 |
Financing lease right-of-use assets, net of accumulated depreciation(1) |  | 300,399 |  |  | 310,534 |
Liabilities: |  |  |  |
Current |  |  |  |
Operating lease liabilities |  | $ | 248,319 |  |  | $ | 250,239 |
Financing lease liabilities(1) |  | 42,692 |  |  | 43,149 |
Long-term |  |  |  |
Operating lease liabilities |  | 2,061,140 |  |  | 2,044,598 |
Financing lease liabilities(1) |  | 311,448 |  |  | 323,162 |
(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 months ended March 31, 2021 and 2020 are as follows:
|  | THREE MONTHS ENDED MARCH 31, |  |
DESCRIPTION |  | 2021 |  | 2020 |  |  |  |
Operating lease cost(1) |  | $ | 132,675 |  |  | $ | 123,289 |  |  |  |  |
Financing lease cost: |  |  |  |  |  |  |  |
Depreciation of financing lease right-of-use assets |  | $ | 12,648 |  |  | $ | 12,955 |  |  |  |  |
Interest expense for financing lease liabilities |  | 4,975 |  |  | 4,844 |  |  |  |  |
(1)Operating lease cost, the majority of which is included in Cost of sales, includes variable lease costs of $28,368 and $27,805 for the three months ended March 31, 2021 and 2020, respectively. Other information: Supplemental cash flow information relating to our leases for the three months ended March 31, 2021 and 2020 is as follows:
|  | THREE MONTHS ENDED MARCH 31,
CASH PAID FOR AMOUNTS INCLUDED IN MEASUREMENT OF LEASE LIABILITIES: |  | 2021 |  | 2020
Operating cash flows used in operating leases |  | $ | 93,645 |  |  | $ | 86,418 |
Operating cash flows used in financing leases (interest) |  | 4,975 |  |  | 4,844 |
Financing cash flows used in financing leases |  | 12,441 |  |  | 12,739 |
NON-CASH ITEMS: |  |  |  |
Operating lease modifications and reassessments |  | $ | 31,994 |  |  | $ | 34,916 |
New operating leases (including acquisitions and sale-leaseback transactions) |  | 48,200 |  |  | 110,609 |
D. GOODWILL Our reporting units as of December 31, 2020 are described in detail in Note 2.k. to Notes to Consolidated Financial Statements included in our Annual Report. The changes in the carrying value of goodwill attributable to each reportable operating segment for the three months ended March 31, 2021 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, 2020 | $ | 4,024,182 |  |  | $ | 436,987 |  |  | $ | 96,440 |  |  | $ | 4,557,609 |
Fair value and other adjustments | (5,804) |  |  | — |  |  | — |  |  | (5,804) |
Currency effects | (24,298) |  |  | (6,359) |  |  | (373) |  |  | (31,030) |
Goodwill balance, net accumulated amortization as of March 31, 2021 | $ | 3,994,080 |  |  | $ | 430,628 |  |  | $ | 96,067 |  |  | $ | 4,520,775 |
Accumulated goodwill impairment balance as of March 31, 2021 | $ | 132,409 |  |  | $ | — |  |  | $ | 26,011 |  |  | $ | 158,420 |
E. INVESTMENTS I. FRANKFURT DATA CENTER JOINT VENTURE In October 2020, we formed a joint venture with AGC Equity Partners (the “Frankfurt JV”). Our equity interest in the Frankfurt JV at both March 31, 2021 and December 31, 2020 was 20%, and the carrying value of our investment in the Frankfurt JV at March 31, 2021 and December 31, 2020 was $26,257 and $26,500, respectively, which is presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheets. II. MAKESPACE JOINT VENTURE During 2019, we formed a joint venture with MakeSpace Labs, Inc. (the “MakeSpace JV”). Our equity interest in the MakeSpace JV at March 31, 2021 and December 31, 2020 was 42% and 39%, respectively, and the carrying value of our investment in the MakeSpace JV at March 31, 2021 and December 31, 2020 was $21,075 and $16,924, respectively, which is presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheets. F. FAIR VALUE MEASUREMENTS The assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2021 and December 31, 2020 are as follows:
|  |  |  | FAIR VALUE MEASUREMENTS AT MARCH 31, 2021 USING
DESCRIPTION |  | TOTAL CARRYING VALUE AT MARCH 31, 2021 |  | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) |  | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) |  | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Money Market Funds |  | $ | 7,673 |  |  | $ | — |  |  | $ | 7,673 |  |  | $ | — |
Time Deposits |  | 1,291 |  |  | — |  |  | 1,291 |  |  | — |
Trading Securities |  | 11,323 |  |  | 11,067 |  |  | 256 |  |  | — |
Derivative Liabilities |  | 34,497 |  |  | — |  |  | 34,497 |  |  | — |
|  |  |  | FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2020 USING
DESCRIPTION |  | TOTAL CARRYING VALUE AT DECEMBER 31, 2020 |  | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) |  | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) |  | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Money Market Funds |  | $ | 62,657 |  |  | $ | — |  |  | $ | 62,657 |  |  | $ | — |
Time Deposits |  | 2,121 |  |  | — |  |  | 2,121 |  |  | — |
Trading Securities |  | 10,892 |  |  | 10,636 |  |  | 256 |  |  | — |
Derivative Liabilities |  | 49,703 |  |  | — |  |  | 49,703 |  |  | — |
There were no material items that are measured at fair value on a non-recurring basis at March 31, 2021 and December 31, 2020, other than those disclosed in Note 2.o. to Notes to Consolidated Financial Statements included in our Annual Report which are based on Level 3 inputs. G. ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET The changes in accumulated other comprehensive items, net for the three months ended March 31, 2021 and 2020 are as follows:
| THREE MONTHS ENDED MARCH 31, 2021 |  | THREE MONTHS ENDED MARCH 31, 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 | $ | (206,190) |  |  | $ | (49,703) |  |  | $ | (255,893) |  |  | $ | (252,825) |  |  | $ | (9,756) |  |  | $ | (262,581) |
Other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation and other adjustments | (66,224) |  |  | — |  |  | (66,224) |  |  | (222,305) |  |  | — |  |  | (222,305) |
Change in fair value of derivative instruments | — |  |  | 15,206 |  |  | 15,206 |  |  | — |  |  | (8,362) |  |  | (8,362) |
Total other comprehensive (loss) income | (66,224) |  |  | 15,206 |  |  | (51,018) |  |  | (222,305) |  |  | (8,362) |  |  | (230,667) |
End of Period | $ | (272,414) |  |  | $ | (34,497) |  |  | $ | (306,911) |  |  | $ | (475,130) |  |  | $ | (18,118) |  |  | $ | (493,248) |
H. REVENUES The costs associated with the initial movement of customer records into physical storage and certain commissions are considered costs to obtain or fulfill customer contracts (collectively, “Contract Fulfillment Costs”). Contract Fulfillment Costs as of March 31, 2021 and December 31, 2020, are as follows:
|  | MARCH 31, 2021 |  | DECEMBER 31, 2020
|  | GROSS CARRYING AMOUNT |  | ACCUMULATED AMORTIZATION |  | NET CARRYING AMOUNT |  | GROSS CARRYING AMOUNT |  | ACCUMULATED AMORTIZATION |  | NET CARRYING AMOUNT
Intake Costs asset |  | $ | 66,337 |  |  | $ | (35,904) |  |  | $ | 30,433 |  |  | $ | 63,721 |  |  | $ | (33,352) |  |  | $ | 30,369 |
Commissions asset |  | 99,721 |  |  | (43,125) |  |  | 56,596 |  |  | 91,069 |  |  | (38,787) |  |  | 52,282 |
Deferred revenue liabilities are reflected in our Condensed Consolidated Balance Sheets as follows:
DESCRIPTION |  | LOCATION IN BALANCE SHEET |  | MARCH 31, 2021 |  | DECEMBER 31, 2020
Deferred revenue - Current |  | Deferred revenue |  | $ | 284,974 |  |  | $ | 295,785 |
Deferred revenue - Long-term |  | Other Long-term Liabilities |  | 36,581 |  |  | 35,612 |
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 Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), as amended (“ASU 2016-02”). Storage rental revenue, including revenue associated with power and connectivity, associated with our Global Data Center Business for the three months ended March 31, 2021 and 2020 are as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2021 |  | 2020 |  |  |  |
Storage rental revenue(1) | $ | 67,157 |  |  | $ | 64,595 |  |  |  |  |
(1)Revenue associated with power and connectivity included within storage rental revenue was $13,133 and $11,413 for the three months ended March 31, 2021 and 2020, respectively. I. 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 months ended March 31, 2021 and 2020 is as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2021 |  | 2020 |  |  |  |
Stock-based compensation expense | $ | 10,953 |  |  | $ | 6,527 |  |  |  |  |
As of March 31, 2021, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $80,625. RESTRICTED STOCK UNITS AND PERFORMANCE UNITS The fair value of RSUs and earned PUs that vested during the three months ended March 31, 2021 and 2020 is as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2021 |  | 2020 |  |  |  |
Fair value of RSUs vested | $ | 19,861 |  |  | $ | 18,379 |  |  |  |  |
Fair value of earned PUs that vested | 5,591 |  |  | 10,890 |  |  |  |  |
As of March 31, 2021, we expected 100% achievement of each of the predefined targets associated with the awards of PUs made in 2021, 2020 and 2019 J. OTHER EXPENSE (INCOME), NET Consolidated other expense (income), net for the three months ended March 31, 2021 and 2020 consists of the following:
|  | THREE MONTHS ENDED MARCH 31, |  |
DESCRIPTION |  | 2021 |  | 2020 |  |  |  |
Foreign currency transaction losses (gains), net |  | $ | 2,314 |  |  | $ | (37,399) |  |  |  |  |
Other, net(1) |  | 2,399 |  |  | (5,327) |  |  |  |  |
Other Expense (Income), Net |  | $ | 4,713 |  |  | $ | (42,726) |  |  |  |  |
(1)Other, net for the three months ended March 31, 2021 is primarily comprised of losses on our equity method investments. Other, net for the three months ended March 31, 2020 is primarily comprised of a gain on our previously held 25% equity investment in OSG Records Management (Europe) Limited (“OSG”), which is partially offset by losses on our equity method investments. K. 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 months ended March 31, 2021 and 2020 are as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2021(1) |  | 2020(2) |  |  |  |
Effective Tax Rate | 23.9 | % |  | 13.0 | % |  |  |  |
(1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended March 31, 2021 were the benefits derived from the dividends paid deduction and the impacts of differences in the tax rates at which our foreign earnings are subject. (2)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended March 31, 2020 were the benefits derived from the dividends paid deduction and foreign exchange losses in different jurisdictions with different tax rates as well as the impacts of differences in the tax rates at which our foreign earnings are subject. L. INCOME (LOSS) PER SHARE—BASIC AND DILUTED The calculation of basic and diluted income (loss) per share for the three months ended March 31, 2021 and 2020 are as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2021 |  | 2020 |  |  |  |
Net Income (Loss) | $ | 46,631 |  |  | $ | 64,892 |  |  |  |  |
Less: Net Income (Loss) Attributable to Noncontrolling Interests | 1,028 |  |  | 917 |  |  |  |  |
Net Income (Loss) Attributable to Iron Mountain Incorporated (utilized in numerator of Earnings Per Share calculation) | $ | 45,603 |  |  | $ | 63,975 |  |  |  |  |
Weighted-average shares—basic | 288,756,000 |  |  | 287,840,000 |  |  |  |  |
Effect of dilutive potential stock options | 56,437 |  |  | 51,799 |  |  |  |  |
Effect of dilutive potential RSUs and PUs | 715,850 |  |  | 467,334 |  |  |  |  |
Weighted-average shares—diluted | 289,528,287 |  |  | 288,359,133 |  |  |  |  |
Net Income (Loss) Per Share Attributable to Iron Mountain Incorporated: |  |  |  |  |  |  |
Basic | $ | 0.16 |  |  | $ | 0.22 |  |  |  |  |
Diluted | $ | 0.16 |  |  | $ | 0.22 |  |  |  |  |
Antidilutive stock options, RSUs and PUs, excluded from the calculation | 4,708,068 |  |  | 5,513,714 |  |  |  |  |
M. RECENT ACCOUNTING PRONOUNCEMENTS In December 2019, the Financial Accounting Standards Board issued ASU No. 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. ASU 2019-12 also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. We adopted ASU 2019-12 on January 1, 2021. ASU 2019-12 did not have a material impact on our consolidated financial statements.

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