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Summary of Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2024
Accounting Policies [Abstract] |
Summary Of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. CASH AND CASH EQUIVALENTS 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. The rollforward of the allowance for doubtful accounts and credit memo reserves for the three months ended March 31, 2024 is as follows:
|  | Balance as of December 31, 2023 |  | $ | 74,762 |
|  | Credit memos charged to revenue |  | 24,035 |
|  | Allowance for bad debts charged to expense |  | 14,338 |
|  | Deductions and other(1) |  | (35,722) |
|  | Balance as of March 31, 2024 |  | $ | 77,413 |
(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, 2024 and December 31, 2023 are as follows:
DESCRIPTION |  | MARCH 31, 2024 |  | DECEMBER 31, 2023
Assets: |  |  |  |
Operating lease right-of-use assets |  | $ | 2,677,803 |  |  | $ | 2,696,024 |
Financing lease right-of-use assets, net of accumulated depreciation(1) |  | 318,753 |  |  | 304,600 |
Liabilities: |  |  |  |
Current |  |  |  |
Operating lease liabilities |  | $ | 301,344 |  |  | $ | 291,795 |
Financing lease liabilities(1) |  | 39,973 |  |  | 39,089 |
Long-term |  |  |  |
Operating lease liabilities |  | $ | 2,525,552 |  |  | $ | 2,562,394 |
Financing lease liabilities(1) |  | 323,653 |  |  | 310,776 |
(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, 2024 and 2023 are as follows:
|  | THREE MONTHS ENDED MARCH 31, |  |
DESCRIPTION |  | 2024 |  | 2023 |  |  |  |
Operating lease cost(1) |  | $ | 171,746 |  |  | $ | 155,873 |  |  |  |  |
Financing lease cost: |  |  |  |  |  |  |  |
Depreciation of financing lease right-of-use assets |  | $ | 10,944 |  |  | $ | 10,008 |  |  |  |  |
Interest expense for financing lease liabilities |  | 5,221 |  |  | 4,341 |  |  |  |  |
(1)Operating lease cost, the majority of which is included in Cost of sales, includes variable lease costs of $38,094 and $31,580 for the three months ended March 31, 2024 and 2023, respectively. Other information: Supplemental cash flow information relating to our leases for the three months ended March 31, 2024 and 2023 is as follows:
|  | THREE MONTHS ENDED MARCH 31,
CASH PAID FOR AMOUNTS INCLUDED IN MEASUREMENT OF LEASE LIABILITIES: |  | 2024 |  | 2023
Operating cash flows used in operating leases |  | $ | 117,336 |  |  | $ | 108,723 |
Operating cash flows used in financing leases (interest) |  | 5,221 |  |  | 4,341 |
Financing cash flows used in financing leases |  | 10,679 |  |  | 11,714 |
NON-CASH ITEMS: |  |  |  |
Operating lease modifications and reassessments |  | $ | (262) |  |  | $ | 18,163 |
New operating leases (including acquisitions and sale-leaseback transactions) |  | 64,556 |  |  | 113,853 |
D. GOODWILL Our reporting units as of December 31, 2023 are described in detail in Note 2.l. to Notes to Consolidated Financial Statements included in our Annual Report. The changes in the carrying value of goodwill attributable to each reportable segment and Corporate and Other (as defined in Note 9) for the three months ended March 31, 2024 are as follows:
| GLOBAL RIM BUSINESS |  | GLOBAL DATA CENTER BUSINESS |  |  |  | CORPORATE AND OTHER |  | TOTAL CONSOLIDATED
Goodwill balance, net of accumulated amortization, as of December 31, 2023 | $ | 3,911,945 |  |  | $ | 478,930 |  |  |  |  | $ | 627,037 |  |  | $ | 5,017,912 |
Tax deductible goodwill acquired during the period | — |  |  | — |  |  |  |  | 131,695 |  |  | 131,695 |
Fair value and other adjustments | 143 |  |  | (186) |  |  |  |  | — |  |  | (43) |
Currency effects | (38,502) |  |  | (2,995) |  |  |  |  | (594) |  |  | (42,091) |
Goodwill balance, net of accumulated amortization, as of March 31, 2024 | $ | 3,873,586 |  |  | $ | 475,749 |  |  |  |  | $ | 758,138 |  |  | $ | 5,107,473 |
Accumulated goodwill impairment balance as of March 31, 2024 | $ | 132,409 |  |  | $ | — |  |  |  |  | $ | 26,011 |  |  | $ | 158,420 |
E. FAIR VALUE MEASUREMENTS The assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2024 and December 31, 2023 are as follows:
|  |  |  | FAIR VALUE MEASUREMENTS AT MARCH 31, 2024 USING
DESCRIPTION |  | TOTAL CARRYING VALUE AT MARCH 31, 2024 |  | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) |  | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) |  | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)(2)
Money Market Funds |  | $ | 6,027 |  |  | $ | — |  |  | $ | 6,027 |  |  | $ | — |
Time Deposits |  | 32,014 |  |  | — |  |  | 32,014 |  |  | — |
Trading Securities |  | 10,662 |  |  | 6,783 |  |  | 3,879 |  |  | — |
Derivative Assets |  | 20,290 |  |  | — |  |  | 20,290 |  |  | — |
Deferred Purchase Obligations(1) |  | 113,471 |  |  | — |  |  | — |  |  | 113,471 |
|  |  |  | FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2023 USING
DESCRIPTION |  | TOTAL CARRYING VALUE AT DECEMBER 31, 2023 |  | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) |  | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) |  | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)(2)
Money Market Funds |  | $ | 68,008 |  |  | $ | — |  |  | $ | 68,008 |  |  | $ | — |
Time Deposits |  | 15,913 |  |  | — |  |  | 15,913 |  |  | — |
Trading Securities |  | 9,952 |  |  | 6,149 |  |  | 3,803 |  |  | — |
Derivative Assets |  | 6,359 |  |  | — |  |  | 6,359 |  |  | — |
Derivative Liabilities |  | 5,769 |  |  | — |  |  | 5,769 |  |  | — |
Deferred Purchase Obligations(1) |  | 208,265 |  |  | — |  |  | — |  |  | 208,265 |
(1)Primarily relates to the fair values of the deferred purchase obligations associated with the ITRenew Transaction (as defined in Note 3 to Notes to Consolidated Financial Statements included in our Annual Report) and the Regency Transaction (as defined in Note 3). (2)The following is a rollforward of the Level 3 liabilities presented above for December 31, 2023 through March 31, 2024:
Balance as of December 31, 2023 | $ | 208,265 |  |  |  |  |
Additions | 63,600 |  |  |  |  |
Payments | (158,677) |  |  |  |  |
Other changes, including accretion | 283 |  |  |  |  |
Balance as of March 31, 2024 | $ | 113,471 |  |  |  |  |
The level 3 valuations of the deferred purchase obligations were determined utilizing Monte-Carlo models and take into account our forecasted projections as they relate to the underlying performance of the respective businesses. The Monte-Carlo simulation model applied in assessing the fair value of the deferred purchase obligation associated with the ITRenew Transaction incorporates assumptions as to expected gross profits over the achievement period, including adjustments for the volatility of timing and amount of the associated revenue and costs, as well as discount rates that account for the risk of the arrangement and overall market risks. The Monte-Carlo simulation model applied in assessing the fair value of the deferred purchase obligation associated with the Regency Transaction incorporates assumptions as to expected revenue over the achievement period, including adjustments for volatility and timing, as well as discount rates that account for the risk of the arrangement and overall market risks. Any material change to these assumptions may result in a significantly higher or lower fair value of the related deferred purchase obligation. There were no material items that were measured at fair value on a non-recurring basis at March 31, 2024 and December 31, 2023 other than (i) those disclosed in Note 2.p. to Notes to Consolidated Financial Statements included in our Annual Report and (ii) assets acquired and liabilities assumed through our acquisitions that occurred during the three months ended March 31, 2024 (see Note 3), both of which are based on Level 3 inputs. F. ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET The changes in Accumulated other comprehensive items, net for the three months ended March 31, 2024 and 2023 are as follows:
| THREE MONTHS ENDED MARCH 31, 2024 |  | THREE MONTHS ENDED MARCH 31, 2023
| FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS |  | DERIVATIVE FINANCIAL INSTRUMENTS |  | TOTAL |  | FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS |  | DERIVATIVE FINANCIAL INSTRUMENTS |  | TOTAL
Beginning of Period | $ | (373,628) |  |  | $ | 2,472 |  |  | $ | (371,156) |  |  | $ | (454,509) |  |  | $ | 12,506 |  |  | $ | (442,003) |
Other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation and other adjustments | (66,501) |  |  | — |  |  | (66,501) |  |  | 39,677 |  |  | — |  |  | 39,677 |
Change in fair value of derivative instruments | — |  |  | 11,388 |  |  | 11,388 |  |  | — |  |  | (3,442) |  |  | (3,442) |
Reclassifications from accumulated other comprehensive items, net | — |  |  | (2,528) |  |  | (2,528) |  |  | — |  |  | — |  |  | — |
Total other comprehensive (loss) income | (66,501) |  |  | 8,860 |  |  | (57,641) |  |  | 39,677 |  |  | (3,442) |  |  | 36,235 |
End of Period | $ | (440,129) |  |  | $ | 11,332 |  |  | $ | (428,797) |  |  | $ | (414,832) |  |  | $ | 9,064 |  |  | $ | (405,768) |
G. REVENUES The costs associated with the initial movement of customer records into physical storage and certain commissions are considered costs to fulfill or obtain customer contracts (collectively, "Contract Costs"). Contract Costs as of March 31, 2024 and December 31, 2023 are as follows:
|  | MARCH 31, 2024 |  | DECEMBER 31, 2023
|  | GROSS CARRYING AMOUNT |  | ACCUMULATED AMORTIZATION |  | NET CARRYING AMOUNT |  | GROSS CARRYING AMOUNT |  | ACCUMULATED AMORTIZATION |  | NET CARRYING AMOUNT
Intake Costs asset |  | $ | 76,233 |  |  | $ | (38,593) |  |  | $ | 37,640 |  |  | $ | 76,150 |  |  | $ | (39,617) |  |  | $ | 36,533 |
Commissions asset |  | 171,254 |  |  | (66,803) |  |  | 104,451 |  |  | 156,639 |  |  | (64,279) |  |  | 92,360 |
Deferred revenue liabilities are reflected in our Condensed Consolidated Balance Sheets as follows:
DESCRIPTION |  | LOCATION IN BALANCE SHEET |  | MARCH 31, 2024 |  | DECEMBER 31, 2023
Deferred revenue - Current |  | Deferred revenue |  | $ | 332,801 |  |  | $ | 325,665 |
Deferred revenue - Long-term |  | Other Long-term Liabilities |  | 97,075 |  |  | 100,770 |
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 Codification 842. Storage rental revenue associated with our Global Data Center Business for the three months ended March 31, 2024 and 2023 is as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2024 |  | 2023 |  |  |  |
Storage rental revenue | $ | 140,028 |  |  | $ | 107,435 |  |  |  |  |
H. STOCK-BASED COMPENSATION Our stock-based compensation expense includes the cost of stock options, restricted stock units ("RSUs") and performance units ("PUs") (together, the "Employee Stock-Based Awards"). STOCK-BASED COMPENSATION EXPENSE Stock-based compensation expense for the Employee Stock-Based Awards for the three months ended March 31, 2024 and 2023 is as follows:
| THREE MONTHS ENDED MARCH 31, |  |  |  |
| 2024 |  | 2023 |  |  |  |  |  |  |  |
Stock-based compensation expense | $ | 14,039 |  |  | $ | 12,509 |  |  |  |  |  |  |  |  |
In March 2024, we granted approximately 83,100, 582,800 and 444,000 stock options, RSUs and PUs, respectively, under the 2014 Plan (as defined in Note 2.t to Notes to Consolidated Financial Statements included in our Annual Report). As of March 31, 2024, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards, inclusive of our estimated achievement of the performance metrics, is $132,940. I. ACQUISITION AND INTEGRATION COSTS Acquisition and integration costs represent operating expenditures directly associated with the closing and integration activities of our business acquisitions that have closed, or are highly probable of closing, and include (i) advisory, legal and professional fees to complete business acquisitions and (ii) costs to integrate acquired businesses into our existing operations, including move, severance and system integration costs (collectively, "Acquisition and Integration Costs"). Acquisition and Integration Costs for the three months ended March 31, 2024 and 2023 are as follows:
| THREE MONTHS ENDED MARCH 31, |  |  |  |
| 2024 |  | 2023 |  |  |  |  |  |  |  |
Acquisition and Integration Costs | $ | 7,809 |  |  | $ | 1,595 |  |  |  |  |  |  |  |  |
J. LOSS (GAIN) ON DISPOSAL/WRITE-DOWN OF PROPERTY, PLANT AND EQUIPMENT, NET Loss (gain) on disposal/write-down of property, plant and equipment, net for the three months ended March 31, 2024 and 2023 is as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2024 |  | 2023(1) |  |  |  |
Loss (gain) on disposal/write-down of property, plant and equipment, net | $ | 389 |  |  | $ | (13,061) |  |  |  |  |
(1) The gains for the three months ended March 31, 2023 primarily consist of a gain of approximately $18,500 associated with a sale-leaseback transaction of a facility in Singapore. The gains recognized during 2023 are the result of our program to monetize a small portion of our industrial assets through sale and sale-leaseback transactions. The terms for these leases are consistent with the terms of our lease portfolio, which are disclosed in detail in Note 2.j. to Notes to Consolidated Financial Statements included in our Annual Report. K. OTHER (INCOME) EXPENSE, NET Other (income) expense, net for the three months ended March 31, 2024 and 2023 consists of the following:
| THREE MONTHS ENDED MARCH 31, |  |
DESCRIPTION | 2024 |  | 2023 |  |  |  |
Foreign currency transaction (gains) losses, net | $ | (16,379) |  |  | $ | 14,424 |  |  |  |  |
Other, net | 3,849 |  |  | 6,776 |  |  |  |  |
Other (Income) Expense, Net | $ | (12,530) |  |  | $ | 21,200 |  |  |  |  |
L. 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, 2024 and 2023 are as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2024 |  | 2023 |  |  |  |
Effective Tax Rate(1) | 17.7 | % |  | 20.4 | % |  |  |  |
(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, 2024 and 2023 were the benefits derived from the dividends paid deduction and the differences in the tax rates to which our foreign earnings are subject. M. INCOME (LOSS) PER SHARE—BASIC AND DILUTED The calculations of basic and diluted income (loss) per share for the three months ended March 31, 2024 and 2023 are as follows:
| THREE MONTHS ENDED MARCH 31, |  |
| 2024 |  | 2023 |  |  |  |
Net Income (Loss) | $ | 77,025 |  |  | $ | 65,535 |  |  |  |  |
Less: Net Income (Loss) Attributable to Noncontrolling Interests | 2,964 |  |  | 940 |  |  |  |  |
Net Income (Loss) Attributable to Iron Mountain Incorporated (utilized in numerator of Earnings Per Share calculation) | $ | 74,061 |  |  | $ | 64,595 |  |  |  |  |
Weighted-average shares—basic | 292,746,000 |  |  | 291,442,000 |  |  |  |  |
Effect of dilutive potential stock options | 1,886,000 |  |  | 1,216,000 |  |  |  |  |
Effect of dilutive potential RSUs and PUs | 589,000 |  |  | 391,000 |  |  |  |  |
Weighted-average shares—diluted | 295,221,000 |  |  | 293,049,000 |  |  |  |  |
Net Income (Loss) Per Share Attributable to Iron Mountain Incorporated: |  |  |  |  |  |  |
Basic | $ | 0.25 |  |  | $ | 0.22 |  |  |  |  |
Diluted | $ | 0.25 |  |  | $ | 0.22 |  |  |  |  |
Antidilutive stock options, RSUs and PUs excluded from the calculation | 365,764 |  |  | 145,730 |  |  |  |  |

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