UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q



(Mark One)
ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2019

~~For the Quarterly Period Ended June 30, 2018~~


OR

o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

~~Commission file number 1-13045~~

Commission file number 1-13045

IRON MOUNTAIN ~~INCORPORATED~~INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)



Delaware	23-2588479
(State or other Jurisdiction of Incorporation or Organization)	~~23-2588479~~ (I.R.S. Employer Identification No.)

One Federal Street, Boston, Massachusetts02110

(Address of Principal Executive Offices, Including Zip Code)

~~(617)~~ (617) 535-4766

(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesý ☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesý ☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filerý

☒

Accelerated filero

☐

Non-accelerated filero

~~(Do not check if a~~

~~smaller reporting company)~~

☐

Smaller reporting companyo

☐

Emerging growth companyo

☐

If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No ý☒

~~Number~~Securities registered pursuant to Section 12(b) of the Exchange Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	IRM	NYSE

As of July 26, 2019, the registrant had 287,106,811 outstanding shares of ~~the registrant's Common Stock outstanding at July 20, 2018: 286,145,783~~common stock, $.01 par value.

IRON MOUNTAIN INCORPORATED

Index



	Page
PART I—FINANCIAL INFORMATION
Item 1—Unaudited Condensed Consolidated Financial Statements	3

Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018 ~~(Unaudited)~~	3

Condensed Consolidated Statements of Operations for the Three Months Ended June 30, ~~2017~~2019 and 2018 ~~(Unaudited)~~	4

Condensed Consolidated Statements of Operations for the Six Months Ended June 30, ~~2017~~2019 and 2018 ~~(Unaudited)~~	5

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, ~~2017~~2019 and 2018 ~~(Unaudited)~~	6

Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, ~~2017 and 2018 (Unaudited)~~2019	7

Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2018	8

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2017~~2019 and 2018 ~~(Unaudited)~~	8

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~	9

Notes to Condensed Consolidated Financial Statements (Unaudited)	10

Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations	5251

Item 4—Controls and Procedures	8379

PART II—OTHER INFORMATION

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	8380

Item 6—Exhibits	8480

Signatures	8581

Part I. Financial Information

Item 1. Unaudited Condensed Consolidated Financial Statements

IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, except Share and Per Share Data)

(Unaudited)


	December 31, 2017			June 30, 2018			June 30, 2019			December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents	$	925,699		$	188,192		$	161,996		$	165,485
Accounts receivable (less allowances of $46,648 and $48,727 as of December 31, 2017 and June 30, 2018, respectively)	835,742			867,041
Accounts receivable (less allowances of $41,305 and $43,584 as of June 30, 2019 and December 31, 2018, respectively)							852,330			846,889
Prepaid expenses and other	188,874			189,101			200,777			195,740
Total Current Assets	1,950,315			1,244,334			1,215,103			1,208,114
Property, Plant and Equipment:
Property, plant and equipment	6,251,100			7,383,554			7,840,423			7,600,949
Less—Accumulated depreciation	(2,833,421		)	(2,977,067		)	(3,281,864		)	(3,111,392		)
Property, Plant and Equipment, Net	3,417,679			4,406,487			4,558,559			4,489,557
Other Assets, Net:
Goodwill	4,070,267			4,466,634			4,473,424			4,441,030
Customer relationships, customer inducements and data center lease-based intangibles	1,400,547			1,530,549			1,467,025			1,506,522
Operating lease right-of-use assets (see Note 2.d.)							1,793,807			—
Other	133,594			164,530			213,064			211,995
Total Other Assets, Net	5,604,408			6,161,713			7,947,320			6,159,547
Total Assets	$	10,972,402		$	11,812,534		$	13,720,982		$	11,857,218
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	146,300		$	123,818		$	123,527		$	126,406
Accounts payable	289,137			293,293			303,988			318,765
Accrued expenses	653,146			599,811
Accrued expenses and other current liabilities (includes current portion of operating lease liabilities, see Note 2.d.)							920,493			780,781
Deferred revenue	241,590			256,181			268,779			264,823
Total Current Liabilities	1,330,173			1,273,103			1,616,787			1,490,775
Long-term Debt, net of current portion	6,896,971			7,961,761			8,390,183			8,016,417
Long-term Operating Lease Liabilities, net of current portion (see Note 2.d.)							1,655,477			—
Other Long-term Liabilities	73,039			119,095			131,909			111,331
Deferred Rent	126,231			120,952
Deferred Rent (see Note 2.d.)							—			121,864
Deferred Income Taxes	155,728			184,836			194,532			183,836
Commitments and Contingencies (see Note 8)
Commitments and Contingencies (see Note 7)
Redeemable Noncontrolling Interests	91,418			95,340			73,113			70,532
Equity:
Iron Mountain Incorporated Stockholders' Equity:
Preferred stock (par value $0.01; authorized 10,000,000 shares; none issued and outstanding)	—			—			—			—
Common stock (par value $0.01; authorized 400,000,000 shares; issued and outstanding 283,110,183 shares and 286,099,227 shares as of December 31, 2017 and June 30, 2018, respectively)	2,831			2,861
Common stock (par value $0.01; authorized 400,000,000 shares; issued and outstanding 287,061,769 and 286,321,009 shares as of June 30, 2019 and December 31, 2018, respectively)							2,870			2,863
Additional paid-in capital	4,164,562			4,256,894			4,281,584			4,263,348
(Distributions in excess of earnings) Earnings in excess of distributions	(1,765,966		)	(1,996,365		)	(2,364,812		)	(2,139,493		)
Accumulated other comprehensive items, net	(103,989		)	(207,450		)	(261,821		)	(265,664		)
Total Iron Mountain Incorporated Stockholders' Equity	2,297,438			2,055,940			1,657,821			1,861,054
Noncontrolling Interests	1,404			1,507			1,160			1,409
Total Equity	2,298,842			2,057,447			1,658,981			1,862,463
Total Liabilities and Equity	$	10,972,402		$	11,812,534		$	13,720,982		$	11,857,218

The accompanying notes are an integral part of these condensed consolidated financial statements.

IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, except Per Share Data)

(Unaudited)


	Three Months Ended June 30,						Three Months Ended June 30,
	2017			2018			2019			2018
Revenues:
Storage rental	$	590,239		$	655,439		$	669,288		$	655,439
Service	359,567			405,384			397,619			405,384
Total Revenues	949,806			1,060,823			1,066,907			1,060,823
Operating Expenses:
Cost of sales (excluding depreciation and amortization)	414,284			451,464			465,102			451,464
Selling, general and administrative	237,445			250,326			252,764			252,225
Depreciation and amortization	128,099			156,220			164,331			156,220
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net	(216		)	(546		)
(Gain) Loss on disposal/write-down of property, plant and equipment, net (see Notes 2.j. and 2.m.)							(8,405		)	(546		)
Total Operating Expenses	779,612			857,464			873,792			859,363
Operating Income (Loss)	170,194			203,359			193,115			201,460
Interest Expense, Net (includes Interest Income of $5,797 and $2,280 for the three months ended June 30, 2017 and 2018, respectively)	89,966			102,107
Interest Expense, Net (includes Interest Income of $1,461 and $2,280 for the three months ended June 30, 2019 and 2018, respectively)							105,314			102,196
Other (Income) Expense, Net	(19,366		)	(19,056		)	(15,192		)	(19,056		)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes and Gain on Sale of Real Estate	99,594			120,308
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes							102,993			118,320
Provision (Benefit) for Income Taxes	18,009			26,405			10,646			26,057
Gain on Sale of Real Estate, Net of Tax	(1,563		)	—
Income (Loss) from Continuing Operations	83,148			93,903			92,347			92,263
(Loss) Income from Discontinued Operations, Net of Tax	(2,026		)	(360		)
Income (Loss) from Discontinued Operations, Net of Tax							128			(360		)
Net Income (Loss)	81,122			93,543			92,475			91,903
Less: Net Income (Loss) Attributable to Noncontrolling Interests	2,492			142			34			142
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	78,630		$	93,401		$	92,441		$	91,761
Earnings (Losses) per Share—Basic:
Income (Loss) from Continuing Operations	$	0.31		$	0.33		$	0.32		$	0.32
Total (Loss) Income from Discontinued Operations, Net of Tax	$	(0.01	)	$	—
Total Income (Loss) from Discontinued Operations, Net of Tax							$	—		$	—
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	0.30		$	0.33		$	0.32		$	0.32
Earnings (Losses) per Share—Diluted:
Income (Loss) from Continuing Operations	$	0.30		$	0.33		$	0.32		$	0.32
Total (Loss) Income from Discontinued Operations, Net of Tax	$	(0.01	)	$	—
Total Income (Loss) from Discontinued Operations, Net of Tax							$	—		$	—
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	0.30		$	0.33		$	0.32		$	0.32
Weighted Average Common Shares Outstanding—Basic	264,217			285,984			286,925			285,984
Weighted Average Common Shares Outstanding—Diluted	264,930			286,569			287,481			286,569
Dividends Declared per Common Share	$	0.5504		$	0.5877

The accompanying notes are an integral part of these condensed consolidated financial statements.

IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, except Per Share Data)

(Unaudited)


	Six Months Ended June 30,						Six Months Ended June 30,
	2017			2018			2019			2018
Revenues:
Storage rental	$	1,162,518		$	1,306,588		$	1,332,262		$	1,306,588
Service	726,164			796,693			788,508			796,693
Total Revenues	1,888,682			2,103,281			2,120,770			2,103,281
Operating Expenses:
Cost of sales (excluding depreciation and amortization)	840,991			900,185			926,646			900,185
Selling, general and administrative	477,611			520,056			523,323			529,395
Depreciation and amortization	252,806			316,798			326,814			316,798
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net	(675		)	(1,676		)
(Gain) Loss on disposal/write-down of property, plant and equipment, net (see Notes 2.j. and 2.m.)							(7,803		)	(1,676		)
Total Operating Expenses	1,570,733			1,735,363			1,768,980			1,744,702
Operating Income (Loss)	317,949			367,918			351,790			358,579
Interest Expense, Net (includes Interest Income of $8,090 and $3,666 for the six months ended June 30, 2017 and 2018, respectively)	176,021			199,733
Other (Income) Expense, Net	(25,730		)	1,095
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes and Gain on Sale of Real Estate	167,658			167,090
Interest Expense, Net (includes Interest Income of $3,246 and $3,666 for the six months ended June 30, 2019 and 2018, respectively)							207,750			199,898
Other Expense (Income), Net							18			1,095
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes							144,022			157,586
Provision (Benefit) for Income Taxes	27,229			27,573			21,199			25,934
Gain on Sale of Real Estate, Net of Tax	(1,563		)	—
Income (Loss) from Continuing Operations	141,992			139,517			122,823			131,652
(Loss) Income from Discontinued Operations, Net of Tax	(2,363		)	(822		)
Income (Loss) from Discontinued Operations, Net of Tax							104			(822		)
Net Income (Loss)	139,629			138,695			122,927			130,830
Less: Net Income (Loss) Attributable to Noncontrolling Interests	2,874			610			925			610
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	136,755		$	138,085		$	122,002		$	130,220
Earnings (Losses) per Share—Basic:
Income (Loss) from Continuing Operations	$	0.53		$	0.49		$	0.43		$	0.46
Total (Loss) Income from Discontinued Operations, Net of Tax	$	(0.01	)	$	—
Total Income (Loss) from Discontinued Operations, Net of Tax							$	—		$	—
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	0.52		$	0.48		$	0.43		$	0.46
Earnings (Losses) per Share—Diluted:
Income (Loss) from Continuing Operations	$	0.53		$	0.49		$	0.42		$	0.46
Total (Loss) Income from Discontinued Operations, Net of Tax	$	(0.01	)	$	—
Total Income (Loss) from Discontinued Operations, Net of Tax							$	—		$	—
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	0.52		$	0.48		$	0.42		$	0.45
Weighted Average Common Shares Outstanding—Basic	264,036			285,622			286,727			285,622
Weighted Average Common Shares Outstanding—Diluted	264,870			286,282			287,487			286,282
Dividends Declared per Common Share	$	1.1008		$	1.1765

The accompanying notes are an integral part of these condensed consolidated financial statements.

IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

(Unaudited)


	Three Months Ended June 30,					Three Months Ended June 30,
	2017		2018			2019			2018
Net Income (Loss)	$	81,122	$	93,543		$	92,475		$	91,903
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments	7,538		(139,172		)
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustment						(5,791		)	(139,172		)
Change in Fair Value of Interest Rate Swap Agreements	—		2,388			(4,931		)	2,388
Total Other Comprehensive Income (Loss)	7,538		(136,784		)
Total Other Comprehensive (Loss) Income						(10,722		)	(136,784		)
Comprehensive Income (Loss)	88,660		(43,241		)	81,753			(44,881		)
Comprehensive Income (Loss) Attributable to Noncontrolling Interests	2,381		(3,274		)	173			(3,274		)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated	$	86,279	$	(39,967	)	$	81,580		$	(41,607	)


	Six Months Ended June 30,					Six Months Ended June 30,
	2017		2018			2019			2018
Net Income (Loss)	$	139,629	$	138,695		$	122,927		$	130,830
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments	58,322		(107,521		)
Foreign Currency Translation Adjustment						12,400			(107,521		)
Change in Fair Value of Interest Rate Swap Agreements	—		2,203			(7,605		)	2,203
Total Other Comprehensive Income (Loss)	58,322		(105,318		)	4,795			(105,318		)
Comprehensive Income (Loss)	197,951		33,377			127,722			25,512
Comprehensive Income (Loss) Attributable to Noncontrolling Interests	2,213		(1,247		)	1,877			(1,247		)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated	$	195,738	$	34,624		$	125,845		$	26,759

The accompanying notes are an integral part of these condensed consolidated financial statements.

IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In Thousands, except Share Data)

(Unaudited)

Iron Mountain Incorporated Stockholders' Equity
Common Stock
Additional
Paid-in Capital
(Distributions in Excess of Earnings) Earnings in Excess of Distributions
Noncontrolling
Interests

Total Shares Amounts Accumulated
Other
Comprehensive
Items, Net Redeemable Noncontrolling Interests
Balance, December 31, 2016 $ 1,936,671
263,682,670
$ 2,636
$ 3,489,795
$ (1,343,311 ) $ (212,573 ) $ 124
$ 54,697
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation 16,150
696,938
8
16,142
—
—
—
—
Change in value of redeemable noncontrolling interests (918 ) —
—
(918 ) —
—
—
918
Parent cash dividends declared (291,729 ) —
—
—
(291,729 ) —
—
—
Foreign currency translation adjustment 58,870
—
—
—
—
58,983
(113 ) (548 )
Net income (loss) 138,870
—
—
—
136,755
—
2,115
759
Noncontrolling interests equity contributions —
—
—
—
—
—
—
13,230
Noncontrolling interests dividends (1,956 ) —
—
—
—
—
(1,956 ) (972 )
Purchase of noncontrolling interests 1,339
—
—
—
—
—
1,339
—
Balance, June 30, 2017 $ 1,857,297
264,379,608
$ 2,644
$ 3,505,019
$ (1,498,285 ) $ (153,590 ) $ 1,509
$ 68,084

Iron Mountain Incorporated Stockholders' Equity
Common Stock
Additional
Paid-in Capital
(Distributions in Excess of Earnings) Earnings in Excess of Distributions
Noncontrolling
Interests

Total Shares Amounts Accumulated
Other
Comprehensive
Items, Net Redeemable Noncontrolling Interests
Balance, December 31, 2017 $ 2,298,842
283,110,183
$ 2,831
$ 4,164,562
$ (1,765,966 ) $ (103,989 ) $ 1,404
$ 91,418
Cumulative-effect adjustment for adoption of ASU 2014-09 (see Note 2.c.) (30,233 ) —
—
—
(30,233 ) —
—
—
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation 13,805
540,558
6
13,799
—
—
—
—
Issuance of shares associated with the Over-Allotment Option, net of underwriting discounts and offering expenses (see Note 9) 76,192
2,175,000
22
76,170
—
—
—
—
Issuance of shares through the At the Market (ATM) Equity Program, net of underwriting discounts and offering expenses (see Note 9) 8,716
273,486
2
8,714
—
—
—
—
Change in value of redeemable noncontrolling interests (6,351 ) —
—
(6,351 ) —
—
—
6,351
Parent cash dividends declared (338,251 ) —
—
—
(338,251 ) —
—
—
Foreign currency translation adjustment (105,512 ) —
—
—
—
(105,664 ) 152
(2,009 )
Change in fair value of interest rate swap agreements 2,203
—
—
—
—
2,203
—

Net income (loss) 138,036
—
—
—
138,085
—
(49 ) 659
Noncontrolling interests dividends —
—
—
—
—
—
—
(1,079 )
Balance, June 30, 2018 $ 2,057,447
286,099,227
$ 2,861
$ 4,256,894
$ (1,996,365 ) $ (207,450 ) $ 1,507
$ 95,340



Three Month Period Ended June 30, 2019
				Iron Mountain Incorporated Stockholders' Equity
				Common Stock			Additional Paid-in Capital			(Distributions in Excess of Earnings) Earnings in Excess of Distributions						Noncontrolling Interests
	Total			Shares	Amounts		Additional Paid-in Capital						Accumulated Other Comprehensive Items, Net			Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, March 31, 2019	$	1,737,608		286,829,854	$	2,868	$	4,264,978		$	(2,280,611	)	$	(250,960	)	$	1,333		$	73,102
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation	16,774			231,915	2		16,772			—			—			—			—
Change in equity related to redeemable noncontrolling interests	(166		)	—	—		(166		)	—			—			—			166
Parent cash dividends declared (see Note 8)	(176,642		)	—	—		—			(176,642		)	—			—			—
Foreign currency translation adjustment	(5,930		)	—	—		—			—			(5,930		)	—			139
Change in fair value of interest rate swap agreements	(4,931		)	—	—		—			—			(4,931		)	—			—
Net income (loss)	92,268			—	—		—			92,441			—			(173		)	207
Noncontrolling interests dividends	—			—	—		—			—			—			—			(501		)
Balance, June 30, 2019	$	1,658,981		287,061,769	$	2,870	$	4,281,584		$	(2,364,812	)	$	(261,821	)	$	1,160		$	73,113

Six Month Period Ended June 30, 2019
				Iron Mountain Incorporated Stockholders' Equity
				Common Stock			Additional Paid-in Capital			(Distributions in Excess of Earnings) Earnings in Excess of Distributions						Noncontrolling Interests
	Total			Shares	Amounts		Additional Paid-in Capital						Accumulated Other Comprehensive Items, Net			Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, December 31, 2018	$	1,862,463		286,321,009	$	2,863	$	4,263,348		$	(2,139,493	)	$	(265,664	)	$	1,409		$	70,532
Cumulative-effect adjustment for adoption of ASU 2016-02 (see Note 2.d.)	5,781			—	—		—			5,781			—			—			—
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation	19,697			740,760	7		19,690			—			—			—			—
Change in equity related to redeemable noncontrolling interests	(1,454		)	—	—		(1,454		)	—			—			—			1,454
Parent cash dividends declared (see Note 8)	(353,102		)	—	—		—			(353,102		)	—			—			—
Foreign currency translation adjustment	11,448			—	—		—			—			11,448			—			952
Change in fair value of interest rate swap agreements	(7,605		)	—	—		—			—			(7,605		)	—			—
Net income (loss)	121,753			—	—		—			122,002			—			(249		)	1,174
Noncontrolling interests dividends	—			—	—		—			—			—			—			(999		)
Balance, June 30, 2019	$	1,658,981		287,061,769	$	2,870	$	4,281,584		$	(2,364,812	)	$	(261,821	)	$	1,160		$	73,113

The accompanying notes are an integral part of these condensed consolidated financial statements.

IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In Thousands, except Share Data)

(Unaudited)



Three Month Period Ended June 30, 2018
				Iron Mountain Incorporated Stockholders' Equity
				Common Stock			Additional Paid-in Capital			(Distributions in Excess of Earnings) Earnings in Excess of Distributions						Noncontrolling Interests
	Total			Shares	Amounts		Additional Paid-in Capital						Accumulated Other Comprehensive Items, Net			Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, March 31, 2018	$	2,241,342		285,923,405	$	2,859	$	4,250,757		$	(1,939,720	)	$	(74,082	)	$	1,528		$	92,877
Cumulative-effect adjustment for adoption of ASU 2014-09 (see Note 2.c.)	(772		)	—	—		—			(772		)	—			—			—
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation	12,373			175,822	2		12,371			—			—			—			—
Change in value of redeemable noncontrolling interests	(6,234		)	—	—		(6,234		)	—			—			—			6,234
Parent cash dividends declared (see Note 8)	(169,207		)	—	—		—			(169,207		)	—			—			—
Foreign currency translation adjustment	(135,758		)	—	—		—			—			(135,756		)	(2		)	(3,414		)
Change in fair value of interest rate swap agreements	2,388			—	—		—			—			2,388			—			—
Net income (loss)	91,742			—	—		—			91,761			—			(19		)	161
Noncontrolling interests dividends	—			—	—		—			—			—			—			(518		)
Balance, June 30, 2018	$	2,035,874		286,099,227	$	2,861	$	4,256,894		$	(2,017,938	)	$	(207,450	)	$	1,507		$	95,340

Six Month Period Ended June 30, 2018
				Iron Mountain Incorporated Stockholders' Equity
				Common Stock			Additional Paid-in Capital			(Distributions in Excess of Earnings) Earnings in Excess of Distributions						Noncontrolling Interests
	Total			Shares	Amounts		Additional Paid-in Capital						Accumulated Other Comprehensive Items, Net			Noncontrolling Interests			Redeemable Noncontrolling Interests
Balance, December 31, 2017	$	2,285,134		283,110,183	$	2,831	$	4,164,562		$	(1,779,674	)	$	(103,989	)	$	1,404		$	91,418
Cumulative-effect adjustment for adoption of ASU 2014-09 (see Note 2.c.)	(30,233		)	—	—		—			(30,233		)	—			—			—
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation	13,805			540,558	6		13,799			—			—			—			—
Issuance of shares associated with the Over-Allotment Option, net of underwriting discounts and offering expenses (see Note 12 to Notes to Consolidated Financial Statements included in our Annual Report)	76,192			2,175,000	22		76,170			—			—			—			—
Issuance of shares through the At the Market (ATM) Equity Program, net of underwriting discounts and offering expenses (see Note 8)	8,716			273,486	2		8,714			—			—			—
Change in value of redeemable noncontrolling interests	(6,351		)	—	—		(6,351		)	—			—			—			6,351
Parent cash dividends declared (see Note 8)	(338,251		)	—	—		—			(338,251		)	—			—			—
Foreign currency translation adjustment	(105,512		)	—	—		—			—			(105,664		)	152			(2,009		)
Change in fair value of interest rate swap agreements	2,203			—	—		—			—			2,203			—			—
Net income (loss)	130,171			—	—		—			130,220			—			(49		)	659
Noncontrolling interests dividends	—			—	—		—			—			—			—			(1,079		)
Balance, June 30, 2018	$	2,035,874		286,099,227	$	2,861	$	4,256,894		$	(2,017,938	)	$	(207,450	)	$	1,507		$	95,340

The accompanying notes are an integral part of these condensed consolidated financial statements.

IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)


	Six Months Ended June 30,						Six Months Ended June 30,
	2017			2018			2019			2018
Cash Flows from Operating Activities:
Net income (loss)	$	139,629		$	138,695		$	122,927		$	130,830
Loss (Income) from discontinued operations	2,363			822
Loss (income) from discontinued operations							(104		)	822
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation	201,907			224,933			228,333			224,933
Amortization (includes amortization of deferred financing costs and discounts of $7,875 and $7,580 for the six months ended June 30, 2017 and 2018, respectively)	58,774			99,445
Revenue reduction associated with amortization of permanent withdrawal fees and above- and below-market leases (see Note 2.b.)	5,906			7,925
Amortization (includes amortization of deferred financing costs and discounts of $8,208 and $7,580 for the six months ended June 30, 2019 and 2018, respectively)							106,689			99,445
Revenue reduction associated with amortization of customer inducements and above- and below-market leases							7,178			7,925
Stock-based compensation expense	15,092			16,073			21,020			16,073
(Benefit) provision for deferred income taxes	(9,536		)	898
(Gain) loss on disposal/write-down of property, plant and equipment, net (including real estate)	(2,238		)	(1,676		)
Gain on Russia and Ukraine Divestment (see Note 10)	(38,869		)	—
Provision (benefit) for deferred income taxes							2,753			(741		)
(Gain) loss on disposal/write-down of property, plant and equipment, net (see Note 2.j.)							(7,803		)	(1,676		)
Foreign currency transactions and other, net	23,508			497			(7,505		)	497
(Increase) decrease in assets	(69,036		)	(54,729		)	(53,038		)	(54,729		)
(Decrease) increase in liabilities	(5,460		)	(39,077		)
Increase (decrease) in liabilities							9,281			(29,573		)
Cash Flows from Operating Activities - Continuing Operations	322,040			393,806			429,731			393,806
Cash Flows from Operating Activities - Discontinued Operations	(2,363		)	(477		)	—			(477		)
Cash Flows from Operating Activities	319,677			393,329			429,731			393,329
Cash Flows from Investing Activities:
Capital expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations)	(165,207		)	(217,601		)	(367,131		)	(217,601		)
Cash paid for acquisitions, net of cash acquired	(38,223		)	(1,666,869		)	(44,651		)	(1,666,869		)
Acquisition of customer relationships	(21,037		)	(23,383		)	(33,375		)	(23,383		)
Customer inducements (see Note 2.b.)	(7,473		)	(4,041		)
Contract fulfillment costs (see Note 2.c.)	—			(9,809		)
Net proceeds from divestments	2,423			—
Proceeds from sales of property and equipment and other, net (including real estate)	8,547			207
Customer inducements							(5,841		)	(4,041		)
Contract fulfillment costs and third-party commissions							(51,346		)	(9,809		)
Investments in joint ventures (see Note 9)							(19,222		)	—
Proceeds from sales of property and equipment and other, net							46,832			207
Cash Flows from Investing Activities - Continuing Operations	(220,970		)	(1,921,496		)	(474,734		)	(1,921,496		)
Cash Flows from Investing Activities - Discontinued Operations	—			—			5,061			—
Cash Flows from Investing Activities	(220,970		)	(1,921,496		)	(469,673		)	(1,921,496		)
Cash Flows from Financing Activities:
Repayment of revolving credit, term loan facilities and other debt	(5,751,416		)	(7,876,796		)
Proceeds from revolving credit, term loan facilities and other debt	5,494,125			8,944,416
Net proceeds from sales of senior notes	332,683			—
Debt financing and equity contribution from noncontrolling interests	13,230			—
Repayment of revolving credit facility, term loan facilities and other debt							(2,602,922		)	(7,876,796		)
Proceeds from revolving credit facility, term loan facilities and other debt							2,998,107			8,944,416
Debt repayment and equity distribution to noncontrolling interests	(3,079		)	(1,079		)	(999		)	(1,079		)
Parent cash dividends	(147,393		)	(337,052		)	(353,357		)	(337,052		)
Net proceeds associated with the Over-Allotment Option (see Note 9)	—			76,192
Net proceeds associated with the Over-Allotment Option							—			76,192
Net proceeds associated with the At the Market (ATM) Program	—			8,716			—			8,716
Net proceeds (payments) associated with employee stock-based awards	810			(2,259		)
Net (payments) proceeds associated with employee stock-based awards							(1,727		)	(2,259		)
Payment of debt financing and stock issuance costs	(544		)	(13,385		)	—			(13,385		)
Cash Flows from Financing Activities - Continuing Operations	(61,584		)	798,753			39,102			798,753
Cash Flows from Financing Activities - Discontinued Operations	—			—			—			—
Cash Flows from Financing Activities	(61,584		)	798,753			39,102			798,753
Effect of Exchange Rates on Cash and Cash Equivalents	17,412			(8,093		)	(2,649		)	(8,093		)
Increase (Decrease) in Cash and Cash Equivalents	54,535			(737,507		)
(Decrease) Increase in Cash and Cash Equivalents							(3,489		)	(737,507		)
Cash and Cash Equivalents, including Restricted Cash, Beginning of Period	236,484			925,699			165,485			925,699
Cash and Cash Equivalents, including Restricted Cash, End of Period	$	291,019		$	188,192		$	161,996		$	188,192

Supplemental Information:
Cash Paid for Interest	$	177,303		$	185,804		$	201,602		$	185,804
Cash Paid for Income Taxes, Net	$	55,922		$	33,858		$	38,302		$	33,858
Non-Cash Investing and Financing Activities:
Capital Leases	$	57,383		$	34,260
Financing Leases (see Note 2.d.)							$	13,662		$	34,260
Accrued Capital Expenditures	$	79,775		$	49,320		$	66,154		$	49,320
Accrued Purchase Price and Other Holdbacks	$	—		$	26,089		$	2,394		$	26,089
Fair Value of Initial OSG Investment (see Note 10)	$	18,000		$	—
Increase (decrease) in Fair Value of OSG Investment (see Note 10)	$	—		$	(94	)
Dividends Payable	$	149,961		$	173,301		$	181,731		$	173,301

The accompanying notes are an integral part of these condensed consolidated financial statements.

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(1) General

The interim condensed consolidated financial statements are presented herein and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair presentation. Interim results are not necessarily indicative of results for a full year. Iron Mountain Incorporated, a Delaware corporation ("IMI"), and its subsidiaries ("we" or "us") ~~store records, primarily~~provide storage of physical records and data backup media, ~~provide~~information management solutions and enterprise-class colocation and wholesale data center ~~spaces and provide information management and data center solutions~~space that help organizations in various locations throughout North America, Europe, Latin America, Asia and ~~Africa protect their~~Africa. We offer comprehensive records and information ~~lower~~management services and data management services, along with the expertise and experience to address complex storage and information management challenges such as rising storage rental costs, ~~comply with regulations, facilitate corporate~~legal and regulatory compliance and disaster recovery requirements. We provide secure and ~~better use their~~reliable data center facilities to protect digital information and ensure the continued operation of our customers’ information technology ~~("IT")~~ infrastructure, for business advantages, regardless of its format, location or life cycle stage. We currently serve customers across an array of market verticals - commercial, legal, financial, healthcare, insurance, life sciences, energy, business services, entertainmentwith flexible deployment options, including both colocation and ~~government organizations.~~wholesale space.

The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted pursuant to those rules and regulations, but we believe that the disclosures included herein are adequate to make the information presented not misleading. The Condensed Consolidated Financial Statements and Notes thereto, which are included herein, should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended December 31, ~~2017~~2018 included in our Annual Report on Form 10-K filed with the SEC on February ~~16, 2018~~14, 2019 (our "Annual Report").

We have been organized and have operated as a real estate investment trust for United States federal income tax purposes ("REIT") beginning with our taxable year ended December 31, 2014.

~~On January 1, 2018, we adopted Accounting Standards Update ("ASU") No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~("ASU 2014-09"). See Note 2.c.~~

On January 10, 2018, we completed the acquisition of IO Data Centers, LLC ("IODC") (the "IODC Transaction"). See Note 4.3.

On January 1, 2019, we adopted Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), as amended ("ASU 2016-02"). See Note 2.d.

(2) 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, 2019 and December 31, ~~2017 and June 30,~~ 2018, we had approximately ~~$22,167~~$9,059 and ~~$17,703,~~$15,141, respectively, of restricted cash held by certain financial institutions related to bank guarantees.

910

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

b. Goodwill and Other Intangible Assets and Liabilities

Goodwill

Since December 31, ~~2017,~~2018, there have been no changes to our accounting polices related to the accounting for goodwill. As of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018, no factors were identified that would alter our October 1, ~~2017~~2018 goodwill impairment analysis. ~~When changes occur in the composition of one or more reporting units, the goodwill is reassigned to the reporting units affected based on their relative fair values.~~

Our reporting units as of December 31, ~~2017~~2018 are described in detail in Note 2.h. to Notes to Consolidated Financial Statements included in our Annual Report. On March 19, 2019, we divested the business included in our former Consumer Storage reporting unit, which had no goodwill associated with it at December 31, 2018 or at the date of the divestment. See Note 9 for additional information.

The goodwill associated with acquisitions completed during the first six months of ~~2018~~2019 (which are described in Note 4)3) has been incorporated into our reporting units as they existed as of December 31, ~~2017.~~2018.

~~During the first quarter of 2018, as a result of~~The changes in the ~~management~~carrying value of ~~our businesses included in our Other International Business~~goodwill attributable to each reportable operating segment ~~we reassessed~~for the composition of our reporting units. As a result of this reassessment, we determined that our business in South Africa, which was previously being managed in conjunction with our businesses in Northern and Eastern Europe and Middle East and Indiasix months ended June 30, 2019 are as a part of our former Northern and Eastern Europe and Middle East, Africa and India (“NEE and MEAI”) reporting unit, was now being managed in conjunction with our businesses included in our Australia and New Zealand reporting unit. This newly formed reporting unit, which consists of (i) the businesses included in our former Australia and New Zealand reporting unit and (ii) our business in South Africa is referred to as the Australia, New Zealand and South Africa (“ANZ-SA”) reporting unit. The former NEE and MEAI reporting unit is now referred to as the Northern and Eastern Europe and Middle East and India ("NEE and MEI") reporting unit.follows:



	North American Records and Information Management Business		North American Data Management Business		Western European Business			Other International Business		Global Data Center Business		Corporate and Other Business			Total Consolidated
Goodwill balance, net of accumulated amortization as of December 31, 2018	$	2,251,795	$	493,491	$	381,806		$	818,223	$	425,956	$	69,759		$	4,441,030
Deductible goodwill acquired during the year	5,501		—		—			2,758		—		—			8,259
Non-deductible goodwill acquired during the year	—		—		5,011			4,387		—		1,904			11,302
Fair value and other adjustments(1)	55		—		959			2,842		258		(422		)	3,692
Currency effects	7,704		2,093		(2,851		)	1,907		193		95			9,141
Goodwill balance, net accumulated amortization as of June 30, 2019	$	2,265,055	$	495,584	$	384,925		$	830,117	$	426,407	$	71,336		$	4,473,424
Accumulated Goodwill Impairment Balance as of December 31, 2018	$	85,909	$	—	$	46,500		$	—	$	—	$	3,011		$	135,420
Accumulated Goodwill Impairment Balance as of June 30, 2019	$	85,909	$	—	$	46,500		$	—	$	—	$	3,011		$	135,420


(1)	Total fair value and other adjustments primarily include $3,755 in net adjustments related to property, plant and equipment, customer relationships and data center lease-based intangible assets and deferred income taxes and other liabilities offset by $63 of cash received related to certain acquisitions completed in 2018.

1011

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

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 (which include data center in-place lease intangible assets, data center tenant relationship intangible assets, data center above-market in-place lease intangible assets and data center below-market in-place lease intangible assets). Since December 31, 2018, 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 ~~changes in the~~gross carrying ~~value~~amount and accumulated amortization of ~~goodwill attributable to each reportable operating segment for the six months ended~~our finite-lived intangible assets as of June 30, 2019 and December 31, 2018 are as follows:

North American
Records and Information
Management
Business North American
Data
Management
Business
Western
European Business
Other International Business Global Data Center Business Corporate and Other Business Total
Consolidated
Gross Balance as of December 31, 2017 $ 2,474,829
$ 551,726
$ 453,537
$ 846,721
$ —
$ 60,048
$ 4,386,861
Non-deductible goodwill acquired during the year —
—
—
5,330
443,368
—
448,698
Fair value and other adjustments(1) (376 ) —
—
7,797
—
4,704
12,125
Currency effects (9,257 ) (2,527 ) (9,353 ) (43,373 ) (2 ) (590 ) (65,102 )
Gross Balance as of June 30, 2018 $ 2,465,196
$ 549,199
$ 444,184
$ 816,475
$ 443,366
$ 64,162
$ 4,782,582
Accumulated Amortization Balance as of December 31, 2017 $ 205,383
$ 53,875
$ 57,048

$ 288
$ —
$ —
$ 316,594
Currency effects (327 ) (82 ) (237 ) —
—
—
(646 )
Accumulated Amortization Balance as of June 30, 2018 $ 205,056
$ 53,793
$ 56,811
$ 288
$ —
$ —
$ 315,948
Net Balance as of December 31, 2017 $ 2,269,446
$ 497,851
$ 396,489
$ 846,433
$ —
$ 60,048
$ 4,070,267
Net Balance as of June 30, 2018 $ 2,260,140
$ 495,406
$ 387,373
$ 816,187
$ 443,366
$ 64,162
$ 4,466,634
Accumulated Goodwill Impairment Balance as of December 31, 2017 $ 85,909
$ —
$ 46,500
$ —
$ —
$ 3,011
$ 135,420
Accumulated Goodwill Impairment Balance as of June 30, 2018 $ 85,909
$ —
$ 46,500
$ —
$ —
$ 3,011
$ 135,420



	June 30, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Assets:
Customer relationship intangible assets	$	1,766,769	$	(511,672	)	$	1,255,097	$	1,718,919	$	(455,705	)	$	1,263,214
Customer inducements	52,542		(29,091		)	23,451		56,478		(34,181		)	22,297
Data center lease-based intangible assets(1)	266,263		(77,786		)	188,477		271,818		(50,807		)	221,011
Third-party commissions asset(2)	31,391		(1,874		)	29,517		30,071		(1,089		)	28,982
	$	2,116,965	$	(620,423	)	$	1,496,542	$	2,077,286	$	(541,782	)	$	1,535,504
Liabilities:
Data center below-market leases	$	12,765	$	(2,954	)	$	9,811	$	12,318	$	(1,642	)	$	10,676


(1)	~~Total fair value and other adjustments include $12,125 in net adjustments primarily related to property, plant and equipment, customer~~Includes data center in-place lease intangible assets, data center tenant relationship intangible assets and ~~deferred income taxes and other liabilities.~~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, 2019 and December 31, 2018. 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 IODC, as described in Note 3.

Other finite-lived intangible assets, including trade names, noncompetition agreements and trademarks, are capitalized and amortized and are included in depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018. The other finite-lived intangible assets as of June 30, 2019 and December 31, 2018 are as follows:



	June 30, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Other finite-lived intangible assets (included in Other, a component of other assets, net)	$	19,960	$	(16,482	)	$	3,478	$	20,310	$	(14,798	)	$	5,512

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~Finite-lived~~Amortization expense associated with finite-lived intangible assets, ~~and liabilities~~

~~i. Customer Relationship Intangible Assets~~

~~Customer relationship intangible assets, which are acquired through either business combinations or acquisitions~~revenue reduction associated with the amortization of customer ~~relationships, are amortized over periods ranging from 10 to 30 years~~inducements and ~~are included in depreciation and amortization in~~net revenue reduction associated with the ~~accompanying Condensed Consolidated Statements of Operations. The value of customer relationship intangible assets is calculated based upon estimates of their fair value.~~

~~ii. Customer Inducements~~

Prior to the adoption of ASU 2014-09, free intake costs to transport boxes to one of our facilities, which include labor and transportation costs ("Free Move Costs"), were capitalized and amortized over periods ranging from 10 to 30 years. The amortization of ~~Free Move Costs is included in depreciation~~data center above-market leases and ~~amortization in the accompanying Condensed Consolidated Statements of Operations~~data center below-market leases for the three and six months ended June 30, ~~2017. Subsequent~~2019 and 2018 are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Amortization expense included in depreciation and amortization associated with:
Customer relationship and customer inducement intangible assets	$	28,283	$	28,813	$	56,164	$	57,619
Data center in-place leases and tenant relationships	11,372		7,563		23,981		18,401
Third-party commissions asset and other finite-lived intangible assets	2,184		1,659		2,941		2,844
Revenue reduction associated with amortization of:
Customer inducements	$	2,598	$	2,968	$	5,338	$	5,553
Data center above-market leases and data center below-market leases	935		1,293		1,840		2,372

c. Revenues

Since December 31, 2018, there have been no changes to the adoption of ASU 2014-09, Free Move Costs are considered a Contract Fulfillment Cost (as defined in Note 2.c.) and, therefore, are now deferred and amortized over three years, consistent with the transfer of the performance obligationour accounting policies related to ~~the customer to which the asset relates. See Note 2.c. for information regarding~~ the accounting for ~~Free Move Costs, which~~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, 2019 and December 31, 2018 are ~~now a component of~~as follows:



		June 30, 2019							December 31, 2018
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)	$	34,915	$	(19,398	)	$	15,517	$	39,748	$	(24,504	)	$	15,244
Capitalized commissions asset	Other (within Other Assets, Net)	48,564		(17,895		)	30,669		58,424		(34,637		)	23,787

Amortization expense associated with the Intake Costs ~~(as defined in Note 2.c.), following~~asset and capitalized commissions asset for the ~~adoption of ASU 2014-09.~~

~~Payments that~~three and six months ended June 30, 2019 and 2018 are made to a customer's current records management vendor in order to terminate the customer's existing contract with that vendor, or direct payments to a customer ("Permanent Withdrawal Fees"), are amortized over periods ranging from 5 to 15 years and are included in storage and service revenue in the accompanying Condensed Consolidated Statements of Operations. Our accounting for Permanent Withdrawal Fees did not change as ~~a result of the adoption of ASU 2014-09.~~

Free Move Costs (prior to the adoption of ASU 2014-09) and Permanent Withdrawal Fees are collectively referred to as "Customer Inducements". If the customer terminates its relationship with us, the unamortized carrying value of the Customer Inducement intangible asset is charged to expense or revenue. However, in the event of such termination, we generally collect, and record as income, permanent removal fees that generally equal or exceed the amount of the unamortized Customer Inducement intangible asset.

follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Intake Costs asset	$	2,835	$	2,891	$	5,514	$	5,621
Capitalized commissions asset	5,935		3,793		9,881		7,380

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~iii.~~ Deferred revenue liabilities are reflected as follows in our Condensed Consolidated Balance Sheets:



Description	Location in Balance Sheet	June 30, 2019		December 31, 2018
Deferred revenue - Current	Deferred revenue	$	268,779	$	264,823
Deferred revenue - Long-term	Other Long-term Liabilities	25,436		26,401

Data Center ~~Intangible Assets~~Lessor Considerations

Our data center business features storage rental provided to customers at contractually specified rates over a fixed contractual period. Prior to January 1, 2019, our data center revenue contracts were accounted for in accordance with Accounting Standards Codification (“ASC”) No. 840, Leases ("ASC 840"). On January 1, 2019, we adopted ASU 2016-02, as described in more detail in Note 2.d. Beginning on January 1, 2019, our data center revenue contracts will be accounted for in accordance with ASU 2016-02. ASU 2016-02 provides a practical expedient which allows lessors to account for nonlease components (such as power and ~~Liabilities~~

~~Finite-lived intangible assets~~connectivity, in the case of our data center business) with the related lease component if both the timing and pattern of transfer are the same for nonlease components and the lease component, and the lease component would be classified as an operating lease. The single combined component is accounted for under ASU 2016-02 if the lease component is the predominant component and is accounted for under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), if the nonlease components are the predominant components. We have elected to take this practical expedient. Storage rental revenue associated with our data center business ~~consist~~was $60,582 and $120,300 for the three and six months ended June 30, 2019, respectively, which includes approximately $9,900 and $19,000 of revenue associated with power and connectivity for the ~~following:~~

~~Data Center In-Place Lease Intangible AssetsandData Center Tenant Relationship Intangible Assets~~

~~Data Center In-Place Lease Intangible Assets (“Data Center In-Place Leases”)~~three and ~~Data Center Tenant Relationship Intangible Assets (“Data Center Tenant Relationships") are acquired through either business combinations or asset acquisitions in~~six months ended June 30, 2019, respectively. The revenue related to the service component of our data center ~~business. These intangible assets reflect~~business remains unchanged from the ~~value associated with acquiring a~~adoption of ASU 2016-02 and is recognized in the period the related services are provided. Our accounting treatment for data center ~~operation~~revenue was not significantly impacted by the adoption of ASU 2016-02.

The future minimum lease payments we expect to receive under non-cancellable data center operating leases, for which we are the lessor, excluding month to month leases, for the next five years are as follows:



	Future minimum lease payments
2019 (excluding the six months ended June 30, 2019)	$	103,016
2020	155,581
2021	111,945
2022	79,763
2023	61,684

d. 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. The majority of our leased facilities are classified as operating leases that, on average, have initial lease terms of five to 10 years, with ~~active tenants as~~one or more lease renewal options to extend the lease term. Our lease renewal option terms generally range from one to five years. The exercise of the ~~date of acquisition. The~~lease renewal option is at our sole discretion and may contain fixed rent, fair market value ~~of Data Center In-Place Leases is determined~~ based upon an estimate of the economic costs (such as lost revenues and unreimbursed operating expenses during the lease-up period, tenant improvement costs, commissions, legal expenses and other costs to acquire new data center leases) avoided by acquiring a data center operation with active tenants that would have otherwise been incurred if the data center operation was purchased vacant. Data Center In-Place Leases are amortized over the weighted average remaining term of the acquired data center leases and are included in depreciation and amortizationrent or Consumer Price Index rent escalation clauses. We include option periods in the ~~accompanying Condensed Consolidated Statements of Operations. The value of Data Center Tenant Relationships is determined based upon~~lease term when our failure to renew the lease would result in an ~~estimate of~~economic disincentive, thereby making it reasonably certain that we will renew the ~~economic costs avoided upon lease renewal of the acquired tenants, based upon expectations of lease renewal. Data Center Tenant Relationships are amortized~~lease. We recognize straight line rental expense over the ~~weighted average remaining anticipated~~ life of the ~~relationship with the acquired tenant~~lease and any fair market value or Consumer Price Index rent escalations are ~~included in depreciation and amortization~~recognized as variable lease expense in the ~~accompanying Condensed Consolidated Statements of Operations. Data Center In-Place Leases~~period in which the obligation is incurred. In addition, we lease certain vehicles and ~~Data Center Tenant Relationships are included in Customer relationships, customer inducements~~equipment. Vehicle and ~~data center lease-based intangibles in the accompanying Condensed Consolidated Balance Sheets.~~equipment leases have lease terms ranging from one to seven years.

~~Data Center Above-Market and Below-Market In-Place Lease Intangible Assets~~

Data Center Above-Market In-Place Lease Intangible Assets (“Data Center Above-Market Leases”) and Data Center Below-Market In-Place Lease Intangible Assets (“Data Center Below-Market Leases”) are acquired through either business combinations or asset acquisitions in our data center business. We record Data Center Above-Market Leases and Data Center Below-Market Leases at the net present value of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of the fair market lease rates for each corresponding in-place lease. Data Center Above-Market Leases and Data Center Below-Market Leases are amortized over the remaining non-cancellable term of the acquired in-place lease to storage revenue in the accompanying Condensed Consolidated Statements of Operations. Data Center Above-Market Leases are included in Customer relationships, customer inducements and data center lease-based intangibles in the accompanying Condensed Consolidated Balance Sheets. Data Center Below-Market Leases are included in Other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets.

1314

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~The components of our finite-lived intangible assets related~~In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842) which requires lessees to ~~customer relationship value, customer inducements and data center lease-based intangible~~recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases, both operating and financing (formerly referred to as capital leases under ASC 840). ASU 2016-02 requires certain qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.

We adopted ASU 2016-02 on January 1, 2019 on a modified retrospective basis under which we recognized and measured leases existing at, or entered into after, the beginning of the period of adoption. Therefore, we applied ASC 840 to all earlier comparative periods (prior to the adoption of ASU 2016-02), including disclosures, and recognized the effects of applying ASU 2016-02 as a cumulative-effect adjustment to retained earnings as of January 1, 2019, the effective date of the standard. As such, the comparative Condensed Consolidated Balance Sheet as of December 31, ~~2017~~2018 has not been restated to reflect the adoption of ASU 2016-02. Accordingly, the majority of the amount presented as deferred rent liabilities on our Consolidated Balance Sheet as of December 31, 2018 is now included in the calculation of operating lease right-of-use assets and any remaining amounts are now classified within other liability line items on our Condensed Consolidated Balance Sheet as of June 30, ~~2018 are as follows:~~

December 31, 2017 June 30, 2018
Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount
Assets:
Customer relationship intangible assets $ 1,704,105
$ (395,278 ) $ 1,308,827
$ 1,690,147
$ (436,076 ) $ 1,254,071
Customer inducements(1) 140,030
(66,981 ) 73,049
57,555
(35,430 ) 22,125
Data center lease-based intangible assets(2) 19,314
(643 ) 18,671
276,936
(22,583 ) 254,353
$ 1,863,449
$ (462,902 ) $ 1,400,547
$ 2,024,638
$ (494,089 ) $ 1,530,549
Liabilities:
Data center below-market leases $ —
$ —
$ —
$ 12,338
$ (761 ) $ 11,577

~~(1)~~

The gross carrying amount, accumulated amortization and net carrying amount of customer inducements as of December 31, 2017 includes Free Move Costs, which were capitalized as Customer Inducements prior to the adoption of ASU 2014-09. Subsequent to the adoption of ASU 2014-09, Free Move Costs are considered Contract Fulfillment Costs and Customer Inducements consist exclusively of Permanent Withdrawal Fees. Contract Fulfillment Costs are included in Other, a component of Other Assets, Net,2019. The transition guidance associated with ASU 2016-02 also permitted certain practical expedients. We elected the "package of 3" practical expedients permitted under the transition guidance which, among other things, allowed us to carryforward our historical lease classifications. We also adopted an accounting policy which provides that leases with an initial term of 12 months or less will not be included within the lease right-of-use assets and lease liabilities recognized on our Condensed Consolidated Balance Sheets after the adoption of ASU 2016-02. We will continue to recognize the lease payments for those leases with an initial term of 12 months or less in the accompanying Condensed Consolidated Balance Sheet as of June 30, 2018. See Note 2.c. for information regarding Contract Fulfillment Costs included in our Condensed Consolidated Balance Sheet as of June 30, 2018.


~~(2)~~	~~Includes Data Center In-Place Leases, Data Center Tenant Relationships and Data Center Above-Market Leases.~~

Other finite-lived intangible assets, including trade names, noncompetition agreements and trademarks, are capitalized and amortized over a weighted average of four years and are included in depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations on a straight-line basis over the lease term.

The lease right-of-use assets and related lease liabilities are classified as either operating or financing. Lease right-of-use assets are calculated as the net present value of future payments plus any capitalized initial direct costs less any tenant improvements or lease incentives. Lease liabilities are calculated as the net present value of future payments. In calculating the present value of the lease payments, we will utilize the rate stated within the lease (in the limited circumstances when such rate is available) or, if no rate is explicitly stated, we have elected to utilize a rate that reflects our securitized incremental borrowing rate by geography for the ~~three~~lease term. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements ("ASU 2018-11"). ASU 2018-11 provides a practical expedient which allows lessees to account for nonlease components (which include common area maintenance, taxes, and ~~six months ended June 30, 2017~~insurance) with the related lease component. Any variable nonlease components are not included within the lease right-of-use asset and ~~2018. The other finite-lived intangible assets~~lease liability on the Condensed Consolidated Balance Sheets, and instead, are reflected as an expense in the period incurred. We have elected to take this practical expedient upon adoption of ~~December 31, 2017 and June 30, 2018~~ASU 2016-02.

At January 1, 2019, we recognized the cumulative effect of initially applying ASU 2016-02 as an adjustment to the opening balance of (Distributions in excess of earnings) Earnings in excess of distributions, resulting in an increase of approximately $5,800 to stockholders' equity due to certain build to suit leases that were accounted for as financing leases under ASC 840, Leases,but are accounted for as ~~follows:~~operating leases under ASU 2016-02 at January 1, 2019.

December 31, 2017 June 30, 2018
Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount
Other finite-lived intangible assets (included in other assets, net) $ 20,929
$ (10,728 ) $ 10,201
$ 20,365
$ (12,611 ) $ 7,754

1415

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~Amortization expense associated with finite-lived intangible~~Operating and financing lease right-of-use assets ~~revenue reduction associated with the amortization~~and lease liabilities as of ~~Permanent Withdrawal Fees and net 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, ~~2017~~2019 and ~~2018~~January 1, 2019 (date of adoption of ASU 2016-02) are as follows:

Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2018 2017 2018
Amortization expense included in depreciation and amortization associated with:
Customer relationship and customer inducement intangible assets $ 24,611
$ 28,813
$ 47,410
$ 57,619
Data center in-place leases and tenant relationships —
7,563
—
18,401
Other finite-lived intangible assets 1,173
1,659
3,489
2,844
Revenue reduction associated with amortization of:
Permanent withdrawal fees $ 2,748
$ 2,968
$ 5,906
$ 5,553
Data center above-market leases and data center below-market leases —
1,293
—
2,372



Description	Location in Balance Sheet	June 30, 2019		January 1, 2019 (Date of Adoption of ASU 2016-02)
Assets:
Operating lease right-of-use assets(1)	Operating lease right-of-use assets	$	1,793,807	$	1,825,721
Financing lease right-of-use assets, net of accumulated depreciation(2)	Property, plant and equipment, net	344,320		361,078
Total		$	2,138,127	$	2,186,799

Liabilities:
Current
Operating lease liabilities	Accrued expenses and other current liabilities	$	212,968	$	209,911
Financing lease liabilities	Current portion of long-term debt	50,116		50,437
Total current lease liabilities		263,084		260,348
Long-term
Operating lease liabilities	Long-term operating lease liabilities, net of current portion	1,655,477		1,685,771
Financing lease liabilities	Long-term Debt, net of current portion	331,233		350,263
Total long-term lease liabilities		1,986,710		2,036,034
Total		$	2,249,794	$	2,296,382

~~c. Revenues~~

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09. ASU 2014-09 provides guidance for management to reassess revenue recognition as it relates to:~~ (1) transfer of control, (2) variable consideration, (3) allocation of transaction price based on relative standalone selling price, (4) licenses, (5) time value of money, and (6) contract costs. We adopted ASU 2014-09 as of January 1, 2018 using the modified retrospective method for all of our customer contracts, whereby the cumulative effect of applying ASU 2014-09 is recognized at the date of initial application. At January 1, 2018, we recognized the cumulative effect of initially applying ASU 2014-09 as an adjustment to the opening balance of (distributions in excess of earnings) earnings in excess of distributions, resulting in a decrease of $30,233 to stockholders' equity. The reduction of (distribution in excess of earnings) earnings in excess of distributions represents the net effect of (i) the write-off of Free Move Costs, net (which were capitalized and amortized prior to the adoption of ASU 2014-09) based upon the net book value of the Free Move Costs as of December 31, 2017, (ii) the recognition of certain Contract Fulfillment Costs, specifically Intake Costs (each as defined below) and commission assets, (iii) the recognition of deferred revenue associated with Intake Costs billed to our customers (as discussed below), and (iv) the deferred income tax impact of the aforementioned items. As we adopted ASU 2014-09 on a modified retrospective basis, the comparative Condensed Consolidated Balance Sheet as of December 31, 2017, the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, ~~2017~~2019, these assets are comprised of approximately 98% real estate related assets (which include land, buildings and ~~the Condensed Consolidated Statement of Equity~~racking) and ~~the Condensed Consolidated Statement of Cash Flows for the six months ended~~2% non-real estate related assets (which include warehouse equipment, vehicles, furniture and fixtures and computer hardware and software).

(2) At June 30, ~~2017 have not been restated to reflect the adoption~~2019, these assets are comprised of ~~ASU 2014-09~~approximately 62% real estate related assets and ~~reflect our revenue policies in place at that time, as disclosed in Note 2.l. to Notes to Consolidated Financial Statements included in our Annual Report.~~38% non-real estate related assets.

Storage rental and service revenues are recognized in the month the respective storage rental or service is provided, and customers are generally billed on a monthly basis on contractually agreed-upon terms. The performance obligation is a series of distinct services (as determined for purposes of ASU 2014-09, a “series”) that have the same pattern of transfer to the customer that is satisfied over time. For those contracts that qualify as a series, we have a right to consideration from the customer in an amount that corresponds directly with the value of the underlying performance obligation transferred to the customer to date. This concept is known as "right to invoice" and we are applying the "right to invoice" practical expedient to all revenues, with the exception of storage revenues in our data center business.

1516

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~For all of our businesses, with the exception~~The components of the ~~storage component~~lease expense for the three and six months ended June 30, 2019 are as follows:



Description	Location in Statement of Operations	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost(1)	Cost of sales and Selling, general and administrative	$	113,392	$	222,571
Financing lease cost:
Depreciation of financing lease right-of-use assets	Depreciation and amortization	$	14,942	$	31,271
Interest expense for financing lease liabilities	Interest expense, net	4,925		11,067
Total financing lease cost		$	19,867	$	42,338

(1) Of the $113,392 incurred for the three months ended June 30, 2019, $110,441 is included within Cost of ~~our data center business, each purchasing decision~~sales and $2,951 is ~~fully in~~included within Selling, general and administrative expenses. Of the control of the customer and, therefore, consideration beyond the current reporting period is variable and allocated to the specific period, which is consistent with the practical expedient above. Our data center business features storage rental provided to the customer at contractually specified rates over a fixed contractual period. The storage rental revenue related to the storage component of our data center business is recognized on a straight-line basis over the contract term. The revenue related to the service component of our data center business is recognized in the period the data center access or related services are provided. Total data center revenues represent approximately 5% of our total consolidated revenues$222,571 incurred for the six months ended June 30, ~~2018.~~

~~The costs associated with the initial movement~~2019, $216,335 is included within Cost of ~~customer records into physical storage~~sales and certain commissions are considered costs to obtain or fulfill customer contracts (“Contract Fulfillment Costs”). The following describes each of these Contract Fulfillment Costs recognized under ASU 2014-09:

~~Intake Costs (and associated deferred revenue)~~

~~Prior to the adoption of ASU 2014-09, intake costs incurred but not charged to a customer to transport records to our facilities (or Free Move Costs, as described in Note 2.b.), which include labor~~$6,236 is included within Selling, general and transportation costs, were capitalized and amortized as a component of depreciation and amortization in our Consolidated Statements of Operations. The initial movement of customer records into physical storage must take place prior to initiation of the storage of records and is not considered a separate performance obligation and, therefore, theadministrative expenses. Operating lease cost includes variable lease costs of ~~the initial intake of customer records into physical storage (“Intake Costs”) represent a contract fulfillment cost~~$23,847 and $46,610 for the ~~storage~~three and six months ended June 30, 2019, respectively.

We sublease certain real estate to third parties. We recognized sublease income of ~~records as~~$1,671 and $3,554 for the earnings process does not commence until a customer’s records or other assets are in our possession. Accordingly, upon the adoption of ASU 2014-09, all Intake Costs, regardless of whether or not the services associated with such initial moves are billed to the customer or are provided to the customer at no charge, will be deferredthree and ~~amortized as a component of depreciation~~six months ended June 30, 2019, respectively.

Weighted average remaining lease terms and amortization in our Consolidated Statements of Operations over three years, consistent with the transfer of the performance obligation to the customer to which the asset relates. Similarly, in instances where such Intake Costs are billed to the customer, the associated revenue will be deferred and recognized over the same three year period.

~~Commissions~~

Prior to the adoption of ASU 2014-09, commissions we paid related to our long-term storage contracts were expensed as incurred. Upon the adoption of ASU 2014-09, certain commission payments that are directly associated with the fulfillment of long-term storage contracts are capitalized and amortized as a component of depreciation and amortization in our Consolidated Statements of Operations over three years, consistent with the transfer of the performance obligation to the customer to which the asset relates. Certain direct commission payments associated with contracts with a duration of one year or less are expensed as incurred under the practical expedient which allows an entity to expense as incurred an incremental cost of obtaining a contract if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

~~The Contract Fulfillment Costs recorded as a result of the adoption of ASU 2014-09~~discount rates as of ~~January 1, 2018 and~~ June 30, ~~2018~~2019 are as follows:



Remaining Lease Term:
Operating leases		11.0 Years
Financing leases		11.0 Years
Discount Rate:
Operating leases		7.1%
Financing leases		5.6%

January 1, 2018 (Date of Adoption of
ASU 2014-09)
June 30, 2018
Description Location in Balance Sheet Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Commissions asset Other (within Other Assets, Net) $ 42,072
$ (21,173 ) $ 20,899
$ 48,833
$ (28,355 ) $ 20,478
Intake Costs asset Other (within Other Assets, Net) 31,604
(14,954 ) 16,650
35,643
(20,135 ) 15,508

1617

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~Amortization expense associated with the commissions asset and Intake Costs asset for the three and six months ended~~The estimated minimum future lease payments as of June 30, 2019, are as follows:



Year	Operating Leases(1)			Sublease Income			Financing Leases(1)
2019 (excluding the six months ended June 30, 2019)	$	171,378		$	(3,494	)	$	40,635
2020	321,670			(5,728		)	60,377
2021	295,696			(4,828		)	54,766
2022	271,552			(4,462		)	48,071
2023	246,252			(4,333		)	40,351
Thereafter	1,482,286			(10,185		)	296,260
Total minimum lease payments	2,788,834			$	(33,030	)	540,460
Less amounts representing interest or imputed interest	(920,389		)				(159,111		)
Present value of lease obligations	$	1,868,445					$	381,349

The estimated minimum future lease payments as of December 31, 2018 are as follows:

Three Month Ended June 30, 2018 Six Months Ended June 30, 2018
Commissions asset $ 3,793
$ 7,380
Intake Costs asset 2,891
5,621



Year	Operating Leases(1)		Sublease Income			Financing Leases(1)(2)
2019	$	323,454	$	(7,525	)	$	80,513
2020	293,276		(7,200		)	71,335
2021	267,379		(7,063		)	61,269
2022	246,128		(6,694		)	52,832
2023	221,808		(6,409		)	44,722
Thereafter	1,287,807		(6,279		)	377,750
Total minimum lease payments	$	2,639,852	$	(41,170	)	688,421
Less amounts representing interest						(241,248		)
Present value of lease obligations						$	447,173

(1)

Estimated minimum future lease payments exclude variable common area maintenance charges, insurance and taxes. Differences in estimated lease payments between June 30, 2019 and December 31, 2018 are primarily related to adjustments to account for certain build to suit leases that were accounted for as financing obligations under ASC 840 but are accounted for as operating leases under ASU 2016-02 and foreign currency exchange rate impacts.


(2)	Includes capital lease and financing obligations associated with build to suit lease transactions at December 31, 2018.

~~Deferred revenue liabilities associated with billed Intake Costs recorded as a result~~As of ~~the adoption of ASU 2014-09 as of January 1, 2018 and~~ June 30, ~~2018~~2019, we do not have any material operating or financing leases that are ~~as follows:~~signed but have not yet commenced and we have certain leases with related parties which are not material to our consolidated financial statements.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

Description Location in Balance Sheet January 1, 2018 (Date of Adoption of ASU 2014-09) June 30, 2018
Deferred revenue - Current Deferred revenue $ 9,671
$ 10,140
Deferred revenue - Long-term Other Long-term Liabilities 9,877
7,467

~~The following table presents certain components of~~Other information: Supplemental cash flow information relating to our ~~Condensed Consolidated Statements of Operations~~leases for the ~~three and~~ six months ended June 30, ~~2018~~2019 is as ~~reported and as if we had not adopted ASU 2014-09 on January 1, 2018:~~follows:



Cash paid for amounts included in measurement of lease liabilities:	Six Months Ended June 30, 2019
Operating cash flows used in operating leases	$	167,426
Financing cash flows used in financing leases	$	31,146
Non-cash items:
Operating lease modifications and reassessments	$	14,024
New operating leases (including acquisitions)	$	87,482
New financing leases, modifications and reassessments	$	13,662

Three Months Ended
June 30, 2018

Six Months Ended
June 30, 2018
As Reported If ASU 2014-09 was not adopted As Reported If ASU 2014-09 was not adopted
Revenues $ 1,060,823
$ 1,057,608
$ 2,103,281
$ 2,098,872
Operating Income $ 203,359
$ 201,664
$ 367,918
$ 366,983
Income from Continuing Operations $ 93,903
$ 92,208
$ 139,517
$ 138,582

Per Share Income from Continuing Operations - Basic $ 0.33
$ 0.32
$ 0.49
$ 0.48
Per Share Income from Continuing Operations - Diluted $ 0.33
$ 0.32
$ 0.49
$ 0.48

d.e. 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 ~~("ESPP")~~ (together, "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.

For our Employee Stock-Based Awards made on or after February 20, 2019, we have included the following retirement provision: Upon an employee’s retirement on or after attaining age 58, if the sum of (i) the award recipient’s age at retirement and (ii) the award recipient’s years of service with the company totals at least 70, the award recipient is entitled to continued vesting of any outstanding Employee Stock-Based Awards which include the 2019 Retirement Criteria subsequent to their retirement, provided that, for awards granted in the year of retirement, their retirement occurs on or after July 1st (the “2019 Retirement Criteria”). Accordingly, (i) grants of Employee Stock-Based Awards to an employee who has met the 2019 Retirement Criteria on or before the date of grant, or will meet the Retirement Criteria before July 1^st of the year of the grant, will be expensed between the date of grant and July 1^st of the grant year and (ii) grants of Employee Stock-Based Awards to employees who will meet the 2019 Retirement Criteria during the award’s normal vesting period will be expensed between the date of grant and the date upon which the award recipient meets the 2019 Retirement Criteria. Stock options and RSUs granted to recipients who meet the 2019 Retirement Criteria will continue vesting on the original vesting schedule, and the stock options will remain exercisable up to three years after retirement, or the original expiration date of the stock options, if earlier. PUs granted to recipients who meet the 2019 Retirement Criteria will continue to vest and be delivered in accordance with the original vesting schedule of the applicable PU award and remain subject to the same performance conditions.

Stock-based compensation expense for Employee Stock-Based Awards for the three and six months ended June 30, ~~2017~~2019 was ~~$8,543~~$12,501 ($~~5,945 after tax or $0.02 per basic and diluted share) and $15,092 ($10,530~~11,649 after tax or $0.04 per basic and diluted share) and $21,020 ($19,585 after tax or $0.07 per basic and diluted share), ~~respectively. Stock-based compensation expense for Employee Stock-Based Awards~~respectively, and for the three and six months ended June 30, 2018 was $8,689 ($8,032 after tax or $0.03 per basic and diluted share) and $16,073 ($14,865 after tax or $0.05 per basic and diluted share), respectively. 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, ~~2018,~~2019, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was ~~$57,429~~$61,833 and is expected to be recognized over a weighted-average period of ~~2.2~~2.1 years.

1719

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~Stock-based compensation expense for Employee Stock-Based Awards included in the accompanying Condensed Consolidated Statements of Operations is as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
Cost of sales (excluding depreciation and amortization) $ 27
$ 29
$ 55
$ 58
Selling, general and administrative expenses 8,516
8,660
15,037
16,015
Total stock-based compensation $ 8,543
$ 8,689
$ 15,092
$ 16,073

Stock Options

A summary of stock option activity for the six months ended June 30, ~~2018~~2019 is as follows:



	Stock Options
Outstanding at December 31, ~~2017~~2018	~~3,671,740~~4,271,834
Granted	~~846,517~~920,706
Exercised	(~~118,304~~194,480	)
Forfeited	(~~23,334~~12,525	)
Expired	(~~4,260~~15,647	)
Outstanding at June 30, ~~2018~~2019	~~4,372,359~~4,969,888
Options exercisable at June 30, ~~2018~~2019	~~2,409,054~~3,160,175
Options expected to vest	~~1,844,046~~1,704,441

Restricted Stock Units

The fair value of RSUs vested during the three and six months ended June 30, ~~2017~~2019 and 2018 is as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
Fair value of RSUs vested $ 2,047
$ 676
$ 16,073
$ 16,006



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Fair value of RSUs vested	$	2,375	$	676	$	17,710	$	16,006

A summary of RSU activity for the six months ended June 30, ~~2018~~2019 is as follows:



	RSUs
Non-vested at December 31, ~~2017~~2018	~~1,071,469~~1,196,566
Granted	~~701,259~~731,801
Vested	(~~455,224~~527,239	)
Forfeited	(~~53,080~~55,070	)
Non-vested at June 30, ~~2018~~2019	~~1,264,424~~1,346,058

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(2) Summary of Significant Accounting Policies (Continued)~~

Performance Units

Under our various equity compensation plans, we may also make awards of PUs. For the majority of outstanding PUs, the number of PUs earned is determined based on our performance against predefined targets of revenue and return on invested capital ("ROIC") and, beginning with PUs granted in 2018, Adjusted EBITDA (as defined in Note 7). The number of PUs earned may range from 0% to 200% of the initial award. The number of PUs earned is determined based on our actual performance as compared to the targets at the end of a three-year performance period. Certain PUs that we grant will be earned based on a market condition associated with the total return on our common stock in relation to either (i) a subset of the Standard & Poor's 500 Index (for certain PUs granted prior to 2017), or (ii) the MSCI United States REIT Index (for certain PUs granted in 2017 and thereafter), rather than the revenue, ROIC and Adjusted EBITDA targets noted above. The number of PUs earned based on the applicable market condition may range from 0% to 200% of the initial award.

The majority of our PUs are earned based on our performance against revenue, ROIC and, beginning with PUs granted in 2018, Adjusted EBITDA targets during their applicable performance period; therefore, we forecast the likelihood of achieving the predefined revenue, ROIC and Adjusted EBITDA targets in order to calculate the expected PUs to be earned. We record a compensation charge based on either the forecasted PUs to be earned (during the performance period) or the actual PUs earned (at the three-year anniversary of the grant date) over the vesting period for each of the awards. The fair value of PUs based on our performance against revenue, ROIC and Adjusted EBITDA targets is the excess of the market price of our common stock at the date of grant over the purchase price (which is typically zero). For PUs earned based on a market condition, we utilize a Monte Carlo simulation to fair value these awards at the date of grant, and such fair value is expensed over the three-year performance period. As of June 30, 2018, we expected 85%, 100% and 100% achievement of the predefined revenue, ROIC and Adjusted EBITDA targets associated with the awards of PUs made in 2016, 2017 and 2018, respectively.

The fair value of earned PUs that vested during the three and six months ended June 30, ~~2017~~2019 and 2018 is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Fair value of earned PUs that vested	$	—	$	—	$	6,503	$	3,033

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
Fair value of earned PUs that vested $ —
$ —
$ 905
$ 3,033

A summary of PU activity for the six months ended June 30, ~~2018~~2019 is as follows:


	Original PU Awards		PU Adjustment(1)		Total PU Awards		Original PU Awards		PU Adjustment(1)		Total PU Awards
Non-vested at December 31, 2017	717,878		(250,067	)	467,811
Non-vested at December 31, 2018							967,049		(299,948	)	667,101
Granted	353,507		—		353,507		380,856		—		380,856
Vested	(79,121	)	—		(79,121	)	(169,523	)	—		(169,523	)
Forfeited/Performance or Market Conditions Not Achieved	(12,368	)	(49,881	)	(62,249	)	(11,093	)	(14,850	)	(25,943	)
Non-vested at June 30, 2018	979,896		(299,948	)	679,948
Non-vested at June 30, 2019							1,167,289		(314,798	)	852,491


(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 or a change in estimated awards based on the forecasted performance against the predefined targets.

As of June 30, 2019, we expected 100% achievement 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 2019, 2018 and 2017.

1921

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

e.f. 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 or PUs) 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, ~~2017~~2019 and 2018 isare as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,					Six Months Ended June 30,
	2017			2018			2017			2018			2019		2018			2019		2018
Income (loss) from continuing operations	$	83,148		$	93,903		$	141,992		$	139,517		$	92,347	$	92,263		$	122,823	$	131,652
Less: Net income (loss) attributable to noncontrolling interests	2,492			142			2,874			610			34		142			925		610
Income (loss) from continuing operations (utilized in numerator of Earnings Per Share calculation)	$	80,656		$	93,761		$	139,118		$	138,907		$	92,313	$	92,121		$	121,898	$	131,042
(Loss) income from discontinued operations, net of tax	$	(2,026	)	$	(360	)	$	(2,363	)	$	(822	)
Income (loss) from discontinued operations, net of tax													$	128	$	(360	)	$	104	$	(822	)
Net income (loss) attributable to Iron Mountain Incorporated	$	78,630		$	93,401		$	136,755		$	138,085		$	92,441	$	91,761		$	122,002	$	130,220

Weighted-average shares—basic	264,217,000			285,984,000			264,036,000			285,622,000			286,925,000		285,984,000			286,727,000		285,622,000
Effect of dilutive potential stock options	395,044			237,708			428,403			243,636			148,629		237,708			190,016		243,636
Effect of dilutive potential RSUs and PUs	318,375			347,543			405,640			415,929			407,659		347,543			570,040		415,929
Weighted-average shares—diluted	264,930,419			286,569,251			264,870,043			286,281,565			287,481,288		286,569,251			287,487,056		286,281,565

Earnings (losses) per share—basic:
Income (loss) from continuing operations	$	0.31		$	0.33		$	0.53		$	0.49		$	0.32	$	0.32		$	0.43	$	0.46
(Loss) income from discontinued operations, net of tax	(0.01		)	—			(0.01		)	—
Income (loss) from discontinued operations, net of tax													—		—			—		—
Net income (loss) attributable to Iron Mountain Incorporated(1)	$	0.30		$	0.33		$	0.52		$	0.48		$	0.32	$	0.32		$	0.43	$	0.46

Earnings (losses) per share—diluted:
Income (loss) from continuing operations	$	0.30		$	0.33		$	0.53		$	0.49		$	0.32	$	0.32		$	0.42	$	0.46
(Loss) income from discontinued operations, net of tax	(0.01		)	—			(0.01		)	—
Income (loss) from discontinued operations, net of tax													—		—			—		—
Net income (loss) attributable to Iron Mountain Incorporated(1)	$	0.30		$	0.33		$	0.52		$	0.48		$	0.32	$	0.32		$	0.42	$	0.45

Antidilutive stock options, RSUs and PUs, excluded from the calculation	2,701,129			3,272,502			2,597,692			3,257,322			5,004,112		3,272,502			4,494,637		3,257,322

(1) Columns may not foot due to rounding.

2022

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

f.g. Income Taxes

We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our estimate of the effective tax ~~rate~~rates for the ~~year~~years ending December 31, 2019 and 2018 ~~reflects~~reflect the impact of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Legislation”). See Note 7 to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding the impact the Tax Reform Legislation ~~(as defined below).~~had on us. 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, ~~2017 were 18.1%~~2019 and 16.2%, respectively. The primary reconciling items between the then current federal statutory tax rate of 35.0% and our overall effective tax rate for the three months ended June 30, 2017 were the benefit derived from the dividends paid deduction and differences in the rates of tax at which our foreign earnings2018 are subject. The primary reconciling items between the then current federal statutory tax rate of 35.0% and our overall effective tax rate for the six months ended June 30, 2017 were the benefit derived from the dividends paid deduction, differences in the rates of tax at which our foreign earnings are subject and a release of valuation allowances on certain of our foreign net operating losses of $7,511 as a result of the merger of certain of our foreign subsidiaries. Our effective tax rates for the three and six months ended June 30, 2018 were 21.9% and 16.5%, respectively. The primary reconciling items between the current federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended June 30, 2018 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. The primary reconciling items between the current federal statutory tax rate of 21.0% and our overall effective tax rate for the six months ended June 30, 2018 were the benefit derived from the dividends paid deduction, a discrete tax benefit of approximately $14,000 associated with the resolution of a tax matter (as disclosed in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report), 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.

On December 22, 2017, legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Legislation”) was enacted into law in the United States. The Tax Reform Legislation amends the Internal Revenue Code of 1986, as amended (the “Code”), to reduce tax rates and modify policies, credits and deductions for businesses and individuals. The components of the Tax Reform Legislation are described in detail in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report. One of the primary components of the Tax Reform Legislation was a reduction in the United States corporate federal income tax rate from 35.0% to 21.0% for taxable years beginning after December 31, 2017.

The Tax Reform Legislation also imposes a transition tax (the “Deemed Repatriation Transition Tax”) on a mandatory deemed repatriation of post-1986 undistributed foreign earnings and profits not previously subject to United States tax as of November 2, 2017 or December 31, 2017, whichever is greater (the “Undistributed E&P”), as of the last taxable year beginning before January 1, 2018. The Deemed Repatriation Transition Tax varies depending on whether the Undistributed E&P is held in liquid (as defined in the Tax Reform Legislation) or non-liquid assets. A participation deduction against the deemed repatriation will result in a Deemed Repatriation Transition Tax on Undistributed E&P of 15.5% if held in cash and liquid assets and 8.0% if held in non-liquid assets. The Deemed Repatriation Transition Tax applies regardless of whether or not an entity has cash in its foreign subsidiaries and regardless of whether the entity actually repatriates the Undistributed E&P back to the United States.

Our estimate of the amount of Undistributed E&P deemed repatriated under the Tax Reform Legislation in our taxable year ending December 31, 2017 is approximately $186,000 (the “Estimated Undistributed E&P”). We will opt to include the full amount of Estimated Undistributed E&P in our 2017 taxable income, rather than spread it over eight years (as permitted by the Tax Reform Legislation). Accordingly, included in our REIT taxable income for 2017 was approximately $82,000 related to the deemed repatriation of Undistributed E&P (the “Deemed Repatriation Taxable Income”).

follows:

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(2) Summary of Significant Accounting Policies (Continued)~~



	Three Months Ended June 30,				Six Months Ended June 30,
	2019(1)		2018(1)		2019(1)		2018(2)
Effective Tax Rate	10.3	%	22.0	%	14.7	%	16.5	%

The Estimated Undistributed E&P includes certain assumptions made by us regarding the cumulative earnings and profits of our foreign subsidiaries, as well as the characterization of such Estimated Undistributed E&P (liquid versus non-liquid assets). We are currently performing additional analysis to determine the actual amount of Undistributed E&P associated with our foreign subsidiaries, as well as the characterization of such Undistributed E&P, and anticipate this analysis will continue until we file our 2017 United States federal income tax return. We do not believe this will have an impact on our provision for income taxes or our qualification as a REIT. However, it may impact our shareholder dividend reporting.

(1)

The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and six months ended June 30, 2019 and for the three months ended June 30, 2018 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.

(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, 2018 were the benefit derived from the dividends paid deduction, a discrete tax benefit of approximately $14,000 associated with the resolution of a tax matter 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.

g.h. 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. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The three levels of the fair value hierarchy are as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3—Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

2223

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

The assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018, respectively, are as follows:

Fair Value Measurements at
December 31, 2017 Using
Description
Total Carrying
Value at
December 31,
2017

Quoted prices
in active
markets
(Level 1)

Significant other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)
Money Market Funds(1) $ 585,000
$ —
$ 585,000
$ —
Time Deposits(1) 24,482
—
24,482
—
Trading Securities 11,784
11,279
(2) 505
(3) —
Derivative Assets(4) 1,579
—
1,579
—
Derivative Liabilities(4) 2,329
—
2,329
—

Fair Value Measurements at
June 30, 2018 Using
Description
Total Carrying
Value at
June 30,
2018

Quoted prices
in active
markets
(Level 1)

Significant other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)
Time Deposits(1) $ 5,759
$ —
$ 5,759
$ —
Trading Securities 11,265
10,529
(2) 736
(3) —
Derivative Assets(4) 318
—
318
—
Derivative Liabilities(4) 3,413
—
3,413
—
Interest Rate Swap Agreements Assets(5) 2,203
—
2,203
—



			Fair Value Measurements at June 30, 2019 Using
Description	Total Carrying Value at June 30, 2019		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Money Market Funds(1)	$	4,418	$	—		$	4,418		$	—
Trading Securities	10,366		9,744		(2)	622		(3)	—
Interest Rate Swap Agreements Liabilities(5)	8,578		—			8,578			—



			Fair Value Measurements at December 31, 2018 Using
Description	Total Carrying Value at December 31, 2018		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Time Deposits(1)	$	956	$	—		$	956		$	—
Trading Securities	10,753		10,248		(2)	505		(3)	—
Derivative Assets(4)	93		—			93			—
Interest Rate Swap Agreements Liabilities(5)	973		—			973			—


(1)	Money market funds and time deposits are measured based on quoted prices for similar assets and/or subsequent transactions. At December 31, 2017, we had money market funds with 12 "Triple A" rated money market funds and time deposits with seven global banks. At June 30, 2018, we had no money market funds and time deposits with seven global banks.


(2)	Certain trading securities are measured at fair value using quoted market prices.


(3)	Certain trading securities are measured based on inputs that are observable other than quoted market ~~prices that are observable.~~prices.

(4)

Derivative assets and liabilities relate to short-term (six months or less) foreign currency contracts that we have entered into to hedge certain of our foreign exchange intercompany ~~exposures, as more fully disclosed in Note 3.~~exposures. We calculate the value of such forward contracts by adjusting the spot rate utilized at the balance sheet date for translation purposes by an estimate of the forward points observed in active markets. As of June 30, 2019, we had no outstanding forward contracts. As of December 31, 2018, we had outstanding forward contracts to purchase 29,000 Euros and sell $33,374 United States dollars. We have not designated any of the forward contracts we have entered into as hedges.

(5)

We have entered into interest rate swap agreements to ~~hedge certain~~limit our exposure to changes in interest rates on a portion of our ~~interest~~floating rate ~~exposures, as more fully disclosed~~indebtedness. As of June 30, 2019 and December 31, 2018, we had $350,000 in ~~Note 3. The~~notional value of interest rate swap agreements ~~are~~outstanding, which expire in March 2022. Under the interest rate swap agreements, we receive variable rate interest payments associated with the notional amount of each interest rate swap, based upon one-month LIBOR, in exchange for the payment of fixed interest rate payments (at the fixed rate interest specified in the interest rate swap agreements). We have designated these interest rate swaps as cash flow ~~hedges and~~hedges. Unrealized gains are ~~measured based on~~recognized as assets while unrealized losses are recognized as liabilities. The fair value of the interest rate swaps are estimated using industry standard valuation models using market-based observable inputs, ~~other than quoted market prices that are observable.~~including interest rate curves.

2324

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

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, 2019 and December 31, ~~2017 and June 30,~~ 2018, other than those disclosed in Note 2.s. to Notes to Consolidated Financial Statements included in our Annual Report, ~~and the~~those acquired in acquisitions that occurred during the six months ended June 30, ~~2018.~~2019 and our investment in Makespace LLC (as disclosed in Note 9), all of which are based on Level 3 inputs.

The fair value of our long-term debt, which was determined based on either Level 1 inputs or Level 3 inputs, is disclosed in Note 5.4. Long-term debt is measured at cost in our Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018.

h.i. Accumulated Other Comprehensive Items, Net

The changes in accumulated other comprehensive items, net for the three and six months ended June 30, ~~2017,~~2019, respectively, are as follows:



	Three Months Ended June 30, 2019									Six Months Ended June 30, 2019
	Foreign Currency Translation Adjustments			Fair Value Adjustments for Interest Rate Swap Agreements			Total			Foreign Currency Translation Adjustments			Fair Value Adjustments for Interest Rate Swap Agreements			Total
Beginning of Period	$	(247,313	)	$	(3,647	)	$	(250,960	)	$	(264,691	)	$	(973	)	$	(265,664	)
Other comprehensive (loss) income:
Foreign currency translation adjustment(1)	(5,930		)	—			(5,930		)	11,448			—			11,448
Fair value adjustments for interest rate swap agreements	—			(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	)

Three Months Ended
June 30, 2017

Six Months Ended
June 30, 2017
Foreign
Currency
Translation
Adjustments Total Foreign
Currency
Translation
Adjustments Total
Beginning of Period $ (161,239 ) $ (161,239 ) $ (212,573 ) $ (212,573 )
Other comprehensive income (loss):
Foreign currency translation adjustments(1) 7,649
7,649
58,983
58,983
Total other comprehensive income (loss) 7,649
7,649
58,983
58,983
Balance as of June 30, 2017 $ (153,590 ) $ (153,590 ) $ (153,590 ) $ (153,590 )


~~(1)~~	During the three and six months ended June 30, 2017, approximately $29,100 of cumulative translation adjustments associated with our businesses in Russia and Ukraine was reclassified from accumulated other comprehensive items, net and was included in the gain on sale associated with the Russia and Ukraine Divestment (as defined and discussed more fully in Note 10).

~~The changes in accumulated other comprehensive items, net~~(1) This amount includes foreign exchange losses (gains) of $4,280 and $(1,861) for the three and six months ended June 30, ~~2018,~~2019, respectively, related to the change in fair value of the portion of our Euro Notes (as defined and discussed more fully in Note 4) designated as a hedge of net investment of certain of our Euro denominated subsidiaries. For the six months ended June 30, 2019, we designated, on average, 274,161 Euros of our Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. As of June 30, 2019, cumulative net gains of $16,119 net of tax, are ~~as follows:~~recorded in accumulated other comprehensive items, net associated with this net investment hedge.

Three Months Ended
June 30, 2018

Six Months Ended
June 30, 2018
Foreign
Currency
Translation
Adjustments Fair Value Adjustments for Interest Rate Swap Agreements Total Foreign
Currency
Translation
Adjustments Fair Value Adjustments for Interest Rate Swap Agreements Total
Beginning of Period $ (73,897 ) $ (185 ) $ (74,082 ) $ (103,989 ) $ —
$ (103,989 )
Other comprehensive (loss) income:

Foreign currency translation adjustments (135,756 ) —
(135,756 ) (105,664 ) —
(105,664 )
Fair value adjustments for interest rate swap agreements —
2,388
2,388
—
2,203
2,203
Total other comprehensive (loss) income (135,756 ) 2,388
(133,368 ) (105,664 ) 2,203
(103,461 )
Balance as of June 30, 2018 $ (209,653 ) $ 2,203
$ (207,450 ) $ (209,653 ) $ 2,203
$ (207,450 )

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

i.The changes in accumulated other comprehensive items, net for the three and six months ended June 30, 2018, respectively, are as follows:



	Three Months Ended June 30, 2018									Six Months Ended June 30, 2018
	Foreign Currency Translation Adjustments			Fair Value Adjustments for Interest Rate Swap Agreements			Total			Foreign Currency Translation Adjustments			Fair Value Adjustments for Interest Rate Swap Agreements		Total
Beginning of Period	$	(73,897	)	$	(185	)	$	(74,082	)	$	(103,989	)	$	—	$	(103,989	)
Other comprehensive (loss) income:
Foreign currency translation adjustment(1)	(135,756		)	—			(135,756		)	(105,664		)	—		(105,664		)
Fair value adjustments for interest rate swap agreements	—			2,388			2,388			—			2,203		2,203
Total other comprehensive (loss) income	(135,756		)	2,388			(133,368		)	(105,664		)	2,203		(103,461		)
End of Period	$	(209,653	)	$	2,203		$	(207,450	)	$	(209,653	)	$	2,203	$	(207,450	)

(1) This amount includes foreign exchange gains of $10,257 and $4,622 for the three and six months ended June 30, 2018, respectively, related to the change in fair value of the portion of our Euro Notes designated as a hedge of net investment of certain of our Euro denominated subsidiaries. For the six months ended June 30, 2018, we designated, on average, 179,881 Euros of our Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries.

j. Gain on Disposal/Write-Down of Property, Plant and Equipment, Net

We are currently exploring strategic options regarding how to maintain and support the infrastructure of select offerings within our Iron Mountain Iron Cloud (“Iron Cloud”) portfolio of products and services. During the second quarter of 2019, we performed a long-lived asset impairment analysis on the assets associated with these select offerings and concluded that the associated carrying value of the long-lived assets (which consisted entirely of property, plant and equipment) was not recoverable based upon the underlying cash flows associated with these select offerings. Therefore, we recorded an impairment charge of approximately $24,000 during the second quarter of 2019, representing the net carrying value of the long-lived assets associated with these select offerings.

Consolidated gain on disposal/write-down of property, plant and equipment, net, for the three and six months ended June 30, 2019 was approximately $8,400 and $7,800, respectively. The gain for the six months ended June 30, 2019 consisted primarily of gains associated with the sale of certain land and buildings in the United Kingdom of approximately $36,000. These gains were partially offset by losses primarily associated with (i) the impairment charge on the assets associated with the select offerings within our Iron Cloud portfolio, as described above, and (ii) the write-down of certain property, plant and equipment in our North American Records and Information Management Business of approximately $3,100.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

k. Other (Income) Expense, Net ~~(including Foreign Currency)~~

Other (income) expense, net for the three and six months ended June 30, ~~2017~~2019 and 2018 consists of the following:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Foreign currency transaction (gains) losses, net	$	(19,331	)	$	(18,624	)	$	(1,634	)	$	3,161
Other, net	4,139			(432		)	1,652			(2,066		)
	$	(15,192	)	$	(19,056	)	$	18		$	1,095

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
Foreign currency transaction losses (gains), net $ 20,199
$ (18,624 ) $ 16,035
$ 3,161
Other, net (39,565 ) (432 ) (41,765 ) (2,066 )
$ (19,366 ) $ (19,056 ) $ (25,730 ) $ 1,095

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, include gains or losses related to (i) borrowings in certain foreign currencies under our ~~Former Revolving Credit Facility (as defined and discussed in Note 4 to Notes to Consolidated Financial Statements included in our Annual Report) and the~~ Revolving Credit Facility (as defined and discussed more fully in Note 5)4), (ii) our Euro Notes, ~~(as defined and discussed more fully in Note 5),~~ (iii) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered permanently invested, and (iv) amounts that are paid or received on the net settlement amount from forward contracts (as more fully discussed in Note 3)2.h.).

Other, net for the six months ended June 30, 2019 includes the gain on sale from the Consumer Storage Transaction (as defined and discussed more fully in Note 9) of approximately $4,200 recorded during the first quarter of 2019. In addition, Other, net for the three and six months ended June 30, ~~2017~~2019 includes ~~a gain~~the change in estimated fair value of ~~$38,869~~the noncontrolling interests associated with ~~the Russia and Ukraine Divestment (see Note 10).~~our business in India, which are accounted for as mandatorily redeemable noncontrolling interests.

j.l. New Accounting Pronouncements

~~Recently Adopted Accounting Pronouncements~~

In ~~May 2014,~~August 2018, the FASB issued ASU ~~2014-09.~~No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) ("ASU 2018-15"). ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. We adopted ASU ~~2014-09~~2018-15 on January 1, ~~2018 using~~2019. ASU 2018-15 did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02. We adopted ASU 2016-02 on January 1, 2019 on a modified retrospective ~~method.~~basis. See Note ~~2.c.~~2.d. for information regarding the impact of the adoption of ASU ~~2014-09~~2016-02 on our consolidated financial statements.

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement~~

m. Correction in Presentation

Subsequent to our conversion to a REIT, we have historically classified gains on sale of ~~Financial Assets and Financial Liabilities~~ ~~("ASU 2016-01"). ASU 2016-01 requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in~~real estate, net income, while eliminating the available-for-sale classification for equity securities with readily determinable fair values and the cost method for equity investments without readily determinable fair values. ASU 2016-01 also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. We adopted ASU 2016-01 on January 1, 2018. ASU 2016-01 did not have an impactof tax, as a separate line on our consolidated ~~financial statements.~~

~~In August 2017,~~statements of operations and excluded such amounts from our reported operating income. We presented such amounts net of tax as these gains were presented below the ~~FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting~~provision (benefit) for ~~Hedging Activities~~ ("ASU 2017-12"). ASU 2017-12 amends the hedge accounting recognition and presentation requirements as outlined in Accounting Standards Codification Topic 815 with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and enhance the transparency and understandability of hedge transactions. In addition, ASU 2017-12 simplifies the application of the hedge accounting guidance. We adopted ASU 2017-12 on January 1, 2018. ASU 2017-12 did not have a material impactincome taxes on our consolidated ~~financial statements.~~statements of operations. Commencing with the first quarter of 2019, we now present gains on sale of real estate as a component of operating income in the line item (gain) loss on disposal/write-down of property, plant and equipment, net. See Note 2.j. for details of the (gain) loss on disposal/write-down of property, plant and equipment, net recognized during the three and six months ended June 30, 2019. Such amounts are presented gross of tax with any tax impact presented within provision (benefit) for income taxes. All prior periods will be conformed to this presentation. We did not recognize any gains on sale of real estate during the three and six months ended June 30, 2018. During the third and fourth quarter of 2018, we recognized a total of approximately $55,000 of gains on sale of real estate, net of tax.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

~~Other As Yet Adopted Accounting Pronouncements~~n. Immaterial Restatement

In ~~February 2016,~~June 2019, we received a notification of assessment from tax and customs authorities in the ~~FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ ~~("ASU 2016-02"). ASU 2016-02 will require lessees~~Netherlands related to ~~recognize assets~~a value-added tax (“VAT”) liability of approximately 16,800 Euros primarily related to the years ending December 31, 2018 and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016-02 also will require certain qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 will be effective for us on January 1, 2019.2017. We have established a ~~cross functional project team responsible~~reserve for this matter based upon our estimate of the amount of loss that is both probable and estimable, inclusive of interest and penalties. See Note 7 for additional information on this matter.

This matter relates to periods prior to January 1, 2019, resulting in (i) an understatement of our prior years' reported selling, general and administrative expense and interest expense and (ii) an overstatement of our prior years’ reported provision for income taxes for the ~~assessment~~related tax impact. Based on our estimate of the amount of loss related to this matter that is both probable and ~~implementation~~estimable, we believe selling, general and administrative expenses and interest expense were understated by approximately $11,000 and $400, respectively, and the provision for income taxes was overstated by approximately $2,000 for the year ended December 31, 2018, which, in the aggregate, would reduce net income from continuing operations by approximately $9,400 for the year ended December 31, 2018. Based on our estimate of ~~ASU 2016-02.~~the amount of loss related to this matter that is both probable and estimable, we believe the selling, general and administrative expenses and interest expense were understated by approximately $16,600 and $100, respectively, and the provision for income taxes was overstated by approximately $3,000 for the year ended December 31, 2017, which, in the aggregate, would reduce net income from continuing operations by approximately $13,700 for the year ended December 31, 2017. We have ~~also entered into an agreement~~determined that no prior period financial statement was materially misstated as a result of the previously unrecorded reserves related to this matter. As a result, we have restated ending (Distributions in excess of earnings) Earnings in excess of distributions as of December 31, 2018 in the amount of approximately $23,100 for the ~~use~~cumulative impact of the aforementioned items. There was no impact to the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2019, as a ~~lease accounting software solution that will support us in meeting~~result of this matter.

Additionally, we have restated our 2018 Condensed Consolidated Balance Sheet, and each of our Condensed Consolidated Statements of Operations, our Condensed Consolidated Statements of Comprehensive Income (Loss), our Condensed Consolidated Statements of Equity and the ~~accounting~~related notes for the three and ~~reporting requirements specific~~six months ended June 30, 2018 to ~~ASU 2016-02. We are currently evaluating~~reflect the impact ~~ASU 2016-02~~of the reserve we have established for this matter in those periods. There was no change to the following lines of the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2018: (1) cash flows from operating activities, (2) cash flows from investing activities and (3) cash flows from financing activities.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

The following table sets forth the effect of the immaterial restatement to certain line items of our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018:



	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
Selling, general and administrative	$	1,899		$	9,339
Total Operating Expenses	$	1,899		$	9,339
Operating Income (Loss)	$	(1,899	)	$	(9,339	)
Interest Expense, Net	$	89		$	165
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	$	(1,988	)	$	(9,504	)
Provision (Benefit) for Income Taxes	$	(348	)	$	(1,639	)
Income (Loss) from Continuing Operations	$	(1,640	)	$	(7,865	)
Net Income (Loss)	$	(1,640	)	$	(7,865	)
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	(1,640	)	$	(7,865	)
Earnings (Losses) per Share - Basic:
Income (Loss) from Continuing Operations	$	(0.01	)	$	(0.03	)
Net Income (Loss) from Continuing Operations Attributable to Iron Mountain	$	(0.01	)	$	(0.03	)
Earnings (Losses) per Share - Diluted:
Income (Loss) from Continuing Operations	$	(0.01	)	$	(0.03	)
Net Income (Loss) from Continuing Operations Attributable to Iron Mountain	$	(0.01	)	$	(0.03	)

The following table sets forth the effect of the immaterial restatement to certain line items of our Condensed Consolidated Balance Sheet as of December 31, 2018:



	December 31, 2018
Total Other Assets, Net	$	4,971
Total Assets	$	4,971
Accrued expenses and other current liabilities	$	28,097
Total Current Liabilities	$	28,097
(Distribution in excess of earnings) Earnings in excess of distributions	$	(23,126	)
Total Iron Mountain Incorporated Stockholders' Equity	$	(23,126	)

The immaterial restatement changed (Distribution in excess of earnings) Earnings in excess of distributions disclosed in our Condensed Consolidated Statements of Equity for the periods ended March 31, 2019, June 30, 2018, March 31, 2018 and December 31, 2017 by $(23,126), $(21,573), $(19,933) and $(13,708), respectively.

Prospectively, we will ~~have on~~process an immaterial restatement of our consolidated financial ~~statements.~~statements for the quarter periods ended September 30, 2018 and December 31, 2018, as well as for the annual periods ended December 31, 2018 and 2017, when those statements are reproduced on a comparative basis in our Form 10-Q for the quarterly period ending September 30, 2019 and our Annual Report on Form 10-K for the year ending December 31, 2019.

2629

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(3) ~~Derivative Instruments and Hedging Activities~~

Historically, we have entered into forward contracts to hedge our exposures associated with certain foreign currencies. As of December 31, 2017, we had outstanding forward contracts to (i) purchase 138,823 United States dollars and sell 176,000 Canadian dollars, (ii) purchase 135,000 Euros and sell 160,757 United States dollars and (iii) purchase 114,390 United States dollars and sell 96,150 Euros to hedge our foreign exchange exposures. As of June 30, 2018, we had outstanding forward contracts to (i) purchase 93,000 Euros and sell 112,315 United States dollars and (ii) purchase 68,015 United States dollars and sell 58,000 Euros to hedge our foreign exchange exposures. We have not designated any of the forward contracts we have entered into as hedges.

Net cash receipts (payments) included in cash from operating activities related to settlements associated with foreign currency forward contracts for the three and six months ended June 30, 2017 and 2018 are as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
Net cash receipts (payments) $ 893
$ (7,554 ) $ 893
$ (1,211 )

Our policy is to record the fair value of each derivative instrument on a gross basis. The following table provides the fair value of our derivative instruments not designated as hedging instruments as of December 31, 2017 and June 30, 2018:

Derivatives Not Designated as Hedging Instruments Balance Sheet Location December 31, 2017 June 30, 2018
Derivative assets Prepaid expenses and other $ 1,579
$ 318
Derivative liabilities Accrued expenses 2,329
3,413

~~(Gains) losses for our derivative instruments not recognized as hedging instruments for the three and six months ended June 30, 2017 and 2018 are as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
Derivatives Not Designated as Hedging Instruments Location of Loss (Gain) Recognized in Income on Derivative 2017 2018 2017 2018
Foreign exchange contracts Other (income) expense, net $ —
$ 9,547
$ —
$ 3,556

We have designated a portion of our (i) Euro denominated borrowings by IMI under our Former Revolving Credit Facility and (ii) Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. For the six months ended June 30, 2017, we designated, on average, 73,175 Euros of our Euro denominated borrowings by IMI under our Former Revolving Credit Facility as a hedge of net investment of certain of our Euro denominated subsidiaries. For the six months ended June 30, 2018, we designated, on average, 179,881 Euros of our Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. As a result, we recorded the following foreign exchange (losses) gains related to the change in fair value of such debt due to currency translation adjustments, which is a component of accumulated other comprehensive items, net:

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
Foreign exchange (losses) gains $ (7,076 ) $ 10,257
$ (8,148 ) $ 4,622

~~As of June 30, 2018, cumulative net gains of $7,810, net of tax, are recorded in accumulated other comprehensive items, net associated with this net investment hedge.~~

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(3) Derivative Instruments and Hedging Activities (Continued)~~

In March 2018, we entered into interest rate swap agreements to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness. As of June 30, 2018, we have $350,000 in notional value of interest rate swap agreements outstanding, which expire in March 2022. Under the interest rate swap agreements, we receive variable rate interest payments associated with the notional amount of each interest rate swap, based upon one-month LIBOR, in exchange for the payment of fixed interest rate payments (at the fixed rate interest specified in the interest rate swap agreements). We have designated these interest rate swaps as cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The fair value of the interest rate swaps are estimated using industry standard valuation models using market-based observable inputs, including interest rate curves (Level 2, as described in Note 2.g.). At June 30, 2018, we had a derivative asset of $2,203, which was recorded as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheet, which represents the fair value of our interest rate swap agreements.

We have recorded the change in fair value of the interest rate swap agreements to accumulated other comprehensive income. We have recorded unrealized gains of $2,388 and $2,203 for the three and six months ended June 30, 2018, respectively, associated with our interest rate swap agreements. At June 30, 2018, we have recorded cumulative unrealized gains of $2,203 within accumulated other comprehensive items, net associated with these agreements.

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(4)~~ Acquisitions

We account for acquisitions using the acquisition method of accounting, and, accordingly, the assets and liabilities acquired are recorded at their estimated fair values and the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates.

~~a. Acquisition of IO Data Centers~~Acquisitions Completed During the Six Months Ended June 30, 2019

~~On January 10, 2018,~~During the six months ended June 30, 2019, in order to enhance our existing operations in the United States, the United Kingdom, Switzerland, Thailand and Latvia and to expand our operations into Bulgaria, we completed the acquisition of ~~the United States operations of IODC, a leading data center colocation space~~six storage and ~~solutions provider based in Phoenix, Arizona, including the land~~records management companies and buildings associated with four data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio (the “IODC Transaction”). At the closing of the IODC Transaction, we paid approximately $1,347,000. In addition to the amount paid at the closing of the IODC Transaction, there is the potential of $35,000 in additional payments associated with the execution of future customer contracts. We have accountedone art storage company for ~~the IODC Transaction as an acquisition of a business in accordance with the guidance in ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~.

The unaudited consolidated pro forma financial information (the "Pro Forma Financial Information") below summarizes the combined results of us and IODC on a pro forma basis as if the IODC Transaction had occurred on January 1, 2017. The Pro Forma Financial Information is presented for informational purposes and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2017. The Pro Forma Financial Information, for all periods presented, includes our current estimates of purchase accounting adjustments (including amortization expenses from acquired intangible assets and depreciation of acquired property, plant and equipment). We and IODC have collectively incurred $28,064 of operating expenditures to complete the IODC Transaction (including advisory and professional fees). These operating expenditures have been reflected within the results of operations in the Pro Forma Financial Information as if they were incurred on January 1, 2017.

Three Months Ended
June 30,

Six Months Ended
June 30,
2017 2018 2017 2018
Total Revenues $ 983,723
$ 1,060,823
$ 1,957,480
$ 2,106,752
Income from Continuing Operations $ 76,085
$ 94,242
$ 93,516
$ 149,423
Per Share Income from Continuing Operations - Basic $ 0.26
$ 0.33
$ 0.32
$ 0.52
Per Share Income from Continuing Operations - Diluted $ 0.26
$ 0.33
$ 0.32
$ 0.52

In addition to our acquisition of IODC, we completed certain other acquisitions during 2017 and 2018. The Pro Forma Financial Information does not reflect these acquisitions due to the insignificant impact of these acquisitions on our consolidated results of operations.

~~b. Other Noteworthy Acquisitions~~

On March 8, 2018, in order to expand our data center operations into Europe and Asia, we acquired the operations of two data centers in London and Singapore from Credit Suisse International and Credit Suisse AG (together, "Credit Suisse") for a total of (i) 34,600 British pounds sterling and (ii) 81,000 Singapore dollars (or collectively, approximately $111,400, based upon the exchange rates between the United States dollar and the British pound sterling and Singapore dollar on the closing date of the Credit Suisse transaction) (the “Credit Suisse Transaction”). As part of the Credit Suisse Transaction, Credit Suisse entered into a long-term lease with us to maintain existing data center operations.

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(4) Acquisitions (Continued)~~

On May 25, 2018, in order to further expand our data center operations in Europe, we acquired EvoSwitch Netherlands B.V. and EvoSwitch Global Services B.V. (collectively, "EvoSwitch"), a leading data center colocation space and solutions provider with a data center in Amsterdam (the "EvoSwitch Transaction"), for (i) cash consideration of ~~189,000 Euros (or~~ approximately $222,000, based upon the exchange rate between the Euro and the United States dollar on the closing date of the EvoSwitch Transaction) and (ii) $25,000 of additional consideration in the form of future services we will provide to the seller, which is included in purchase price holdbacks and other in the allocation of the purchase price paid table below.$36,800.

In November 2017, we entered into an agreement to acquire (i) the storage and information management assets and operations of Santa Fe Group A/S ("Santa Fe") in China (the “Santa Fe China Transaction”) for approximately 14,000 Euros and (ii) certain real estate property located in Beijing, China owned by Santa Fe (the “Beijing Property”) for approximately 9,000 Euros, representing a total purchase price of approximately 23,000 Euros, subject to customary purchase price adjustments. We closed on the Santa Fe China Transaction on December 29, 2017. The purchase price for the Santa Fe China Transaction was not paid until January 2018 and, therefore, we accrued for the purchase price of the Santa Fe China Transaction (which was approximately $16,800, based upon the exchange rate between the Euro and the United States dollar on the closing date of the Santa Fe China Transaction) in our Consolidated Balance Sheet as of December 31, 2017 (the “Accrued Purchase Price”). The Accrued

Purchase Price is presented as a component of the current portion of long-term debt in our Consolidated Balance Sheet as of December 31, 2017. We paid the purchase price of the Santa Fe China Transaction on January 3, 2018. We expect to close on the acquisition of the Beijing Property during the second half of 2018. The completion of the acquisition of the Beijing Property is subject to closing conditions; accordingly, we can provide no assurances that we will be able to complete the acquisition of the Beijing Property, that it will not be delayed or that the terms will remain the same.Allocation

A summary of the cumulative consideration paid and the preliminary allocation of the purchase price paid for all of our ~~2018~~2019 acquisitions through June 30, ~~2018~~2019 is as follows:


	IODC Transaction			Other Fiscal Year 2018 Acquisitions (excluding IODC)			Total			Six Months Ended June 30, 2019
Cash Paid (gross of cash acquired)(1)	$	1,347,046		$	347,357		$	1,694,403		$	39,072
Purchase Price Holdbacks and Other	—			26,089			26,089			2,394
Total Consideration	1,347,046			373,446			1,720,492			41,466
Fair Value of Identifiable Assets Acquired:
Cash	34,227			484			34,711			2,285
Accounts Receivable and Prepaid Expenses	7,070			3,354			10,424
Accounts Receivable, Prepaid Expenses and Other Assets										3,164
Property, Plant and Equipment(2)	863,027			195,470			1,058,497			4,538
Customer Relationship Intangible Assets	—			7,254			7,254			15,670
Data Center In-Place Leases	104,340			32,091			136,431
Data Center Tenant Relationships	77,362			18,410			95,772
Data Center Above-Market Leases	16,439			2,381			18,820
Other Assets	—			273			273
Debt Assumed	—			(19,941		)	(19,941		)
Operating Lease Right-of-Use Assets										13,256
Accounts Payable, Accrued Expenses and Other Liabilities	(23,198		)	(2,197		)	(25,395		)	(2,124		)
Operating Lease Liabilities										(13,256		)
Deferred Income Taxes	—			(31,761		)	(31,761		)	(1,628		)
Data Center Below-Market Leases	(11,421		)	(694		)	(12,115		)
Other Liabilities	—			(1,176		)	(1,176		)
Total Fair Value of Identifiable Net Assets Acquired	1,067,846			203,948			1,271,794			21,905
Goodwill Initially Recorded(3)	$	279,200		$	169,498		$	448,698		$	19,561

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(4) Acquisitions (Continued)~~

(1)

Included in cash paid for acquisitions in the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, ~~2018~~2019 is net cash acquired of ~~$34,711~~$2,285 and contingent and other payments, net of ~~$7,177~~$7,864 related to acquisitions made in previous years. The cash paid for the Accrued Purchase Price for the Santa Fe China Transaction is included in cash flows from financing activities (as a component of repayment of revolving credit, term loan and bridge facilities and other debt) in the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2018.


(2)	Consists primarily of ~~building, building improvements,~~ leasehold improvements, ~~data center infrastructure,~~ racking structures and warehouse equipment. These assets are depreciated using the straight-line method with the useful lives as noted in Note ~~2.g.~~2.f. to Notes to Consolidated Financial Statements included in our Annual Report.

(3) The goodwill associated with acquisitions is primarily attributable to the assembled workforce, expanded market opportunities and costs and other operating synergies anticipated upon the integration of the operations of us and the acquired businesses.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(3) Acquisitions (Continued)

See Note 6 to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding our allocations of the purchase price for acquisitions. The preliminary purchase price allocations that are not finalized as of June 30, ~~2018~~2019 primarily relate to the final assessment of the fair values of intangible assets and liabilities (primarily customer relationship ~~intangible assets and data center lease-based~~ intangible assets), property, plant and equipment (primarily building, building improvements ~~data center infrastructure~~ and racking structures), right-of-use assets and liabilities associated with acquired operating leases, contingencies and income taxes (primarily deferred income taxes), primarily associated with the Bonded Transaction, the Santa Fe Transaction, the Fortrust Transaction (each as defined in Note 6 to Notes to Consolidated Financial Statements included in our Annual Report), the IODC Transaction, the Credit Suisse Transaction and the EvoSwitch Transaction, as well as other acquisitions we closed in ~~2018.~~2019.

As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. Adjustments recorded during the ~~six~~three months ended June 30, ~~2018~~2019 were not material to our results from operations.

Acquisition of IO Data Centers in 2018

On January 10, 2018, we completed the IODC Transaction. At the closing of the IODC Transaction, we paid approximately $1,347,000. In February 2019, we paid approximately $31,000 in additional purchase price associated with the execution of customer contracts from the closing through the one-year anniversary of the IODC Transaction, which was accrued at December 31, 2018. This amount, net of amortization, is reported as a third-party commissions asset as a component of Other within Other assets, net, in our Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, 2018.

The unaudited consolidated pro forma financial information (the "Pro Forma Financial Information") below summarizes the combined results of us and IODC on a pro forma basis as if the IODC Transaction had occurred on January 1, 2017. The Pro Forma Financial Information is presented for informational purposes and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2017. The Pro Forma Financial Information, for the period presented, includes purchase accounting adjustments (including amortization expenses from acquired intangible assets and depreciation of acquired property, plant and equipment). We and IODC collectively incurred $28,064 of operating expenditures to complete the IODC Transaction (including advisory and professional fees). These operating expenditures have been reflected within the results of operations in the Pro Forma Financial Information as if they were incurred on January 1, 2017.



	Three Months Ended June 30, 2018		Six Months Ended June 30, 2018
Total Revenues	$	1,060,823	$	2,106,771
Income from Continuing Operations	$	92,263	$	141,604
Per Share Income from Continuing Operations - Basic	$	0.32	$	0.49
Per Share Income from Continuing Operations - Diluted	$	0.32	$	0.49

In addition to our acquisition of IODC, we completed certain other acquisitions during the first six months of 2019 and in fiscal year 2018. The Pro Forma Financial Information does not reflect these acquisitions due to the insignificant impact of these acquisitions on our consolidated results of operations.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(5)~~(4) Debt

Long-term debt is as follows:

December 31, 2017 June 30, 2018
Debt (inclusive of discount) Unamortized Deferred Financing Costs Carrying Amount Fair
Value Debt (inclusive of discount) Unamortized Deferred Financing Costs Carrying Amount Fair
Value
Revolving Credit Facility(1) $ 466,593
$ (14,407 ) $ 452,186
$ 466,593
$ 828,567

$ (15,617 )
$ 812,950
$ 828,567
Term Loan A(1) 243,750
—
243,750
243,750
246,875

—

246,875
246,875
Term Loan B(2) —
—
—
—
696,556
(9,367 ) 687,189
686,031
Australian Dollar Term Loan (the "AUD Term Loan")(3) 187,504
(3,382 ) 184,122
189,049
248,670

(3,433 )
245,237
250,681
4³/₈% Senior Notes due 2021 (the "4³/₈% Notes")(4)(5)
500,000
(5,874 ) 494,126
507,500
500,000

(5,015 )
494,985
496,250
6% Senior Notes due 2023 (the "6% Notes due 2023")(4) 600,000
(6,224 ) 593,776
625,500
600,000

(5,675 )
594,325
613,500
5³/₈% CAD Senior Notes due 2023 (the "CAD Notes due 2023")(5)(6)
199,171
(3,295 ) 195,876
208,631
190,330

(2,875 )
187,455
191,519
5³/₄% Senior Subordinated Notes due 2024 (the "5³/₄% Notes")(4)
1,000,000
(9,156 ) 990,844
1,012,500
1,000,000

(8,469 )
991,531
980,000
3% Euro Senior Notes due 2025 (the "Euro Notes")(4)(5) 359,386
(4,691 ) 354,695
364,776
350,508

(4,419 )
346,089
346,582
3⁷/₈% GBP Senior Notes due 2025 (the "GBP Notes due 2025")(5)
539,702
(7,718 ) 531,984
527,559
528,296

(7,104 )
521,192
499,240
5³/₈% Senior Notes due 2026 (the "5³/₈% Notes")(5)
250,000
(3,615 ) 246,385
256,875
250,000

(3,400 )
246,600
238,125
4⁷/₈% Senior Notes due 2027 (the "4⁷/₈% Notes")(4)(5)
1,000,000
(13,866 ) 986,134
1,000,000
1,000,000

(13,153 )
986,847
921,250
5¹/₄% Senior Notes due 2028 (the "5¹/₄% Notes")(4)(5)
825,000
(11,817 ) 813,183
826,031
825,000

(11,511 )
813,489
767,250
Real Estate Mortgages, Capital Leases and Other 649,432
(566 ) 648,866
649,432
614,145

(316 )
613,829
614,145
Accounts Receivable Securitization Program(7) 258,973
(356 ) 258,617
258,973
248,473

(287 )
248,186
248,473
Mortgage Securitization Program(8) 50,000
(1,273 ) 48,727
50,000
50,000
(1,200 ) 48,800
50,000
Total Long-term Debt 7,129,511
(86,240 ) 7,043,271

8,177,420
—
(91,841 ) 8,085,579

Less Current Portion (146,300 ) —
(146,300 )
(123,818 )
—

(123,818 )
Long-term Debt, Net of Current Portion $ 6,983,211
$ (86,240 ) $ 6,896,971

$ 8,053,602

$ (91,841 ) $ 7,961,761



	June 30, 2019											December 31, 2018
	Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount			Fair Value		Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount			Fair Value
Revolving Credit Facility(1)	$	1,181,376		$	(12,548	)	$	1,168,828		$	1,181,376	$	793,832		$	(14,117	)	$	779,715		$	793,832
Term Loan A(1)	234,375			—			234,375			234,375		240,625			—			240,625			240,625
Term Loan B(2)	689,782			(8,118		)	681,664			668,784		693,169			(8,742		)	684,427			660,013
Australian Dollar Term Loan (the "AUD Term Loan")(3)	230,048			(2,691		)	227,357			231,506		233,955			(3,084		)	230,871			235,645
UK Bilateral Revolving Credit Facility ("UK Bilateral Facility")(4)	177,762			(2,030		)	175,732			177,762		178,299			(2,357		)	175,942			178,299
4³/₈% Senior Notes due 2021 (the "4³/₈% Notes")(5)	500,000			(3,295		)	496,705			505,000		500,000			(4,155		)	495,845			488,750
6% Senior Notes due 2023 (the "6% Notes due 2023")(5)	600,000			(4,576		)	595,424			612,000		600,000			(5,126		)	594,874			606,000
5³/₈% CAD Senior Notes due 2023 (the "CAD Notes")	190,972			(2,335		)	188,637			192,882		183,403			(2,506		)	180,897			186,154
5³/₄% Senior Subordinated Notes due 2024 (the "5³/₄% Notes")(5)	1,000,000			(7,096		)	992,904			1,010,000		1,000,000			(7,782		)	992,218			940,000
3% Euro Senior Notes due 2025 (the "Euro Notes")(5)	341,128			(3,781		)	337,347			351,113		343,347			(4,098		)	339,249			321,029
3⁷/₈% GBP Senior Notes due 2025 (the "GBP Notes")	507,891			(6,074		)	501,817			502,192		509,425			(6,573		)	502,852			453,811
5³/₈% Senior Notes due 2026 (the "5³/₈% Notes")	250,000			(2,971		)	247,029			252,500		250,000			(3,185		)	246,815			224,375
4⁷/₈% Senior Notes due 2027 (the "4⁷/₈% Notes")(5)	1,000,000			(11,731		)	988,269			990,000		1,000,000			(12,442		)	987,558			855,000
5¹/₄% Senior Notes due 2028 (the "5¹/₄% Notes")(5)	825,000			(10,333		)	814,667			825,000		825,000			(10,923		)	814,077			713,625
Real Estate Mortgages, Financing Lease Liabilities and Other	559,622			(425		)	559,197			559,622		606,702			(171		)	606,531			606,702
Accounts Receivable Securitization Program(6)	254,962			(149		)	254,813			254,962		221,673			(218		)	221,455			221,673
Mortgage Securitization Program(7)	50,000			(1,055		)	48,945			50,000		50,000			(1,128		)	48,872			50,000
Total Long-term Debt	8,592,918			(79,208		)	8,513,710					8,229,430			(86,607		)	8,142,823
Less Current Portion	(123,527		)	—			(123,527		)			(126,406		)	—			(126,406		)
Long-term Debt, Net of Current Portion	$	8,469,391		$	(79,208	)	$	8,390,183				$	8,103,024		$	(86,607	)	$	8,016,417

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(5)~~(4) Debt (Continued)

(1)

Collectively, ~~as amended as described below,~~ the ~~"Credit~~credit agreement ("Credit Agreement"). The Credit Agreement consists of a revolving credit facility (the "Revolving Credit Facility") and a term loan (the "Term Loan A"). The Credit Agreement is scheduled to mature on June 3, 2023. Of the ~~$828,567~~$1,181,376 of outstanding borrowings under the Revolving Credit Facility ~~618,300~~as of June 30, 2019, 1,028,900 was denominated in United States dollars, ~~135,000~~76,800 was denominated in Canadian dollars and ~~92,000~~82,500 was denominated in Euros. In addition, we also had various outstanding letters of credit totaling ~~$54,638.~~$35,250. The remaining amount available for borrowing under the Revolving Credit Facility as of June 30, ~~2018~~2019 was ~~$866,795~~$533,374 (which amount represents the maximum availability as of such date). The average interest rate in effect under the Credit Agreement was ~~3.5%~~4.0% as of June 30, ~~2018.~~2019. The average interest rate in effect under the Revolving Credit Facility as of June 30, ~~2018~~2019 was ~~3.5% and ranged from 1.8% to 5.8%~~4.0% and the interest rate in effect under ~~the~~ Term Loan A as of June 30, ~~2018~~2019 was ~~3.8%~~4.2%.

(2)

~~Interest~~In connection with the 2018 First Amendment (as defined in Note 5 to Notes to Consolidated Financial Statements included in our Annual Report), Iron Mountain Information Management, LLC ("IMIM") entered into an incremental term loan activation notice (the "Activation Notice") with certain lenders pursuant to which the lenders party to the Activation Notice agreed to provide commitments to fund an incremental term loan B in the amount of $700,000 (the "Term Loan B"). On March 26, 2018, IMIM borrowed the full amount of the Term Loan B. The Term Loan B is scheduled to mature on January 2, 2026. The interest rate in effect as of June 30, ~~2018~~2019 was ~~3.8%~~4.2%. The amount of debt for the Term Loan B ~~(as defined below)~~ reflects an unamortized original issue discount of ~~$1,694~~$1,468 and $1,581 as of June 30, ~~2018.~~2019 and December 31, 2018, respectively.

(3)

~~Interest~~The interest rate in effect as of June 30, ~~2018~~2019 was ~~6.0%~~5.1%. We had ~~338,438~~329,688 Australian dollars outstanding on the AUD Term Loan as of June 30, ~~2018.~~2019. The amount of debt for the AUD Term Loan reflects an unamortized original issue discount of ~~$1,545~~$1,458 and ~~$2,011~~$1,690 as of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018, respectively.


(4)	The interest rate in effect as of June 30, 2019 was 3.1%.


(5)	Collectively, the "Parent Notes".


~~(5)~~	~~Collectively, the "Unregistered Notes".~~


(6)	~~Together, with our previously outstanding 6~~¹/₈~~% CAD Senior Notes due 2021 (the "CAD Notes due 2021"), the "CAD Notes"~~The interest rate in effect as of June 30, 2019 was 3.4%.


(7)	~~Interest~~The interest rate in effect as of June 30, ~~2018 was 3.0%.~~


~~(8)~~	~~Interest rate in effect as of June 30, 2018~~2019 was 3.5%.

See Note 4 to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding our Credit Agreement and our other long-term debt, including the direct obligors of each of our debt instruments as well as information regarding the fair value of our debt instruments (including the levels of the fair value hierarchy used to determine the fair value of our debt instruments). The levels of the fair value hierarchy used to determine the fair value of our debt as of June 30, ~~2018~~2019 are consistent with the levels of the fair value hierarchy used to determine the fair value of our debt as of December 31, ~~2017~~2018 (which are disclosed in our Annual Report). Additionally, see Note 5 to Notes to Consolidated Financial Statements included in our Annual Report for information regarding which of our consolidated subsidiaries guarantee certain of our debt instruments. There have been no material changes to our long-term debt since December 31, ~~2017 other than those changes described below.~~2018.

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(5) Debt (Continued)~~

~~a. Credit Agreement Amendments~~

On March 22, 2018, we entered into an amendment (the “2018 First Amendment”) to the Credit Agreement which provided us with the option to request additional commitments of up to $1,260,000 under the Credit Agreement in the form of term loans or through increased commitments under the Revolving Credit Facility, subject to the conditions specified in the Credit Agreement. On June 4, 2018, we entered into another amendment (the "2018 Second Amendment") to the Credit Agreement which (i) reduced interest rate margins applicable to existing and future borrowings under the Revolving Credit Facility and Term Loan A by 0.25% and (ii) extended the maturity date of the Credit Agreement to June 4, 2023.

In connection with the 2018 First Amendment, Iron Mountain Information Management, LLC ("IMIM") entered into an incremental term loan activation notice, or the Activation Notice, with certain lenders pursuant to which the lenders party to the Activation Notice agreed to provide commitments to fund an incremental term loan B in the amount of $700,000 (the “Term Loan B”). On March 26, 2018, IMIM borrowed the full amount of the Term Loan B, which matures on January 2, 2026. The Term Loan B was issued at 99.75% of par. The aggregate net proceeds of approximately $689,850, after paying commissions to the joint lead arrangers and net of the original discount, were used to repay outstanding borrowings under the Revolving Credit Facility. The Term Loan B holders benefit from the same security and guarantees as other borrowings under the Credit Agreement. The Term Loan B holders also benefit from the same affirmative and negative covenants as other borrowings under the Credit Agreement; however, the Term Loan B holders are not generally entitled to the benefits of the financial covenants under the Credit Agreement.

Principal payments on the Term Loan B are to be paid in quarterly installments of $1,750 per quarter during the period June 30, 2018 through December 31, 2025, with the balance due on January 2, 2026. The Term Loan B may be prepaid without penalty at any time after September 22, 2018. The Term Loan B bears interest at a rate of LIBOR plus 1.75%.

~~b. Australian Dollar Term Loan Amendment~~

On March 27, 2018, Iron Mountain Australia Group Pty Ltd, a wholly owned subsidiary of IMI, amended its AUD Term Loan (the "AUD Term Loan Amendment") to (i) increase the borrowings under the AUD Term Loan from 250,000 Australian dollars to 350,000 Australian dollars; (ii) increase the quarterly principal payments from 6,250 Australian dollars per year to 8,750 Australian dollars per year and (iii) decrease the interest rate on the AUD Term Loan from BBSY (an Australian benchmark variable interest rate) plus 4.3% to BBSY plus 3.875%. The AUD Term Loan matures in September 2022. All indebtedness associated with the AUD Term Loan was issued at 99% of par. The net proceeds associated with the AUD Term Loan Amendment of approximately 99,000 Australian dollars (or approximately $75,621, based on the exchange rate between the Australian dollar and the United States dollar on March 29, 2018 (the closing date of the AUD Term Loan Amendment)), net of the original discount, were used to repay outstanding borrowings under the Revolving Credit Facility.

Principal payments on the AUD Term Loan are to be paid in quarterly installments in an amount equivalent to an aggregate of 8,750 Australian dollars per year, with the remaining balance due September 22, 2022. The AUD Term Loan is secured by substantially all assets of Iron Mountain Australia Group Pty. Ltd. IMI and its direct and indirect 100% owned United States subsidiaries that represent the substantial majority of its United States operations (the “Guarantors”) guarantee all obligations under the AUD Term Loan.

c. Cash Pooling

As described in greater detail in Note 4 to Notes to Consolidated Financial Statements included in our Annual Report, certain of our subsidiaries participate in cash pooling arrangements (the “Cash Pools”) ~~with Bank Mendes Gans (“BMG”), an independently operated fully-owned subsidiary of ING Group,~~ in order to help manage global liquidity requirements. We currently utilize two separate cash pools, ~~with BMG,~~ one of which we utilize to manage global liquidity requirements for our QRSs (the "QRS Cash Pool") and the other for our TRSs (the "TRS Cash Pool").

3433

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(5)~~(4) Debt (Continued)

AsThe approximate amount of ~~December 31, 2017, we had a~~the net cash position ~~of approximately $5,700 in the~~for our QRS Cash Pool ~~(which consisted of a gross cash position of approximately $383,700 less outstanding debit balances of approximately $378,000 by participating subsidiaries)~~ and ~~we had a zero balance in~~ the TRS Cash Pool ~~(which consisted~~and the approximate amount of athe gross ~~cash~~ position ~~of approximately $229,600 less~~and outstanding debit balances for each of ~~approximately $229,600 by participating subsidiaries). As~~these pools as of June 30, 2019 and December 31, 2018 we had a net cash position of approximately $2,000 in the QRS Cash Pool (which consisted of a gross cash position of approximately $406,900 less outstanding debit balances of approximately $404,900 by participating subsidiaries) and we had a net cash position of approximately $600 in the TRS Cash Pool (which consisted of a gross cash position of approximately $262,800 less outstanding debit balances of approximately $262,200 by participating subsidiaries). are as follows:



	June 30, 2019							December 31, 2018
	Gross Cash Position		Outstanding Debit Balances			Net Cash Position		Gross Cash Position		Outstanding Debit Balances			Net Cash Position
QRS Cash Pool	$	308,200	$	(306,500	)	$	1,700	$	300,800	$	(298,800	)	$	2,000
TRS Cash Pool	295,500		(292,700		)	2,800		281,500		(279,300		)	2,200

The net cash position balances as of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018 are reflected as cash and cash equivalents in the Condensed Consolidated Balance Sheets.

d. Debt Covenants

The Credit Agreement, our indentures and other agreements governing our indebtedness contain certain restrictive financial and operating covenants, including covenants that restrict our ability to complete acquisitions, pay cash dividends, incur indebtedness, make investments, sell assets and take certain other corporate actions. The covenants do not contain a rating trigger. Therefore, a change in our debt rating would not trigger a default under the Credit Agreement, our indentures or other agreements governing our indebtedness. The Credit Agreement uses EBITDAR-based calculations as the primary measures of financial performance, including leverage and fixed charge coverage ratios.

Our leverage and fixed charge coverage ratios under the Credit Agreement as of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018, as well as our leverage ratio under our indentures as of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018 are as follows:


	December 31, 2017	June 30, 2018	Maximum/Minimum Allowable	June 30, 2019	December 31, 2018	Maximum/Minimum Allowable
Net total lease adjusted leverage ratio	5.0	5.6	Maximum allowable of 6.5	5.8	5.6	Maximum allowable of 6.5
Net secured debt lease adjusted leverage ratio	1.6	2.5	Maximum allowable of 4.0	2.8	2.6	Maximum allowable of 4.0
Bond leverage ratio (not lease adjusted)	5.8	5.7	Maximum allowable of 6.5-7.0(1)(2)	6.1	5.8	Maximum allowable of 6.5-7.0(1)
Fixed charge coverage ratio	2.1	2.3	Minimum allowable of 1.5	2.2	2.2	Minimum allowable of 1.5

(1)

The maximum allowable leverage ratio under our indentures for the 4⁷/₈% Notes, the GBP Notes ~~due 2025~~ and the 5¹/₄% Notes is 7.0, while the maximum allowable leverage ratio under the indentures pertaining to our remaining senior and senior subordinated notes is 6.5. In certain instances as provided in our indentures, we have the ability to incur additional indebtedness that would result in our bond leverage ratio exceeding the maximum allowable ratio under our indentures and still remain in compliance with the covenant.

~~(2)~~

~~At December 31, 2017, a portion of the net proceeds from the 5~~¹/₄% Notes, together with a portion of the net proceeds of the Equity Offering (as defined in Note 9), were used to temporarily repay approximately $807,000 of outstanding indebtedness under our Revolving Credit Facility until the closing of the IODC Transaction, which occurred on January 10, 2018. The bond leverage ratio at December 31, 2017 is calculated based on our outstanding indebtedness at this date, which reflects the temporary payment of the Revolving Credit Facility.

Noncompliance with these leverage and fixed charge coverage ratios would have a material adverse effect on our financial condition and liquidity.

3534

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(6)~~(5) Selected Consolidated Financial Statements of Parent, Guarantors ~~Canada Company~~ and Non-Guarantors

The following data summarizes the consolidating results of IMI on the equity method of accounting as of June 30, 2019 and December 31, ~~2017 and June 30,~~ 2018 and for the three and six months ended June 30, ~~2017~~2019 and 2018 and are prepared on the same basis as the consolidated financial statements.

The Parent Notes, the CAD Notes, the 6¹/₈~~% GBP Senior Notes due 2022 (the "GBP Notes due 2022") (which were redeemed in November 2017), the~~ GBP Notes, ~~due 2025,~~ and the 5³/₈% Notes are guaranteed by the subsidiaries referred to below as the Guarantors. These subsidiaries are 100% owned by IMI. The guarantees are full and unconditional, as well as joint and several.

Additionally, IMI guarantees the CAD Notes, which were issued by Iron Mountain Canada Operations ULC ("Canada Company"), the GBP Notes, ~~due 2022, which were issued by Iron Mountain Europe PLC ("IME"), the GBP Notes due 2025,~~ which were issued by Iron Mountain (UK) PLC ("IM UK"), and the 5³/₈% Notes, which were issued by Iron Mountain US Holdings, ~~Inc,~~Inc., which is one of the Guarantors. Canada Company ~~IME~~ and IM UK do not guarantee the Parent Notes. The subsidiaries that do not guarantee the Parent Notes, the CAD Notes, the GBP Notes, ~~due 2022, the GBP Notes due 2025,~~ and the 5³/₈% Notes ~~including IME, IM UK, Iron Mountain Receivables QRS, LLC, Iron Mountain Receivables TRS, LLC and Iron Mountain Mortgage Finance I, LLC,~~ are referred to below as the Non-Guarantors. ~~As discussed below, the results of the Non-Guarantors for the three and six months ended June 30, 2017 exclude the results of Canada Company, as those are presented in a separate column.~~

The CAD Notes due 2021 were issued by Canada Company and registered under the Securities Act of 1933, as amended (the “Securities Act”). The CAD Notes due 2023 have not been registered under the Securities Act, or under the securities laws of any other jurisdiction. We redeemed the CAD Notes due 2021 in August 2017 and, therefore, as of that date, Canada Company had no outstanding debt registered under the Securities Act that would require the presentation of Canada Company on a standalone basis in the accompanying consolidating financial statements. Accordingly, (i) the assets, liabilities and equity of Canada Company are presented as a component of the Non-Guarantor subsidiaries in the accompanying Condensed Consolidated Balance Sheets as of December 31, 2017 and June 30, 2018, (ii) the revenues, expenses and other comprehensive income (loss) of Canada Company are presented as a component of the Non-Guarantor subsidiaries in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2018, and (iii) the operating, investing and financing cash flows for Canada Company are presented as a component of the Non-Guarantor subsidiaries in the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2018.

In the normal course of business, we periodically change the ownership structure of our subsidiaries to meet the requirements of our business. In the event of such changes, we recast the prior period financial information within this footnote to conform to the current period presentation in the period such changes occur. Generally, these changes do not alter the designation of the underlying subsidiaries as Guarantors or Non-Guarantors. However, they may change whether the underlying subsidiary is owned by the Parent, a Guarantor or a Non-Guarantor. If such a change occurs, the amount of investment in subsidiaries in the below Condensed Consolidated Balance Sheets and equity in the earnings (losses) of subsidiaries, net of tax in the below Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) with respect to the relevant Parent, Guarantors, Non-Guarantors and Eliminations columns also would change.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS



	June 30, 2019
	Parent		Guarantors		Non- Guarantors		Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents(1)	$	6	$	124,553	$	106,923	$	(69,486	)	$	161,996
Accounts receivable	—		65,357		786,973		—			852,330
Intercompany receivable	—		1,184,345		—		(1,184,345		)	—
Prepaid expenses and other	—		87,505		113,301		(29		)	200,777
Total Current Assets	6		1,461,760		1,007,197		(1,253,860		)	1,215,103
Property, Plant and Equipment, Net	145		3,013,538		1,544,876		—			4,558,559
Other Assets, Net:
Long-term notes receivable from affiliates and intercompany receivable	5,072,926		—		—		(5,072,926		)	—
Investment in subsidiaries	1,982,052		1,073,877		—		(3,055,929		)	—
Goodwill	—		2,857,968		1,615,456		—			4,473,424
Operating lease right-of-use assets	—		921,540		872,267		—			1,793,807
Other	2		965,060		715,027		—			1,680,089
Total Other Assets, Net	7,054,980		5,818,445		3,202,750		(8,128,855		)	7,947,320
Total Assets	$	7,055,131	$	10,293,743	$	5,754,823	$	(9,382,715	)	$	13,720,982
Liabilities and Equity
Intercompany Payable	$	892,894	$	—	$	291,451	$	(1,184,345	)	$	—
Debit Balances Under Cash Pools	—		—		69,486		(69,486		)	—
Current Portion of Long-Term Debt	—		54,848		68,708		(29		)	123,527
Total Other Current Liabilities (includes current portion of operating lease liabilities)	270,521		679,750		542,989		—			1,493,260
Long-Term Debt, Net of Current Portion	4,225,317		2,265,699		1,899,167		—			8,390,183
Long-Term Operating Lease Liabilities, Net of Current Portion	—		857,375		798,102		—			1,655,477
Long-Term Notes Payable to Affiliates and Intercompany Payable	—		5,072,926		—		(5,072,926		)	—
Other Long-term Liabilities	8,578		51,721		266,142		—			326,441
Commitments and Contingencies (See Note 7)
Redeemable Noncontrolling Interests	—		—		73,113		—			73,113
Total Iron Mountain Incorporated Stockholders' Equity	1,657,821		1,311,424		1,744,505		(3,055,929		)	1,657,821
Noncontrolling Interests	—		—		1,160		—			1,160
Total Equity	1,657,821		1,311,424		1,745,665		(3,055,929		)	1,658,981
Total Liabilities and Equity	$	7,055,131	$	10,293,743	$	5,754,823	$	(9,382,715	)	$	13,720,982


(1)	Included within Cash and Cash Equivalents at June 30, 2019 is approximately $74,000 and $0 of cash on deposit associated with our Cash Pools for the Guarantors and Non-Guarantors, respectively.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)



	December 31, 2018
	Parent		Guarantors		Non- Guarantors		Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents(1)	$	132	$	61,650	$	169,318	$	(65,615	)	$	165,485
Accounts receivable	—		47,900		798,989		—			846,889
Intercompany receivable	—		818,463		—		(818,463		)	—
Prepaid expenses and other	93		108,879		86,797		(29		)	195,740
Total Current Assets	225		1,036,892		1,055,104		(884,107		)	1,208,114
Property, Plant and Equipment, Net	190		3,002,104		1,487,263		—			4,489,557
Other Assets, Net:
Long-term notes receivable from affiliates and intercompany receivable	4,954,686		—		—		(4,954,686		)	—
Investment in subsidiaries	1,862,048		983,018		—		(2,845,066		)	—
Goodwill	—		2,858,539		1,582,491		—			4,441,030
Other	—		979,483		739,034		—			1,718,517
Total Other Assets, Net	6,816,734		4,821,040		2,321,525		(7,799,752		)	6,159,547
Total Assets	$	6,817,149	$	8,860,036	$	4,863,892	$	(8,683,859	)	$	11,857,218
Liabilities and Equity
Intercompany Payable	$	462,927	$	—	$	355,536	$	(818,463	)	$	—
Debit Balances Under Cash Pools	—		10,612		55,003		(65,615		)	—
Current Portion of Long-Term Debt	—		63,703		62,732		(29		)	126,406
Total Other Current Liabilities	268,373		616,826		479,170		—			1,364,369
Long-Term Debt, Net of Current Portion	4,223,822		1,877,649		1,914,946		—			8,016,417
Long-Term Notes Payable to Affiliates and Intercompany Payable	—		4,954,686		—		(4,954,686		)	—
Other Long-term Liabilities	973		115,994		300,064		—			417,031
Commitments and Contingencies (See Note 7)
Redeemable Noncontrolling Interests	—		—		70,532		—			70,532
Total Iron Mountain Incorporated Stockholders' Equity	1,861,054		1,220,566		1,624,500		(2,845,066		)	1,861,054
Noncontrolling Interests	—		—		1,409		—			1,409
Total Equity	1,861,054		1,220,566		1,625,909		(2,845,066		)	1,862,463
Total Liabilities and Equity	$	6,817,149	$	8,860,036	$	4,863,892	$	(8,683,859	)	$	11,857,218


(1)	Included within Cash and Cash Equivalents at December 31, 2018 is approximately $57,200 and $12,700 of cash on deposit associated with our Cash Pools for the Guarantors and Non-Guarantors, respectively.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)



	Three Months Ended June 30, 2019
	Parent			Guarantors				Non- Guarantors			Eliminations			Consolidated
Revenues:
Storage rental	$	—		$	411,159			$	258,129		$	—		$	669,288
Service	—			246,090				151,529			—			397,619
Intercompany revenues	—			1,158				4,540			(5,698		)	—
Total Revenues	—			658,407				414,198			(5,698		)	1,066,907
Operating Expenses:
Cost of sales (excluding depreciation and amortization)	—			260,675				204,427			—			465,102
Intercompany	—			4,540				1,158			(5,698		)	—
Selling, general and administrative	62			173,443				79,259			—			252,764
Depreciation and amortization	22			104,594				59,715			—			164,331
Loss (Gain) on disposal/write-down of property, plant and equipment, net	—			26,786				(35,191		)	—			(8,405		)
Total Operating Expenses	84			570,038				309,368			(5,698		)	873,792
Operating (Loss) Income	(84		)	88,369				104,830			—			193,115
Interest Expense (Income), Net(1)	49,601			8,640				47,073			—			105,314
Other Expense (Income), Net	359			4,487				(20,038		)	—			(15,192		)
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes	(50,044		)	75,242				77,795			—			102,993
Provision (Benefit) for Income Taxes	—			1,153				9,493			—			10,646
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax	(142,485		)	(69,710		)		—			212,195			—
Income (Loss) from Continuing Operations	92,441			143,799				68,302			(212,195		)	92,347
Income (Loss) from Discontinued Operations, Net of Tax	—			144				(16		)	—			128
Net Income (Loss)	92,441			143,943				68,286			(212,195		)	92,475
Less: Net Income (Loss) Attributable to Noncontrolling Interests	—			—				34			—			34
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	92,441		$	143,943			$	68,252		$	(212,195	)	$	92,441
Net Income (Loss)	$	92,441		$	143,943			$	68,286		$	(212,195	)	$	92,475
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustments	(4,280		)	—				(1,511		)	—			(5,791		)
Change in fair value of interest rate swap agreements	(4,931		)	—			��	—			—			(4,931		)
Equity in Other Comprehensive (Loss) Income of Subsidiaries	(1,650		)	1,121				—			529			—
Total Other Comprehensive (Loss) Income	(10,861		)	1,121				(1,511		)	529			(10,722		)
Comprehensive Income (Loss)	81,580			145,064				66,775			(211,666		)	81,753
Comprehensive Income (Loss) Attributable to Noncontrolling Interests	—			—				173			—			173
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated	$	81,580		$	145,064			$	66,602		$	(211,666	)	$	81,580


(1)	Included within Interest Expense (Income), Net are intercompany management fees and royalty fees, which are eliminated in our consolidated financial statements.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)



	Three Months Ended June 30, 2018
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues:
Storage rental	$	—		$	397,449		$	257,990		$	—		$	655,439
Service	—			244,403			160,981			—			405,384
Intercompany revenues	—			1,216			4,305			(5,521		)	—
Total Revenues	—			643,068			423,276			(5,521		)	1,060,823
Operating Expenses:
Cost of sales (excluding depreciation and amortization)	—			251,360			200,104			—			451,464
Intercompany cost of sales	—			4,305			1,216			(5,521		)	—
Selling, general and administrative	36			167,739			84,450			—			252,225
Depreciation and amortization	32			96,170			60,018			—			156,220
(Gain) Loss on disposal/write-down of property, plant and equipment, net	—			(462		)	(84		)	—			(546		)
Total Operating Expenses	68			519,112			345,704			(5,521		)	859,363
Operating (Loss) Income	(68		)	123,956			77,572			—			201,460
Interest Expense (Income), Net(1)	50,313			3,005			48,878			—			102,196
Other Expense (Income), Net	2,767			6,575			(28,398		)	—			(19,056		)
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes	(53,148		)	114,376			57,092			—			118,320
Provision (Benefit) for Income Taxes	—			12,509			13,548			—			26,057
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax	(144,909		)	(38,071		)	—			182,980			—
Income (Loss) from Continuing Operations	91,761			139,938			43,544			(182,980		)	92,263
(Loss) Income from Discontinued Operations	—			(273		)	(87		)	—			(360		)
Net Income (Loss)	91,761			139,665			43,457			(182,980		)	91,903
Less: Net Income (Loss) Attributable to Noncontrolling Interests	—			—			142			—			142
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	91,761		$	139,665		$	43,315		$	(182,980	)	$	91,761
Net Income (Loss)	$	91,761		$	139,665		$	43,457		$	(182,980	)	$	91,903
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustment	10,257			—			(149,429		)	—			(139,172		)
Change in fair value of interest rate swap agreements	2,388			—			—			—			2,388
Equity in Other Comprehensive (Loss) Income of Subsidiaries	(146,018		)	(129,860		)	—			275,878			—
Total Other Comprehensive (Loss) Income	(133,373		)	(129,860		)	(149,429		)	275,878			(136,784		)
Comprehensive (Loss) Income	(41,612		)	9,805			(105,972		)	92,898			(44,881		)
Comprehensive (Loss) Income Attributable to Noncontrolling Interests	—			—			(3,274		)	—			(3,274		)
Comprehensive (Loss) Income Attributable to Iron Mountain Incorporated	$	(41,612	)	$	9,805		$	(102,698	)	$	92,898		$	(41,607	)

_____________________________________________________________


(1)	Included within Interest Expense (Income), Net are intercompany management fees and royalty fees, which are eliminated in our consolidated financial statements.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)



	Six Months Ended June 30, 2019
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues:
Storage rental	$	—		$	814,900		$	517,362		$	—		$	1,332,262
Service	—			485,783			302,725			—			788,508
Intercompany revenues	—			2,312			9,463			(11,775		)	—
Total Revenues	—			1,302,995			829,550			(11,775		)	2,120,770
Operating Expenses:
Cost of sales (excluding depreciation and amortization)	—			523,812			402,834			—			926,646
Intercompany cost of sales	—			9,463			2,312			(11,775		)	—
Selling, general and administrative	149			361,265			161,909			—			523,323
Depreciation and amortization	45			207,548			119,221			—			326,814
Loss (Gain) on disposal/write-down of property, plant and equipment, net	—			27,360			(35,163		)	—			(7,803		)
Total Operating Expenses	194			1,129,448			651,113			(11,775		)	1,768,980
Operating (Loss) Income	(194		)	173,547			178,437			—			351,790
Interest Expense (Income), Net(1)	99,226			12,697			95,827			—			207,750
Other Expense (Income), Net	541			5,014			(5,537		)	—			18
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes	(99,961		)	155,836			88,147			—			144,022
Provision (Benefit) for Income Taxes	—			2,454			18,745			—			21,199
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax	(221,963		)	(65,552		)	—			287,515			—
Income (Loss) from Continuing Operations	122,002			218,934			69,402			(287,515		)	122,823
Income (Loss) from Discontinued Operations	—			120			(16		)	—			104
Net Income (Loss)	122,002			219,054			69,386			(287,515		)	122,927
Less: Net Income (Loss) Attributable to Noncontrolling Interests	—			—			925			—			925
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	122,002		$	219,054		$	68,461		$	(287,515	)	$	122,002
Net Income (Loss)	$	122,002		$	219,054		$	69,386		$	(287,515	)	$	122,927
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments	1,861			—			10,539			—			12,400
Change in fair value of interest rate swap agreements	(7,605		)	—			—			—			(7,605		)
Equity in Other Comprehensive Income (Loss) of Subsidiaries	9,587			8,277			—			(17,864		)	—
Total Other Comprehensive Income (Loss)	3,843			8,277			10,539			(17,864		)	4,795
Comprehensive Income (Loss)	125,845			227,331			79,925			(305,379		)	127,722
Comprehensive Income (Loss) Attributable to Noncontrolling Interests	—			—			1,877			—			1,877
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated	$	125,845		$	227,331		$	78,048		$	(305,379	)	$	125,845


(1)	Included within Interest Expense (Income), Net are intercompany management fees and royalty fees, which are eliminated in our consolidated financial statements.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)



	Six Months Ended June 30, 2018
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues:
Storage rental	$	—		$	793,925		$	512,663		$	—		$	1,306,588
Service	—			474,633			322,060			—			796,693
Intercompany revenues	—			2,421			8,796			(11,217		)	—
Total Revenues	—			1,270,979			843,519			(11,217		)	2,103,281
Operating Expenses:
Cost of sales (excluding depreciation and amortization)	—			497,523			402,662			—			900,185
Intercompany cost of sales	—			8,796			2,421			(11,217		)	—
Selling, general and administrative	79			353,087			176,229			—			529,395
Depreciation and amortization	65			198,616			118,117			—			316,798
(Gain) Loss on disposal/write-down of property, plant and equipment, net	—			(818		)	(858		)	—			(1,676		)
Total Operating Expenses	144			1,057,204			698,571			(11,217		)	1,744,702
Operating (Loss) Income	(144		)	213,775			144,948			—			358,579
Interest Expense (Income), Net(1)	100,254			1,497			98,147			—			199,898
Other Expense (Income), Net	1,610			8,135			(8,650		)	—			1,095
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes	(102,008		)	204,143			55,451			—			157,586
Provision (Benefit) for Income Taxes	—			5,797			20,137			—			25,934
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax	(232,228		)	(28,981		)	—			261,209			—
Income (Loss) from Continuing Operations	130,220			227,327			35,314			(261,209		)	131,652
(Loss) Income from Discontinued Operations	—			(695		)	(127		)	—			(822		)
Net Income (Loss)	130,220			226,632			35,187			(261,209		)	130,830
Less: Net Income (Loss) Attributable to Noncontrolling Interests	—			—			610			—			610
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	130,220		$	226,632		$	34,577		$	(261,209	)	$	130,220
Net Income (Loss)	$	130,220		$	226,632		$	35,187		$	(261,209	)	$	130,830
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustment	4,622			—			(112,143		)	—			(107,521		)
Change in fair value of interest rate swap agreements	2,203			—			—			—			2,203
Equity in Other Comprehensive (Loss) Income of Subsidiaries	(110,286		)	(91,524		)	—			201,810			—
Total Other Comprehensive (Loss) Income	(103,461		)	(91,524		)	(112,143		)	201,810			(105,318		)
Comprehensive Income (Loss)	26,759			135,108			(76,956		)	(59,399		)	25,512
Comprehensive (Loss) Income Attributable to Noncontrolling Interests	—			—			(1,247		)	—			(1,247		)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated	$	26,759		$	135,108		$	(75,709	)	$	(59,399	)	$	26,759


(1)	Included within Interest Expense (Income), Net are intercompany management fees and royalty fees, which are eliminated in our consolidated financial statements.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



	Six Months Ended June 30, 2019
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:
Cash Flows from Operating Activities—Continuing Operations	$	(75,316	)	$	397,474		$	107,573		$	—		$	429,731
Cash Flows from Operating Activities—Discontinued Operations	—			—			—			—			—
Cash Flows from Operating Activities	(75,316		)	397,474			$	107,573		$	—		$	429,731
Cash Flows from Investing Activities:
Capital expenditures	—			(201,784		)	(165,347		)	—			(367,131		)
Cash paid for acquisitions, net of cash acquired	—			(9,508		)	(35,143		)	—			(44,651		)
Intercompany loans to subsidiaries	430,274			10,696			—			(440,970		)	—
Acquisitions of customer relationships, customer inducements and data center lease-based intangibles	—			(68,153		)	(22,409		)	—			(90,562		)
Investments in joint ventures (see Note 9)	—			(19,222		)	—			—			(19,222		)
Proceeds from sales of property and equipment and other, net	—			54			46,778			—			46,832
Cash Flows from Investing Activities—Continuing Operations	430,274			(287,917		)	(176,121		)	(440,970		)	(474,734		)
Cash Flows from Investing Activities—Discontinued Operations	—			2,564			2,497			—			5,061
Cash Flows from Investing Activities	430,274			(285,353		)	(173,624		)	(440,970		)	(469,673		)
Cash Flows from Financing Activities:
Repayment of revolving credit facility, term loan facilities and other debt	—			(837,712		)	(1,765,210		)	—			(2,602,922		)
Proceeds from revolving credit facility, term loan facilities and other debt	—			1,209,304			1,788,803			—			2,998,107
Debit (payments) balances under cash pools	—			(10,612		)	14,483			(3,871		)	—
Debt (repayment to) financing from and equity (distribution to) contribution from noncontrolling interests, net	—			—			(999		)	—			(999		)
Intercompany loans from parent	—			(410,198		)	(30,772		)	440,970			—
Parent cash dividends	(353,357		)	—			—			—			(353,357		)
Net (payments) proceeds associated with employee stock-based awards	(1,727		)	—			—			—			(1,727		)
Cash Flows from Financing Activities—Continuing Operations	(355,084		)	(49,218		)	6,305			437,099			39,102
Cash Flows from Financing Activities—Discontinued Operations	—			—			—			—			—
Cash Flows from Financing Activities	(355,084		)	(49,218		)	6,305			437,099			39,102
Effect of exchange rates on cash and cash equivalents	—			—			(2,649		)	—			(2,649		)
(Decrease) Increase in cash and cash equivalents	(126		)	62,903			(62,395		)	(3,871		)	(3,489		)
Cash and cash equivalents, including Restricted Cash, beginning of period	132			61,650			169,318			(65,615		)	165,485
Cash and cash equivalents, including Restricted Cash, end of period	$	6		$	124,553		$	106,923		$	(69,486	)	$	161,996

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(5) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)



	Six Months Ended June 30, 2018
	Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash Flows from Operating Activities:
Cash Flows from Operating Activities—Continuing Operations	$	(117,979	)	$	409,167		$	102,618		$	—		$	393,806
Cash Flows from Operating Activities—Discontinued Operations	—			(477		)	—			—			(477		)
Cash Flows from Operating Activities	(117,979		)	408,690			102,618			—			393,329
Cash Flows from Investing Activities:
Capital expenditures	—			(142,737		)	(74,864		)	—			(217,601		)
Cash paid for acquisitions, net of cash acquired	—			(1,314,370		)	(352,499		)	—			(1,666,869		)
Intercompany loans to subsidiaries	370,423			19,092			—			(389,515		)	—
Acquisitions of customer relationships, customer inducements and data center lease-based intangibles	—			(24,922		)	(12,311		)	—			(37,233		)
Proceeds from sales of property and equipment and other, net	—			—			207			—			207
Cash Flows from Investing Activities—Continuing Operations	370,423			(1,462,937		)	(439,467		)	(389,515		)	(1,921,496		)
Cash Flows from Investing Activities—Discontinued Operations	—			—			—			—			—
Cash Flows from Investing Activities	370,423			(1,462,937		)	(439,467		)	(389,515		)	(1,921,496		)
Cash Flows from Financing Activities:
Repayment of revolving credit facility, term loan facilities and other debt	—			(3,657,315		)	(4,219,481		)	—			(7,876,796		)
Proceeds from revolving credit facility, term loan facilities and other debt	—			4,531,603			4,412,813			—			8,944,416
Debit (payments) balances under cash pools	—			(7,657		)	2,850			4,807			—
Debt (repayment to) financing from and equity (distribution to) contribution from noncontrolling interests, net	—			—			(1,079		)	—			(1,079		)
Intercompany loans from parent	—			(384,323		)	(5,192		)	389,515			—
Parent cash dividends	(337,052		)	—			—			—			(337,052		)
Net (payments) proceeds associated with employee stock-based awards	(2,259		)	—			—			—			(2,259		)
Net proceeds associated with the Over-Allotment Option exercise	76,192			—			—			—			76,192
Net proceeds associated with the At the Market (ATM) Program	8,716			—			—			—			8,716
Payment of debt financing and stock issuance costs	(412		)	(12,322		)	(651		)	—			(13,385		)
Cash Flows from Financing Activities—Continuing Operations	(254,815		)	469,986			189,260			394,322			798,753
Cash Flows from Financing Activities—Discontinued Operations	—			—			—			—			—
Cash Flows from Financing Activities	(254,815		)	469,986			189,260			394,322			798,753
Effect of exchange rates on cash and cash equivalents	—			—			(8,093		)	—			(8,093		)
(Decrease) Increase in cash and cash equivalents	(2,371		)	(584,261		)	(155,682		)	4,807			(737,507		)
Cash and cash equivalents, including Restricted Cash, beginning of period	2,433			634,317			383,675			(94,726		)	925,699
Cash and cash equivalents, including Restricted Cash, end of period	$	62		$	50,056		$	227,993		$	(89,919	)	$	188,192

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(6) ~~Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

December 31, 2017
Parent Guarantors Non-
Guarantors Eliminations Consolidated
Assets

Current Assets:

Cash and cash equivalents(1) $ 2,433
$ 634,317
$ 383,675
$ (94,726 ) $ 925,699
Accounts receivable —
32,972
802,770
—
835,742
Intercompany receivable 332,293
149,731
—
(482,024 ) —
Prepaid expenses and other 1,579
103,643
83,681
(29 ) 188,874
Total Current Assets 336,305
920,663
1,270,126
(576,779 ) 1,950,315
Property, Plant and Equipment, Net 316
2,030,875
1,386,488
—
3,417,679
Other Assets, Net:

Long-term notes receivable from affiliates and intercompany receivable 4,578,995
—
—
(4,578,995 ) —
Investment in subsidiaries 1,858,045
885,999
—
(2,744,044 ) —
Goodwill —
2,577,310
1,492,957
—
4,070,267
Other —
796,913
737,228
—
1,534,141
Total Other Assets, Net 6,437,040
4,260,222
2,230,185
(7,323,039 ) 5,604,408
Total Assets $ 6,773,661
$ 7,211,760
$ 4,886,799
$ (7,899,818 ) $ 10,972,402
Liabilities and Equity

Intercompany Payable $ —
$ —
$ 482,024
$ (482,024 ) $ —
Debit Balances Under Cash Pools —
56,233
38,493
(94,726 ) —
Current Portion of Long-Term Debt —
54,247
92,082
(29 ) 146,300
Total Other Current Liabilities 235,062
527,549
421,262
—
1,183,873
Long-Term Debt, Net of Current Portion 4,232,759
758,166
1,906,046
—
6,896,971
Long-Term Notes Payable to Affiliates and Intercompany Payable —
4,578,995
—
(4,578,995 ) —
Other Long-term Liabilities —
113,024
241,974
—
354,998
Commitments and Contingencies (See Note 8)

Redeemable Noncontrolling Interests 8,402
—
83,016
—
91,418
Total Iron Mountain Incorporated Stockholders' Equity 2,297,438
1,123,546
1,620,498
(2,744,044 ) 2,297,438
Noncontrolling Interests —
—
1,404
—
1,404
Total Equity 2,297,438
1,123,546
1,621,902
(2,744,044 ) 2,298,842
Total Liabilities and Equity $ 6,773,661
$ 7,211,760
$ 4,886,799
$ (7,899,818 ) $ 10,972,402


~~(1)~~	Included within Cash and Cash Equivalents at December 31, 2017 is approximately $38,400 and $62,000 of cash on deposit associated with our Cash Pools for the Guarantors and Non-Guarantors, respectively.

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(6) Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)~~

June 30, 2018
Parent Guarantors Non-
Guarantors Eliminations Consolidated
Assets

Current Assets:

Cash and cash equivalents(1) $ 62
$ 50,056
$ 227,993
$ (89,919 ) $ 188,192
Accounts receivable —
58,280
808,761
—
867,041
Intercompany receivable —
437,598
—
(437,598 ) —
Prepaid expenses and other 318
108,078
80,734
(29 ) 189,101
Total Current Assets 380
654,012
1,117,488
(527,546 ) 1,244,334
Property, Plant and Equipment, Net 251
2,939,491
1,466,745
—
4,406,487
Other Assets, Net:

Long-term notes receivable from affiliates and intercompany receivable 4,764,133
—
—
(4,764,133 ) —
Investment in subsidiaries 1,892,689
935,316
—
(2,828,005 ) —
Goodwill —
2,860,920
1,605,714
—
4,466,634
Other 2,203
944,678
748,198
—
1,695,079
Total Other Assets, Net 6,659,025
4,740,914
2,353,912
(7,592,138 ) 6,161,713
Total Assets $ 6,659,656
$ 8,334,417
$ 4,938,145
$ (8,119,684 ) $ 11,812,534
Liabilities and Equity

Intercompany Payable $ 114,379
$ —
$ 323,219
$ (437,598 ) $ —
Debit Balances Under Cash Pools —
48,576
41,343
(89,919 ) —
Current Portion of Long-Term Debt —
60,363
63,484
(29 ) 123,818
Total Other Current Liabilities 246,808
532,092
370,385
—
1,149,285
Long-Term Debt, Net of Current Portion 4,227,267
1,637,813
2,096,681
—
7,961,761
Long-Term Notes Payable to Affiliates and Intercompany Payable —
4,764,133
—
(4,764,133 ) —
Other Long-term Liabilities —
118,575
306,308
—
424,883
Commitments and Contingencies (See Note 8)

Redeemable Noncontrolling Interests 15,262
—
80,078
—
95,340
Total Iron Mountain Incorporated Stockholders' Equity 2,055,940
1,172,865
1,655,140
(2,828,005 ) 2,055,940
Noncontrolling Interests —
—
1,507
—
1,507
Total Equity 2,055,940
1,172,865
1,656,647
(2,828,005 ) 2,057,447
Total Liabilities and Equity $ 6,659,656
$ 8,334,417
$ 4,938,145
$ (8,119,684 ) $ 11,812,534


~~(1)~~	~~Included within Cash and Cash Equivalents at June 30, 2018 is approximately $42,000 and $50,600 of cash on deposit associated with our Cash Pools for the Guarantors and Non-Guarantors, respectively.~~

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(6) Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

Three Months Ended June 30, 2017
Parent Guarantors Canada
Company Non-
Guarantors Eliminations Consolidated
Revenues:

Storage rental and service (excluding intercompany) $ —
$ 574,211
$ 47,587
$ 328,008
$ —
$ 949,806
Intercompany —
1,141
—
21,649
(22,790 ) —
Total Revenues —
575,352
47,587
349,657
(22,790 ) 949,806
Operating Expenses

Cost of sales (excluding depreciation and amortization) and Selling, general and administrative 273
389,679
10,585
251,192
—
651,729
Intercompany —
6,590
15,059
1,141
(22,790 ) —
Depreciation and amortization 43
75,129
4,309
48,618
—
128,099
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net —
(246 ) 4
26
—
(216 )
Total Operating Expenses 316
—
471,152
—
29,957
—
300,977
(22,790 ) 779,612
Operating (Loss) Income (316 ) 104,200
17,630
48,680
—
170,194
Interest Expense (Income), Net 40,377
15,637
(6,035 ) 39,987
—
89,966
Other Expense (Income), Net 339
543
(127 ) (20,121 ) —
(19,366 )
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes and Gain on Sale of Real Estate (41,032 ) 88,020
23,792
28,814
—
99,594
Provision (Benefit) for Income Taxes —
436
10,010
7,563
—
18,009
Gain on Sale of Real Estate, Net of Tax —
—
—
(1,563 ) —
(1,563 )
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax (119,662 ) (29,962 ) (363 ) (13,782 ) 163,769
—
Income (Loss) from Continuing Operations 78,630
117,546
14,145
36,596
(163,769 ) 83,148
(Loss) Income from Discontinued Operations —
(1,155 ) —
(871 ) —
(2,026 )
Net Income (Loss) 78,630
116,391
14,145
35,725
(163,769 ) 81,122
Less: Net Income (Loss) Attributable to Noncontrolling Interests —
—
—
2,492
—
2,492
Net Income (Loss) Attributable to Iron Mountain Incorporated $ 78,630
$ 116,391
$ 14,145
$ 33,233
$ (163,769 ) $ 78,630
Net Income (Loss) $ 78,630
$ 116,391
$ 14,145
$ 35,725
$ (163,769 ) $ 81,122
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments (7,076 ) —
2,704
11,910
—
7,538
Equity in Other Comprehensive Income (Loss) of Subsidiaries 14,725
11,213
970
2,704
(29,612 ) —
Total Other Comprehensive Income (Loss) 7,649
11,213
3,674
14,614
(29,612 ) 7,538
Comprehensive Income (Loss) 86,279
127,604
17,819
50,339
(193,381 ) 88,660
Comprehensive Income (Loss) Attributable to Noncontrolling Interests —
—
—
2,381
—
2,381
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated $ 86,279
$ 127,604
$ 17,819
$ 47,958
$ (193,381 ) $ 86,279

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(6) Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)~~

Three Months Ended June 30, 2018
Parent Guarantors Non-
Guarantors Eliminations Consolidated
Revenues:

Storage rental and service (excluding intercompany) $ —
$ 641,852
$ 418,971
$ —
$ 1,060,823
Intercompany —
1,216
4,305
(5,521 ) —
Total Revenues —
643,068
423,276
(5,521 ) 1,060,823
Operating Expenses:

Cost of sales (excluding depreciation and amortization) and Selling, general and administrative 36
419,099
282,655
—
701,790
Intercompany —
4,305
1,216
(5,521 ) —
Depreciation and amortization 32
96,170
60,018
—
156,220
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net —
(462 ) (84 ) —
(546 )
Total Operating Expenses 68
519,112
343,805
(5,521 ) 857,464
Operating (Loss) Income (68 ) 123,956
79,471
—
203,359
Interest Expense (Income), Net 50,313
3,005
48,789
—
102,107
Other Expense (Income), Net 2,767
6,575
(28,398 ) —
(19,056 )
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes (53,148 )
114,376

59,080

—

120,308
Provision (Benefit) for Income Taxes —
12,509
13,896
—
26,405
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax (146,549 ) (39,711 ) —
186,260
—
Income (Loss) from Continuing Operations 93,401
141,578
45,184
(186,260 ) 93,903
(Loss) Income from Discontinued Operations, Net of Tax —
(273 ) (87 ) —
(360 )
Net Income (Loss) 93,401
141,305
45,097
(186,260 ) 93,543
Less: Net (Loss) Income Attributable to Noncontrolling Interests —
—
142
—
142
Net Income (Loss) Attributable to Iron Mountain Incorporated $ 93,401
$ 141,305
$ 44,955
$ (186,260 ) $ 93,401
Net Income (Loss) $ 93,401
$ 141,305
$ 45,097
$ (186,260 ) $ 93,543
Other Comprehensive Income (Loss):

Foreign Currency Translation Adjustments 10,257
—
(149,429 ) —
(139,172 )
Change in fair value of interest rate swap agreements 2,388
—
—
—
2,388
Equity in Other Comprehensive Income (Loss) of Subsidiaries (146,018 ) (129,860 ) —
275,878
—
Total Other Comprehensive Income (Loss) (133,373 ) (129,860 ) (149,429 ) 275,878
(136,784 )
Comprehensive Income (Loss) (39,972 ) 11,445
(104,332 ) 89,618
(43,241 )
Comprehensive (Loss) Income Attributable to Noncontrolling Interests —
—
(3,274 ) —
(3,274 )
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated $ (39,972 ) $ 11,445
$ (101,058 ) $ 89,618
$ (39,967 )

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(6) Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)~~

Six Months Ended June 30, 2017
Parent Guarantors Canada
Company Non-
Guarantors Eliminations Consolidated
Revenues:

Storage rental and service (excluding intercompany) $ —
$ 1,141,771
$ 95,643
$ 651,268
$ —
$ 1,888,682
Intercompany —
2,238
—
43,991
(46,229 ) —
Total Revenues —
1,144,009
95,643
695,259
(46,229 ) 1,888,682
Operating Expenses:

Cost of sales (excluding depreciation and amortization) and Selling, general and administrative 352
791,713
21,696
504,841
—
1,318,602
Intercompany —
13,196
30,795
2,238
(46,229 ) —
Depreciation and amortization 89
151,290
8,547
92,880
—
252,806
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net —
(794 ) 6
113
—
—
(675 )
Total Operating Expenses 441
955,405
61,044
600,072
(46,229 ) 1,570,733
Operating (Loss) Income (441 ) 188,604
34,599
95,187
—
317,949
Interest Expense (Income), Net 83,161
12,358
5,635
74,867
—
176,021
Other Expense (Income), Net 420
3,062
(154 ) (29,058 ) —
(25,730 )
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes and Gain on Sale of Real Estate (84,022 ) 173,184
29,118
49,378
—
167,658
Provision (Benefit) for Income Taxes —
13,180
6,522
7,527
—
27,229
Gain on Sale of Real Estate, Net of Tax —
—
—
(1,563 ) —
(1,563 )
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax (220,777 ) (53,375 ) (520 ) (22,596 ) 297,268
—
Income (Loss) from Continuing Operations 136,755
213,379
23,116
66,010
(297,268 ) 141,992
(Loss) Income from Discontinued Operations —
(957 ) —
(1,406 ) —
(2,363 )
Net Income (Loss) 136,755
212,422
23,116
64,604
(297,268 ) 139,629
Less: Net Income (Loss) Attributable to Noncontrolling Interests —
—
—
2,874
—
2,874
Net Income (Loss) Attributable to Iron Mountain Incorporated $ 136,755
$ 212,422
$ 23,116
$ 61,730
$ (297,268 ) $ 136,755
Net Income (Loss) $ 136,755
$ 212,422
$ 23,116
$ 64,604
$ (297,268 ) $ 139,629
Other Comprehensive Income (Loss):

Foreign Currency Translation Adjustments (8,148 ) —
3,339
63,131
—
58,322
Equity in Other Comprehensive Income (Loss) of Subsidiaries 67,131
39,753
1,257
3,339
(111,480 ) —
Total Other Comprehensive Income (Loss) 58,983
39,753
4,596
66,470
(111,480 ) 58,322
Comprehensive Income (Loss) 195,738
252,175
27,712
131,074
(408,748 ) 197,951
Comprehensive Income (Loss) Attributable to Noncontrolling Interests —
—
—
2,213
—
2,213
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated $ 195,738
$ 252,175
$ 27,712
$ 128,861
$ (408,748 ) $ 195,738

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(6) Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)~~

Six Months Ended June 30, 2018
Parent Guarantors Non-
Guarantors Eliminations Consolidated
Revenues:

Storage rental and service (excluding intercompany) $ —
$ 1,268,558
$ 834,723
$ —
$ 2,103,281
Intercompany —
2,421
8,796
(11,217 ) —
Total Revenues —
1,270,979
843,519
(11,217 ) 2,103,281
Operating Expenses:

Cost of sales (excluding depreciation and amortization) and Selling, general and administrative 79
850,610
569,552
—
1,420,241
Intercompany —
8,796
2,421
(11,217 ) —
Depreciation and amortization 65
198,616
118,117
—
316,798
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net —
(818 ) (858 ) —

(1,676 )
Total Operating Expenses 144
1,057,204
689,232
(11,217 ) 1,735,363
Operating (Loss) Income (144 ) 213,775
154,287
—
367,918
Interest Expense (Income), Net 100,254
1,497
97,982
—
199,733
Other Expense (Income), Net 1,610
8,135
(8,650 ) —
1,095
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes (102,008 ) 204,143
64,955
—
167,090
Provision (Benefit) for Income Taxes —
5,797
21,776
—
27,573
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax (240,093 ) (36,846 ) —
276,939
—
Income (Loss) from Continuing Operations 138,085
235,192
43,179
(276,939 ) 139,517
(Loss) Income from Discontinued Operations, Net of Tax —
(695 ) (127 ) —
(822 )
Net Income (Loss) 138,085
234,497
43,052
(276,939 ) 138,695
Less: Net Income (Loss) Attributable to Noncontrolling Interests —
—
610
—
610
Net Income (Loss) Attributable to Iron Mountain Incorporated $ 138,085
$ 234,497
$ 42,442
$ (276,939 ) $ 138,085
Net Income (Loss) $ 138,085
$ 234,497
$ 43,052
$ (276,939 ) $ 138,695
Other Comprehensive Income (Loss):

Foreign Currency Translation Adjustments 4,622
—
(112,143 ) —
(107,521 )
Change in fair value of interest rate swap agreements 2,203
—
—
—
2,203
Equity in Other Comprehensive Income (Loss) of Subsidiaries (110,286 ) (91,524 ) —
201,810
—
Total Other Comprehensive Income (Loss) (103,461 ) (91,524 ) (112,143 ) 201,810
(105,318 )
Comprehensive Income (Loss) 34,624
142,973
(69,091 ) (75,129 ) 33,377
Comprehensive Income (Loss) Attributable to Noncontrolling Interests —
—
(1,247 ) —
(1,247 )
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated $ 34,624
$ 142,973
$ (67,844 ) $ (75,129 ) $ 34,624

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(6) Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Six Months Ended June 30, 2017
Parent Guarantors Canada
Company Non-
Guarantors Eliminations Consolidated
Cash Flows from Operating Activities:

Cash Flows from Operating Activities—Continuing Operations $ (81,406 ) $ 305,548
$ 27,976
$ 69,922
$ —
$ 322,040
Cash Flows from Operating Activities—Discontinued Operations —
(957 ) —
(1,406 ) —
(2,363 )
Cash Flows from Operating Activities (81,406 ) 304,591
27,976
68,516
—
319,677
Cash Flows from Investing Activities:

Capital expenditures —
(124,559 ) (4,171 ) (36,477 ) —
(165,207 )
Cash paid for acquisitions, net of cash acquired —
(6,380 ) —
(31,843 ) —
(38,223 )
Intercompany loans to subsidiaries (51,119 ) (41,642 ) —
(474 ) 93,235
—
Investment in subsidiaries (16,170 ) —
—
—
16,170
—
Acquisitions of customer relationships and customer inducements —
(26,924 ) (410 ) (1,176 ) —
(28,510 )
Net proceeds from Divestments (see Note 10) —
—
—
2,423
—
2,423
Proceeds from sales of property and equipment and other, net (including real estate) —
12,933
2
(4,388 ) —
8,547
Cash Flows from Investing Activities—Continuing Operations (67,289 ) (186,572 ) (4,579 ) (71,935 ) 109,405
(220,970 )
Cash Flows from Investing Activities—Discontinued Operations —
—
—
—
—
—
Cash Flows from Investing Activities (67,289 ) (186,572 ) (4,579 ) (71,935 ) 109,405
(220,970 )
Cash Flows from Financing Activities:

Repayment of revolving credit, term loan facilities and other debt (262,579 ) (3,197,148 ) (51 ) (2,291,638 ) —
(5,751,416 )
Proceeds from revolving credit, term loan facilities and other debt 224,660
2,913,810
—
2,355,655
—
5,494,125
Net proceeds from sales of senior notes 332,683
—
—
—
—
332,683
Debit balances (payments) under cash pools —
136,379
—
25,171
(161,550 ) —
Debt financing from (repayment to) and equity contribution from (distribution to) noncontrolling interests, net —
—
—
10,151
—
10,151
Intercompany loans from parent —
44,957
(43,089 ) 91,367
(93,235 ) —
Equity contribution from parent —
—
—
16,170
(16,170 ) —
Parent cash dividends (147,393 ) —
—
—
—
(147,393 )
Net proceeds (payments) associated with employee stock-based awards 810
—
—
—
—
810
Payment of debt financing and stock issuance costs (471 ) —
(73 ) —
—
(544 )
Cash Flows from Financing Activities—Continuing Operations 147,710
(102,002 ) (43,213 ) 206,876
(270,955 ) (61,584 )
Cash Flows from Financing Activities—Discontinued Operations —
—
—
—
—
—
Cash Flows from Financing Activities 147,710
(102,002 ) (43,213 ) 206,876
(270,955 ) (61,584 )
Effect of exchange rates on cash and cash equivalents —
—
2,706
14,706
—
17,412
(Decrease) Increase in cash and cash equivalents (985 ) 16,017
(17,110 ) 218,163
(161,550 ) 54,535
Cash and cash equivalents, beginning of period 2,405
23,380
17,110
193,589
—
236,484
Cash and cash equivalents, end of period $ 1,420
$ 39,397
$ —
$ 411,752
$ (161,550 ) $ 291,019

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(6) Selected Consolidated Financial Statements of Parent, Guarantors, Canada Company and Non-Guarantors (Continued)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)~~

Six Months Ended June 30, 2018
Parent Guarantors Non-
Guarantors Eliminations Consolidated
Cash Flows from Operating Activities:

Cash Flows from Operating Activities—Continuing Operations $ (117,979 ) $ 409,167
$ 102,618
$ —
$ 393,806
Cash Flows from Operating Activities—Discontinued Operations —
(477 ) —
—
(477 )
Cash Flows from Operating Activities (117,979 ) 408,690
102,618
—
393,329
Cash Flows from Investing Activities:

Capital expenditures —
(142,737 ) (74,864 ) —
(217,601 )
Cash paid for acquisitions, net of cash acquired —
(1,314,370 ) (352,499 ) —
(1,666,869 )
Intercompany loans to subsidiaries 370,423
19,092
—
(389,515 ) —
Investment in subsidiaries —
—
—
—
—
Acquisitions of customer relationships, customer inducements and data center lease-based intangibles —
(24,922 ) (12,311 ) —
(37,233 )
Proceeds from sales of property and equipment and other, net (including real estate) —
—
207
—
207
Cash Flows from Investing Activities—Continuing Operations 370,423
(1,462,937 ) (439,467 ) (389,515 ) (1,921,496 )
Cash Flows from Investing Activities—Discontinued Operations —
—
—
—
—
Cash Flows from Investing Activities 370,423
(1,462,937 ) (439,467 ) (389,515 ) (1,921,496 )
Cash Flows from Financing Activities:

Repayment of revolving credit, term loan facilities and other debt —
(3,657,315 ) (4,219,481 ) —
(7,876,796 )
Proceeds from revolving credit, term loan facilities and other debt —
4,531,603
4,412,813
—
8,944,416
Debit (payments) balances under cash pools —
(7,657 ) 2,850
4,807
—
Debt financing from (repayment to) and equity contribution from (distribution to) noncontrolling interests, net —
—
(1,079 ) —
(1,079 )
Intercompany loans from parent —
(384,323 ) (5,192 ) 389,515
—
Parent cash dividends (337,052 ) —
—
—
(337,052 )
Net (payments) proceeds associated with employee stock-based awards (2,259 ) —
—
—
(2,259 )
Net proceeds associated with the Over-Allotment Option exercise 76,192
—
—
—
76,192
Net proceeds associated with the At the Market (ATM) Program 8,716
—
—
—
8,716
Payment of debt financing and stock issuance costs (412 ) (12,322 ) (651 ) —
(13,385 )
Cash Flows from Financing Activities—Continuing Operations (254,815 ) 469,986
189,260
394,322
798,753
Cash Flows from Financing Activities—Discontinued Operations —
—
—
—
—
Cash Flows from Financing Activities (254,815 ) 469,986
189,260
394,322
798,753
Effect of exchange rates on cash and cash equivalents —
—
(8,093 ) —
(8,093 )
Increase (Decrease) in cash and cash equivalents (2,371 ) (584,261 ) (155,682 ) 4,807
(737,507 )
Cash and cash equivalents, beginning of period 2,433
634,317
383,675
(94,726 ) 925,699
Cash and cash equivalents, end of period $ 62
$ 50,056
$ 227,993
$ (89,919 ) $ 188,192

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(7)~~ Segment Information

Our six reportable operating segments as of December 31, ~~2017~~2018 are described in Note 9 to Notes to Consolidated Financial Statements included in our Annual Report and are as follows:

North American Records and Information Management Business

North American Data Management Business

Western European Business

Other International Business

Global Data Center Business

Corporate and Other Business

There have been no changes made to our reportable operating segments since December 31, ~~2017. All~~2018, other than the impact of the Consumer Storage Transaction (as defined in Note 9). Prior to the Consumer Storage Transaction, our consumer storage business was a component of our Corporate and Other Business Segment. The previously reported segment information has been restated to conform to the current presentation and reflects the changes to our reportable operating segments that occurred in fourth quarter of ~~2017.~~2018 as described in Note 9 to Notes to Consolidated Financial Statements included in our Annual Report. The operations associated with acquisitions completed during the first ~~half~~six months of ~~2018 (for which noteworthy acquisitions are described in Note 4)~~2019 have been incorporated into our existing reportable operating segments.

An analysis of our business segment information and reconciliation to the accompanying Condensed Consolidated Financial Statements is as follows:


	North American Records and Information Management Business		North American Data Management Business		Western European Business		Other International Business		Global Data Center Business		Corporate and Other Business			Total Consolidated		North American Records and Information Management Business		North American Data Management Business		Western European Business		Other International Business		Global Data Center Business		Corporate and Other Business			Total Consolidated
For the Three Months Ended June 30, 2017
For the Three Months Ended June 30, 2019
Total Revenues	$	509,597	$	99,677	$	121,866	$	192,405	$	10,360	$	15,901		$	949,806	$	539,273	$	96,415	$	127,327	$	199,823	$	62,291	$	41,778		$	1,066,907
Storage Rental	305,168		68,735		74,535		121,317		9,931		10,553			590,239		313,355		66,750		78,554		128,898		60,582		21,149			669,288
Service	204,429		30,942		47,331		71,088		429		5,348			359,567		225,918		29,665		48,773		70,925		1,709		20,629			397,619
Depreciation and Amortization	58,628		8,272		16,124		30,203		1,595		13,277			128,099		62,691		10,100		14,328		30,760		32,671		13,781			164,331
Depreciation	50,119		6,091		12,366		20,518		1,531		11,690			102,315		46,655		7,818		10,476		17,833		19,027		11,913			113,722
Amortization	8,509		2,181		3,758		9,685		64		1,587			25,784		16,036		2,282		3,852		12,927		13,644		1,868			50,609
Adjusted EBITDA	220,768		55,448		36,528		56,166		5,991		(56,847		)	318,054		245,585		53,068		44,163		58,749		27,641		(78,264		)	350,942
Expenditures for Segment Assets	52,640		7,174		2,079		43,084		8,797		11,374			125,148		46,545		5,254		24,334		18,829		102,477		12,805			210,244
Capital Expenditures	46,235		7,174		1,723		16,702		8,797		11,374			92,005
Cash Paid (Received) for Acquisitions, Net of Cash Acquired	—		—		—		26,036		—		—			26,036
Acquisitions of Customer Relationships and Customer Inducements	6,405		—		356		346		—		—			7,107
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations)																28,596		5,254		22,724		11,955		101,032		12,805			182,366
Cash Paid for Acquisitions, Net of Cash Acquired																—		—		366		4,862		—		—			5,228
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs and third-party commissions																17,949		—		1,244		2,012		1,445		—			22,650
For the Three Months Ended June 30, 2018
Total Revenues	539,080		100,031		136,215		204,752		54,895		25,850			1,060,823		$	539,080	$	100,031	$	133,440	$	207,527	$	54,895	$	25,850		$	1,060,823
Storage Rental	305,895		68,808		82,439		129,611		51,945		16,741			655,439		305,895		68,808		82,439		129,611		51,945		16,741			655,439
Service	233,185		31,223		53,776		75,141		2,950		9,109			405,384		233,185		31,223		51,001		77,916		2,950		9,109			405,384
Depreciation and Amortization	60,970		9,538		17,700		30,164		22,503		15,345			156,220		60,970		9,538		17,500		30,364		22,503		15,345			156,220
Depreciation	48,252		7,217		11,958		18,062		13,120		12,892			111,501		48,252		7,217		11,821		18,199		13,120		12,892			111,501
Amortization	12,718		2,321		5,742		12,102		9,383		2,453			44,719		12,718		2,321		5,679		12,165		9,383		2,453			44,719
Adjusted EBITDA	244,861		55,280		46,413		60,633		24,901		(62,634		)	369,454		244,861		55,280		46,594		60,452		24,901		(64,533		)	367,555
Expenditures for Segment Assets	41,364		3,643		27,799		30,047		265,173		11,052			379,078		41,364		3,643		27,559		30,287		265,173		11,052			379,078
Capital Expenditures	25,122		3,643		25,336		13,681		43,162		11,052			121,996
Cash Paid (Received) for Acquisitions, Net of Cash Acquired	—		—		—		16,188		221,707		—			237,895
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations)																25,122		3,643		25,096		13,921		43,162		11,052			121,996
Cash Paid for Acquisitions, Net of Cash Acquired																—		—		—		16,188		221,707		—			237,895
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs	16,242		—		2,463		178		304		—			19,187		16,242		—		2,463		178		304		—			19,187

4544

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(7)~~(6) Segment Information (Continued)

North American
Records and
Information
Management
Business North American
Data
Management
Business Western European Business Other International Business Global Data Center Business
Corporate
and Other
Business
Total
Consolidated
As of and for the Six Months Ended June 30, 2017

Total Revenues $ 1,017,194
$ 200,511
$ 241,938
$ 381,646
$ 16,583
$ 30,810
$ 1,888,682
Storage Rental 603,351
137,559
146,102
238,932
15,789
20,785
1,162,518
Service 413,843
62,952
95,836
142,714
794
10,025
726,164
Depreciation and Amortization 119,163
16,523
30,421
57,879
3,019
25,801
252,806
Depreciation 102,071
12,154
23,254
39,823
2,891
21,714
201,907
Amortization 17,092
4,369
7,167
18,056
128
4,087
50,899
Adjusted EBITDA 430,298
110,718
70,670
111,513
7,497
(120,068 ) 610,628
Total Assets (1) 4,987,060
826,868
983,797
2,215,589
207,777
593,602
9,814,693
Expenditures for Segment Assets 104,528
15,080
7,104
61,704
17,692
25,832
231,940
Capital Expenditures 72,813
15,080
6,621
29,169
17,692
23,832
165,207
Cash (Received) Paid for Acquisitions, Net of Cash Acquired 4,379
—
—
31,844
—
2,000
38,223
Acquisitions of Customer Relationships and Customer Inducements 27,336
—
483
691
—
—
28,510
As of and for the Six Months Ended June 30, 2018

Total Revenues 1,065,923
199,995
273,087
412,722
101,498
50,056
2,103,281
Storage Rental 610,714
138,054
166,391
261,358
97,440
32,631
1,306,588
Service 455,209
61,941
106,696
151,364
4,058
17,425
796,693
Depreciation and Amortization 123,722
19,642
35,470
61,823
44,771
31,370
316,798
Depreciation 97,390
15,240
24,863
36,979
24,500
25,961
224,933
Amortization 26,332
4,402
10,607
24,844
20,271
5,409
91,865
Adjusted EBITDA 470,599
109,132
90,495
121,264
45,691
(124,712 ) 712,469
Total Assets (1) 5,010,186
829,682
1,355,980
2,235,790
1,909,088
471,808
11,812,534
Expenditures for Segment Assets 84,545
10,496
35,383
62,103
1,703,185
25,991
1,921,703
Capital Expenditures 54,992
10,496
31,487
38,719
56,273
25,634
217,601
Cash Paid (Received) for Acquisitions, Net of Cash Acquired 1,551
—
—
19,396
1,645,922
—
1,666,869
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs 28,002
—
3,896
3,988
990
357
37,233



	North American Records and Information Management Business		North American Data Management Business		Western European Business		Other International Business		Global Data Center Business		Corporate and Other Business			Total Consolidated
As of and for the Six Months Ended June 30, 2019
Total Revenues	$	1,066,653	$	193,162	$	256,080	$	400,779	$	123,827	$	80,269		$	2,120,770
Storage Rental	620,341		133,322		159,249		258,371		120,300		40,679			1,332,262
Service	446,312		59,840		96,831		142,408		3,527		39,590			788,508
Depreciation and Amortization	122,693		20,302		29,585		61,359		64,303		28,572			326,814
Depreciation	92,407		15,831		21,423		36,051		38,040		24,581			228,333
Amortization	30,286		4,471		8,162		25,308		26,263		3,991			98,481
Adjusted EBITDA	469,268		103,620		83,372		116,873		53,652		(151,337		)	675,448
Total Assets (1)	5,840,023		877,777		1,406,937		2,703,347		2,330,535		562,363			13,720,982
Expenditures for Segment Assets	102,810		10,886		54,435		50,083		256,182		27,948			502,344
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations)	57,284		10,886		24,840		27,104		222,589		24,428			367,131
Cash Paid for Acquisitions, Net of Cash Acquired	9,876		—		11,850		19,405		—		3,520			44,651
Acquisitions of Customer Relationships and Customer Inducements and Contract Fulfillment Costs and third-party commissions	35,650		—		17,745		3,574		33,593		—			90,562
As of and for the Six Months Ended June 30, 2018
Total Revenues	$	1,065,923	$	199,995	$	267,515	$	418,294	$	101,498	$	50,056		$	2,103,281
Storage Rental	610,714		138,054		166,391		261,358		97,440		32,631			1,306,588
Service	455,209		61,941		101,124		156,936		4,058		17,425			796,693
Depreciation and Amortization	123,722		19,642		35,056		62,237		44,771		31,370			316,798
Depreciation	97,390		15,240		24,579		37,263		24,500		25,961			224,933
Amortization	26,332		4,402		10,477		24,974		20,271		5,409			91,865
Adjusted EBITDA	470,599		109,132		90,560		121,199		45,691		(134,051		)	703,130
Total Assets (1)	5,010,186		829,682		1,344,699		2,247,071		1,909,088		476,433			11,817,159
Expenditures for Segment Assets	84,545		10,496		35,039		62,447		1,703,185		25,991			1,921,703
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations)	54,992		10,496		31,143		39,063		56,273		25,634			217,601
Cash Paid for Acquisitions, Net of Cash Acquired	1,551		—		—		19,396		1,645,922		—			1,666,869
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs	28,002		—		3,896		3,988		990		357			37,233


(1)	Excludes all intercompany receivables or payables and investment in subsidiary balances. Total assets as of June 30, 2019 reflects the adoption of ASU 2016-02.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(7)~~(6) Segment Information (Continued)

The accounting policies of the reportable operating segments are the same as those described in Note 2 and in Note 2 to Notes to Consolidated Financial Statements included in our Annual Report. Adjusted EBITDA for each segment is defined as income (loss) from continuing operations before interest expense, net, provision (benefit) for income taxes, depreciation and amortization, and also excludes certain items that we believe are not indicative of our core operating results, specifically: (i) (gain) loss on disposal/write-down of property, plant and equipment, ~~(excluding~~net (including real estate)~~, net;~~; (ii) intangible impairments; (iii) other ~~(income)~~ expense ~~net;~~(income), net (which includes foreign currency transaction (gains) losses, net); and (iv) ~~gain on sale of real estate, net of tax; and (v)~~ Significant Acquisition Costs (as defined below). Internally, we use Adjusted EBITDA as the basis for evaluating the performance of, and allocating resources to, our operating segments.

A reconciliation of Adjusted EBITDA to income (loss) from continuing operations on a consolidated basis for the three and six months ended June 30, 2019 and 2018 is as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2018			2017			2018			2019			2018			2019			2018
Adjusted EBITDA	$	318,054		$	369,454		$	610,628		$	712,469		$	350,942		$	367,555		$	675,448		$	703,130
(Add)/Deduct:
Gain on Sale of Real Estate, Net of Tax	(1,563		)	—			(1,563		)	—
Provision (Benefit) for Income Taxes	18,009			26,405			27,229			27,573			10,646			26,057			21,199			25,934
Other (Income) Expense, Net	(19,366		)	(19,056		)	(25,730		)	1,095			(15,192		)	(19,056		)	18			1,095
Interest Expense, Net	89,966			102,107			176,021			199,733			105,314			102,196			207,750			199,898
(Gain) loss on disposal/write-down of property, plant and equipment (excluding real estate), net	(216		)	(546		)	(675		)	(1,676		)
(Gain) loss on disposal/write-down of property, plant and equipment, net													(8,405		)	(546		)	(7,803		)	(1,676		)
Depreciation and Amortization	128,099			156,220			252,806			316,798			164,331			156,220			326,814			316,798
Significant Acquisition Costs(1)	19,977			10,421			40,548			29,429			1,901			10,421			4,647			29,429
Income (Loss) from Continuing Operations	$	83,148		$	93,903		$	141,992		$	139,517		$	92,347		$	92,263		$	122,823		$	131,652

(1)

~~Represents operating expenditures associated with (1) the Recall Transaction (as~~As defined in Note 19 to Notes to Consolidated Financial Statements included in our Annual Report), including: (i) advisory and professional fees to complete the Recall Transaction; (ii) costs associated with the Divestments (as defined in Note 14 to Notes to Consolidated Financial Statements included in our Annual Report) required in connection with receipt of regulatory approvals (including transitional services); and (iii) costs to integrate Recall Holdings Limited ("Recall") with our existing operations, including moving, severance, facility upgrade, REIT conversion 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 IODC Transaction (collectively, "Significant Acquisition Costs").Report.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(8)~~(6) Segment Information (Continued)

Information as to our revenues by product and service lines by segment for the three and six months ended June 30, 2019 and 2018 are as follows:



	North American Records and Information Management Business		North American Data Management Business		Western European Business		Other International Business		Global Data Center Business		Corporate and Other Business		Total Consolidated
For the Three Months Ended June 30, 2019
Records Management(1)	$	442,785	$	—	$	109,369	$	172,433	$	—	$	26,195	$	750,782
Data Management(1)	—		93,152		16,908		18,787		—		15,583		144,430
Information Destruction(1)(2)	96,488		3,263		1,050		8,603		—		—		109,404
Data Center	—		—		—		—		62,291		—		62,291
Total Revenues	$	539,273	$	96,415	$	127,327	$	199,823	$	62,291	$	41,778	$	1,066,907
For the Three Months Ended June 30, 2018
Records Management(1)	$	441,401	$	—	$	113,925	$	179,194	$	—	$	11,801	$	746,321
Data Management(1)	—		97,768		19,393		19,227		—		14,049		150,437
Information Destruction(1)(2)	97,679		2,263		122		9,106		—		—		109,170
Data Center	—		—		—		—		54,895		—		54,895
Total Revenues	$	539,080	$	100,031	$	133,440	$	207,527	$	54,895	$	25,850	$	1,060,823
For the Six Months Ended June 30, 2019
Records Management(1)	$	870,152	$	—	$	218,076	$	345,410	$	—	$	50,540	$	1,484,178
Data Management(1)	—		187,141		36,794		38,014		—		29,729		291,678
Information Destruction(1)(2)	196,501		6,021		1,210		17,355		—		—		221,087
Data Center	—		—		—		—		123,827		—		123,827
Total Revenues	$	1,066,653	$	193,162	$	256,080	$	400,779	$	123,827	$	80,269	$	2,120,770
For the Six Months Ended June 30, 2018
Records Management(1)	$	876,403	$	—	$	227,684	$	360,524	$	—	$	22,205	$	1,486,816
Data Management(1)	—		195,362		39,612		39,705		—		27,851		302,530
Information Destruction(1)(2)	189,520		4,633		219		18,065		—		—		212,437
Data Center	—		—		—		—		101,498		—		101,498
Total Revenues	$	1,065,923	$	199,995	$	267,515	$	418,294	$	101,498	$	50,056	$	2,103,281


(1)	Each of the offerings within our product and service lines has a component of revenue that is storage rental related and a component that is service revenues, except for information destruction, which does not have a storage rental component.


(2)	Includes secure shredding services.

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(7) Commitments and Contingencies

We are involved in litigation from time to time in the ordinary course of business. A portion of the defense and/or settlement costs associated with such litigation is covered by various commercial liability insurance policies purchased by us and, in limited cases, indemnification from third parties. Our policy is to establish reserves for loss contingencies when the losses are both probable and reasonably able to be estimated. We record legal costs associated with loss contingencies as expenses in the period in which they are incurred. There have been no material updates or changes to the matters disclosed in Note 10 to Notes to Consolidated Financial Statements included in our Annual ~~Report, nor have there been any new material loss contingencies since December 31, 2017.~~Report. We ~~continue to~~ believe that the resolution of the matters disclosed in Note 10 to Notes to Consolidated Financial Statements included in our Annual Report will not have a material impact on our consolidated financial condition, results of operations or cash flows.

We have estimated a reasonably possible range for all loss contingencies, including those disclosed in Note 10 to Notes to Consolidated Financial Statements included in our Annual Report and the item below, and believe it is reasonably possible that we could incur aggregate losses in addition to amounts currently accrued for all matters up to an additional ~~$17,200~~$17,000 over the next several years, of which certain amounts would be covered by insurance or indemnity arrangements.

In June 2019, we received a notification of assessment from tax and customs authorities in the Netherlands related to a VAT liability of approximately 16,800 Euros. The notification of assessment is related to our customs clearing and logistics business in the Netherlands, which we acquired through the acquisition of Bonded Services of America, Inc. and Bonded Services Acquisition, Ltd. (collectively, “Bonded”) in September 2017. As part of the import and declaration services we provide in the Netherlands, we file import declaration forms to the customs authorities for all goods imported in a particular month and calculate the amount of VAT that is due on the goods being imported. In certain instances, we remit import VAT to the Dutch tax authorities and subsequently are reimbursed by the entity the goods are being imported on behalf of. In other instances, however, the payment of VAT may be deferred and paid upon the sale of the goods to the ultimate end customer in cases where the entity receiving the goods holds a valid license allowing for the deferment of VAT (referred to as an Article 23 license). In the notification of assessment, the Dutch tax authorities have asserted that (i) we inappropriately deferred VAT for goods imported under Article 23 for certain of our customers between March 2017 and August 2018 and (ii) we are liable for the amount of VAT related to those goods for which VAT was inappropriately deferred. We have responded to the notification of assessment and have requested additional information regarding the matter from the Dutch tax authorities.

We believe that the amount, if assessed, would be subject to interest and potential penalties. We have established a reserve for this matter based upon our estimate of the amount of loss that is both probable and estimable. We are in the process of exploring potential recoveries (including insurance recoveries and/or claims against other third parties) against any losses we incur associated with this matter.

~~(9)~~(8) Stockholders' Equity Matters

Our board of directors has adopted a dividend policy under which we have paid, and in the future intend to pay, quarterly cash dividends on our common stock. The amount and timing of future dividends will continue to be subject to the approval of our board of directors, in its sole discretion, and to applicable legal requirements.

In fiscal year ~~2017~~2018 and in the first six months of ~~2018,~~2019, our board of directors declared the following dividends:

Declaration Date

Dividend
Per Share

Record Date

Total
Amount

Payment Date

February 14, 2018

0.5875

March 15, 2018

167,969

April 2, 2018

May 24, 2018

0.5875

June 15, 2018

168,078

July 2, 2018

July 24, 2018

0.5875

September 17, 2018

168,148

October 2, 2018

October 25, 2018

0.6110

December 17, 2018

174,935

January 3, 2019

February 7, 2019

0.6110

March 15, 2019

175,242

April 2, 2019

May 22, 2019

0.6110

June 17, 2019

175,389

July 2, 2019

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

(8) Stockholders' Equity Matters (Continued)

Declaration Date Dividend
Per Share Record Date Total
Amount Payment Date
February 15, 2017 $ 0.5500
March 15, 2017 $ 145,235
April 3, 2017
May 24, 2017 0.5500
June 15, 2017 145,417
July 3, 2017
July 27, 2017 0.5500
September 15, 2017 146,772
October 2, 2017
October 24, 2017 0.5875
December 15, 2017 166,319
January 2, 2018
February 14, 2018 0.5875
March 15, 2018 167,969
April 2, 2018
May 24, 2018 0.5875
June 15, 2018 168,078
July 2, 2018

At The Market (ATM) Equity Program

As described in greater detail in Note 1312 to Notes to Consolidated Financial Statements included in our Annual Report, we entered into a distribution agreement ~~(the “Distribution Agreement”)~~ with a syndicate of 10 banks (the “Agents”) pursuant to which we may sell, from time to time, up to an aggregate sales price of $500,000 of our common stock through the Agents (the “At The Market (ATM) Equity Program”). There were no shares of common stock sold under the At The Market (ATM) Equity Program during the ~~three months ended June 30, 2018. During the~~ six months ended June 30, 2018 under the At The Market (ATM) Equity Program, we sold an aggregate of 273,486 shares of common stock for gross proceeds of approximately $8,800, generating net proceeds of $8,716, after deducting commissions of $90.2019. As of June 30, ~~2018~~2019, the remaining aggregate sale price of shares of our common stock available for distribution under the At The Market (ATM) Equity Program was approximately $431,200.

~~Equity Offering~~

(9) Divestments

On ~~December 12, 2017,~~March 19, 2019, we ~~entered into an underwriting agreement (the "Underwriting Agreement") with a syndicate of 16 banks (the “Underwriters”) related to the public offering~~contributed our customer contracts and certain intellectual property and other assets used by us to operate our consumer storage business in the United States and Canada (the "IM Consumer Storage Assets") and approximately $20,000 in cash (gross of ~~14,500,000 shares~~certain transaction expenses) (the ~~“Firm Shares”~~"Cash Contribution") ~~of our common stock~~to a joint venture entity, Makespace LLC (the ~~“Equity Offering”~~"Makespace JV"). The offering price to the public for the Equity Offering was $37.00 per share, and we agreed to pay the Underwriters an underwriting commission of $1.38195 per share. The net proceeds to us from the Equity Offering, after deducting underwriters' commissions, was $516,462. At December 31, 2017, the net proceeds of the Equity Offering, together with the net proceeds from the 5¹/₄~~% Notes, were used to temporarily repay borrowings under our Revolving Credit Facility and invest in money market funds.~~

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(9) Stockholders' Equity Matters (Continued)~~

Pursuant to the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase from us up to an additional 2,175,000 shares of common stock (the “Option Shares”) at the public offering price, less the underwriting commission and less an amount per share equal to any dividends or distributions declared, established by us and ~~payable on the Firm Shares but not payable on the Option Shares~~Makespace Labs, Inc. ("Makespace"), a consumer storage services provider (the ~~“Over-Allotment Option"~~"Consumer Storage Transaction"). On January 10, 2018, the Underwriters exercised the Over-Allotment Option in its entirety. The net proceeds to us from the exercise of the Over-Allotment Option, after deducting underwriters' commissions and the per share value of the dividend we declared on our common stock on October 24, 2017 (for which the record date was December 15, 2017) which was paid on January 2, 2018, was approximately $76,200. The net proceeds of the Equity Offering and the Over-Allotment Option, together with the net proceeds from the issuance of the 5¹/₄~~% Notes, were used to finance the purchase price of the IODC Transaction, and to pay related fees and expenses.~~

~~(10) Divestments~~

~~a. Recall Divestments~~

The table below summarizes certain results of operations of the Recall Divestments (as defined in Note 14 to Notes to Consolidated Financial Statements included in our Annual Report) included in discontinued operations for the three and six months ended June 30, 2017 and 2018:

Three Months Ended
June 30,
Six Months Ended
June 30,
Description 2017 2018 2017 2018
(Loss) Income from Discontinued Operations Before (Benefit) Provision for Income Taxes $ (3,049 ) $ (477 ) $ (3,478 ) $ (973 )
(Benefit) Provision for Income Taxes (1,023 ) (117 ) (1,115 ) (151 )
(Loss) Income from Discontinued Operations, Net of Tax $ (2,026 ) $ (360 ) $ (2,363 ) $ (822 )

On May 4, 2016, we completed the Access Sale to Access CIG (each as defined in Note 6 to Notes to Consolidated Financial Statements included in our Annual Report) for total consideration of approximately $80,000. Of the total consideration, we received $55,000 in cash proceeds at closing and we are entitled to receive up to $25,000 of additional cash proceeds (the “Access Contingent Consideration”). The Access Contingent Consideration is subject to adjustments for customer attrition subsequent toUpon the closing of the ~~Access Sale. We are also subject~~Consumer Storage Transaction on March 19, 2019, the Makespace JV owned (i) the IM Consumer Storage Assets, (ii) the Cash Contribution and (iii) the customer contracts, intellectual property and certain other assets used by Makespace to ~~potential indemnity obligations as~~operate its consumer storage business in the United States. As part of the ~~Access Sale.~~

Consumer Storage Transaction, we received an equity interest of approximately 34% in the Makespace JV (the "Makespace Investment"). In ~~June 2018, Access CIG sent us~~connection with the Consumer Storage Transaction and the Makespace Investment, we also entered into a ~~communication asserting that they did not owe any Access Contingent Consideration~~storage and service agreement with the Makespace JV to ~~us. Access CIG has also made claims for indemnification in unspecified amounts. We are currently evaluating the assertions~~provide certain storage and ~~claims made by Access CIG, though we expect to vigorously contest certain of their assertions and claims. We have recorded a non-trade receivable~~ related services to the Access Contingent Consideration within Prepaid expenses and other in our Condensed Consolidated Balance Sheets as of December 31, 2017 and June 30, 2018 based upon our estimate of the realizable value of the Access Contingent Consideration. Any change to our estimate of the realizable value of the Access Contingent Consideration (either favorable or unfavorable) will be recorded to our Consolidated Statement of Operations as a component of discontinued operations.

~~b. Russia and Ukraine Divestment~~

On May 30, 2017, Iron Mountain EES Holdings Ltd. ("IM EES"), a consolidated subsidiary of IMI, sold its records and information management operations in Russia and Ukraine to OSG Records Management (Europe) Limited (“OSG”) in a stock transaction (the “Russia and Ukraine Divestment”). As consideration for the Russia and Ukraine Divestment, IM EES received a 25% equity interest in OSG (the "OSG Investment")Makespace JV (see Note 11).

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(In Thousands, Except Share and Per Share Data)~~

~~(Unaudited)~~

~~(10) Divestments (Continued)~~

We have concluded that the ~~Russia and Ukraine Divestment~~divestment of the IM Consumer Storage Assets in the Consumer Storage Transaction does not meet the criteria to be reported as a discontinued ~~operations~~operation in our consolidated financial statements, as our decision to divest ~~these businesses~~this business does not represent a strategic shift that will have a major effect on our operations and financial results. Accordingly, the revenues and expenses associated with ~~these businesses~~this business are presented as a component of income (loss) from continuing operations in our Condensed Consolidated Statements of Operations for the six months ended June 30, 2019 through the closing date of the Consumer Storage Transaction and for the three and six months ended June 30, ~~2017~~2018 and the cash flows associated with ~~these businesses~~this business are presented as a component of cash flows from continuing operations in our Condensed Consolidated ~~Statement~~Statements of Cash Flows for the six months ended June 30, ~~2017.~~2019 through the closing date of the Consumer Storage Transaction and for the six months ended June 30, 2018.

As a result of the ~~Russia and Ukraine Divestment,~~Consumer Storage Transaction, we recorded a gain on sale of ~~$38,869~~approximately $4,200 to ~~other~~Other expense (income), net, ~~during~~in the ~~second~~first quarter of ~~2017,~~2019, representing the excess of the fair value of the consideration received over the sum of (i) the carrying value of our ~~businesses in Russia~~consumer storage operations and ~~Ukraine. As of~~(ii) the Cash Contribution. At the closing date of the ~~Russia and Ukraine Divestment,~~Consumer Storage Transaction, the fair value of the ~~OSG~~Makespace Investment ~~(as defined in Note 14 to Notes to Consolidated Financial Statements included in our Annual Report)~~ was approximately $18,000. As of the closing date of the Russia and Ukraine Divestment, the carrying value of our businesses in Russia and Ukraine was a credit balance of $20,869, which consisted of (i) a credit balance of approximately $29,100 of cumulative translation adjustment associated with our businesses in Russia and Ukraine that was reclassified from accumulated other comprehensive items, net, (ii) the carrying value of the net assets of our businesses in Russia and Ukraine, excluding goodwill, of $4,716 and (iii) $3,515 of goodwill associated with our former Northern and Eastern Europe reporting unit (of which our businesses in Russia and Ukraine were a component of prior to the Russia and Ukraine Divestment), which was allocated, on a relative fair value basis, to our businesses in Russia and Ukraine.

$27,500. We account for the ~~OSG~~Makespace Investment as an equity method investment. ~~As of December 31, 2017 and June 30, 2018, the fair~~The carrying value of the ~~OSG~~Makespace Investment at June 30, 2019 is ~~$17,539 and $17,445, respectively~~$23,896, and is presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheet.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(11)~~(10) Significant Acquisition Costs

Significant Acquisition Costs included in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018 are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cost of sales (excluding depreciation and amortization)	$	1,293	$	1,827	$	2,191	$	2,123
Selling, general and administrative expenses	608		8,594		2,456		27,306
Total Significant Acquisition Costs	$	1,901	$	10,421	$	4,647	$	29,429

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
Cost of sales (excluding depreciation and amortization) $ 5,073
$ 1,827
$ 12,960
$ 2,123
Selling, general and administrative expenses 14,904
8,594
27,588
27,306
Total Significant Acquisition Costs $ 19,977
$ 10,421
$ 40,548
$ 29,429

Significant Acquisition Costs included in the accompanying Condensed Consolidated Statements of Operations by segment for the three and six months ended June 30, 2019 and 2018 are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
North American Records and Information Management Business	$	—	$	3,017	$	378	$	3,601
North American Data Management Business	—		351		—		351
Western European Business	81		1,427		81		3,579
Other International Business	951		896		1,453		1,433
Global Data Center Business	124		1,159		267		11,340
Corporate and Other Business	745		3,571		2,468		9,125
Total Significant Acquisition Costs	$	1,901	$	10,421	$	4,647	$	29,429

Three Months Ended
June 30, Six Months Ended
June 30,
2017 2018 2017 2018
North American Records and Information Management Business $ 6,326
$ 3,017
$ 13,625
$ 3,601
North American Data Management Business 938
351
1,683
351
Western European Business 2,131
1,427
5,347
3,579
Other International Business 1,937
896
3,588
1,433
Global Data Center Business —
1,159
—
11,340
Corporate and Other Business 8,645
3,571
16,305
9,125
Total Significant Acquisition Costs $ 19,977
$ 10,421
$ 40,548
$ 29,429

~~A rollforward~~

(11) Related Party Transactions

In connection with the Consumer Storage Transaction and the Makespace Investment (both as described more fully in Note 9), we also entered into a storage and service agreement with the Makespace JV to provide certain storage and related services to the Makespace JV (the "Makespace Agreement"). Revenues and expenses associated with the Makespace Agreement are presented as a component of ~~accrued liabilities related to Significant Acquisition Costs on~~ our ~~Condensed Consolidated Balance Sheets as~~North American Records and Information Management Business segment. We recognized approximately $7,400 and $7,900 of ~~December 31, 2017 to~~revenue, respectively, for the three and six months ended June 30, ~~2018 is as follows:~~2019, associated with the Makespace Agreement.

Accrual for Significant Acquisition Costs
Balance at December 31, 2017 $ 12,622
Amounts accrued 2,437
Change in estimates(1) (64 )
Payments (8,593 )
Currency translation adjustments (7 )
Balance at June 30, 2018(2) $ 6,395


~~(1)~~	~~Includes adjustments made to amounts accrued in a prior period.~~

~~(2)~~

Accrued liabilities related to Significant Acquisition Costs as of June 30, 2018 presented in the table above generally related to employee severance costs and onerous lease liabilities associated with the Recall Transaction. We expect that the majority of these liabilities will be paid in 2018. Additional Significant Acquisition Costs recorded in our Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2018 have either been settled in cash during such periods or are included in our Condensed Consolidated Balance Sheet as of June 30, 2018 as a component of accounts payable.

IRON MOUNTAIN INCORPORATED

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, ~~2018~~2019 should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto for the three and six months ended June 30, ~~2018,~~2019, included herein, and our Consolidated Financial Statements and Notes thereto for the year ended December 31, ~~2017,~~2018, included in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on February ~~16, 2018~~14, 2019 (our "Annual Report").

FORWARD-LOOKING STATEMENTS

We have made statements in this Quarterly Report on Form 10-Q ("Quarterly Report") that constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements concern our operations, economic performance, financial condition, goals, beliefs, future growth strategies, investment objectives, plans and current expectations, such as our (1) commitment to future dividend payments, (2) expected growth of records stored with us from existing customers, (3) expected ~~2018~~2019 consolidated ~~internal~~organic storage rental revenue growth rate, consolidated organic total revenue growth rate and capital expenditures, (4) ~~statements made~~expectation that profits will increase in ~~relation (i) to~~ our ~~acquisition~~emerging markets, (5) expectation that our growth portfolio will become a large part of ~~Recall Holdings Limited ("Recall") pursuant to the Scheme Implementation Deed, as amended, with Recall (the "Recall Transaction") and (ii)~~ our ~~acquisition of IO Data Centers, LLC ("IODC"), including the total acquisition expenditures related to Recall and IODC and the cost to integrate Recall into our existing operations, (5)~~business over time, (6) statements regarding our expectation to reduce our leverage ratio ~~(6) our~~and (7) ability to close pending acquisitions, (7) expectations regarding the impact of the recent United States tax reform legislation on our consolidated results of operations and (8) expectations regarding the impact of the adoption of ASU 2014-09 (as defined below) on our Adjusted EBITDA (as defined below) for the year ending December 31, 2018.acquisitions. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors. When we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements. Although we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. In addition, important factors that could cause actual results to differ from expectations include, among others:

our ability to remain qualified for taxation as a real estate investment trust for United States federal income tax purposes ("REIT");

the adoption of alternative technologies and shifts by our customers to storage of data through non-paper based technologies;

changes in customer preferences and demand for our storage and information management services;

the cost to comply with current and future laws, regulations and customer demands relating to data security and privacy issues, as well as fire and safety standards;

the impact of litigation or disputes that may arise in connection with incidents in which we fail to protect our customers' information or our internal records or ITinformation technology ("IT") systems and the impact of such incidents on our reputation and ability to compete;

changes in the price for our storage and information management services relative to the cost of providing such storage and information management services;

changes in the political and economic environments in the countries in which our international subsidiaries operate and changes in the global political climate;

our ability or inability to manage growth, expand internationally, complete acquisitions on satisfactory terms, to close pending acquisitions and to integrate acquired companies efficiently;

changes in the amount of our growth and ~~maintenance~~recurring capital expenditures and our ability to invest according to plan;

our ability to comply with our existing debt obligations and restrictions in our debt instruments or to obtain additional financing to meet our working capital needs;

the impact of service interruptions or equipment damage and the cost of power on our data center operations;

changes in the cost of our debt;

the impact of alternative, more attractive investments on dividends;

the cost or potential liabilities associated with real estate necessary for our business;

the performance of business partners upon whom we depend for technical assistance or management ~~expertise outside the United States;~~expertise; and

other trends in competitive or economic conditions affecting our financial condition or results of operations not presently contemplated.

You should not rely upon forward-looking statements except as statements of our present intentions and of our present expectations, which may or may not occur. You should read these cautionary statements as being applicable to all forward-looking statements wherever they appear. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures we have made in this Quarterly Report, as well as our other periodic reports filed with the SEC including under "Risk Factors" in our Annual Report.

Overview

The following discussions set forth, for the periods indicated, management's discussion and analysis of financial condition and results of operations. Significant trends and changes are discussed for the three and six month periods ended June 30, ~~2018~~2019 within each section. ~~Trends and changes that are consistent with~~

IODC Acquisition

On January 10, 2018, we completed the ~~three and six month periods are not repeated and are discussed on a year to date basis only.~~

~~Adoption of ASU 2014-09~~

~~In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ("ASU 2014-09"), which is described in greater detail in Note 2.c. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report. We adopted ASU 2014-09 as of January 1, 2018 using the modified retrospective method, whereby the cumulative effect of applying ASU 2014-09 is recognized at the date of initial application. As a result, the comparative Condensed Consolidated Balance Sheet as of December 31, 2017, the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2017 and the Condensed Consolidated Statement of Equity and the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2017 have not been restated to reflect the adoption of ASU 2014-09.

~~As a result~~acquisition of the ~~adoption~~United States operations of ~~ASU 2014-09, Adjusted EBITDA for~~IODC (the "IODC Transaction"). At the ~~three and six months ended June 30, 2018 increased by~~closing of the IODC Transaction, we paid approximately ~~$8.0~~$1,347.0 million. In February 2019, we paid approximately $31.0 million and $12.0 million, respectively, compared to the prior year periods. The adoption of ASU 2014-09 did not have a material impact on Adjusted EPS, FFO (Nareit) or FFO (Normalized) (each as defined below) for the three and six months ended June 30, 2018 compared to the prior year periods. The revenues for the three and six months ended June 30, 2018 reflect a net $3.1 million and $6.6 million, respectively, reclassification of certain components of storage rental revenues to service revenuesin additional purchase price associated with the ~~adoption~~execution of ~~ASU 2014-09. We expect our Adjusted EBITDA for~~customer contracts from the ~~year ending December 31, 2018 to increase by approximately $20.0 million to $25.0 million as a result~~closing through the one-year anniversary of the ~~adoption of ASU 2014-09.~~

~~Significant Acquisitions~~

~~a. Recall Acquisition~~

~~On May 2, 2016, we completed the Recall~~IODC Transaction. ~~The results of operations of Recall have been included in our consolidated results from May 2, 2016.~~ See Note 6 to Notes to Consolidated Financial Statements included in our Annual Report for additional information.

~~b. IODC Acquisition~~Divestments

a. Consumer Storage Transaction

On ~~January 10, 2018,~~March 19, 2019, we ~~completed the acquisition of~~contributed our customer contracts and certain intellectual property and other assets used by us to operate our consumer storage business in the United States ~~operations~~and Canada (the "IM Consumer Storage Assets") and approximately $20.0 million in cash (gross of ~~IODC,~~certain transaction expenses) (the "Cash Contribution") to a ~~leading data center colocation space~~joint venture entity, Makespace LLC (the "Makespace JV"), established by us and ~~solutions~~Makespace Labs, Inc. ("Makespace"), a consumer storage services provider ~~based in Phoenix, Arizona, including the land and buildings associated with four data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio~~ (the ~~"IODC~~"Consumer Storage Transaction"). AtUpon the closing of the ~~IODC~~Consumer Storage Transaction on March 19, 2019, the Makespace JV owned (i) the IM Consumer Storage Assets, (ii) the Cash Contribution and (iii) the customer contracts, intellectual property and certain other assets used by Makespace to operate its consumer storage business in the United States. As part of the Consumer Storage Transaction, we ~~paid~~received an equity interest of approximately ~~$1,347.0 million.~~34% in the Makespace JV (the "Makespace Investment").

As described in Note 9 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report, the divestment of the IM Consumer Storage Assets in the Consumer Storage Transaction does not meet the criteria to be reported as a discontinued operations in our consolidated financial statements. In ~~addition~~connection with the Consumer Storage Transaction and the Makespace Investment, we also entered into a storage and service agreement with the Makespace JV to provide certain storage and related services to the ~~amount paid at the closing of the IODC Transaction, there is the potential of $35.0 million in additional payments~~Makespace JV (the "Makespace Agreement"). Revenues and expenses associated with the ~~execution~~Makespace Agreement are presented as a component of ~~future customer contracts.~~our North American Records and Information Management Business segment. We recognized approximately $7.4 million and $7.9 million of revenue, respectively, for the three and six months ended June 30, 2019 associated with the Makespace Agreement.

As a result of the Consumer Storage Transaction, we recorded a gain on sale of approximately $4.2 million to Other expense (income), net, in the first quarter of 2019, representing the excess of the fair value of the consideration received over the sum of (i) carrying value of our consumer storage operations and (ii) the Cash Contribution.

b. IMFS Divestment

On September 28, 2018, we sold substantially all of the assets associated with our fulfillment services business in the United States for total consideration of approximately $3.0 million (the "IMFS Divestment"). As described in Note 13 to Notes to Consolidated Financial Statements in our Annual Report, we have concluded that the IMFS Divestment does not meet the criteria to be reported as discontinued operations in our consolidated financial statements, as our decision to divest this business does not represent a strategic shift that will have a major effect on our operations and financial results. Our fulfillment services business represented approximately $6.8 million and $14.2 million of total revenues and approximately $0.0 million and $1.2 million of income from continuing operations for the three and six months ended June 30, 2018, respectively.

Significant Acquisition Costs

We currently estimate total acquisition and integration expenditures associated with ~~the~~our acquisition of Recall ~~Transaction~~Holdings Limited ("Recall") (the "Recall Transaction") and acquisition expenditures associated with the IODC Transaction to be approximately ~~$395.0~~$405.0 million, the substantial majority of which ~~is expected~~was incurred prior to ~~be incurred by~~ the end of 2018. This amount consists of operating expenditures associated with (1) the Recall Transaction, including: (i) advisory and professional fees to complete the Recall Transaction; (ii) costs associated with the Divestments (as defined in Note 14 to Notes to Consolidated Financial Statements included in our Annual Report) 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 conversion 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 IODC Transaction (collectively, "Significant Acquisition Costs"). From January 1, 2015 through June 30, ~~2018,~~2019, we have incurred cumulative operating and capital expenditures associated with the Recall Transaction and the IODC Transaction of ~~$350.4~~$394.1 million, including ~~$293.3~~$319.2 million of Significant Acquisition Costs (as defined in Note 9 to Notes to Consolidated Financial Statements included in our Annual Report) and ~~$57.1~~$74.9 million of capital expenditures. We expect the remaining amount of these operating and capital expenditures will be primarily related to moving costs associated with facility consolidation and system upgrade costs.

Immaterial Restatement

In June 2019, we received a notification of assessment from tax and customs authorities in the Netherlands related to a value-added tax (“VAT”) liability which relates to periods prior to January 1, 2019. We have established a reserve for this matter based upon our estimate of the amount of loss that is both probable and estimable, and have reflected this reserve through an immaterial restatement of our consolidated financial statements. As a result, certain line items in our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 have been restated to reflect the immaterial restatement. See Note 112.n. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for ~~more~~additional information regarding the effect of the immaterial restatement on ~~Significant Acquisition Costs, including costs recorded by segment as well as recorded between cost of sales and selling, general and administrative expenses.~~

~~Divestments~~

~~On May 30, 2017, as disclosed~~certain line items in ~~Note 10 to Notes to~~our Condensed Consolidated ~~Financial~~ Statements ~~included in this Quarterly Report, Iron Mountain EES Holdings Ltd. ("IM EES"), a consolidated subsidiary~~ of ours, sold its records and information management operations in Russia and Ukraine to OSG Records Management (Europe) Limited (“OSG”) in a stock transaction in exchange for a 25% equity interest in OSG (the “Russia and Ukraine Divestment”). As described in Note 10 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report, the Russia and Ukraine Divestment did not meet the criteria to be reported as discontinued operations in our consolidated financial statements. The Russia and Ukraine Divestment represents approximately $3.4 million and $8.6 million of total revenues and approximately $(1.3) million and $0.9 million of total (loss) income from continuing operationsOperations for the three and six months ended June 30, ~~2017, respectively.~~2018.

General

Our revenues consist of storage rental revenues as well as service revenues and are reflected net of sales and value added taxes. Storage rental revenues, which are considered a key driver of financial performance for the storage and information management services industry, consist primarily of recurring periodic rental charges related to the storage of materials or data (generally on a per unit basis) that are typically retained by customers for many years, technology escrow services that protect and manage source code, data backup and storage on our proprietary cloud and revenues associated with our data center operations. Service revenues include charges for related service activities, the most significant of which ~~include~~include: (1) the handling of records, including the addition of new records, temporary removal of records from storage, refiling of removed records and courier operations, consisting primarily of the pickup and delivery of records upon customer request; (2) destruction services, consisting primarily of secure shredding of sensitive documents and the related sale of recycled paper, the price of which can fluctuate from period to period, and customer termination and permanent removal fees; (3) other services, including the scanning, imaging and document conversion services of active and inactive records and project revenues; (4) consulting services; and (5) cloud-related data protection, preservation, restoration and recovery. Our service revenue growth has been negatively impacted by declining activity rates as stored records are becoming less active. While customers continue to store their records and tapes with us, they are less likely than they have been in the past to retrieve records for research and other purposes, thereby reducing service activity levels.

Cost of sales (excluding depreciation and amortization) consists primarily of wages and benefits for field personnel, facility occupancy costs (including rent and utilities), transportation expenses (including vehicle leases and fuel), other product cost of sales and other equipment costs and supplies. Of these, wages and benefits and facility occupancy costs are the most significant. Selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, information technology, sales, account management and marketing personnel, as well as expenses related to communications and data processing, travel, professional fees, bad debts, training, office equipment and supplies.

The expansion of our international businesses has impacted the major cost of sales components and selling, general and administrative expenses. Our international operations are more labor intensive relative to revenue than our operations in North America and, therefore, labor costs are a higher percentage of international segment revenue. In addition, the overhead structure of our expanding international operations has generally not achieved the same level of overhead leverage as our North American segments, which may result in an increase in selling, general and administrative expenses as a percentage of consolidated revenue as our international operations become a ~~more meaningful~~larger percentage of our consolidated results.

Our consolidated revenues and expenses are subject to the net effect of foreign currency translation related to our ~~entities~~operations outside the United States. It is difficult to predict the future fluctuations of foreign currency exchange rates and how those fluctuations will impact our Consolidated Statements of Operations. As a result of the relative size of our international operations, these fluctuations may be material on individual balances. Our revenues and expenses from our international operations are generally denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of currency fluctuations on our operating income and operating margin is partially mitigated. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we compare the percentage change in the results from one period to another period in this report using constant currency presentation. The constant currency growth rates are calculated by translating the ~~2017~~2018 results at the ~~2018~~2019 average exchange rates. Constant currency growth rates are a non-GAAP measure.

The following table is a comparison of underlying average exchange rates of the foreign currencies that had the most significant impact on our United States dollar-reported revenues and expenses:


	Average Exchange Rates for the Three Months Ended June 30,				Percentage Strengthening / (Weakening) of Foreign Currency		Percentage of United States Dollar-Reported Revenue for the Three Months Ended June 30,				Average Exchange Rates for the Three Months Ended June 30,				Percentage Strengthening / (Weakening) of Foreign Currency
	2017		2018		Percentage Strengthening / (Weakening) of Foreign Currency		2019		2018		2019		2018		Percentage Strengthening / (Weakening) of Foreign Currency
Australian dollar	$	0.751	$	0.757	0.8	%	3.4	%	3.8	%	$	0.700	$	0.757	(7.5	)%
Brazilian real	$	0.311	$	0.278	(10.6	)%	2.6	%	2.9	%	$	0.255	$	0.278	(8.3	)%
British pound sterling	$	1.278	$	1.361	6.5	%	6.4	%	6.8	%	$	1.285	$	1.361	(5.6	)%
Canadian dollar	$	0.744	$	0.775	4.2	%	5.7	%	6.0	%	$	0.748	$	0.775	(3.5	)%
Euro	$	1.100	$	1.192	8.4	%	7.5	%	7.2	%	$	1.124	$	1.192	(5.7	)%


	Average Exchange Rates for the Six Months Ended June 30,				Percentage Strengthening / (Weakening) of Foreign Currency		Percentage of United States Dollar-Reported Revenue for the Six Months Ended June 30,				Average Exchange Rates for the Six Months Ended June 30,				Percentage Strengthening / (Weakening) of Foreign Currency
	2017		2018		Percentage Strengthening / (Weakening) of Foreign Currency		2019		2018		2019		2018		Percentage Strengthening / (Weakening) of Foreign Currency
Australian dollar	$	0.754	$	0.771	2.3	%	3.4	%	3.8	%	$	0.706	$	0.771	(8.4	)%
Brazilian real	$	0.315	$	0.293	(7.0	)%	2.6	%	3.0	%	$	0.260	$	0.293	(11.3	)%
British pound sterling	$	1.259	$	1.376	9.3	%	6.5	%	6.8	%	$	1.294	$	1.376	(6.0	)%
Canadian dollar	$	0.750	$	0.783	4.4	%	5.7	%	6.0	%	$	0.750	$	0.783	(4.2	)%
Euro	$	1.083	$	1.211	11.8	%	7.5	%	7.1	%	$	1.130	$	1.211	(6.7	)%

The percentage of United States dollar-reported revenues for all other foreign currencies was 12.6% and 12.7% for the three and six months ended June 30, 2019, respectively, and 12.6% and 12.7% for the three and six months ended June 30, 2018, respectively.

Non-GAAP Measures

Adjusted EBITDA

Adjusted EBITDA is defined as income (loss) from continuing operations before interest expense, net, provision (benefit) for income taxes, depreciation and amortization, and also excludes certain items that we believe are not indicative of our core operating results, specifically: ~~(i)~~(1) (gain) loss on disposal/write-down of property, plant and equipment, ~~(excluding~~net (including real estate)~~, net; (ii)~~; (2) intangible impairments; ~~(iii)~~(3) other ~~(income)~~ expense ~~net; (iv) gain on sale of real estate,~~(income), net ~~of tax;~~(which includes foreign currency transaction (gains) losses, net); and ~~(v)~~(4) Significant Acquisition Costs. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenues. We use multiples of current or projected Adjusted EBITDA in conjunction with our discounted cash flow models to determine our estimated overall enterprise valuation and to evaluate acquisition targets. We believe Adjusted EBITDA and Adjusted EBITDA Margin provide our current and potential investors with relevant and useful information regarding our ability to generate cash flow to support business investment. These measures are an integral part of the internal reporting system we use to assess and evaluate the operating performance of our business.

Adjusted EBITDA excludes both interest expense, net and the provision (benefit) for income taxes. These expenses are associated with our capitalization and tax structures, which we do not consider when evaluating the operating profitability of our core operations. Finally, Adjusted EBITDA does not include depreciation and amortization expenses, in order to eliminate the impact of capital investments, which we evaluate by comparing capital expenditures to incremental revenue generated and as a percentage of total revenues. Adjusted EBITDA and Adjusted EBITDA Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America ("GAAP"), such as operating income, income (loss) from continuing operations, net income (loss) or cash flows from operating activities from continuing operations (as determined in accordance with GAAP).

Reconciliation of Income (Loss) from Continuing Operations to Adjusted EBITDA (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2018			2017			2018			2019			2018			2019			2018
Income (Loss) from Continuing Operations	$	83,148		$	93,903		$	141,992		$	139,517		$	92,347		$	92,263		$	122,823		$	131,652
Add/(Deduct):
Gain on Sale of Real Estate, Net of Tax(1)	(1,563		)	—			(1,563		)	—
Provision (Benefit) for Income Taxes	18,009			26,405			27,229			27,573			10,646			26,057			21,199			25,934
Other (Income) Expense, Net	(19,366		)	(19,056		)	(25,730		)	1,095			(15,192		)	(19,056		)	18			1,095
Interest Expense, Net	89,966			102,107			176,021			199,733			105,314			102,196			207,750			199,898
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment (Excluding Real Estate), Net	(216		)	(546		)	(675		)	(1,676		)
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment, Net													(8,405		)	(546		)	(7,803		)	(1,676		)
Depreciation and Amortization	128,099			156,220			252,806			316,798			164,331			156,220			326,814			316,798
Significant Acquisition Costs	19,977			10,421			40,548			29,429			1,901			10,421			4,647			29,429
Adjusted EBITDA	$	318,054		$	369,454		$	610,628		$	712,469		$	350,942		$	367,555		$	675,448		$	703,130


~~(1)~~	~~There was no tax impact associated with the gain on sale of real estate recognized during the three and six months ended June 30, 2017.~~

Adjusted EPS

Adjusted EPS is defined as reported earnings per share fully diluted from continuing operations excluding: (1) (gain) loss on disposal/write-down of property, plant and equipment, ~~(excluding~~net (including real estate)~~, net;~~; (2) ~~gain on sale of real estate, net of tax; (3)~~ intangible impairments; ~~(4)~~(3) other ~~(income)~~ expense ~~net; (5)~~(income), net (which includes foreign currency transaction (gains) losses, net); (4) Significant Acquisition Costs; and ~~(6)~~(5) the tax impact of reconciling items and discrete tax items. Adjusted EPS includes income (loss) attributable to noncontrolling interests. We do not believe these excluded items to be indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. We believe Adjusted EPS is of value to our current and potential investors when comparing our results from past, present and future periods.

Reconciliation of Reported EPS—Fully Diluted from Continuing Operations to Adjusted EPS—Fully Diluted from Continuing Operations:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2018			2017			2018			2019			2018			2019			2018
Reported EPS—Fully Diluted from Continuing Operations	$	0.30		$	0.33		$	0.53		$	0.49		$	0.32		$	0.32		$	0.42		$	0.46
Add/(Deduct):
Income (Loss) Attributable to Noncontrolling Interests	0.01			—			0.01			—			—			—			—			—
Gain on Sale of Real Estate, Net of Tax	(0.01		)	—			(0.01		)	—
Other (Income) Expense, Net	(0.07		)	(0.07		)	(0.10		)	—			(0.05		)	(0.07		)	—			—
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment (Excluding Real Estate), Net	—			—			—			(0.01		)
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment, Net													(0.03		)	—			(0.03		)	(0.01		)
Significant Acquisition Costs	0.08			0.04			0.15			0.10			0.01			0.04			0.02			0.10
Tax Impact of Reconciling Items and Discrete Tax Items(1)	(0.01		)	0.01			(0.04		)	(0.05		)	(0.01		)	0.01			(0.01		)	(0.05		)
Adjusted EPS—Fully Diluted from Continuing Operations(2)	$	0.30		$	0.30		$	0.54		$	0.54		$	0.23		$	0.30		$	0.40		$	0.51

(1)

The difference between our effective tax ~~rate~~rates and our structural tax rate (or adjusted effective tax ~~rate)~~rates) for the three and six months ended June 30, ~~2017~~2019 and 2018, respectively, is primarily due to (i) the reconciling items above, which impact our reported income (loss) from continuing operations before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Our structural tax rate for purposes of the calculation of Adjusted EPS for the three and six months ended June 30, ~~2017~~2019 and 2018 was ~~21.3%~~17.7% and ~~21.8%~~22.0%, respectively.


(2)	Columns may not foot due to rounding.

FFO (Nareit) and FFO (Normalized)

Funds from operations (“FFO”) is defined by the National Association of Real Estate Investment Trusts ("Nareit") and us as net income (loss) excluding depreciation on real estate assets, ~~and gain~~gains on sale of real estate, net of tax and amortization of data center leased-based intangibles ("FFO (Nareit)"). FFO (Nareit) does not give effect to real estate depreciation because these amounts are computed, under GAAP, to allocate the cost of a property over its useful life. Because values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO (Nareit) provides investors with a clearer view of our operating performance. Our most directly comparable GAAP measure to FFO (Nareit) is net income (loss). Although Nareit has published a definition of FFO, modifications to FFO (Nareit) are common among REITs as companies seek to provide financial measures that most meaningfully reflect their particular business. Our definition of FFO (Normalized) excludes certain items included in FFO (Nareit) that we believe are not indicative of our core operating results, specifically: (1) (gain) loss on disposal/write-down of property, plant and equipment (excluding real estate), net; (2) intangible impairments; (3) other ~~(income)~~ expense ~~net;~~(income), net (which includes foreign currency transaction (gains) losses, net); (4) real estate financing lease depreciation; (5) Significant Acquisition Costs; ~~(5)~~(6) the tax impact of reconciling items and discrete tax items; ~~(6)~~(7) loss (income) from discontinued operations, net of tax; and ~~(7)~~(8) loss (gain) on sale of discontinued operations, net of tax.

Reconciliation of Net Income (Loss) to FFO (Nareit) and FFO (Normalized) (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2018			2017			2018			2019			2018			2019			2018
Net Income (Loss)	$	81,122		$	93,543		$	139,629		$	138,695		$	92,475		$	91,903		$	122,927		$	130,830
Add/(Deduct):
Real Estate Depreciation(1)	65,913			73,411			128,869			146,390			74,161			69,908			147,240			139,441
Gain on Sale of Real Estate, Net of Tax	(1,563		)	—			(1,563		)	—
Gains on Sale of Real Estate, Net of Tax													(30,512		)	—			(30,512		)	—
Data Center Lease-Based Intangible Assets Amortization(2)													11,372			7,563			23,981			18,401
FFO (Nareit)	145,472			166,954			266,935			285,085			147,496			169,374			263,636			288,672
Add/(Deduct):
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment (Excluding Real Estate), Net	(216		)	(546		)	(675		)	(1,676		)	27,587			(546		)	28,189			(1,676		)
Other (Income) Expense, Net(2)	(19,366		)	(19,056		)	(25,730		)	1,095
Other (Income) Expense, Net(3)													(15,192		)	(19,056		)	18			1,095
Real Estate Financing Lease Depreciation													3,113			3,503			6,617			6,949
Significant Acquisition Costs	19,977			10,421			40,548			29,429			1,901			10,421			4,647			29,429
Tax Impact of Reconciling Items and Discrete Tax Items(3)	(3,288		)	2,157			(11,494		)	(15,181		)
Loss (Income) from Discontinued Operations, Net of Tax(4)	2,026			360			2,363			822
Tax Impact of Reconciling Items and Discrete Tax Items(4)													(10,168		)	2,002			(10,144		)	(15,008		)
(Income) Loss from Discontinued Operations, Net of Tax(5)													(128		)	360			(104		)	822
FFO (Normalized)	$	144,605		$	160,290		$	271,947		$	299,574		$	154,609		$	166,058		$	292,859		$	310,283


(1)	Includes depreciation expense related to owned real estate assets (land improvements, buildings, building improvements, leasehold improvements and racking)., excluding depreciation related to real estate financing leases.


(2)	Includes amortization expense for data center in-place lease intangible assets and data center tenant relationship intangible assets as discussed in Note 2.b. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

(3)

Includes foreign currency transaction (gains) losses, ~~(gains),~~ net of ~~$20.2~~$(19.3) million and ~~$16.0~~$(1.6) million in the three and six months ended June 30 ~~2017,~~2019, respectively, and $(18.6) million and $3.2 million in the three and six months ended June 30, 2018, respectively. See Note ~~2.i.~~2.k. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding the components of Other (income) expense, net.

~~(3)~~(4)

Represents the tax impact of (i) the reconciling items above, which impact our reported income (loss) from continuing operations before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Discrete tax items resulted in a (benefit) provision ~~(benefit)~~ for income taxes of ~~$0.2~~$(5.9) million and ~~$(8.0)~~$(6.5) million for the three and six months ended June 30, ~~2017,~~2019, respectively, and $2.9 million and $(10.6) million for the three and six months ended June 30, 2018, respectively.


~~(4)~~(5)	Net of a de minimis tax benefit ~~of $1.0 million and $1.1 million~~ for the three and six months ended June 30, ~~2017, respectively. Net of tax benefit of $0.1 million~~2019 and ~~$0.2 million for the three and six months ended June 30, 2018, respectively.~~2018.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. On an ongoing basis, we evaluate the estimates used. We base our estimates on historical experience, actuarial estimates, current conditions and various other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities and are not readily apparent from other sources. Actual results may differ from these estimates. Our critical accounting policies include the following, which are listed in no particular order:

Revenue Recognition

Accounting for Acquisitions

Impairment of Tangible and Intangible Assets

Income Taxes

Further detail regarding our critical accounting policies can be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report, and the Consolidated Financial Statements and the Notes included therein. We have determined that no material changes concerning our critical accounting policies have occurred since December 31, ~~2017,~~2018, other than the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), as amended ("ASU ~~2014-09,~~2016-02"), as described in Note ~~2.c.~~2.d. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

Recent Accounting Pronouncements

See Note ~~2.j.~~2.l. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for a description of recently issued accounting pronouncements, including those recently adopted.

Results of Operations

Comparison of the three and six months ended June 30, 2019 to the three and six months ended June 30, 2018 ~~to three and six months ended June 30, 2017~~ (in thousands):


	Three Months Ended June 30,												Three Months Ended June 30,
	Three Months Ended June 30,						Dollar Change				Percentage Change		Three Months Ended June 30,								Dollar Change				Percentage Change
	2017			2018						2019				2018							Dollar Change				Percentage Change
Revenues	$	949,806		$	1,060,823		Dollar Change	$	111,017		Percentage Change			11.7	%	$	1,066,907			$	1,060,823			$	6,084		0.6	%
Operating Expenses	779,612			857,464			77,852				10.0	%	873,792				859,363				14,429				1.7	%
Operating Income	170,194			203,359			33,165				19.5	%	193,115				201,460				(8,345		)		(4.1	)%
Other Expenses, Net	87,046			109,456			22,410				25.7	%	100,768				109,197				(8,429		)		(7.7	)%
Income from Continuing Operations	83,148			93,903			10,755				12.9	%	92,347				92,263				84				0.1	%
(Loss) Income from Discontinued Operations, Net of Tax	(2,026		)	(360		)	1,666				(82.2	)%
Income (Loss) from Discontinued Operations, Net of Tax													128				(360		)		488				(135.6	)%
Net Income	81,122			93,543			12,421				15.3	%	92,475				91,903				572				0.6	%
Net Income (Loss) Attributable to Noncontrolling Interests	2,492			142			(2,350		)		(94.3	)%	34				142				(108		)		(76.1	)%
Net Income Attributable to Iron Mountain Incorporated	$	78,630		$	93,401		$	14,771			18.8	%	$	92,441			$	91,761			$	680			0.7	%
Adjusted EBITDA(1)	$	318,054		$	369,454		$	51,400			16.2	%	$	350,942			$	367,555			$	(16,613	)		(4.5	)%
Adjusted EBITDA Margin(1)	33.5		%	34.8		%							32.9		%		34.6		%


	Six Months Ended June 30,												Six Months Ended June 30,
	Six Months Ended June 30,						Dollar Change				Percentage Change		Six Months Ended June 30,								Dollar Change				Percentage Change
	2017			2018						2019				2018							Dollar Change				Percentage Change
Revenues	$	1,888,682		$	2,103,281		Dollar Change	$	214,599		Percentage Change			11.4	%	$	2,120,770			$	2,103,281			$	17,489		0.8	%
Operating Expenses	1,570,733			1,735,363			164,630				10.5	%	1,768,980				1,744,702				24,278				1.4	%
Operating Income	317,949			367,918			49,969				15.7	%	351,790				358,579				(6,789		)		(1.9	)%
Other Expenses, Net	175,957			228,401			52,444				29.8	%	228,967				226,927				2,040				0.9	%
Income from Continuing Operations	141,992			139,517			(2,475		)		(1.7	)%	122,823				131,652				(8,829		)		(6.7	)%
(Loss) Income from Discontinued Operations, Net of Tax	(2,363		)	(822		)	1,541				(65.2	)%
Income (Loss) from Discontinued Operations, Net of Tax													104				(822		)		926				(112.7	)%
Net Income	139,629			138,695			(934		)		(0.7	)%	122,927				130,830				(7,903		)		(6.0	)%
Net Income Attributable to Noncontrolling Interests	2,874			610			(2,264		)		(78.8	)%	925				610				315				51.6	%
Net Income Attributable to Iron Mountain Incorporated	$	136,755		$	138,085		$	1,330			1.0	%	$	122,002			$	130,220			$	(8,218	)		(6.3	)%
Adjusted EBITDA(1)	$	610,628		$	712,469		$	101,841			16.7	%	$	675,448			$	703,130			$	(27,682	)		(3.9	)%
Adjusted EBITDA Margin(1)	32.3		%	33.9		%							31.8		%		33.4		%


(1)	See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.

REVENUES

Consolidated revenues consists of the following (in thousands):


	Three Months Ended June 30,							Percentage Change								Three Months Ended June 30,												Percentage Change
	Three Months Ended June 30,				Dollar Change			Actual			Constant Currency(1)			Internal Growth(2)		Three Months Ended June 30,								Dollar Change				Actual		Constant Currency(1)		Organic Growth(2)
	2017		2018				2019				Constant Currency(1)		2018											Dollar Change				Actual		Constant Currency(1)		Organic Growth(2)
Storage Rental	$	590,239	$	655,439	Dollar Change		$	Actual		65,200			11.0	Internal Growth(2)		%		10.1	%		1.9	%	$	669,288			$	655,439		$	13,849		2.1	%	4.6	%	2.4	%
Service	359,567		405,384		45,817			12.7	%		11.8	%		7.6	%	397,619				405,384				(7,765		)		(1.9	)%	0.7	%	(2.0	)%
Total Revenues	$	949,806	$	1,060,823	$	111,017		11.7	%		10.8	%		4.1	%	$	1,066,907			$	1,060,823			$	6,084			0.6	%	3.1	%	0.7	%


	Six Months Ended June 30,							Percentage Change								Six Months Ended June 30,												Percentage Change
	Six Months Ended June 30,				Dollar Change			Actual			Constant Currency(1)			Internal Growth(2)		Six Months Ended June 30,								Dollar Change				Actual		Constant Currency(1)		Organic Growth(2)
	2017		2018				2019				Constant Currency(1)		2018											Dollar Change				Actual		Constant Currency(1)		Organic Growth(2)
Storage Rental	$	1,162,518	$	1,306,588	Dollar Change		$	Actual		144,070			12.4	Internal Growth(2)		%		10.4	%		2.8	%	$	1,332,262			$	1,306,588		$	25,674		2.0	%	4.8	%	2.2	%
Service	726,164		796,693		70,529			9.7	%		7.7	%		4.2	%	788,508				796,693				(8,185		)		(1.0	)%	2.1	%	(0.2	)%
Total Revenues	$	1,888,682	$	2,103,281	$	214,599		11.4	%		9.4	%		3.3	%	$	2,120,770			$	2,103,281			$	17,489			0.8	%	3.8	%	1.3	%


(1)	Constant currency growth rates are calculated by translating the ~~2017~~2018 results at the ~~2018~~2019 average exchange rates.

(2)

Our ~~internal~~organic revenue growth rate, which is a non-GAAP measure, represents the year-over-year growth rate of our revenues excluding the impact of business acquisitions, divestitures and foreign currency exchange rate ~~fluctuations and the impact of the adoption of ASU 2014-09.~~fluctuations. Our ~~internal~~organic revenue growth rate includes the impact of acquisitions of customer relationships.

Storage Rental Revenues

In the three and six months ended June 30, ~~2018,~~2019, the increase in reported consolidated storage rental revenues was driven by the favorable impact of acquisitions/divestitures and consolidated ~~internal~~organic storage rental revenue growth, ~~and favorable~~partially offset by unfavorable fluctuations in foreign currency exchange rates. The net impact of acquisitions/divestitures ~~net of the impact of the adoption of ASU 2014-09,~~ contributed ~~7.6%~~2.6% to the reported storage rental revenue growth rates for the six months ended June 30, ~~2018~~2019 compared to the prior year period, primarily driven by ~~recent~~ acquisitions in our Global Data Center Business segment. ~~Internal~~Organic storage rental revenue growth of ~~2.8%~~2.2% in the six months ended June 30, ~~2018~~2019 compared to the prior year period was driven by ~~internal~~organic storage rental revenue growth of ~~2.4%~~1.6% in our North American Records and Information Management Business segment ~~driven by~~due to revenue management ~~programs,~~partially offset by volume decreases, as well as ~~internal~~organic storage rental revenue growth of ~~0.9%, 1.9%~~2.8% and ~~5.8%~~4.2% in our ~~North American Data Management Business,~~ Western European Business and Other International Business segments, respectively, primarily ~~driven~~a result of volume increases and, to a lesser extent, revenue management. Organic storage rental revenue growth in our Global Data Center Business segment was 5.7% for the six months ended June 30, 2019 compared to the prior year period, primarily related to a $1.7 million lease modification fee that benefited organic storage rental revenue growth for the segment by 1.7%. Organic storage rental revenue growth in our North American Data Management Business segment was negative 2.5% for the six months ended June 30, 2019 compared to the prior year period due to lower storage volume, ~~increases.~~partially offset by the impact of revenue management. Excluding the impact of acquisitions/divestitures, global records management net volumes as of June 30, ~~2018~~2019 increased by ~~0.2%~~0.4% over the ending volume as of June 30, ~~2017. Global~~2018. Including the impact of acquisitions/divestitures, global records management ~~reported~~ net volumes ~~including acquisitions/divestitures,~~ as of June 30, ~~2018~~2019 increased by ~~1.5%~~1.4% over the ending volume at June 30, ~~2017,~~2018, supported by net volume increases of ~~0.5%~~1.9% and ~~9.0%~~6.5% in our Western European Business and Other International Business segments, respectively, partially offset by a net volume decrease of ~~1.2%~~1.0% in our North American Records and Information Management Business segment. Foreign currency exchange rate fluctuations ~~increased~~decreased our reported storage rental revenue growth rate for the six months ended June 30, ~~2018~~2019 by ~~2.0%~~2.8%, compared to the prior year period.

Service Revenues

In the three and six months ended June 30, ~~2018,~~2019, the ~~increase~~decrease in reported consolidated service revenues was driven by ~~internal~~unfavorable fluctuations in foreign currency exchange rates and negative organic service revenue growth, partially offset by the favorable impact of acquisitions/~~divestitures and favorable fluctuations in foreign~~divestitures. Foreign currency exchange ~~rates.~~rate fluctuations decreased our reported service revenue growth rate for the six months ended June 30, 2019 by 3.1%, compared to the prior year period. In the three months ended June 30, 2019, organic service revenue growth was negative 2.0% compared to the prior year period, primarily driven by negative organic service revenue growth of 2.1% in our North American Records and Information Management Business segment, primarily due to recent declines in recycled paper prices and lower destruction activity. In the six months ended June 30, 2019, organic service revenue growth was negative 0.2% compared to the prior year period, primarily driven by continued declines in organic service revenue activity levels in our North American Data Management Business segment resulting in negative 4.9% organic service revenue growth in this segment, as the storage business in this segment becomes more archival in nature and tape volumes decline, and flat organic service revenue growth in our North American Records and Information Management Business segment reflecting increased secured shredding revenues and project activity which were fully offset by lower destructions and recent declines in recycled paper prices. The negative growth in organic service revenue was partially offset by organic service revenue growth of 2.1% in our Western European Business segment, primarily due to higher destruction activity. The net impact of acquisitions/divestitures ~~and the adoption of ASU 2014-09~~ contributed ~~3.5%~~2.3% to the reported service revenue growth rates for the six months ended June 30, 2018, compared to the prior year period. Internal service revenue growth of 4.2% for the six months ended June 30, 2018, compared to the prior year period was primarily driven by increased secured shredding revenues and increased project activity in our North American Records and Information Management Business segment and project activity in our Other International Business and Western European Business segments, partially offset by continued declines in service revenue activity levels in our North American Data Management Business segment, as the storage business becomes more archival in nature. Foreign currency exchange rate fluctuations increased our reported service revenue growth rate for the six months ended June 30, 2018 by 2.0%,2019, compared to the prior year period.

Total Revenues

For the reasons stated above, our reported consolidated revenues increased ~~$111.0~~$6.1 million, or ~~11.7%~~0.6%, to $1,066.9 million and $17.5 million, or 0.8%, to $2,120.8 million for the three and six months ended June 30, 2019, respectively, from $1,060.8 million and ~~$214.6 million, or 11.4%, to~~ $2,103.3 million for the three and six months ended June 30, 2018, ~~respectively, from $949.8 million and $1,888.7 million for the three and six months ended June 30, 2017,~~ respectively. The net impact of acquisitions/divestitures contributed ~~6.1%~~2.5% to the reported consolidated revenue growth rate for the six months ended June 30, ~~2018~~2019 compared to the prior year ~~period, primarily driven by recent acquisitions in our Global Data Center Business segment.~~period. Consolidated ~~internal~~organic revenue growth was ~~3.3%~~1.3% in the six months ended June 30, ~~2018~~2019 compared to the prior year period. Foreign currency exchange rate fluctuations ~~increased~~decreased our reported consolidated revenue growth rate for the six months ended June 30, ~~2018~~2019 by ~~2.0%~~3.0%, compared to the prior year period.

~~Internal~~Organic Growth—Eight-Quarter Trend


	2016				2017								2018				2017				2018								2019
	Third Quarter		Fourth Quarter		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter		Second Quarter
Storage Rental Revenue	2.1	%	2.9	%	3.0	%	4.8	%	3.5	%	4.2	%	3.7	%	1.9	%	3.5	%	4.2	%	3.7	%	1.9	%	2.3	%	1.9	%	2.0	%	2.4	%
Service Revenue	(1.3	)%	(0.9	)%	0.6	%	(1.1	)%	(0.2	)%	(0.1	)%	1.4	%	7.6	%	(0.2	)%	(0.1	)%	1.4	%	7.6	%	7.1	%	6.1	%	1.8	%	(2.0	)%
Total Revenue	0.8	%	1.4	%	2.0	%	2.5	%	2.0	%	2.5	%	2.8	%	4.1	%
Total Revenues																	2.0	%	2.5	%	2.8	%	4.1	%	4.1	%	3.5	%	1.9	%	0.7	%

We expect our consolidated ~~internal~~organic storage rental revenue growth rate for ~~2018~~2019 to be approximately ~~3.0%~~2.2% to ~~3.5%~~2.8% and our consolidated organic total revenue growth rate to be approximately 1.3% to 2.0%. During the past eight quarters, our ~~internal~~organic storage rental revenue growth rate has ranged between 1.9% and ~~4.8%~~4.2%. ~~In the second quarter of 2017, consolidated internal~~Consolidated organic storage rental revenue growth and consolidated total ~~internal~~organic revenue growth ~~benefited~~for the second quarter of 2018 were negatively impacted by ~~approximately~~ 0.8% and 0.5%, respectively, ~~from~~related to a $4.2 million customer termination fee in our Global Data Center Business ~~segment. Conversely, consolidated internal~~segment in the second quarter of 2017. Consolidated organic storage rental revenue growth and consolidated total ~~internal~~organic revenue growth for the second quarter of ~~2018~~2019 were ~~negatively impacted~~benefited by ~~the 0.8%~~0.3% and ~~0.5%~~0.2%, respectively, related to a $1.7 million customer lease modification fee in our Global Data Center Business segment. We expect similar benefits in the ~~termination~~third and fourth quarters of 2019 related to this modification fee, ~~mentioned above.~~which will total approximately $5.4 million for the full year 2019. Our ~~internal~~organic storage rental revenue growth rates have ~~been relatively stable~~declined over the past two fiscal years, as ~~internal~~organic storage rental revenue growth for full year ~~2016~~2017 and ~~2017~~2018 was ~~2.3%~~3.9% and ~~3.9%~~2.4%, respectively. At various points in the economic cycle, ~~internal~~organic storage rental revenue growth may be influenced by changes in pricing and volume. In ~~North America, internal storage rental revenue growth~~2018 and in 2017 resulted primarily from revenue management programs in our North American Records and Information Management Business segment as well as internal storage rental revenue growth in our North American Data Management Business segment, although North America volume continued to be flat in 2017 due to us receiving fewer documents from customers. For the ~~first half of 2018,~~six months ended June 30, 2019, we experienced ~~flat to modestly decreasing~~modest volume ~~growth~~declines in our North American Records and Information Management Business and North American Data Management Business segments, with organic storage rental revenue growth coming primarily from revenue management ~~programs~~ in these segments and volume growth in our Western European Business and Other International Business ~~segment. We~~segments. Within these business segments, we expect ~~this trend~~these trends to continue ~~for~~into the ~~remainder of 2018.~~next few years.

~~Our internal service revenue growth has been negatively impacted by declining activity rates as stored records are becoming less active. Additionally, the internal~~The organic growth rate for service revenue is inherently more volatile than the ~~internal~~organic growth rate for storage rental revenues due to the more discretionary nature of certain services we offer, such as large special projects, and, as a commodity, the volatility of pricing for recycled paper. These revenues, which are often event-driven and impacted to a greater extent by economic downturns as customers defer or cancel the purchase of certain services as a way to reduce their short-term costs, may be difficult to replicate in future periods. The ~~internal~~organic growth rate for total service revenues over the past eight quarters reflects reduced retrieval/re-file activity and a related decrease in transportation revenues within our North American Records and Information Management Business and Western European Business segments, as well as continued ~~service~~ declines in service revenue activity levels in our North American Data Management Business segment, as the storage business becomes more archival in ~~nature.~~nature and tape volumes decline. The ~~internal~~recent increases in organic service revenue growth rates of 7.6%, 7.1% and 6.1% in the second, ~~quarter~~third and fourth quarters of 2018 ~~reflects~~reflect a strong contribution from our secure shredding business, which benefited from higher recycled paper prices, ~~as well as~~ higher destruction activity inand acquisitions of customer relationships. Organic service revenue growth declined to 1.8% and (2.0)% for the ~~quarter.~~first and second quarter of 2019, respectively, reflecting declining recycled paper prices and moderation of destruction activity compared to previous quarters. We expect these trends to continue throughout 2019.

OPERATING EXPENSES

Cost of Sales

Consolidated cost of sales (excluding depreciation and amortization) consists of the following expenses (in thousands):


	Three Months Ended June 30,								Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable		Three Months Ended June 30,											Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable
																																		Percentage Change
					Dollar Change				Percentage Change		Actual			Constant Currency																Dollar Change				Actual			Constant Currency
	2017		2018					2017			Actual		2018					2019						2018						Dollar Change			2019				Constant Currency		2018
Labor	$	196,727	$	207,099	Dollar Change			$	10,372			5.3	%	Constant Currency		4.6	%		20.7	%				19.5	%	(1.2	)%	$	206,623			$	207,099	Actual			$	(476	)			(0.2	)%		3.0	%		19.4	%	19.5	%	(0.1	)%
Facilities	141,062		162,450		21,388				15.2	%		14.3	%		14.9	%		15.3	%			0.4	%	176,950			162,450				14,500				8.9	%		11.9	%		16.6	%		15.3	%		1.3	%
Transportation	35,659		40,084		4,425				12.4	%		11.8	%		3.8	%		3.8	%		—	%	41,959			40,084				1,875				4.7	%		7.5	%		3.9	%		3.8	%		0.1	%
Product Cost of Sales and Other	35,763		40,004		4,241				11.9	%		11.3	%		3.8	%		3.8	%		—	%	38,277			40,004				(1,727		)		(4.3	)%		(0.5	)%		3.6	%		3.8	%		(0.2	)%
Significant Acquisition Costs	5,073		1,827		(3,246		)		(64.0	)%		(64.6	)%		0.5	%		0.2	%		(0.3	)%	1,293			1,827				(534		)		(29.2	)%		(28.0	)%		0.1	%		0.2	%		(0.1	)%
Total Cost of Sales	$	414,284	$	451,464	$	37,180			9.0	%		8.2	%		43.6	%		42.6	%		(1.0	)%	$	465,102		$	451,464			$	13,638			3.0	%		6.3	%		43.6	%		42.6	%		1.0	%


	Six Months Ended June 30,								Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable		Six Months Ended June 30,											Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable
																																		Percentage Change
					Dollar Change				Percentage Change		Actual			Constant Currency																Dollar Change				Actual			Constant Currency
	2017		2018					2017			Actual		2018					2019						2018						Dollar Change			2019				Constant Currency		2018
Labor	$	396,887	$	416,006	Dollar Change			$	19,119			4.8	%	Constant Currency		2.9	%		21.0	%				19.8	%	(1.2	)%	$	411,914			$	416,006	Actual			$	(4,092	)			(1.0	)%		2.8	%		19.4	%	19.8	%	(0.4	)%
Facilities	285,315		324,562		39,247				13.8	%		11.7	%		15.1	%		15.4	%			0.3	%	351,669			324,562				27,107				8.4	%		11.7	%		16.6	%		15.4	%		1.2	%
Transportation	70,880		78,357		7,477				10.5	%		8.9	%		3.8	%		3.7	%		(0.1	)%	82,999			78,357				4,642				5.9	%		9.3	%		3.9	%		3.7	%		0.2	%
Product Cost of Sales and Other	74,949		79,137		4,188				5.6	%		3.6	%		4.0	%		3.8	%		(0.2	)%	77,873			79,137				(1,264		)		(1.6	)%		2.7	%		3.7	%		3.8	%		(0.1	)%
Significant Acquisition Costs	12,960		2,123		(10,837		)		(83.6	)%		(84.0	)%		0.7	%		0.1	%		(0.6	)%	2,191			2,123				68				3.2	%		7.8	%		0.1	%		0.1	%		—	%
Total Cost of Sales	$	840,991	$	900,185	$	59,194			7.0	%		5.1	%		44.5	%		42.8	%		(1.7	)%	$	926,646		$	900,185			$	26,461			2.9	%		6.6	%		43.7	%		42.8	%		0.9	%

Labor

Labor expenses decreased to ~~19.8%~~19.4% of consolidated revenues in the six months ended June 30, ~~2018~~2019 compared to ~~21.0%~~19.8% in the six months ended June 30, ~~2017.~~2018. The decrease in labor expenses as a percentage of consolidated revenues was primarily driven by ~~an approximately 130 basis point decrease in labor expenses associated with~~improvements across our North American Records and Information Management Business, ~~segment as a percentage of consolidated revenues, primarily associated with wages~~North American Data Management Business, Western European Business and ~~benefits growing at a lower rate than revenue,~~Other International Business segments, partially attributable to ~~synergies associated with our acquisition of Recall and~~ongoing cost management initiatives. On a constant dollar basis, labor expenses for the six months ended June 30, ~~2018~~2019 increased by ~~$11.8~~$11.1 million, or ~~2.9%~~2.8%, compared to the prior year period, primarily driven by ~~recent acquisitions.~~acquisitions in our Adjacent Businesses operating segment within our Corporate and Other Business segment, as well as increased labor costs related to growth of our shredding operations within our North American Records and Information Management Business segment.

Facilities

Facilities expenses increased to ~~15.4%~~16.6% of consolidated revenues in the six months ended June 30, ~~2018~~2019 compared to ~~15.1%~~15.4% in the six months ended June 30, ~~2017.~~2018. The 30120 basis point increase in facilities expenses as a percentage of consolidated revenues was driven primarily by ~~a 100 basis point increase in facilities expenses~~acquisitions in our Global Data Center Business segment ~~primarily driven by an increase in utility costs supporting power generation as a result of recent acquisitions, partially offset by a 75 basis point decrease in facilities expenses in~~and our ~~North American Records~~Adjacent Businesses operating segment within our Corporate and ~~Information Management~~Other Business ~~segment partially attributable to synergies associated with our acquisition of Recall.~~segment. On a constant dollar basis, facilities expenses for the six months ended June 30, ~~2018~~2019 increased by ~~$34.1~~$36.9 million, or 11.7%, compared to the prior year period, ~~primarily~~ driven by ~~recent~~higher rent expense, insurance costs and building maintenance, in part driven by the acquisitions ~~in our Global Data Center Business segment.~~

mentioned above.

Transportation

Transportation expenses ~~decreased~~increased to ~~3.7%~~3.9% of consolidated revenues in the six months ended June 30, ~~2018~~2019 compared to ~~3.8%~~3.7% in the six months ended June 30, ~~2017.~~2018. The ~~decrease~~increase in transportation expenses as a percentage of consolidated revenues was primarily driven by ~~a decrease~~increases in ~~vehicle lease~~third party carrier expenses, in part due to recent acquisitions in our Adjacent Businesses operating segment within our Corporate and ~~maintenance expenses, primarily associated with our North American Records and Information Management~~Other Business segment. On a constant dollar basis, transportation expenses for the six months ended June 30, ~~2018~~2019 increased by ~~$6.4~~$7.1 million, or ~~8.9%~~9.3%, compared to the prior year period, primarily driven by ~~increases~~acquisitions in ~~third party carrier, vehicle insurance~~our Adjacent Businesses operating segment within our Corporate and ~~fuel costs.~~Other Business segment.

Product Cost of Sales and Other

Product cost of sales and other, which includes cartons, media and other service, storage and supply costs and is highly correlated to service revenue streams, particularly project revenues, ~~decreased to 3.8%~~were 3.7% of consolidated revenues for the six months ended June 30, ~~2018~~2019 compared to ~~4.0%~~3.8% in the six months ended June 30, ~~2017. The decrease in product cost of sales and other as a percentage of revenue was driven by special project costs.~~2018. On a constant dollar basis, product cost of sales and other increased by ~~$2.7~~$2.0 million, or ~~3.6%~~2.7%, compared to the prior year period, primarily driven by special project costs.

Significant Acquisition Costs

Significant Acquisition Costs included in cost of sales were ~~$13.0~~$2.2 million and $2.1 million in the six months ended June 30, ~~2017~~2019 and 2018, respectively, and primarily consisted of employee severance costs and facility integration costs associated with the Recall ~~acquisition.~~Transaction.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consists of the following expenses (in thousands):


	Three Months Ended June 30,								Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable		Three Months Ended June 30,											Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable
																																		Percentage Change
					Dollar Change				Percentage Change		Actual			Constant Currency																Dollar Change				Actual			Constant Currency
	2017		2018					2017			Actual		2018				2019						2018						2019					Actual		2018
General and Administrative	$	126,113	$	135,582	Dollar Change			$	9,469			7.5	%	Constant Currency		6.8	%		13.3	%				12.8	%	(0.5	)%	$	143,842	Dollar Change			$	137,481			Constant Currency	$	6,361			4.6	%		7.1	%		13.5	%	13.0	%	0.5	%
Sales, Marketing & Account Management	61,714		63,537		1,823				3.0	%		1.8	%		6.5	%		6.0	%			(0.5	)%	62,536			63,537				(1,001		)		(1.6	)%		0.6	%		5.9	%		6.0	%		(0.1	)%
Information Technology	30,316		37,248		6,932				22.9	%		22.0	%		3.2	%		3.5	%		0.3	%	42,029			37,248				4,781				12.8	%		14.5	%		3.9	%		3.5	%		0.4	%
Bad Debt Expense	4,398		5,365		967				22.0	%		22.1	%		0.5	%		0.5	%		—	%	3,749			5,365				(1,616		)		(30.1	)%		(29.2	)%		0.4	%		0.5	%		(0.1	)%
Significant Acquisition Costs	14,904		8,594		(6,310		)		(42.3	)%		(42.4	)%		1.6	%		0.8	%		(0.8	)%	608			8,594				(7,986		)		(92.9	)%		(92.8	)%		0.1	%		0.8	%		(0.7	)%
Total Selling, General and Administrative Expenses	$	237,445	$	250,326	$	12,881			5.4	%		4.7	%		25.0	%		23.6	%		(1.4	)%	$	252,764		$	252,225			$	539			0.2	%		2.4	%		23.7	%		23.8	%		(0.1	)%


	Six Months Ended June 30,								Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable		Six Months Ended June 30,											Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable
																																		Percentage Change
					Dollar Change				Percentage Change		Actual			Constant Currency																Dollar Change				Actual			Constant Currency
	2017		2018					2017			Actual		2018				2019						2018						2019					Actual		2018
General and Administrative	$	260,913	$	271,875	Dollar Change			$	10,962			4.2	%	Constant Currency		2.6	%		13.8	%				12.9	%	(0.9	)%	$	295,174	Dollar Change			$	281,214			Constant Currency	$	13,960			5.0	%		7.8	%		13.9	%	13.4	%	0.5	%
Sales, Marketing & Account Management	125,020		132,410		7,390				5.9	%		4.0	%		6.6	%		6.3	%			(0.3	)%	128,706			132,410				(3,704		)		(2.8	)%		(0.5	)%		6.1	%		6.3	%		(0.2	)%
Information Technology	62,109		76,752		14,643				23.6	%		21.9	%		3.3	%		3.6	%		0.3	%	88,200			76,752				11,448				14.9	%		16.9	%		4.2	%		3.6	%		0.6	%
Bad Debt Expense	1,981		11,713		9,732				491.3	%		489.7	%		0.1	%		0.6	%		0.5	%	8,787			11,713				(2,926		)		(25.0	)%		(23.5	)%		0.4	%		0.6	%		(0.2	)%
Significant Acquisition Costs	27,588		27,306		(282		)		(1.0	)%		(2.5	)%		1.5	%		1.3	%		(0.2	)%	2,456			27,306				(24,850		)		(91.0	)%		(90.9	)%		0.1	%		1.3	%		(1.2	)%
Total Selling, General and Administrative Expenses	$	477,611	$	520,056	$	42,445			8.9	%		7.1	%		25.3	%		24.7	%		(0.6	)%	$	523,323		$	529,395			$	(6,072	)		(1.1	)%		1.2	%		24.7	%		25.2	%		(0.5	)%

General and Administrative

General and administrative expenses ~~decreased~~increased to ~~12.9%~~13.9% of consolidated revenues in the six months ended June 30, ~~2018~~2019 compared to ~~13.8%~~13.4% in the six months ended June 30, ~~2017.~~2018. The ~~decrease~~increase in general and administrative expenses as a percentage of consolidated revenues was driven mainly by ~~a decrease in~~higher compensation ~~expense, partially attributable to synergies~~and professional fees within the Corporate and Other Business segment, primarily associated with our ~~acquisition of Recall, as well as lower professional fees.~~new global operations support team that is tasked with driving operational improvements, and acquisitions in the Global Data Center Business segment. On a constant dollar basis, general and administrative expenses for the six months ended June 30, ~~2018~~2019 increased by ~~$6.8~~$21.4 million, or ~~2.6%~~7.8%, compared to the prior year period, primarily driven by ~~recent acquisitions~~increases in compensation and professional fees related to our ~~Global Data Center Business segment.~~global operations support team.

Sales, Marketing & Account Management

Sales, marketing and account management expenses decreased to ~~6.3%~~6.1% of consolidated revenues in the six months ended June 30, ~~2018~~2019 compared to ~~6.6%~~6.3% in the six months ended June 30, ~~2017.~~2018. The decrease in sales, marketing and account management expenses as a percentage of consolidated revenues was driven by a decrease in compensation expense, primarily due to ~~the impact of our adoption of ASU 2014-09 related to capitalization of~~lower commissions expense and ~~lower professional fees.~~marketing costs. On a constant dollar basis, sales, marketing and account management expenses for the six months ended June 30, ~~2018 increased~~2019 decreased by ~~$5.0~~$0.6 million, or ~~4.0%~~0.5%, compared to the prior year period, primarily driven by ~~recent acquisitions in our Global Data Center Business segment.~~lower marketing costs.

Information Technology

Information technology expenses increased to ~~3.6%~~4.2% of consolidated revenues in the six months ended June 30, ~~2018~~2019 compared to ~~3.3%~~3.6% in the six months ended June 30, ~~2017.~~2018. Information technology expenses as a percentage of consolidated revenues reflect an increase in professional ~~fees.~~fees and compensation, primarily related to information security costs and investments in innovation and product development. On a constant dollar basis, information technology expenses for the six months ended June 30, ~~2018~~2019 increased by ~~$13.8~~$12.7 million, or ~~21.9%~~16.9%, compared to the prior year period, primarily driven by an increase in professional ~~fees.~~fees and compensation, primarily related to information security costs and investments in innovation and product development.

Bad Debt Expense

We maintain an allowance for doubtful accounts that is calculated based on our past loss experience, current and prior trends in our aged receivables, current economic conditions, and specific circumstances of individual receivable balances. We continue to monitor our customers' payment activity and make adjustments based on their financial condition and in light of historical and expected trends. Bad debt expense for the six months ended June 30, ~~2018 increased~~2019 decreased by ~~$9.7~~$2.7 million on a constant dollar basis compared to the prior year period, primarily driven by ~~higher~~lower bad debt expense associated with our North American Records and Information Management Business ~~segment.~~and Other International Business segments.

Significant Acquisition Costs

Significant Acquisition Costs included in selling, general and administrative expenses were ~~$27.6~~$2.5 million and $27.3 million in the six months ended June 30, ~~2017~~2019 and 2018, respectively, and primarily consisted of advisory and professional fees, as well as severance costs.

Depreciation and Amortization

Our depreciation and amortization charges result primarily from ~~the capital-intensive nature of our business. The principal components of~~ depreciation ~~relate~~related to storage systems, which include racking structures, buildings, building and leasehold improvements and computer systems hardware and software. Amortization relates primarily to customer relationship intangible assets, contract fulfillment costs and data center ~~in-place leases and tenant relationships.~~lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Depreciation expense increased ~~$23.0~~$3.4 million, or ~~11.4%~~1.5%, on a reported dollar basis for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017, primarily due to recent acquisitions in our Global Data Center Business segment.~~2018. See Note 2.f. to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding the useful lives over which our property, plant and equipment is depreciated.

Amortization expense increased ~~$41.0~~$6.6 million, or ~~80.5%~~7.2%, on a reported dollar basis for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017,~~2018.

Gain on disposal/write-down of property, plant and equipment, net

We are currently exploring strategic options regarding how to maintain and support the infrastructure of select offerings within our Iron Mountain Iron Cloud (“Iron Cloud”) portfolio of products and services. During the second quarter of 2019, we performed a long-lived asset impairment analysis on the assets associated with these select offerings and concluded that the associated carrying value of the long-lived assets (which consisted entirely of property, plant and equipment) was not recoverable based upon the underlying cash flows associated with these select offerings. Therefore, we recorded an impairment charge of approximately $24.0 million during the second quarter of 2019, representing the net carrying value of the long-lived assets associated with these select offerings.

Consolidated gain on disposal/write-down of property, plant and equipment, net, for the three and six months ended June 30, 2019 was approximately $8.4 million and $7.8 million, respectively. The gain for the six months ended June 30, 2019 consisted primarily ~~due to recent acquisitions~~of gains associated with the sale of certain land and buildings in the United Kingdom of approximately $36.0 million. These gains were partially offset by losses primarily associated with (i) the impairment charge on the assets associated with the select offerings within our Iron Cloud portfolio, as described above, and (ii) the write-down of certain property, plant and equipment in our ~~Global Data Center~~North American Records and Information Management Business ~~segment and, to a lesser extent, the adoption~~ of ~~ASU 2014-09.~~approximately $3.1 million.

OTHER EXPENSES, NET

Interest Expense, Net

Consolidated interest expense, net increased ~~$23.7~~$7.9 million, or 3.9%, to ~~$199.7~~$207.8 million in the six months ended June 30, ~~2018~~2019 from ~~$176.0~~$199.9 million in the six months ended June 30, ~~2017.~~2018. This increase was a result of higher ~~borrowings~~average debt outstanding during the ~~current year period compared to the prior year period. Our weighted average interest rate was 4.8% and 5.4% at~~six months ended June 30, ~~2018 and 2017, respectively.~~2019. See Note 54 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our indebtedness.

Other (Income) Expense, Net (in thousands)


	Three Months Ended June 30,						Dollar Change				Six Months Ended June 30,								Dollar Change		Three Months Ended June 30,						Dollar Change				Six Months Ended June 30,							Dollar Change
	2017			2018						2017				2018				2019				2018				2019					2018							Dollar Change
Foreign currency transaction losses (gains), net	$	20,199		$	(18,624	)	Dollar Change	$	(38,823	)		$	16,035			$	3,161		Dollar Change		$	(12,874	)
Foreign currency transaction (gains) losses, net																					$	(19,331	)	$	(18,624	)	Dollar Change	$	(707	)		$	(1,634	)		$	3,161		$	(4,795	)
Other, net	(39,565		)	(432		)	39,133				(41,765		)		(2,066		)		39,699		4,139			(432		)	4,571				1,652				(2,066		)	3,718
	$	(19,366	)	$	(19,056	)	$	310			$	(25,730	)		$	1,095			$	26,825	$	(15,192	)	$	(19,056	)	$	3,864			$	18			$	1,095		$	(1,077	)

Foreign Currency Transaction (Gains) Losses ~~(Gains)~~

We recorded net foreign currency transaction gains of $(1.6) million in the six months ended June 30, 2019, based on period-end exchange rates. These gains resulted primarily from the impact of changes in the exchange rate of the British pound sterling against the United States dollar compared to December 31, 2018 on our intercompany balances with and between certain of our subsidiaries. These gains were partially offset by losses primarily from the impact of changes in the exchange rate of the Euro against the United States dollar compared to December 31, 2018 on our intercompany balances with and between certain of our subsidiaries.

We recorded net foreign currency transaction losses of $3.2 million in the six months ended June 30, 2018, based on period-end exchange rates. These losses resulted primarily from the impact of changes in the exchange rate of the Brazilian real against the United States dollar compared to December 31, 2017 on our intercompany balances with and between certain of our subsidiaries. These losses were partially offset by gains resulting primarily from the impact of changes in the exchange rate of each of the British pound sterling and Canadian dollar against the United States dollar compared to December 31, 2017 on our intercompany balances with and between certain of our subsidiaries and the Euro Notes (as defined below).

~~We recorded~~Other, net ~~foreign currency transaction losses of $16.0 million in~~

Other, net for the six months ended June 30, ~~2017, based~~2019 includes the gain on ~~period-end exchange rates. These losses resulted primarily~~sale from the ~~impact~~Consumer Storage Transaction (as defined and discussed more fully in Note 9 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report) of changes in the exchange rate of each of the British pound sterling, Canadian dollar and Euro against the United States dollar compared to December 31, 2016 on our intercompany balances with and between certain of our subsidiaries. These losses were partially offset by gains resulting primarily from the impact of changes in the exchange rate of each of the Mexican peso and Russian ruble against the United States dollar compared to December 31, 2016 on our intercompany balances with and between certain of our subsidiaries.

~~Other, net~~

approximately $4.2 million. In addition, Other, net for the three and six months ended June 30, ~~2017~~2019 includes ~~a gain~~the change in estimated fair value of ~~$38.9 million~~the noncontrolling interests associated with ~~the Russia and Ukraine Divestment.~~our business in India, which are accounted for as mandatorily redeemable noncontrolling interests.

Provision for Income Taxes

We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our estimate of the effective tax rate for the ~~year~~years ending December 31, 2019 and 2018 ~~reflects~~reflect the impact of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Legislation”). See Note 7 to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding the impact the Tax Reform Legislation ~~(as defined below).~~had on us. 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, ~~2017 were 18.1%~~2019 and 16.2%, respectively. The primary reconciling items between the then current federal statutory tax rate of 35.0% and our overall effective tax rate for the three months ended June 30, 2017 were the benefit derived from the dividends paid deduction and differences in the rates of tax at which our foreign earnings2018 are subject. The primary reconciling items between the then current federal statutory tax rate of 35.0% and our overall effective tax rate for the six months ended June 30, 2017 were the benefit derived from the dividends paid deduction, differences in the rates of tax at which our foreign earnings are subject and a release of valuation allowances on certain of our foreign net operating losses of $7.5 million as a result of the merger of certain of our foreign subsidiaries. Our effective tax rates for the three and six months ended June 30, 2018 were 21.9% and 16.5%, respectively. The primary reconciling items between the current federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended June 30, 2018 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. The primary reconciling items between the current federal statutory tax rate of 21.0% and our overall effective tax rate for the six months ended June 30, 2018 were the benefit derived from the dividends paid deduction, a discrete tax benefit of approximately $14.0 million associated with the resolution of a tax matter (as disclosed in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report), 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.follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019(1)		2018(1)		2019(1)		2018(2)
Effective Tax Rate	10.3	%	22.0	%	14.7	%	16.5	%

~~Tax Reform~~

~~a. Deemed Repatriation Transition Tax~~

Our estimate of the amount of Undistributed E&P deemed repatriated under the Tax Reform Legislation in our taxable year ending December 31, 2017 is approximately $186.0 million (the “Estimated Undistributed E&P”). We will opt to include the full amount of Estimated Undistributed E&P in our 2017 taxable income, rather than spread it over eight years (as permitted by the Tax Reform Legislation). Accordingly, included in our REIT taxable income for 2017 was approximately $82.0 million related to the deemed repatriation of Undistributed E&P (the “Deemed Repatriation Taxable Income”).

~~b. Global Intangible Low-Taxed Income~~

For taxable years beginning after December 31, 2017, the Tax Reform Legislation introduced new provisions intended to prevent the erosion of the United States federal income tax base through the taxation of certain global intangible low-taxed income (“GILTI”). The GILTI provision created a new requirement that certain income earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFC’s United States tax resident shareholder. Generally, GILTI is the excess of the United States shareholder's pro rata portion of the income of its foreign subsidiaries over the net deemed tangible income return of such subsidiaries.

The GILTI provision also provides for certain deductions against the inclusion of GILTI in taxable income; however, REITs are not eligible for such deductions. Therefore, 100% of our GILTI is included in our taxable income and may increase the required distribution to our stockholders, similar to the Subpart F income inclusion we are subject to as a REIT.

We are in the process of developing our estimates of GILTI. It is unclear at this time whether the GILTI inclusion will be considered as qualifying income for the purpose of the REIT gross income tests that we are required to satisfy. The United States Treasury Department and the Internal Revenue Service have authority to issue guidance clarifying that GILTI would be qualifying income and we expect that they will. The timing of such guidance is unclear and there can be no assurance that such guidance will be provided. At this time, we do not expect the GILTI provision will impact our provision for income taxes. However, the GILTI provision may impact the amount and characterization of dividends that we expect to pay in future taxable years.

~~c. Interest Deduction Limitation~~

The Tax Reform Legislation also limits, for certain entities, the deduction of net interest expense to the sum of business interest income plus 30% of adjusted taxable income (the “Interest Deduction Limitation”). Adjusted taxable income is defined in the Tax Reform Legislation as taxable income before interest, taxes, depreciation and amortization for taxable years beginning after December 31, 2017 and before January 1, 2022, and is defined as taxable income before interest and taxes for taxable years beginning after December 31, 2021.

The Interest Deduction Limitation does not apply to taxpayers that qualify, and make an election, to be treated as a “real property trade or business”. As a REIT, if Iron Mountain Incorporated ("IMI"), including all of our QRSs, were to make an election to be treated as a "real property trade or business", then the interest deduction limitation would not apply. However, IMI would be required to utilize the alternative depreciation system for its real property. We do not believe our TRSs are eligible for treatment as a "real property trade or business".

If IMI does not elect to be treated as a “real property trade or business”, we will remain subject to the Interest Deduction Limitation and may be limited in the amount of interest expense we can deduct for United States federal income tax purposes beginning in our taxable year ending December 31, 2018. If we are limited in our ability to fully deduct our interest expense for the 2018 taxable year, we will consider making an election to be treated as a "real property trade or business" to avoid such limitation.

(1)

(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, 2018 were the benefit derived from the dividends paid deduction, a discrete tax benefit of approximately $14.0 million associated with the resolution of a tax matter 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.

INCOME (LOSS) FROM CONTINUING OPERATIONS AND ADJUSTED EBITDA (in thousands)

The following table reflects the effect of the foregoing factors on our consolidated income (loss) from continuing operations and Adjusted EBITDA:


	Three Months Ended June 30,						Dollar Change		Percentage Change		Three Months Ended June 30,						Dollar Change			Percentage Change
	2017			2018			Dollar Change		Percentage Change		2019			2018			Dollar Change			Percentage Change
Income from Continuing Operations	$	83,148		$	93,903		$	10,755	12.9	%
Income from Continuing Operations as a percentage of Consolidated Revenue	8.8		%	8.9		%
Income (Loss) from Continuing Operations											$	92,347		$	92,263		$	84		0.1	%
Income (Loss) from Continuing Operations as a percentage of Consolidated Revenue											8.7		%	8.7		%
Adjusted EBITDA	$	318,054		$	369,454		$	51,400	16.2	%	$	350,942		$	367,555		$	(16,613	)	(4.5	)%
Adjusted EBITDA Margin	33.5		%	34.8		%					32.9		%	34.6		%


	Six Months Ended June 30,						Dollar Change			Percentage Change		Six Months Ended June 30,						Dollar Change				Percentage Change
	2017			2018			Dollar Change			Percentage Change		2019			2018							Percentage Change
Income from Continuing Operations	$	141,992		$	139,517		$	(2,475	)	(1.7	)%
Income from Continuing Operations as a percentage of Consolidated Revenue	7.5		%	6.6		%
Income (Loss) from Continuing Operations												122,823			$	131,652		Dollar Change	$	(8,829	)		(6.7	)%
Income (Loss) from Continuing Operations as a percentage of Consolidated Revenue												5.8		%	6.3		%
Adjusted EBITDA	$	610,628		$	712,469		$	101,841		16.7	%	$	675,448		$	703,130		$	(27,682	)		(3.9	)%
Adjusted EBITDA Margin	32.3		%	33.9		%						31.8		%	33.4		%

Consolidated Adjusted EBITDA for the six months ended June 30, 2019 decreased by $27.7 million, or approximately 3.9%, and consolidated Adjusted EBITDA Margin decreased by 160 basis points compared to the same prior year period, primarily as a result of increased labor costs in our secure shredding business, higher technology costs associated with information security investments and higher overhead expenses associated with the growth of our data center business.

(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

Loss from discontinued operations, net of tax was ~~$2.4 million and~~ $0.8 million for the six months ended June 30, ~~2017 and~~ 2018, ~~respectively,~~ primarily related to the ~~operations of~~costs associated with the Recall Divestments (as ~~defined~~discussed in Note 1413 to Notes to Consolidated Financial Statements ~~included~~ in our Annual Report).

NONCONTROLLING INTERESTS

For the six months ended June 30, ~~2017~~2019 and 2018, net income attributable to noncontrolling interests resulted in a decrease in net income attributable to IMI of ~~$2.9~~$0.9 million and $0.6 million, respectively. These amounts represent our noncontrolling partners' share of earnings/losses in our majority-owned international subsidiaries that are consolidated in our operating results.

Segment Analysis (in thousands)

See Note 9 to Notes to Consolidated Financial Statements included in our Annual Report for a description of our reportable operating segments.

North American Records and Information Management Business


	Three Months Ended June 30,									Percentage Change								Three Months Ended June 30,												Percentage Change
	Three Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Three Months Ended June 30,								Dollar Change				Actual		Constant Currency		Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	305,168		$	305,895		Dollar Change		$	Actual		727			0.2	Internal Growth		%		(0.2	)%		1.4	%	$	313,355			$	305,895		$	7,460		2.4	%	2.8	%	1.8	%
Service	204,429			233,185			28,756			14.1	%		13.5	%		10.1	%	225,918				233,185				(7,267		)		(3.1	)%	(2.7	)%	(2.1	)%
Segment Revenue	$	509,597		$	539,080		$	29,483		5.8	%		5.3	%		4.9	%	$	539,273			$	539,080			$	193			—	%	0.4	%	0.1	%
Segment Adjusted EBITDA(1)	$	220,768		$	244,861		$	24,093										$	245,585			$	244,861			$	724
Segment Adjusted EBITDA Margin(1)(2)	43.3		%	45.4		%
Segment Adjusted EBITDA Margin(2)																		45.5		%		45.4		%


	Six Months Ended June 30,									Percentage Change								Six Months Ended June 30,												Percentage Change
	Six Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Six Months Ended June 30,								Dollar Change				Actual		Constant Currency		Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	603,351		$	610,714		Dollar Change		$	Actual		7,363			1.2	Internal Growth		%		0.8	%		2.4	%	$	620,341			$	610,714		$	9,627		1.6	%	2.0	%	1.6	%
Service	413,843			455,209			41,366			10.0	%		9.4	%		6.0	%	446,312				455,209				(8,897		)		(2.0	)%	(1.5	)%	—	%
Segment Revenue	$	1,017,194		$	1,065,923		$	48,729		4.8	%		4.3	%		3.9	%	$	1,066,653			$	1,065,923			$	730			0.1	%	0.5	%	0.9	%
Segment Adjusted EBITDA(1)	$	430,298		$	470,599		$	40,301										$	469,268			$	470,599			$	(1,331	)
Segment Adjusted EBITDA Margin(2)	42.3		%	44.1		%												44.0		%		44.1		%


(1)	See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.


(2)	Segment Adjusted EBITDA Margin is calculated by dividing Segment Adjusted EBITDA by total segment revenues.

For the six months ended June 30, ~~2018,~~2019, reported revenue in our North American Records and Information Management Business segment increased ~~4.8%~~0.1%, compared to the six months ended June 30, ~~2017,~~2018, due to ~~internal~~organic revenue growth, offset by the ~~favorable~~unfavorable net impact of ~~acquisitions~~acquisitions/dispositions (due to the IMFS Divestment) and ~~the adoption of ASU 2014-09, as well as fluctuations in~~ foreign currency exchange rates. ~~Internal~~Organic revenue growth of ~~3.9% in the six months ended June 30, 2018~~0.9% was primarily the result of ~~internal~~organic storage rental revenue growth of ~~2.4% in the six months ended June 30, 2018,~~1.6% driven by revenue management, ~~programs and internal~~partially offset by volume decreases. In addition, flat organic service revenue growth ~~of 6.0% in the six months ended June 30, 2018,~~was driven by growth in secure shredding ~~revenues~~revenue and increased project activity, fully offset by recent declines in recycled paper prices, lower destructions and reduced retrieval/re-file and related transportation activity. ~~The net impact of acquisitions and~~In the ~~adoption of ASU 2014-09 contributed 0.4% to the reported revenue growth rates in our North American Records and Information Management Business segment for the six~~three months ended June 30, ~~2018, compared~~2019, organic service revenue growth was negative 2.1% primarily due to ~~the prior year period.~~recent declines in recycled paper prices and lower destruction activity. Adjusted EBITDA margin ~~increased 180~~decreased 10 basis points during the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017,~~2018, primarily driven by ~~a decrease~~higher labor and transportation costs in ~~wages~~our secure shredding business and ~~benefits as a percentage of segment revenue,~~increased facility rent expense, partially ~~attributable to synergies associated with our acquisition of Recall, cost management initiatives and the capitalization of certain~~offset by lower commissions ~~as a result of our adoption of ASU 2014-09.~~

expense.

North American Data Management Business


	Three Months Ended June 30,										Percentage Change								Three Months Ended June 30,												Percentage Change
	Three Months Ended June 30,						Dollar Change				Actual			Constant Currency			Internal Growth		Three Months Ended June 30,								Dollar Change				Actual		Constant Currency			Organic Growth
	2017			2018						2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency			Organic Growth
Storage Rental	$	68,735		$	68,808		Dollar Change			$	Actual		73			0.1	Internal Growth		%		(0.2	)%		0.7	%	$	66,750			$	68,808		$	(2,058	)		(3.0	)%	(2.7	)%	(2.1	)%
Service	30,942			31,223			281				0.9	%		0.6	%		(1.4	)%	29,665				31,223				(1,558		)		(5.0	)%	(4.7	)%		(6.5	)%
Segment Revenue	$	99,677		$	100,031		$	354			0.4	%		0.1	%		—	%	$	96,415			$	100,031			$	(3,616	)		(3.6	)%	(3.4	)%		(3.5	)%
Segment Adjusted EBITDA(1)	$	55,448		$	55,280		$	(168	)										$	53,068			$	55,280			$	(2,212	)
Segment Adjusted EBITDA Margin(1)(2)	55.6		%	55.3		%
Segment Adjusted EBITDA Margin(2)																			55.0		%		55.3		%


	Six Months Ended June 30,										Percentage Change								Six Months Ended June 30,												Percentage Change
	Six Months Ended June 30,						Dollar Change				Actual			Constant Currency			Internal Growth		Six Months Ended June 30,								Dollar Change				Actual		Constant Currency			Organic Growth
	2017			2018						2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency			Organic Growth
Storage Rental	$	137,559		$	138,054		Dollar Change			$	Actual		495			0.4	Internal Growth		%		0.1	%		0.9	%	$	133,322			$	138,054		$	(4,732	)		(3.4	)%	(3.1	)%	(2.5	)%
Service	62,952			61,941			(1,011		)		(1.6	)%		(1.9	)%		(3.8	)%	59,840				61,941				(2,101		)		(3.4	)%	(3.1	)%		(4.9	)%
Segment Revenue	$	200,511		$	199,995		$	(516	)		(0.3	)%		(0.6	)%		(0.6	)%	$	193,162			$	199,995			$	(6,833	)		(3.4	)%	(3.1	)%		(3.2	)%
Segment Adjusted EBITDA(1)	$	110,718		$	109,132		$	(1,586	)										$	103,620			$	109,132			$	(5,512	)
Segment Adjusted EBITDA Margin(2)	55.2		%	54.6		%													53.6		%		54.6		%


(1)	See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.


(2)	Segment Adjusted EBITDA Margin is calculated by dividing Segment Adjusted EBITDA by total segment revenues.

For the six months ended June 30, ~~2018,~~2019, reported revenue in our North American Data Management Business segment decreased ~~0.3%~~3.4%, compared to the six months ended June 30, ~~2017,~~2018, primarily due to negative ~~internal~~organic revenue growth. The negative organic revenue growth ~~partially offset by favorable fluctuations in foreign currency exchange rates. The negative internal revenue growth for the six months ended June 30, 2018~~ of ~~0.6% is~~3.2% was primarily attributable to a decline in ~~internal~~organic service revenue growth of ~~3.8% in the six months ended June 30, 2018~~4.9% due to continued declines in service revenue activity levels as the business becomes more archival in nature ~~partially offset by internal~~and tape volumes decrease, as well as a decline in organic storage rental revenue ~~growth~~ of ~~0.9% in the six months ended June 30, 2018,~~2.5%, primarily attributable to volume ~~increases and~~decreases, partially offset by the impact of revenue ~~management programs.~~management. Adjusted EBITDA margin decreased 60100 basis points during the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017,~~2018, primarily associated with investments in ~~product management~~new products and ~~development.~~

services, as well as lower revenue not being offset by lower fixed costs.

Western European Business


	Three Months Ended June 30,									Percentage Change								Three Months Ended June 30,												Percentage Change
	Three Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Three Months Ended June 30,								Dollar Change				Actual		Constant Currency			Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency			Organic Growth
Storage Rental	$	74,535		$	82,439		Dollar Change		$	Actual		7,904			10.6	Internal Growth		%		3.3	%		1.8	%	$	78,554			$	82,439		$	(3,885	)		(4.7	)%	0.8	%	2.4	%
Service	47,331			53,776			6,445			13.6	%		6.4	%		5.0	%	48,773				51,001				(2,228		)		(4.4	)%	1.0	%		1.2	%
Segment Revenue	$	121,866		$	136,215		$	14,349		11.8	%		4.5	%		3.0	%	$	127,327			$	133,440			$	(6,113	)		(4.6	)%	0.9	%		1.9	%
Segment Adjusted EBITDA(1)	$	36,528		$	46,413		$	9,885										$	44,163			$	46,594			$	(2,431	)
Segment Adjusted EBITDA Margin(1)(2)	30.0		%	34.1		%
Segment Adjusted EBITDA Margin(2)																		34.7		%		34.9		%


	Six Months Ended June 30,									Percentage Change								Six Months Ended June 30,												Percentage Change
	Six Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Six Months Ended June 30,								Dollar Change				Actual		Constant Currency			Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency			Organic Growth
Storage Rental	$	146,102		$	166,391		Dollar Change		$	Actual		20,289			13.9	Internal Growth		%		3.4	%		1.9	%	$	159,249			$	166,391		$	(7,142	)		(4.3	)%	2.0	%	2.8	%
Service	95,836			106,696			10,860			11.3	%		1.1	%		2.0	%	96,831				101,124				(4,293		)		(4.2	)%	2.0	%		2.1	%
Segment Revenue	$	241,938		$	273,087		$	31,149		12.9	%		2.5	%		1.9	%	$	256,080			$	267,515			$	(11,435	)		(4.3	)%	2.0	%		2.5	%
Segment Adjusted EBITDA(1)	$	70,670		$	90,495		$	19,825										$	83,372			$	90,560			$	(7,188	)
Segment Adjusted EBITDA Margin(2)	29.2		%	33.1		%												32.6		%		33.9		%


(1)	See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.


(2)	Segment Adjusted EBITDA Margin is calculated by dividing Segment Adjusted EBITDA by total segment revenues.

For the six months ended June 30, ~~2018,~~2019, reported revenue in our Western European Business segment ~~increased 12.9%~~decreased 4.3%, compared to the six months ended June 30, ~~2017,~~2018, due to ~~favorable~~unfavorable fluctuations in foreign currency exchange rates, ~~and internal~~partially offset by organic revenue growth. ~~Internal~~Organic revenue growth ~~for the six months ended June 30, 2018~~ was ~~1.9%~~2.5%, primarily attributable to ~~internal~~organic storage rental revenue growth of ~~1.9% for the six months ended June 30, 2018,~~2.8%, primarily associated with volume increases and, to a lesser extent, revenue management, ~~programs.~~as well as organic service revenue growth of 2.1%, reflecting higher destruction activity. For the six months ended June 30, ~~2018,~~2019, foreign currency exchange rate fluctuations ~~increased~~decreased our reported revenues for the Western European Business segment by ~~10.4%~~6.3% compared to the prior year period due to the ~~strengthening~~weakening of the British pound sterling and Euro against the United States dollar. Adjusted EBITDA margin ~~increased 390~~decreased 130 basis points during the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017,~~2018, primarily driven by ~~wages~~higher facilities costs, compensation and ~~benefits, facility~~higher professional fees. The higher facilities costs reflect increased rent and ~~transportation expense growing at a~~utility costs, partially offset by lower ~~rate than revenue as a result of synergies associated with our acquisition of Recall and cost management initiatives.~~property taxes.

Other International Business


	Three Months Ended June 30,									Percentage Change								Three Months Ended June 30,												Percentage Change
	Three Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Three Months Ended June 30,								Dollar Change				Actual		Constant Currency			Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency			Organic Growth
Storage Rental	$	121,317		$	129,611		Dollar Change		$	Actual		8,294			6.8	Internal Growth		%		8.1	%		5.9	%	$	128,898			$	129,611		$	(713	)		(0.6	)%	7.0	%	3.7	%
Service	71,088			75,141			4,053			5.7	%		7.6	%		6.0	%	70,925				77,916				(6,991		)		(9.0	)%	(0.4	)%		(2.0	)%
Segment Revenue	$	192,405		$	204,752		$	12,347		6.4	%		8.0	%		5.9	%	$	199,823			$	207,527			$	(7,704	)		(3.7	)%	4.3	%		1.6	%
Segment Adjusted EBITDA(1)	$	56,166		$	60,633		$	4,467										$	58,749			$	60,452			$	(1,703	)
Segment Adjusted EBITDA Margin(1)(2)	29.2		%	29.6		%
Segment Adjusted EBITDA Margin(2)																		29.4		%		29.1		%


	Six Months Ended June 30,									Percentage Change								Six Months Ended June 30,												Percentage Change
	Six Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Six Months Ended June 30,								Dollar Change				Actual		Constant Currency			Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency			Organic Growth
Storage Rental	$	238,932		$	261,358		Dollar Change		$	Actual		22,426			9.4	Internal Growth		%		7.9	%		5.8	%	$	258,371			$	261,358		$	(2,987	)		(1.1	)%	7.8	%	4.2	%
Service	142,714			151,364			8,650			6.1	%		5.0	%		3.9	%	142,408				156,936				(14,528		)		(9.3	)%	0.4	%		(1.3	)%
Segment Revenue	$	381,646		$	412,722		$	31,076		8.1	%		6.8	%		5.1	%	$	400,779			$	418,294			$	(17,515	)		(4.2	)%	5.1	%		2.1	%
Segment Adjusted EBITDA(1)	$	111,513		$	121,264		$	9,751										$	116,873			$	121,199			$	(4,326	)
Segment Adjusted EBITDA Margin(2)	29.2		%	29.4		%												29.2		%		29.0		%


(1)	See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.


(2)	Segment Adjusted EBITDA Margin is calculated by dividing Segment Adjusted EBITDA by total segment revenues.

In the six months ended June 30, ~~2018,~~2019, reported revenue in our Other International Business segment ~~increased 8.1%,~~decreased 4.2% compared to the six months ended June 30, ~~2017,~~2018, due to ~~internal revenue growth, favorable~~unfavorable fluctuations in foreign currency exchange rates, partially offset by organic revenue growth and the favorable impact of acquisitions/divestitures. ~~Internal~~Organic revenue growth ~~for the six months ended June 30, 2018~~ was ~~5.1%~~2.1%, supported by ~~5.8% internal~~4.2% organic storage rental revenue growth, primarily due to volume increases and, ~~3.9% internal~~to a lesser extent, revenue management, partially offset by negative 1.3% organic service revenue growth, primarily due to ~~increased~~a decrease in project activity. The net impact of acquisitions/divestitures contributed ~~1.7%~~3.0% to reported revenue growth for the six months ended June 30, ~~2018,~~2019, compared to the prior year period. For the six months ended June 30, ~~2018,~~2019, foreign currency exchange rate fluctuations ~~increased~~decreased our reported revenues for the Other International Business segment by ~~1.3%~~9.3% compared to the prior year period primarily due to the ~~strengthening~~weakening of the Australian dollar and Brazilian real against the United States dollar. Adjusted EBITDA margin ~~of 29.4%~~increased 20 basis points for the six months ended June 30, ~~2018 increased 20 basis point~~2019 compared to the six months ended June 30, ~~2017,~~2018, primarily due to compensation growing at a lower rate than revenue and a decrease in ~~part due to cost management initiatives,~~transportation costs, partially offset by ~~increases in facility~~higher facilities costs, mainly rent expense and building maintenance ~~costs and bad debt expense.~~costs.

Global Data Center Business


	Three Months Ended June 30,									Percentage Change								Three Months Ended June 30,												Percentage Change
	Three Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Three Months Ended June 30,								Dollar Change				Actual		Constant Currency		Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	9,931		$	51,945		Dollar Change		$	Actual		42,014			423.1	Internal Growth		%		423.1	%		(23.4	)%	$	60,582			$	51,945		$	8,637		16.6	%	17.2	%	8.4	%
Service	429			2,950			2,521			587.6	%		587.6	%		35.1	%	1,709				2,950				(1,241		)		(42.1	)%	(42.1	)%	(45.4	)%
Segment Revenue	$	10,360		$	54,895		$	44,535		429.9	%		429.9	%		(21.0	)%	$	62,291			$	54,895			$	7,396			13.5	%	14.0	%	5.5	%
Segment Adjusted EBITDA(1)	$	5,991		$	24,901		$	18,910										$	27,641			$	24,901			$	2,740
Segment Adjusted EBITDA Margin(1)(2)	57.8		%	45.4		%
Segment Adjusted EBITDA Margin(2)																		44.4		%		45.4		%


	Six Months Ended June 30,									Percentage Change								Six Months Ended June 30,												Percentage Change
	Six Months Ended June 30,						Dollar Change			Actual			Constant Currency			Internal Growth		Six Months Ended June 30,								Dollar Change				Actual		Constant Currency		Organic Growth
	2017			2018					2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	15,789		$	97,440		Dollar Change		$	Actual		81,651			517.1	Internal Growth		%		517.1	%		(4.1	)%	$	120,300			$	97,440		$	22,860		23.5	%	23.9	%	5.7	%
Service	794			4,058			3,264			411.1	%		411.1	%		37.6	%	3,527				4,058				(531		)		(13.1	)%	(13.1	)%	(23.7	)%
Segment Revenue	$	16,583		$	101,498		$	84,915		512.1	%		512.1	%		(2.1	)%	$	123,827			$	101,498			$	22,329			22.0	%	22.4	%	4.5	%
Segment Adjusted EBITDA(1)	$	7,497		$	45,691		$	38,194										$	53,652			$	45,691			$	7,961
Segment Adjusted EBITDA Margin(2)	45.2		%	45.0		%												43.3		%		45.0		%


(1)	See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.


(2)	Segment Adjusted EBITDA Margin is calculated by dividing Segment Adjusted EBITDA by total segment revenues.

For the six months ended June 30, ~~2018,~~2019, reported revenue in our Global Data Center Business segment increased ~~512.1%~~22.0% compared to the six months ended June 30, ~~2017,~~2018, primarily due to the ~~favorable~~ impact of ~~acquisitions.~~acquisitions (see Note 6 of Notes to Consolidated Financial Statements included in our Annual Report for additional acquisition details). The impact of acquisitions contributed ~~514.2%~~17.9% to the reported revenue growth rate in our Global Data Center Business segment for the six months ended June 30, ~~2018~~2019 compared to the prior year period. Organic storage rental revenue growth in our Global Data Center Business segment was 5.7% for the six months ended June 30, 2019 compared to the prior year period, ~~(see Note 4 of Notes~~primarily related to ~~Condensed Consolidated Financial Statements included in this Quarterly Report for additional acquisition details). Internal~~a $1.7 million lease modification fee that benefited organic storage rental revenue growth ~~for~~by 1.7%. For the three months ended June 30, ~~2018 was negative 21.0%. The negative internal revenue growth was primarily driven by a $4.2 million customer termination fee in the second quarter of 2017. Excluding~~2019 the impact of ~~this termination~~the modification fee ~~internal~~benefited organic storage rental revenue growth ~~for the three months ended June 30, 2018 was 34.5%~~by 3.2%. Adjusted EBITDA increased ~~$38.2~~$8.0 million for the six months ended June 30, ~~2018~~2019 compared to the prior year period, primarily due to the impact of acquisitions. Adjusted EBITDA margin decreased 170 basis points during the six months ended June 30, 2019 compared to the prior year period primarily due to the impact of recent ~~acquisitions.~~acquisitions that operate at lower margins and increased overhead to support the growth of this business.

Corporate and Other Business


	Three Months Ended June 30,										Percentage Change								Three Months Ended June 30,												Percentage Change
	Three Months Ended June 30,						Dollar Change				Actual			Constant Currency			Internal Growth		Three Months Ended June 30,								Dollar Change				Actual		Constant Currency		Organic Growth
	2017			2018						2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	10,554		$	16,741		Dollar Change			$	Actual		6,187			58.6	Internal Growth		%		58.6	%		4.2	%	$	21,149			$	16,741		$	4,408		26.3	%	27.6	%	3.0	%
Service	5,347			9,109			3,762				70.4	%		70.4	%		10.9	%	20,629				9,109				11,520				126.5	%	132.5	%	14.9	%
Segment Revenue	$	15,901		$	25,850		$	9,949			62.6	%		62.6	%		6.5	%	$	41,778			$	25,850			$	15,928			61.6	%	64.2	%	7.1	%
Segment Adjusted EBITDA(1)	$	(56,847	)	$	(62,634	)	$	(5,787	)										$	(78,264	)		$	(64,533	)		$	(13,731	)
Segment Adjusted EBITDA(1) as a percentage of Consolidated Revenue	(6.0		)%	(5.9		)%													(7.3		)%		(6.1		)%


	Six Months Ended June 30,										Percentage Change								Six Months Ended June 30,												Percentage Change
	Six Months Ended June 30,						Dollar Change				Actual			Constant Currency			Internal Growth		Six Months Ended June 30,								Dollar Change				Actual		Constant Currency		Organic Growth
	2017			2018						2019				Constant Currency		2018											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	20,786		$	32,631		Dollar Change			$	Actual		11,845			57.0	Internal Growth		%		57.0	%		4.3	%	$	40,679			$	32,631		$	8,048		24.7	%	26.0	%	4.8	%
Service	10,024			17,425			7,401				73.8	%		73.8	%		5.5	%	39,590				17,425				22,165				127.2	%	135.7	%	13.4	%
Segment Revenue	$	30,810		$	50,056		$	19,246			62.5	%		62.5	%		4.7	%	$	80,269			$	50,056			$	30,213			60.4	%	63.5	%	7.7	%
Segment Adjusted EBITDA(1)	$	(120,068	)	$	(124,712	)	$	(4,644	)										$	(151,337	)		$	(134,051	)		$	(17,286	)
Segment Adjusted EBITDA(1) as a percentage of Consolidated Revenue	(6.4		)%	(5.9		)%													(7.1		)%		(6.4		)%


(1)	See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.

During the six months ended June 30, ~~2018,~~2019, Adjusted EBITDA in the Corporate and Other Business segment as a percentage of consolidated revenues ~~improved 50~~decreased 70 basis points compared to the six months ended June 30, ~~2017.~~2018. Adjusted EBITDA in the Corporate and Other Business segment decreased ~~$4.6~~$17.3 million in the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017,~~2018, primarily driven by higher compensation and professional fees associated with investments in our global operations support team that is tasked with driving operational improvements and continued investment in innovation and product development, partially offset by profitability associated with recent acquisitions in our Adjacent Businesses operating segment.

Liquidity and Capital Resources

The following is a summary of our cash balances and cash flows (in thousands) as of and for the six months ended June 30,


	2017			2018			2019			2018
Cash flows from operating activities - continuing operations	$	322,040		$	393,806		$	429,731		$	393,806
Cash flows from investing activities - continuing operations	(220,970		)	(1,921,496		)	(474,734		)	(1,921,496		)
Cash flows from financing activities - continuing operations	(61,584		)	798,753			39,102			798,753
Cash and cash equivalents at the end of period	291,019			188,192			161,996			188,192

Cash Flows from Operating Activities

For the six months ended June 30, ~~2018,~~2019, net cash flows provided by operating activities increased by ~~$71.8~~$35.9 million compared to the prior year period. The primary factors that impacted the increase in cash provided by operating activities were an increase in net income (including non-cash charges and realized foreign exchange losses) of $91.1 million, offset by an increaseperiod, primarily due to a decrease in cash used in working capital of ~~$19.3~~$40.5 million, primarily related to the timing of ~~the payment~~collections of accounts receivable and certain prepaid and accrued ~~expenses.~~expenses, offset by a decrease in net income (including non-cash charges) of $4.6 million.

Cash Flows from Investing Activities

Our significant investing activities during the six months ended June 30, ~~2018~~2019 are highlighted below:

•

~~We paid cash for acquisitions (net of cash acquired) of $1,666.9 million, primarily funded by the net proceeds of our issuance of the 5~~¹/₄~~% Notes (as defined below), the net proceeds of the Equity Offering and Over-Allotment Option (both as defined below) and borrowings under our Revolving Credit Facility.~~

We paid cash for acquisitions (net of cash acquired) of $44.7 million, primarily funded by borrowings under our revolving credit facility (the "Revolving Credit Facility").

We paid cash for capital expenditures of ~~$217.6~~$367.1 million. Our business requires capital expenditures to maintain our ongoing operations, support our expected revenue growth and new products and services, and increase our profitability. All of these expenditures are included in the cash flows from investing activities. Additional details of our capital spending is included in the Capital Expenditures section below.

We acquired customer relationships, and incurred both (i) customer inducements (which ~~consists~~consist primarily of permanent withdrawal ~~fees following the adoption of ASU 2014-09)~~fees) and (ii) Contract Fulfillment Costs (as defined in Note 2.c. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report) and third-party commissions during the six months ended June 30, ~~2018~~2019 of ~~$23.4~~$33.4 million, ~~$4.0~~$5.8 million and ~~$9.8~~$51.3 million, respectively.

~~Excluding~~We paid $19.2 million as part of our investment in Makespace (as discussed above).

We received proceeds of $46.8 million, primarily from the sale of three facilities in the United Kingdom.

Cash Flows from Financing Activities

Our significant financing activities during the six months ended June 30, 2019 included:

Net proceeds of $395.2 million primarily associated with the borrowings and repayments on our Revolving Credit Facility.

Payment of dividends in the amount of $353.4 million on our common stock.

Capital Expenditures

The following table presents our capital spend for the six months ended June 30, 2019 and 2018, organized by the type of the spending as described in our Annual Report:



	Six Months Ended June 30,
	Six Months Ended June 30,
Nature of Capital Spend (in thousands)	2019		2018
Growth Investment Capital Expenditures:
Real Estate(1)	$	40,459	$	73,493
Non-Real Estate(2)	18,993		22,868
Data Center(3)	235,170		56,815
Innovation(1)	10,680		4,587
Total Growth Investment Capital Expenditures	305,302		157,763
Recurring Capital Expenditures:
Real Estate(2)	27,563		23,615
Non-Real Estate(2)	12,260		10,435
Data Center(3)	3,607		5,743
Total Recurring Capital Expenditures	43,430		39,793
Total Capital Spend (on accrual basis)	348,732		197,556
Net increase (decrease) in prepaid capital expenditures	410		(1,733		)
Net decrease (increase) in accrued capital expenditures	17,989		21,778
Total Capital Spend (on cash basis)	$	367,131	$	217,601

For the year ending December 31, 2019, excluding capital expenditures associated with potential future acquisitions, opportunistic real estate investments and capital expenditures associated with the ~~integration~~integrations of Recall and IODC, we expect our capital expenditures on real estate and non-real estate maintenance, as well as non-real estate investment, to be approximately $155.0 million to $165.0 million, our capital expenditures on our data center business to be approximately $200.0 million, and our capital expenditures on real estate investment, net of sales, and innovation to be approximately $75.0 million in the ~~year ending December 31, 2018.~~following:

~~Cash Flows from Financing Activities~~

~~Our significant financing activities during the six months ended June 30, 2018 included:~~

~~Net proceeds of $371.0 million associated with the borrowings and repayments on our Revolving Credit Facility;~~

~~Proceeds, net of repayments, of $696.6 million associated with the borrowing of our Term Loan B (as defined below);~~

~~Net proceeds of $76.2 million from the exercise of the Over-Allotment Option;~~

~~Net proceeds of $8.7 million from sales of stock under our At The Market (ATM) Equity Program (as defined below);~~

~~Payment of dividends in the amount of $337.1 million on our common stock; and~~

~~Payment of $13.4 million for debt financing and equity issuance costs.~~

~~Capital Expenditures~~

~~The following table presents our capital spend for the six months ended June 30, 2017 and 2018, respectively, organized by the type of the spending as described in our Annual Report:~~

Six Months Ended
June 30,

Nature of Capital Spend (in thousands) 2017 2018
Real Estate:
Investment $ 72,172
$ 73,493
Maintenance 22,071
23,615
Total Real Estate Capital Spend 94,243
97,108
Non-Real Estate:

Investment 22,834
22,868
Maintenance 12,328
10,435
Total Non-Real Estate Capital Spend 35,162
33,303
Data Center:
Investment(1) 43,460
56,815
Maintenance(2) 84
5,743
Total Data Center Capital Spend 43,544
62,558
Innovation and Growth Investment Capital Spend 8,342
4,587
Total Capital Spend (on accrual basis) 181,291
197,556
Net increase (decrease) in prepaid capital expenditures 1,000
(1,733 )
Net (increase) decrease in accrued capital expenditures (17,084 ) 21,778
Total Capital Spend (on cash basis) $ 165,207
$ 217,601

(1)

~~Represents~~Growth investment capital expenditures that support data center business growth, primarily related to investments in new construction of data center facilities (including the acquisition of land and development of facilities) or capacity expansion in existing buildings, as well as capital expenditures that are expected to support incremental improvements to our data center business, through either increasing revenue, improving operating efficiency, or extending the useful life of ouron real estate ~~operating assets.~~and innovation to be approximately $175.0 million;


(2)	~~Represents~~Recurring capital expenditures ~~necessary~~on real estate and non-real estate, as well as non-real estate growth investment capital expenditures, to ~~maintain ongoing business operations at~~be approximately $145.0 million to $155.0 million; and


(3)	Capital expenditures on our data ~~centers, including the re-configuration of existing assets.~~center business to be approximately $300.0 million.

Dividends

See Note 98 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for a listing of dividends that were declared ~~in fiscal year 2017 and~~during the first six months of 2019 and fiscal year 2018.

Financial Instruments and Debt

Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents (including money market funds and time deposits) and accounts receivable. The only significant concentration of liquid investment as of June 30, 2019 is related to cash and cash equivalents. See Note ~~2.g.~~2.h. to Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report for information on our ~~money market funds and~~ time deposits.

~~Our consolidated~~Long-term debt as of June 30, ~~2018~~2019 is as follows (in thousands):


	June 30, 2018									June 30, 2019
	Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount			Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount
Revolving Credit Facility	$	828,567		$	(15,617	)	$	812,950		$	1,181,376		$	(12,548	)	$	1,168,828
Term Loan A	246,875			—			246,875			234,375			—			234,375
Term Loan B	696,556			(9,367		)	687,189			689,782			(8,118		)	681,664
Australian Dollar Term Loan (the "AUD Term Loan")	248,670			(3,433		)	245,237
4³/₈% Senior Notes due 2021 (the "4³/₈% Notes")	500,000			(5,015		)	494,985
6% Senior Notes due 2023 (the "6% Notes due 2023")	600,000			(5,675		)	594,325
5³/₈% CAD Senior Notes due 2023 (the "CAD Notes due 2023")	190,330			(2,875		)	187,455
5³/₄% Senior Subordinated Notes due 2024 (the "5³/₄% Notes")	1,000,000			(8,469		)	991,531
3% Euro Senior Notes due 2025 (the "Euro Notes")	350,508			(4,419		)	346,089
3⁷/₈% GBP Senior Notes due 2025 (the "GBP Notes due 2025")	528,296			(7,104		)	521,192
5³/₈% Senior Notes due 2026 (the "5³/₈% Notes")	250,000			(3,400		)	246,600
Australian Dollar Term Loan										230,048			(2,691		)	227,357
UK Bilateral Revolving Credit Facility										177,762			(2,030		)	175,732
4³/₈% Senior Notes due 2021										500,000			(3,295		)	496,705
6% Senior Notes due 2023										600,000			(4,576		)	595,424
5³/₈% CAD Senior Notes due 2023										190,972			(2,335		)	188,637
5³/₄% Senior Subordinated Notes due 2024										1,000,000			(7,096		)	992,904
3% Euro Senior Notes due 2025										341,128			(3,781		)	337,347
3⁷/₈% GBP Senior Notes due 2025 (the "GBP Notes")										507,891			(6,074		)	501,817
5³/₈% Senior Notes due 2026										250,000			(2,971		)	247,029
4⁷/₈% Senior Notes due 2027 (the "4⁷/₈% Notes")	1,000,000			(13,153		)	986,847			1,000,000			(11,731		)	988,269
5¹/₄% Senior Notes due 2028 (the "5¹/₄% Notes")	825,000			(11,511		)	813,489			825,000			(10,333		)	814,667
Real Estate Mortgages, Capital Leases and Other	614,145			(316		)	613,829
Real Estate Mortgages, Financing Lease Liabilities and Other										559,622			(425		)	559,197
Accounts Receivable Securitization Program	248,473			(287		)	248,186			254,962			(149		)	254,813
Mortgage Securitization Program	50,000			(1,200		)	48,800			50,000			(1,055		)	48,945
Total Long-term Debt	8,177,420			(91,841		)	8,085,579			8,592,918			(79,208		)	8,513,710
Less Current Portion	(123,818		)	—			(123,818		)	(123,527		)	—			(123,527		)
Long-term Debt, Net of Current Portion	$	8,053,602		$	(91,841	)	$	7,961,761		$	8,469,391		$	(79,208	)	$	8,390,183

See Note 4 to Notes to Consolidated Financial Statements included in our Annual Report and Note 54 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our long-term debt.

~~a. Credit Agreement Amendments~~

As of December 31, 2017, we had a credit agreement, as amended as described below (the "Credit Agreement"), which consisted of a revolving credit facility (the "Revolving Credit Facility") and a term loan (the "Term Loan A") and was scheduled to terminate on August 21, 2022. The maximum amount permitted to be borrowed under the Revolving Credit Facility was $1,750.0 million and the original amount of the Term Loan A was $250.0 million.

On March 22, 2018, we entered into an amendment (the “2018 First Amendment”) to the Credit Agreement which provided us with the option to request additional commitments of up to $1,260.0 million under the Credit Agreement in the form of term loans or through increased commitments under the Revolving Credit Facility, subject to the conditions specified in the Credit Agreement. On June 4, 2018, we entered into another amendment (the "2018 Second Amendment") to the Credit Agreement which (i) reduced interest rate margins applicable to existing and future borrowings under the Revolving Credit Facility and Term Loan A by 0.25% and (ii) extended the maturity date of the Credit Agreement to June 4, 2023.

~~The amount available for borrowing under the Revolving Credit Facility as of June 30, 2018 was $866.8 million (which amount represents the maximum availability as of such date).~~

In connection with the 2018 First Amendment, we entered into an incremental term loan activation notice (the "Activation Notice") with certain lenders pursuant to which the lenders party to the Activation Notice agreed to provide commitments to fund an incremental term loan B in the amount of $700.0 million (the “Term Loan B”). On March 26, 2018, we borrowed the full amount of the Term Loan B, which matures on January 2, 2026. The Term Loan B was issued at 99.75% of par. The aggregate net proceeds of approximately $689.9 million, after paying commissions to the joint lead arrangers and net of the original discount, were used to repay outstanding borrowings under the Revolving Credit Facility. See Note 5 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional details on the Term Loan B.

At June 30, 2018, we had $698.3 million outstanding on the Term Loan B and the interest rate in effect under the Term Loan B was 3.8%. The amount of debt for the Term Loan B reflects an unamortized original issue discount of $1.7 million as of June 30, 2018.

~~b . Australian Dollar Term Loan Amendment~~

On March 27, 2018, Iron Mountain Australia Group Pty Ltd, a wholly owned subsidiary of IMI, amended its AUD Term Loan (the "AUD Term Loan Amendment") to (i) increase the borrowings under the AUD Term Loan from 250.0 million Australian dollars to 350.0 million Australian dollars; (ii) increase the quarterly principal payments from 6.3 million Australian dollars per year to 8.8 million Australian dollars per year and (iii) decrease the interest rate on the AUD Term Loan from BBSY (an Australian benchmark variable interest rate) plus 4.3% to BBSY plus 3.875%. The AUD Term Loan matures in September 2022. All indebtedness associated with the AUD Term Loan was issued at 99% of par. The net proceeds associated with the AUD Term Loan Amendment of approximately 99.0 million Australian dollars (or approximately $75.6 million, based on the exchange rate between the Australian dollar and the United States dollar on March 29, 2018 (the closing date of the AUD Term Loan Amendment)), net of the original discount, were used to repay outstanding borrowings under the Revolving Credit Facility. See Note 5 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional details on the AUD Term Loan.

c. Debt Covenants


	December 31, 2017	June 30, 2018	Maximum/Minimum Allowable	June 30, 2019	December 31, 2018	Maximum/Minimum Allowable
Net total lease adjusted leverage ratio	5.0	5.6	Maximum allowable of 6.5	5.8	5.6	Maximum allowable of 6.5
Net secured debt lease adjusted leverage ratio	1.6	2.5	Maximum allowable of 4.0	2.8	2.6	Maximum allowable of 4.0
Bond leverage ratio (not lease adjusted)	5.8	5.7	Maximum allowable of 6.5-7.0(1)(2)	6.1	5.8	Maximum allowable of 6.5-7.0(1)
Fixed charge coverage ratio	2.1	2.3	Minimum allowable of 1.5	2.2	2.2	Minimum allowable of 1.5

(1)

~~(2)~~

~~At December 31, 2017, a portion of the net proceeds from the 5~~¹/₄% Notes, together with a portion of the net proceeds of the Equity Offering, were used to temporarily repay approximately $807.0 million of outstanding indebtedness under our Revolving Credit Facility until the closing of the IODC Transaction, which occurred on January 10, 2018. The bond leverage ratio at December 31, 2017 is calculated based on our outstanding indebtedness at this date, which reflects the temporary payment of the Revolving Credit Facility.

Noncompliance with these leverage and fixed charge coverage ratios would have a material adverse effect on our financial condition and liquidity.

Our ability to pay interest on or to refinance our indebtedness depends on our future performance, working capital levels and capital structure, which are subject to general economic, financial, competitive, legislative, regulatory and other factors which may be beyond our control. There can be no assurance that we will generate sufficient cash flow from our operations or that future financings will be available on acceptable terms or in amounts sufficient to enable us to service or refinance our indebtedness or to make necessary capital expenditures.

~~Equity Financings~~

a. At The Market (ATM) Equity Program

As described in greater detail in Note 1312 to Notes to Consolidated Financial Statements included in our Annual Report, we entered into a distribution agreement ~~(the “Distribution Agreement”)~~ with a syndicate of 10 banks (the “Agents”) pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common stock through the Agents (the “At The Market (ATM) Equity Program”). There were no shares of common stock sold under the At the Market (ATM) Equity Program during the ~~three~~six months ended June 30, ~~2018.~~2019. During the six months ended June 30, 2018, under the At The Market (ATM) Equity Program, we sold an aggregate of 273,486 shares of common stock for gross proceeds of approximately $8.8 million, generating net proceeds of $8.7 million, after deducting commissions of $0.1 million. As of June 30, ~~2018,~~2019, the remaining aggregate sale price of shares of our common stock available for distribution under the At The Market (ATM) Equity Program was approximately $431.2 million.

~~b. Equity Offering~~

~~On December 12, 2017,~~Forward-Starting Interest Rate Swap Agreements

In July 2019, we entered into ~~an underwriting agreement (the "Underwriting Agreement") with~~forward-starting interest rate swap agreements to limit our exposure to changes in interest rates on a ~~syndicate of 16 banks (the “Underwriters”) related to the public offering by us of 14,500,000 shares (the “Firm Shares”)~~portion of our ~~common stock (the “Equity Offering”)~~floating rate indebtedness once our current interest rate swaps expire in March 2022 (as described in Note 2.h. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report). The ~~offering price to~~forward-starting interest rate swap agreements have $350.0 million in notional value, commence in March 2022 and expire in March 2024. Under the ~~public~~swap agreements we will receive variable rate interest payments based upon one-month LIBOR, in exchange for the ~~Equity Offering was $37.00 per share, and we agreed to pay the Underwriters an underwriting commission~~payment of ~~$1.38195 per share. The net proceeds to us from the Equity Offering, after deducting Underwriters' commissions, was $516.5 million.~~

~~Pursuant to the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase from us up to an additional 2,175,000 shares of common stock (the “Option Shares”)~~fixed interest rate payments at the ~~public offering price, less~~rates specified in the ~~underwriting commission and less an amount per share equal to any dividends or distributions declared by us and payable on~~interest rate swap agreements. We have designated these interest rate swap agreements as cash flow hedges beginning in the Firm Shares but not payable on the Option Shares (the “Over-Allotment Option"). On January 10, 2018, the Underwriters exercised the Over-Allotment Option in its entirety. The net proceeds to us from the exercisethird quarter of the Over-Allotment Option, after deducting underwriters' commissions and the per share value of the dividend we declared on our common stock on October 24, 2017 (for which the record date was December 15, 2017) which was paid on January 2, 2018, was approximately $76.2 million. The net proceeds of the Equity Offering and the Over-Allotment Option, together with the net proceeds from the issuance of the 5¹/₄~~% Notes, were used to finance the purchase price of the IODC Transaction, and to pay related fees and expenses.~~2019.

Acquisitions

~~a. 2018 Acquisitions of Data Centers~~See Note 3 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for information regarding our 2019 acquisitions.

On January 10, 2018, we completed the IODC Transaction. At the closing of the IODC Transaction, we paid approximately $1,347.0 million. In addition to the amount paid at the closing of the IODC Transaction, there is the potential of $35.0 million in additional payments associated with the execution of future customer contracts.

On March 8, 2018, in order to expand our data center operations into Europe and Asia, we acquired the operations of two data centers in London and Singapore from Credit Suisse International and Credit Suisse AG (together, "Credit Suisse") for a total of (i) 34.6 million British pounds sterling and (ii) 81.0 million Singapore dollars (or collectively, approximately $111.4 million, based upon the exchange rates between the United States dollar and the British pound sterling and Singapore dollar on the closing date of the Credit Suisse transaction) (the “Credit Suisse Transaction”). As part of the Credit Suisse Transaction, Credit Suisse entered into a long-term lease with us to maintain existing data center operations.

On May 25, 2018, in order to further expand our data center operations in Europe, we acquired EvoSwitch Netherlands B.V. and EvoSwitch Global Services B.V. (collectively, "EvoSwitch"), a leading data center colocation space and solutions provider with a data center in Amsterdam (the "EvoSwitch Transaction"), for (i) cash consideration of 189.0 million Euros (or approximately $222.0 million, based upon the exchange rate between the Euro and the United States dollar on the closing date of the EvoSwitch Transaction) and (ii) $25.0 million of additional consideration in the form of future services we will provide to the seller.

~~b. Significant Acquisition Costs~~

Included in Significant Acquisition Costs are certain costs associated with the Recall Transaction and the IODC Transaction. This amount consists of (i) Significant Acquisition Costs and (ii) capital expenditures to integrate Recall with our existing operations. We currently estimate total acquisition and integration expenditures associated with the Recall Transaction and acquisition expenditures associated with the IODC Transaction to be approximately ~~$395.0~~$405.0 million, the substantial majority of which ~~is related~~was incurred prior to ~~Recall and the majority of which is expected to be incurred by~~ the end of 2018. ~~This amount consists of (i) Significant Acquisition Costs and (ii) capital expenditures to integrate Recall with our existing operations.~~

The following table presents the cumulative amount of operating and capital expenditures incurred during the six months ended June 30, 2019 and 2018, as well as the cumulative amount incurred through June 30, 2019, associated with the Recall Transaction and the IODC Transaction ~~incurred for the three and six months ended June 30, 2017 and 2018 and the cumulative amount incurred through June 30, 2018~~ (in thousands):


	Year Ended December 31, 2017		Three Months Ended June 30, 2018		Six Months Ended June 30, 2018		Cumulative Total Through June 30, 2018		Cumulative Total Through June 30, 2019		Six Months Ended June 30, 2019		Six Months Ended June 30, 2018
Significant Acquisition Costs	$	84,901	$	10,421	$	29,429	$	293,288	$	319,171	$	4,647	$	29,429
Recall Capital Expenditures	31,441		5,361		7,245		57,142		74,890		1,353		7,245
Total	$	116,342	$	15,782	$	36,674	$	350,430	$	394,061	$	6,000	$	36,674

Contractual Obligations

We expect to meet our cash flow requirements for the next twelve months ~~from~~by utilizing cash on hand, cash generated from operations, ~~cash on hand,~~ borrowings under the Credit Agreement and other financings (including the issuance of equity under the At The Market (ATM) Equity Program). We expect to meet our long-term cash flow requirements using the same ~~means~~resources described above. We are currently operating above our long-term targeted leverage ratio ~~primarily as a result of costs incurred to fund the REIT conversion, the Recall Transaction~~ and ~~more recently, the IODC Transaction. We~~ expect to reduce our leverage ratio over time through business growth and effective capital allocation ~~strategies and business growth.~~strategies.

Inflation

Certain of our expenses, such as wages and benefits, insurance, occupancy costs and equipment repair and replacement, are subject to normal inflationary pressures. Although to date we have been able to offset inflationary cost increases with increased operating efficiencies, the negotiation of favorable long-term real estate leases and an ability to increase prices in our customer contracts (many of which contain provisions for inflationary price escalators), we can give no assurance that we will be able to offset any future inflationary cost increases through similar efficiencies, leases or increased storage rental or service charges.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These rules refer to the controls and other procedures of a company that are designed to ensure that information is recorded, processed, accumulated, summarized, communicated and reported to management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding what is required to be disclosed by a company in the reports that it files under the Exchange Act. As of June 30, ~~2018~~2019 (the "Evaluation Date"), we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, our chief executive officer and chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

Our management, with the participation of our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.

There were no changes in our internal control over financial reporting during the quarter ended June 30, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any unregistered equity securities during the three months ended June 30, ~~2018,~~2019, nor did we repurchase any shares of our common stock during the three months ended June 30, ~~2018.~~2019.

Item 6. Exhibits

(a) Exhibits

Certain exhibits indicated below are incorporated by reference to documents we have filed with the SEC.



Exhibit No.			Description
~~10.1~~31.1			Third Amendment and Refinancing Facility Agreement, dated as of June 4, 2018, to Credit Agreement, dated as of June 27, 2011, as amended and restated as of August 21, 2017, among the Company, Iron Mountain Information Management, LLC, certain other subsidiaries of the Company party thereto, the lenders and other financial institutions party thereto, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent.~~(Incorporated by reference to the Company’s Current Report on Form 8-K dated June 4, 2018.)~~
12			~~Statement: re Computation of Ratios.(Filed herewith.)~~
~~31.1~~			Rule 13a-14(a) Certification of Chief Executive Officer.(Filed herewith.)
31.2			Rule 13a-14(a) Certification of Chief Financial Officer.(Filed herewith.)
32.1			Section 1350 Certification of Chief Executive Officer.(Furnished herewith.)
32.2			Section 1350 Certification of Chief Financial Officer.(Furnished herewith.)
~~101.1~~101.INS			~~The following materials from Iron Mountain Incorporated's Quarterly Report on Form 10-Q for~~XBRL Instance Document - the ~~quarter ended June 30, 2018, formatted~~instance document does not appear in the Interactive Data File because its XBRL ~~(eXtensible Business Reporting Language): (i)~~tags are embedded within the Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail. ~~(Filed herewith.)~~ Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			Inline XBRL Taxonomy Label Linkbase Document.
101.PRE			Inline XBRL Taxomony Extension Presentation Linkbase Document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	IRON MOUNTAIN INCORPORATED
	By:	/s/ DANIEL BORGES


		Daniel Borges SeniorVice President, Chief Accounting Officer

Dated: ~~July 27, 2018~~August 1, 2019

8581



	Three Month Ended June 30, 2018			Six Months Ended June 30, 2018
Commissions asset		$	3,793		$	7,380
Intake Costs asset		2,891			5,621



Description	Location in Balance Sheet	January 1, 2018 (Date of Adoption of ASU 2014-09)		June 30, 2018
Deferred revenue - Current	Deferred revenue	$	9,671	$	10,140
Deferred revenue - Long-term	Other Long-term Liabilities	9,877		7,467



	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
	As Reported		If ASU 2014-09 was not adopted		As Reported		If ASU 2014-09 was not adopted
Revenues	$	1,060,823	$	1,057,608	$	2,103,281	$	2,098,872
Operating Income	$	203,359	$	201,664	$	367,918	$	366,983
Income from Continuing Operations	$	93,903	$	92,208	$	139,517	$	138,582

Per Share Income from Continuing Operations - Basic	$	0.33	$	0.32	$	0.49	$	0.48
Per Share Income from Continuing Operations - Diluted	$	0.33	$	0.32	$	0.49	$	0.48



			Fair Value Measurements at December 31, 2017 Using
Description	Total Carrying Value at December 31, 2017		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Money Market Funds(1)	$	585,000	$	—		$	585,000		$	—
Time Deposits(1)	24,482		—			24,482			—
Trading Securities	11,784		11,279		(2)	505		(3)	—
Derivative Assets(4)	1,579		—			1,579			—
Derivative Liabilities(4)	2,329		—			2,329			—



			Fair Value Measurements at June 30, 2018 Using
Description	Total Carrying Value at June 30, 2018		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Time Deposits(1)	$	5,759	$	—		$	5,759		$	—
Trading Securities	11,265		10,529		(2)	736		(3)	—
Derivative Assets(4)	318		—			318			—
Derivative Liabilities(4)	3,413		—			3,413			—
Interest Rate Swap Agreements Assets(5)	2,203		—			2,203			—



	Three Months Ended June 30, 2017						Six Months Ended June 30, 2017
	Foreign Currency Translation Adjustments			Total			Foreign Currency Translation Adjustments			Total
Beginning of Period	$	(161,239	)	$	(161,239	)	$	(212,573	)	$	(212,573	)
Other comprehensive income (loss):
Foreign currency translation adjustments(1)	7,649			7,649			58,983			58,983
Total other comprehensive income (loss)	7,649			7,649			58,983			58,983
Balance as of June 30, 2017	$	(153,590	)	$	(153,590	)	$	(153,590	)	$	(153,590	)



Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	December 31, 2017		June 30, 2018
Derivative assets	Prepaid expenses and other	$	1,579	$	318
Derivative liabilities	Accrued expenses	2,329		3,413



	Three Months Ended June 30, 2017
	Parent				Guarantors				Canada Company				Non- Guarantors			Eliminations			Consolidated
Revenues:
Storage rental and service (excluding intercompany)	$	—			$	574,211			$	47,587			$	328,008		$	—		$	949,806
Intercompany	—				1,141				—				21,649			(22,790		)	—
Total Revenues	—				575,352				47,587				349,657			(22,790		)	949,806
Operating Expenses
Cost of sales (excluding depreciation and amortization) and Selling, general and administrative	273				389,679				10,585				251,192			—			651,729
Intercompany	—				6,590				15,059				1,141			(22,790		)	—
Depreciation and amortization	43				75,129				4,309				48,618			—			128,099
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net	—				(246		)		4				26			—			(216		)
Total Operating Expenses	316			—	471,152			—	29,957			—	300,977			(22,790		)	779,612
Operating (Loss) Income	(316		)		104,200				17,630				48,680			—			170,194
Interest Expense (Income), Net	40,377				15,637				(6,035		)		39,987			—			89,966
Other Expense (Income), Net	339				543				(127		)		(20,121		)	—			(19,366		)
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes and Gain on Sale of Real Estate	(41,032		)		88,020				23,792				28,814			—			99,594
Provision (Benefit) for Income Taxes	—				436				10,010				7,563			—			18,009
Gain on Sale of Real Estate, Net of Tax	—				—				—				(1,563		)	—			(1,563		)
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax	(119,662		)		(29,962		)		(363		)		(13,782		)	163,769			—
Income (Loss) from Continuing Operations	78,630				117,546				14,145				36,596			(163,769		)	83,148
(Loss) Income from Discontinued Operations	—				(1,155		)		—				(871		)	—			(2,026		)
Net Income (Loss)	78,630				116,391				14,145				35,725			(163,769		)	81,122
Less: Net Income (Loss) Attributable to Noncontrolling Interests	—				—				—				2,492			—			2,492
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	78,630			$	116,391			$	14,145			$	33,233		$	(163,769	)	$	78,630
Net Income (Loss)	$	78,630			$	116,391			$	14,145			$	35,725		$	(163,769	)	$	81,122
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments	(7,076		)		—				2,704				11,910			—			7,538
Equity in Other Comprehensive Income (Loss) of Subsidiaries	14,725				11,213				970				2,704			(29,612		)	—
Total Other Comprehensive Income (Loss)	7,649				11,213				3,674				14,614			(29,612		)	7,538
Comprehensive Income (Loss)	86,279				127,604				17,819				50,339			(193,381		)	88,660
Comprehensive Income (Loss) Attributable to Noncontrolling Interests	—				—				—				2,381			—			2,381
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated	$	86,279			$	127,604			$	17,819			$	47,958		$	(193,381	)	$	86,279



	Six Months Ended June 30, 2017
	Parent			Guarantors			Canada Company			Non- Guarantors				Eliminations			Consolidated
Revenues:
Storage rental and service (excluding intercompany)	$	—		$	1,141,771		$	95,643		$	651,268			$	—		$	1,888,682
Intercompany	—			2,238			—			43,991				(46,229		)	—
Total Revenues	—			1,144,009			95,643			695,259				(46,229		)	1,888,682
Operating Expenses:
Cost of sales (excluding depreciation and amortization) and Selling, general and administrative	352			791,713			21,696			504,841				—			1,318,602
Intercompany	—			13,196			30,795			2,238				(46,229		)	—
Depreciation and amortization	89			151,290			8,547			92,880				—			252,806
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net	—			(794		)	6			113			—	—			(675		)
Total Operating Expenses	441			955,405			61,044			600,072				(46,229		)	1,570,733
Operating (Loss) Income	(441		)	188,604			34,599			95,187				—			317,949
Interest Expense (Income), Net	83,161			12,358			5,635			74,867				—			176,021
Other Expense (Income), Net	420			3,062			(154		)	(29,058		)		—			(25,730		)
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes and Gain on Sale of Real Estate	(84,022		)	173,184			29,118			49,378				—			167,658
Provision (Benefit) for Income Taxes	—			13,180			6,522			7,527				—			27,229
Gain on Sale of Real Estate, Net of Tax	—			—			—			(1,563		)		—			(1,563		)
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax	(220,777		)	(53,375		)	(520		)	(22,596		)		297,268			—
Income (Loss) from Continuing Operations	136,755			213,379			23,116			66,010				(297,268		)	141,992
(Loss) Income from Discontinued Operations	—			(957		)	—			(1,406		)		—			(2,363		)
Net Income (Loss)	136,755			212,422			23,116			64,604				(297,268		)	139,629
Less: Net Income (Loss) Attributable to Noncontrolling Interests	—			—			—			2,874				—			2,874
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	136,755		$	212,422		$	23,116		$	61,730			$	(297,268	)	$	136,755
Net Income (Loss)	$	136,755		$	212,422		$	23,116		$	64,604			$	(297,268	)	$	139,629
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments	(8,148		)	—			3,339			63,131				—			58,322
Equity in Other Comprehensive Income (Loss) of Subsidiaries	67,131			39,753			1,257			3,339				(111,480		)	—
Total Other Comprehensive Income (Loss)	58,983			39,753			4,596			66,470				(111,480		)	58,322
Comprehensive Income (Loss)	195,738			252,175			27,712			131,074				(408,748		)	197,951
Comprehensive Income (Loss) Attributable to Noncontrolling Interests	—			—			—			2,213				—			2,213
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated	$	195,738		$	252,175		$	27,712		$	128,861			$	(408,748	)	$	195,738



	Accrual for Significant Acquisition Costs
Balance at December 31, 2017	$	12,622
Amounts accrued	2,437
Change in estimates(1)	(64		)
Payments	(8,593		)
Currency translation adjustments	(7		)
Balance at June 30, 2018(2)	$	6,395