UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q



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

For the Quarterly Period Ended ~~June 30, 2019~~March 31, 2020




OR

☐	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

IRON MOUNTAIN INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)



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

One Federal Street, Boston, Massachusetts 02110

(Address of Principal Executive Offices, Including Zip Code)

(617) 535-4766

(Registrant's Telephone Number, Including Area Code)

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

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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.☐

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

~~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,~~May 1, 2020, the registrant had ~~287,106,811~~287,882,853 outstanding shares of 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~~March 31, 2020 and December 31, ~~2018~~2019	3

Condensed Consolidated Statements of Operations for the Three Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	4

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

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019	5

Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2020 and ~~2018~~2019	6

Condensed Consolidated Statements of ~~Equity~~Cash Flows for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 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, 2019 and 2018~~	9

Notes to Condensed Consolidated Financial Statements (Unaudited)	108

Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations	5135

Item 4—Controls and Procedures	7962

PART II—OTHER INFORMATION

Item 1A—Risk Factors	63

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	8064

Item 5—Other Information	64

Item 6—Exhibits	8065

Signatures	8166

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)


	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	161,996		$	165,485		$	152,684		$	193,555
Accounts receivable (less allowances of $41,305 and $43,584 as of June 30, 2019 and December 31, 2018, respectively)	852,330			846,889
Accounts receivable (less allowances of $44,021 and $42,856 as of March 31, 2020 and December 31, 2019, respectively) (see Note 2.d.)							831,507			850,701
Prepaid expenses and other	200,777			195,740			214,865			192,083
Total Current Assets	1,215,103			1,208,114			1,199,056			1,236,339
Property, Plant and Equipment:
Property, plant and equipment	7,840,423			7,600,949			7,950,140			8,048,906
Less—Accumulated depreciation	(3,281,864		)	(3,111,392		)	(3,429,048		)	(3,425,869		)
Property, Plant and Equipment, Net	4,558,559			4,489,557			4,521,092			4,623,037
Other Assets, Net:
Goodwill	4,473,424			4,441,030			4,372,503			4,485,209
Customer relationships, customer inducements and data center lease-based intangibles	1,467,025			1,506,522			1,363,943			1,393,183
Operating lease right-of-use assets (see Note 2.d.)	1,793,807			—
Operating lease right-of-use assets (see Note 2.e.)							1,906,678			1,869,101
Other	213,064			211,995			203,064			209,947
Total Other Assets, Net	7,947,320			6,159,547			7,846,188			7,957,440
Total Assets	$	13,720,982		$	11,857,218		$	13,566,336		$	13,816,816
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	123,527		$	126,406		$	127,557		$	389,013
Accounts payable	303,988			318,765			321,160			324,708
Accrued expenses and other current liabilities (includes current portion of operating lease liabilities, see Note 2.d.)	920,493			780,781
Accrued expenses and other current liabilities (includes current portion of operating lease liabilities) (see Note 2.e.)							872,147			961,752
Deferred revenue	268,779			264,823			260,399			274,036
Total Current Liabilities	1,616,787			1,490,775			1,581,263			1,949,509
Long-term Debt, net of current portion	8,390,183			8,016,417			8,708,017			8,275,566
Long-term Operating Lease Liabilities, net of current portion (see Note 2.d.)	1,655,477			—
Long-term Operating Lease Liabilities, net of current portion (see Note 2.e.)							1,760,478			1,728,686
Other Long-term Liabilities	131,909			111,331			153,264			143,018
Deferred Rent (see Note 2.d.)	—			121,864
Deferred Income Taxes	194,532			183,836			177,316			188,128
Commitments and Contingencies (see Note 7)
Redeemable Noncontrolling Interests	73,113			70,532			62,157			67,682
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 287,061,769 and 286,321,009 shares as of June 30, 2019 and December 31, 2018, respectively)	2,870			2,863
Common stock (par value $0.01; authorized 400,000,000 shares; issued and outstanding 287,879,142 and 287,299,645 shares as of March 31, 2020 and December 31, 2019, respectively)							2,879			2,873
Additional paid-in capital	4,281,584			4,263,348			4,304,477			4,298,566
(Distributions in excess of earnings) Earnings in excess of distributions	(2,364,812		)	(2,139,493		)	(2,690,433		)	(2,574,896		)
Accumulated other comprehensive items, net	(261,821		)	(265,664		)	(493,248		)	(262,581		)
Total Iron Mountain Incorporated Stockholders' Equity	1,657,821			1,861,054			1,123,675			1,463,962
Noncontrolling Interests	1,160			1,409			166			265
Total Equity	1,658,981			1,862,463			1,123,841			1,464,227
Total Liabilities and Equity	$	13,720,982		$	11,857,218		$	13,566,336		$	13,816,816

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 March 31,
	2019			2018			2020			2019
Revenues:
Storage rental	$	669,288		$	655,439		$	683,547		$	662,974
Service	397,619			405,384			385,184			390,889
Total Revenues	1,066,907			1,060,823			1,068,731			1,053,863
Operating Expenses:
Cost of sales (excluding depreciation and amortization)	465,102			451,464			466,921			460,646
Selling, general and administrative	252,764			252,225			238,733			268,711
Depreciation and amortization	164,331			156,220			162,584			162,483
(Gain) Loss on disposal/write-down of property, plant and equipment, net (see Notes 2.j. and 2.m.)	(8,405		)	(546		)
Significant Acquisition Costs (see Note 2.m.)							—			2,746
Restructuring Charges (see Note 9)							41,046			—
Intangible impairments (see Note 2.b.)							23,000			—
(Gain) Loss on disposal/write-down of property, plant and equipment, net							(1,055		)	602
Total Operating Expenses	873,792			859,363			931,229			895,188
Operating Income (Loss)	193,115			201,460			137,502			158,675
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
Interest Expense, Net (includes interest income of $1,448 and $1,785 for the three months ended March 31, 2020 and 2019, respectively)							105,649			102,436
Other (Income) Expense, Net	(15,192		)	(19,056		)	(42,726		)	15,210
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes	102,993			118,320			74,579			41,029
Provision (Benefit) for Income Taxes	10,646			26,057			9,687			10,553
Income (Loss) from Continuing Operations	92,347			92,263			64,892			30,476
Income (Loss) from Discontinued Operations, Net of Tax	128			(360		)
(Loss) Income from Discontinued Operations, Net of Tax							—			(24		)
Net Income (Loss)	92,475			91,903			64,892			30,452
Less: Net Income (Loss) Attributable to Noncontrolling Interests	34			142			917			891
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	92,441		$	91,761		$	63,975		$	29,561
Earnings (Losses) per Share—Basic:
Income (Loss) from Continuing Operations	$	0.32		$	0.32		$	0.22		$	0.10
Total Income (Loss) from Discontinued Operations, Net of Tax	$	—		$	—
Total (Loss) Income from Discontinued Operations, Net of Tax							$	—		$	—
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	0.32		$	0.32		$	0.22		$	0.10
Earnings (Losses) per Share—Diluted:
Income (Loss) from Continuing Operations	$	0.32		$	0.32		$	0.22		$	0.10
Total Income (Loss) from Discontinued Operations, Net of Tax	$	—		$	—
Total (Loss) Income from Discontinued Operations, Net of Tax							$	—		$	—
Net Income (Loss) Attributable to Iron Mountain Incorporated	$	0.32		$	0.32		$	0.22		$	0.10
Weighted Average Common Shares Outstanding—Basic	286,925			285,984			287,840			286,528
Weighted Average Common Shares Outstanding—Diluted	287,481			286,569			288,359			287,492

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,
2019 2018
Revenues:

Storage rental $ 1,332,262
$ 1,306,588
Service 788,508
796,693
Total Revenues 2,120,770
2,103,281
Operating Expenses:

Cost of sales (excluding depreciation and amortization) 926,646
900,185
Selling, general and administrative 523,323
529,395
Depreciation and amortization 326,814
316,798
(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 1,768,980
1,744,702
Operating Income (Loss) 351,790
358,579
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 21,199
25,934
Income (Loss) from Continuing Operations 122,823
131,652
Income (Loss) from Discontinued Operations, Net of Tax 104
(822 )
Net Income (Loss) 122,927
130,830
Less: Net Income (Loss) Attributable to Noncontrolling Interests 925
610
Net Income (Loss) Attributable to Iron Mountain Incorporated $ 122,002
$ 130,220
Earnings (Losses) per Share—Basic:

Income (Loss) from Continuing Operations $ 0.43
$ 0.46
Total Income (Loss) from Discontinued Operations, Net of Tax $ —
$ —
Net Income (Loss) Attributable to Iron Mountain Incorporated $ 0.43
$ 0.46
Earnings (Losses) per Share—Diluted:

Income (Loss) from Continuing Operations $ 0.42
$ 0.46
Total Income (Loss) from Discontinued Operations, Net of Tax $ —
$ —
Net Income (Loss) Attributable to Iron Mountain Incorporated $ 0.42
$ 0.45
Weighted Average Common Shares Outstanding—Basic 286,727
285,622
Weighted Average Common Shares Outstanding—Diluted 287,487
286,282

~~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,
2019 2018
Net Income (Loss) $ 92,475
$ 91,903
Other Comprehensive (Loss) Income:

Foreign Currency Translation Adjustment (5,791 ) (139,172 )
Change in Fair Value of Interest Rate Swap Agreements (4,931 ) 2,388
Total Other Comprehensive (Loss) Income (10,722 ) (136,784 )
Comprehensive Income (Loss) 81,753
(44,881 )
Comprehensive Income (Loss) Attributable to Noncontrolling Interests 173
(3,274 )
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated $ 81,580
$ (41,607 )

Six Months Ended
June 30,
2019 2018
Net Income (Loss) $ 122,927
$ 130,830
Other Comprehensive Income (Loss):

Foreign Currency Translation Adjustment 12,400
(107,521 )
Change in Fair Value of Interest Rate Swap Agreements (7,605 ) 2,203
Total Other Comprehensive Income (Loss) 4,795
(105,318 )
Comprehensive Income (Loss) 127,722
25,512
Comprehensive Income (Loss) Attributable to Noncontrolling Interests 1,877
(1,247 )
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated $ 125,845
$ 26,759



	Three Months Ended March 31,
	2020			2019
Net Income (Loss)	$	64,892		$	30,452
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustment	(223,652		)	18,191
Change in Fair Value of Derivative Instruments	(8,362		)	(2,674		)
Total Other Comprehensive (Loss) Income	(232,014		)	15,517
Comprehensive (Loss) Income	(167,122		)	45,969
Comprehensive (Loss) Income Attributable to Noncontrolling Interests	(430		)	1,704
Comprehensive (Loss) Income Attributable to Iron Mountain Incorporated	$	(166,692	)	$	44,265

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, 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 Accumulated
Other
Comprehensive
Items, Net 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 Accumulated
Other
Comprehensive
Items, Net 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 Accumulated
Other
Comprehensive
Items, Net 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 Accumulated
Other
Comprehensive
Items, Net 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



				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 Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), as amended ("ASU 2016-02")	5,781			—	—		—			5,781			—			—			—
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation	2,923			508,845	5		2,918			—			—			—			—
Change in equity related to redeemable noncontrolling interests	(1,288		)	—	—		(1,288		)	—			—			—			1,288
Parent cash dividends declared ($0.6110 per share)	(176,460		)	—	—		—			(176,460		)	—			—			—
Foreign currency translation adjustment	17,378			—	—		—			—			17,378			—			813
Change in fair value of derivative instruments	(2,674		)	—	—		—			—			(2,674		)	—			—
Net income (loss)	29,485			—	—		—			29,561			—			(76		)	967
Noncontrolling interests dividends	—			—	—		—			—			—			—			(498		)
Balance, March 31, 2019	$	1,737,608		286,829,854	$	2,868	$	4,264,978		$	(2,280,611	)	$	(250,960	)	$	1,333		$	73,102

				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, 2019	$	1,464,227		287,299,645	$	2,873	$	4,298,566		$	(2,574,896	)	$	(262,581	)	$	265		$	67,682
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation	1,917			579,497	6		1,911			—			—			—			—
Change in equity related to redeemable noncontrolling interests	4,000			—	—		4,000			—			—			—			(4,000		)
Parent cash dividends declared ($0.6185 per share)	(179,512		)	—	—		—			(179,512		)	—			—			—
Foreign currency translation adjustment	(222,305		)	—	—		—			—			(222,305		)	—			(1,347		)
Change in fair value of derivative instruments	(8,362		)	—	—		—			—			(8,362		)	—			—
Net income (loss)	63,876			—	—		—			63,975			—			(99		)	1,016
Noncontrolling interests dividends	—			—	—		—			—			—			—			(1,194		)
Balance, March 31, 2020	$	1,123,841		287,879,142	$	2,879	$	4,304,477		$	(2,690,433	)	$	(493,248	)	$	166		$	62,157

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,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash Flows from Operating Activities:
Net income (loss)	$	122,927		$	130,830		$	64,892		$	30,452
Loss (income) from discontinued operations	(104		)	822			—			24
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation	228,333			224,933			113,700			114,611
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
Amortization (includes amortization of deferred financing costs and discounts of $4,513 and $4,108 for the three months ended March 31, 2020 and 2019, respectively)							53,397			51,980
Intangible impairments							23,000			—
Revenue reduction associated with amortization of customer inducements and above- and below-market leases	7,178			7,925			2,682			3,645
Stock-based compensation expense	21,020			16,073			6,527			8,519
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		)
(Benefit) provision for deferred income taxes							(107		)	1,423
(Gain) loss on disposal/write-down of property, plant and equipment, net							(1,055		)	602
Foreign currency transactions and other, net	(7,505		)	497			(44,849		)	11,707
(Increase) decrease in assets	(53,038		)	(54,729		)	(45,594		)	(33,138		)
Increase (decrease) in liabilities	9,281			(29,573		)
(Decrease) increase in liabilities							(47,178		)	(72,758		)
Cash Flows from Operating Activities - Continuing Operations	429,731			393,806			125,415			117,067
Cash Flows from Operating Activities - Discontinued Operations	—			(477		)	—			—
Cash Flows from Operating Activities	429,731			393,329			125,415			117,067
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)	(367,131		)	(217,601		)
Capital expenditures							(97,144		)	(184,765		)
Cash paid for acquisitions, net of cash acquired	(44,651		)	(1,666,869		)	(118,069		)	(39,423		)
Acquisition of customer relationships	(33,375		)	(23,383		)	(1,734		)	(23,934		)
Customer inducements	(5,841		)	(4,041		)	(4,328		)	(2,817		)
Contract fulfillment costs and third-party commissions	(51,346		)	(9,809		)	(11,142		)	(41,161		)
Investments in joint ventures (see Note 9)	(19,222		)	—
Investments in joint ventures							—			(19,222		)
Proceeds from sales of property and equipment and other, net	46,832			207			1,246			105
Cash Flows from Investing Activities - Continuing Operations	(474,734		)	(1,921,496		)	(231,171		)	(311,217		)
Cash Flows from Investing Activities - Discontinued Operations	5,061			—			—			—
Cash Flows from Investing Activities	(469,673		)	(1,921,496		)	(231,171		)	(311,217		)
Cash Flows from Financing Activities:
Repayment of revolving credit facility, term loan facilities and other debt	(2,602,922		)	(7,876,796		)	(2,581,771		)	(1,351,242		)
Proceeds from revolving credit facility, term loan facilities and other debt	2,998,107			8,944,416			2,850,451			1,723,462
Debt repayment and equity distribution to noncontrolling interests	(999		)	(1,079		)	(1,194		)	(498		)
Parent cash dividends	(353,357		)	(337,052		)	(181,302		)	(178,023		)
Net proceeds associated with the Over-Allotment Option	—			76,192
Net proceeds associated with the At the Market (ATM) Program	—			8,716
Net (payments) proceeds associated with employee stock-based awards	(1,727		)	(2,259		)	(4,610		)	(5,963		)
Payment of debt financing and stock issuance costs	—			(13,385		)
Payment of debt financing and stock issuance costs and other							(7,816		)	—
Cash Flows from Financing Activities - Continuing Operations	39,102			798,753			73,758			187,736
Cash Flows from Financing Activities - Discontinued Operations	—			—			—			—
Cash Flows from Financing Activities	39,102			798,753			73,758			187,736
Effect of Exchange Rates on Cash and Cash Equivalents	(2,649		)	(8,093		)	(8,873		)	2,404
(Decrease) Increase in Cash and Cash Equivalents	(3,489		)	(737,507		)
(Decrease) increase in Cash and Cash Equivalents							(40,871		)	(4,010		)
Cash and Cash Equivalents, including Restricted Cash, Beginning of Period	165,485			925,699			193,555			165,485
Cash and Cash Equivalents, including Restricted Cash, End of Period	$	161,996		$	188,192		$	152,684		$	161,475

Supplemental Information:
Cash Paid for Interest	$	201,602		$	185,804		$	157,541		$	136,667
Cash Paid for Income Taxes, Net	$	38,302		$	33,858		$	14,004		$	15,141
Non-Cash Investing and Financing Activities:
Financing Leases (see Note 2.d.)	$	13,662		$	34,260
Financing Leases (see Note 2.e.)							$	13,061		$	7,523
Accrued Capital Expenditures	$	66,154		$	49,320		$	60,761		$	75,824
Fair Value of Investments Applied to Acquisitions (see Note 4)							$	27,276		$	—
Accrued Purchase Price and Other Holdbacks	$	2,394		$	26,089		$	—		$	1,042
Dividends Payable	$	181,731		$	173,301		$	184,231		$	180,422

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)~~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") ~~provide~~, help organizations around the world protect their information, reduce storage rental costs, comply with regulations, facilitate corporate disaster recovery, and better use their information and information technology ("IT") infrastructure for business advantages, regardless of its format, location or life cycle stage. We do this by storing physical records and data backup media, offering information management solutions, and providing data center space for enterprise-class colocation and ~~wholesale~~opportunistic hyperscale data center ~~space that help organizations in various locations throughout North America, Europe, Latin America, Asia and Africa.~~deployments. We offer comprehensive records and information 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, legal and regulatory compliance, and disaster recovery requirements. We provide secure and reliable data center facilities to protect digital information and ensure the continued operation of our customers’ ~~information technology~~IT infrastructure, with reliable and flexible deployment ~~options, including both colocation and wholesale space.~~options.

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, ~~2018~~2019 included in our Annual Report on Form 10-K filed with the SEC on February ~~14, 2019~~13, 2020 (our "Annual Report").

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China. In January 2020, COVID-19 spread to other countries, including the United States, and the World Health Organization subsequently declared COVID-19 a pandemic. This has resulted in U.S. federal, state and local and foreign governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories and the quarantining of people who may have been exposed to the virus. We have temporarily closed certain of our offices and facilities across the world and implemented certain travel restrictions for our employees, which have disrupted how we operate our business. The preventative and protective actions that the governments have ordered, or we have implemented as an organization, have resulted in a period of reduced operations and business disruption for us, our customers and other third parties with which we do business. The broader impacts of the COVID-19 pandemic on our financial position, results of operations and cash flows, including impacts to estimates used throughout this Quarterly Report on Form 10-Q (this “Quarterly Report”), remain uncertain and difficult to predict as information is rapidly evolving, and the severity and duration of the COVID-19 pandemic is still unknown, as is our visibility to the COVID-19 pandemic’s effect on the markets we serve and our customers within those markets. See Note 2.b. and Note 2.d. for additional information.

In October 2019, we announced a global program designed to better position us for future growth and achievement of our strategic objectives (“Project Summit”). The activities associated with Project Summit began in the fourth quarter of 2019 and are expected to be substantially complete by the end of 2021. See Note 9.

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

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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)

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~~March 31, 2020 and December 31, ~~2018,~~2019, we had ~~approximately $9,059~~$6,679 and ~~$15,141,~~$4,865, respectively, of restricted cash held by certain financial institutions related to bank ~~guarantees.~~guarantees and required cash collateral.

~~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)~~

b. Goodwill and Other Intangible Assets and Liabilities

Goodwill

Since December 31, 2018, there have been no changes to our accounting polices related to the accounting for goodwill. As of June 30, 2019 and December 31, 2018, no factors were identified that would alter our October 1, 2018 goodwill impairment analysis.

Our reporting units as of December 31, ~~2018~~2019 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~~three months of ~~2019~~2020 (which are described in Note 3)4) has been incorporated into our reporting units as they existed as of December 31, ~~2018.~~2019. There were no other changes to the composition of our reporting units for the three months ended March 31, 2020.

Since December 31, 2019, there have been no changes to our accounting polices related to the accounting for goodwill. As of December 31, 2019, no factors were identified that would alter our October 1, 2019 goodwill impairment analysis. During the first quarter of 2020, we concluded that we had a triggering event related to our Fine Arts reporting unit, requiring us to perform an interim goodwill impairment test. The ~~changes in~~primary factor contributing to our conclusion was the expected impact of the COVID-19 pandemic to this particular business and its customers and revenue sources, which caused us to believe it was more likely than not that the carrying value of our Fine Arts reporting unit exceeded its fair value. During the first quarter of 2020, we performed an interim goodwill ~~attributable~~impairment test for our Fine Arts reporting unit utilizing a discounted cash flow model, with updated assumptions on future revenues, operating expenditures and capital expenditures. As a result of the interim goodwill impairment test, we concluded that the fair value of our Fine Arts reporting unit was less than its carrying value and, therefore, we recorded a $23,000 impairment charge on the goodwill associated with this reporting unit during the first quarter of 2020. The remaining goodwill for this reporting unit as of March 31, 2020 is approximately $15,000. Factors that may impact these assumptions include, but are not limited to: (i) our ability to ~~each reportable operating segment for~~maintain, or grow, storage rental and service revenues in line with current expectations and (ii) our ability to manage our fixed and variable costs in line with potential future revenue declines.

Additionally, we concluded that, as of March 31, 2020, we did not have a triggering event requiring an interim impairment test on the ~~six months ended June 30, 2019 are~~goodwill associated with our other reporting units. However, the duration and severity of the COVID-19 pandemic, as ~~follows:~~

well as the related economic impact on both our business and the businesses of our customers, remain uncertain as of the filing of this Quarterly Report. Any material adverse changes to our businesses that negatively impact their fair values could result in future goodwill impairments.

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.

119

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

The changes in the carrying value of goodwill attributable to each reportable operating segment for the three months ended March 31, 2020 are as follows:



	Global RIM Business			Global Data Center Business			Corporate and Other Business			Total Consolidated
Goodwill balance, net of accumulated amortization as of December 31, 2019	$	3,942,901		$	424,568		$	117,740		$	4,485,209
Non-deductible goodwill acquired during the year	60,018			—			—			60,018
Goodwill impairment	—			—			(23,000		)	(23,000		)
Fair value and other adjustments(1)	(4,854		)	—			403			(4,451		)
Currency effects	(141,752		)	(2,547		)	(974		)	(145,273		)
Goodwill balance, net accumulated amortization as of March 31, 2020	$	3,856,313		$	422,021		$	94,169		$	4,372,503
Accumulated Goodwill Impairment Balance as of December 31, 2019	$	132,409		$	—		$	3,011		$	135,420
Accumulated Goodwill Impairment Balance as of March 31, 2020	$	132,409		$	—		$	26,011		$	158,420


(1)	Total fair value and other adjustments include $(4,451) in net adjustments primarily related to customer relationships.

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).liabilities. Since December 31, ~~2018,~~2019, there have been no changes to our accounting policies related to the accounting for any of our finite-lived intangible assets and liabilities as disclosed in Note 2.i. to Notes to Consolidated Financial Statements included in our Annual Report.

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 gross carrying amount and accumulated amortization of our finite-lived intangible assets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows:


	June 30, 2019							December 31, 2018							March 31, 2020							December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		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	$	1,734,034	$	(544,952	)	$	1,189,082	$	1,751,848	$	(544,721	)	$	1,207,127
Customer inducements	52,542		(29,091		)	23,451		56,478		(34,181		)	22,297		55,571		(30,370		)	25,201		52,718		(29,397		)	23,321
Data center lease-based intangible assets(1)	266,263		(77,786		)	188,477		271,818		(50,807		)	221,011		264,631		(114,971		)	149,660		265,945		(103,210		)	162,735
Third-party commissions asset(2)	31,391		(1,874		)	29,517		30,071		(1,089		)	28,982		31,708		(5,277		)	26,431		31,708		(4,134		)	27,574
	$	2,116,965	$	(620,423	)	$	1,496,542	$	2,077,286	$	(541,782	)	$	1,535,504	$	2,085,944	$	(695,570	)	$	1,390,374	$	2,102,219	$	(681,462	)	$	1,420,757
Liabilities:
Data center below-market leases	$	12,765	$	(2,954	)	$	9,811	$	12,318	$	(1,642	)	$	10,676	$	12,729	$	(4,393	)	$	8,336	$	12,750	$	(3,937	)	$	8,813


(1)	Includes data center in-place lease intangible assets, data center tenant relationship intangible assets and data center above-market in-place lease intangible assets.

(2)

Third-party commissions asset is included in Other, a component of Other assets, net in the accompanying Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. The third-party commissions asset is primarily comprised of additional payments associated with the execution of future customer contracts through the one-year anniversary of the acquisition of ~~IODC, as described in Note 3.~~IO Data Centers, LLC ("IODC").

~~Other~~Amortization expense associated with finite-lived intangible assets, ~~including trade names, noncompetition agreements~~revenue reduction associated with the amortization of customer inducements and ~~trademarks, are capitalized~~revenue reduction associated with the amortization of data center above-market leases and ~~amortized and are included in depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations~~data center below-market leases for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 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



	Three Months Ended March 31,
	2020		2019
Amortization expense included in depreciation and amortization associated with:
Customer relationship and customer inducement intangible assets	$	26,764	$	27,881
Data center in-place leases and tenant relationships	11,353		12,609
Third-party commissions asset and other finite-lived intangible assets	2,363		757
Revenue reduction associated with amortization of:
Permanent withdrawal fees	$	2,465	$	2,740
Data center above-market leases and data center below-market leases	217		905

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

Amortization expense associated with finite-lived intangible assets, revenue reduction associated with the amortization of customer inducements 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, 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,~~2019, there have been no changes to our accounting policies related to the accounting for revenues as disclosed in Note 2.l. to Notes to Consolidated Financial Statements included in our Annual Report.

The costs of the initial intake of customer records into physical storage ("Intake Costs") and capitalized commissions asset (collectively, "Contract Fulfillment Costs") as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows:


		June 30, 2019							December 31, 2018								March 31, 2020							December 31, 2019
Description	Location in Balance Sheet	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		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	Other (within Other Assets, Net)	$	40,585	$	(23,615	)	$	16,970	$	41,224	$	(23,579	)	$	17,645
Capitalized commissions asset	Other (within Other Assets, Net)	48,564		(17,895		)	30,669		58,424		(34,637		)	23,787		Other (within Other Assets, Net)	73,638		(31,259		)	42,379		68,008		(27,178		)	40,830

Amortization expense associated with the Intake Costs asset and capitalized commissions asset for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Intake Costs asset	$	2,835	$	2,891	$	5,514	$	5,621	$	2,779	$	2,679
Capitalized commissions asset	5,935		3,793		9,881		7,380		5,625		3,946

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



Description	Location in Balance Sheet	March 31, 2020		December 31, 2019
Deferred revenue - Current	Deferred revenue	$	260,399	$	274,036
Deferred revenue - Long-term	Other Long-term Liabilities	34,783		36,029

Data Center Lessor Considerations

Our Global Data Center Business features storage rental provided to customers at contractually specified rates over a fixed contractual period, which are accounted for in accordance with ASU 2016-02. Since December 31, 2019, there have been no changes to our accounting policies related to the accounting for our lessor revenue as disclosed in Note 2.l. to Notes to Consolidated Financial Statements included in our Annual Report. Storage rental revenue, including revenue associated with power and connectivity, associated with our Global Data Center Business for the three months ended March 31, 2020 and 2019 are as follows:



	Three Months Ended March 31,
	2020		2019
Storage rental revenue(1)	$	64,595	$	59,718


(1)	Revenue associated with power and connectivity included within storage rental revenue was $11,413 and $9,118 for the three months ended March 31, 2020 and 2019, respectively.

1312

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

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

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

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses on most financialassets. The standard eliminates the probable initial recognition of estimated losses and provides a forward-lookingexpected credit loss model for accounts receivable, loans and other financial instruments.

~~Data Center Lessor Considerations~~Prior to our adoption of ASU 2016-13, we maintained an allowance for doubtful accounts for estimated losses resulting from the potential inability of our customers to make required payments and potential disputes regarding billing and service issues. When calculating the allowance, we considered our past loss experience, current and prior trends in our aged receivables and credit memo activity, current economic conditions, and specific circumstances of individual receivable balances. If the financial condition of our customers were to significantly change, resulting in a significant improvement or impairment of their ability to make payments, an adjustment of the allowance might have been required. Additionally, we write off uncollectible balances as circumstances warrant, generally, no later than one year past due.

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,~~2020 we adopted ASU ~~2016-02, as described in more detail in Note 2.d. Beginning~~2016-13 on ~~January 1, 2019, our data center revenue contracts will be accounted~~a modified retrospective basis 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 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.all financial assets measured at amortized cost. 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 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 three and six months ended June 30, 2019, respectively. The revenue related to the service component of our data center business remains unchanged from the adoption of ASU ~~2016-02~~2016-13 did not result in a material impact on our consolidated financial statements. In accordance with the guidance in ASU 2016-13, we now calculate and monitor our allowance considering future potential economic and macroeconomic conditions and reasonable and supportable forecasts for expected future collectability of our outstanding receivables, in addition to the factors identified above. Our considerations when calculating our allowance include, but are not limited to, the following: the location of our businesses, the composition of our customer base, our product and service lines, potential future economic unrest, and potential future macroeconomic factors, including natural disasters and any impacts associated with the COVID-19 pandemic. Continued adjustments will be made should there be any material change to reasonable and supportable forecasts that may impact our likelihood of collection, as it becomes evident, including the effects of the COVID-19 pandemic. Our financial assets measured at amortized cost that potentially subject us to credit risk consist predominantly of our accounts receivable. Our highly diverse global customer base, with no single customer accounting for more than 1% of revenue during the three months ended March 31, 2020, limits our exposure to concentration of credit risk. However, the COVID-19 pandemic is ~~recognized in~~impacting numerous industries and geographies globally. We continue to monitor the ~~period~~credit worthiness of our customers, customer payment trends and the ~~related services are provided. Our accounting treatment for data center revenue was not significantly impacted by~~adequacy of our bad debt allowance as the ~~adoption of ASU 2016-02.~~COVID-19 pandemic continues.

The ~~future minimum lease payments we expect to receive under non-cancellable data center operating leases,~~rollforward of allowance for ~~which we are the lessor, excluding month to month leases,~~doubtful accounts and credit memo reserves for the ~~next five years are~~three months ended March 31, 2020 is 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



	Allowance for Doubtful Accounts and Credit Memo Reserves
Balance at December 31, 2019	$	42,856
Credit memos charged to revenue	13,030
Allowance for bad debts charged to expense	6,197
Deductions and other(1)	(18,062		)
Balance at March 31, 2020	$	44,021


(1)	Primarily consists of the issuance of credit memos, the write-off of accounts receivable and the impact associated with currency translation adjustments.

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. Leases

We lease facilities for certain of our warehouses, data centers and office space. We also have land leases, including those on which certain of our facilities are located. ~~The majority~~Since December 31, 2019 there have been no changes to our accounting policies related to the accounting for leases as disclosed in Note 2.m. to Notes to Consolidated Financial Statements included in our Annual Report.

Operating and financing lease right-of-use assets and lease liabilities as of ~~our leased facilities~~March 31, 2020 and December 31, 2019 are ~~classified~~ as ~~operating leases that, on average, have initial lease terms~~follows:



Description	Location in Balance Sheet	March 31, 2020		December 31, 2019
Assets:
Operating lease right-of-use assets(1)	Operating lease right-of-use assets	$	1,906,678	$	1,869,101
Financing lease right-of-use assets, net of accumulated depreciation(2)	Property, Plant and Equipment, Net	316,422		327,215
Total		$	2,223,100	$	2,196,316
Liabilities:
Current
Operating lease liabilities	Accrued expenses and other current liabilities	$	229,331	$	223,249
Financing lease liabilities	Current portion of long-term debt	44,427		46,582
Total current lease liabilities		273,758		269,831
Long-term
Operating lease liabilities	Long-term Operating Lease Liabilities, net of current portion	1,760,478		1,728,686
Financing lease liabilities	Long-term Debt, net of current portion	312,415		320,600
Total long-term lease liabilities		2,072,893		2,049,286
Total		$	2,346,651	$	2,319,117

(1) At March 31, 2020, these assets are comprised of ~~five to 10 years, with 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~~approximately 99% real estate related assets (which include land, buildings and racking) and 1% non-real estate related assets (which include warehouse equipment, vehicles, furniture and fixtures and computer hardware and software). At December 31, 2019, these assets are comprised of ~~the lease renewal option is at our sole discretion~~approximately 99% real estate related assets (which include land, buildings and ~~may contain fixed rent, fair market value based rent or Consumer Price Index rent escalation clauses. We~~racking) and 1% non-real estate related assets (which include option periods in the lease term when our failure to renew the lease would result in an economic disincentive, thereby making it reasonably certain that we will renew the lease. We recognize straight line rental expense over the lifewarehouse equipment, vehicles, furniture and fixtures and computer hardware and software).

(2) At March 31, 2020, these assets are comprised of ~~the lease~~approximately 69% real estate related assets and ~~any fair market value or Consumer Price Index rent escalations~~31% non-real estate related assets. At December 31, 2019, these assets are ~~recognized as variable lease expense in the period in which the obligation is incurred. In addition, we lease certain vehicles~~comprised of approximately 69% real estate related assets and ~~equipment. Vehicle and equipment leases have lease terms ranging from one to seven years.~~31% non-real estate related assets.

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)~~

~~In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02,~~ ~~Leases (Topic 842)~~ which requires lessees to 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, 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, 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 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 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 insurance) with the related lease component. Any variable nonlease components are not included within the lease right-of-use asset and 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 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 operating leases under ASU 2016-02 at January 1, 2019.~~

~~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)~~

~~Operating and financing lease right-of-use assets and lease liabilities as of June 30, 2019 and January 1, 2019 (date of adoption of ASU 2016-02) are as follows:~~

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

(1) At June 30, 2019, these assets are comprised of approximately 98% real estate related assets (which include land, buildings and racking) and 2% non-real estate related assets (which include warehouse equipment, vehicles, furniture and fixtures and computer hardware and software).

~~(2) At June 30, 2019, these assets are comprised of approximately 62% real estate related assets and 38% non-real estate related assets.~~

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

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

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

~~(Unaudited)~~

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

The components of the lease expense for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 are as follows:


							Three Months Ended March 31,
Description	Location in Statement of Operations	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019		Location in Statement of Operations	2020		2019
Operating lease cost(1)	Cost of sales and Selling, general and administrative	$	113,392	$	222,571	Cost of sales and Selling, general and administrative	$	123,289	$	111,906
Financing lease cost:
Depreciation of financing lease right-of-use assets	Depreciation and amortization	$	14,942	$	31,271	Depreciation and amortization	$	12,955	$	16,329
Interest expense for financing lease liabilities	Interest expense, net	4,925		11,067		Interest Expense, Net	4,844		6,142
Total financing lease cost		$	19,867	$	42,338		$	17,799	$	22,471

(1) Of the ~~$113,392~~$123,289 incurred for the three months ended ~~June 30, 2019, $110,441~~March 31, 2020, $120,315 is included within Cost of sales and ~~$2,951 is included within Selling, general and administrative expenses. Of the $222,571 incurred for the six months ended June 30, 2019, $216,335 is included within Cost of sales and $6,236~~$2,974 is included within Selling, general and administrative expenses. Operating lease cost includes variable lease costs of ~~$23,847 and $46,610~~$27,805 for the three ~~and six~~ months ended ~~June 30, 2019, respectively.~~

~~We sublease certain real estate to third parties. We recognized sublease income of $1,671 and $3,554~~March 31, 2020. Of the $111,906 incurred for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019, ~~respectively.~~

~~Weighted average remaining~~$108,601 is included within Cost of sales and $3,305 is included within Selling, general and administrative expenses. Operating lease ~~terms and discount rates as~~cost includes variable lease costs of ~~June 30, 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%~~

$25,489 for the three months ended March 31, 2019.

~~Table~~Other than the lease agreement entered into during the fourth quarter 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 estimated minimum future lease payments~~2019 in the United Kingdom for a facility that is currently under construction, 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:~~

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.~~

~~As of June 30, 2019,~~disclosed in Note 2.m. to Notes to Consolidated Financial Statement included in our Annual Report, we do not have any material operating or financing leases that are signed but have not yet commenced ~~and~~as of March 31, 2020. In addition, as of March 31, 2020, we do not have ~~certain~~any operating or financing leases with related parties ~~which~~that 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)~~

Other information: Supplemental cash flow information relating to our leases for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 is as follows:


			Three Months Ended March 31,
Cash paid for amounts included in measurement of lease liabilities:	Six Months Ended June 30, 2019		2020		2019
Operating cash flows used in operating leases	$	167,426	$	86,418	$	83,676
Operating cash flows used in financing leases (interest)			4,844		6,142
Financing cash flows used in financing leases	$	31,146	12,739		16,675
Non-cash items:
Operating lease modifications and reassessments	$	14,024	$	34,916	$	1,842
New operating leases (including acquisitions)	$	87,482	110,609		21,535
New financing leases, modifications and reassessments	$	13,662	13,061		7,523

e.f. Stock-Based Compensation

We record stock-based compensation expense, utilizing the straight-line method, for the cost of stock options, restricted stock units ("RSUs"), performance units ("PUs") and shares of stock issued under our employee stock purchase plan (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~~Table of ~~(i) the award recipient’s age at retirement~~Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and ~~(ii) the award recipient’s years~~Per Share Data)

(Unaudited)

2. Summary 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.Significant Accounting Policies (Continued)

Stock-based compensation expense for Employee Stock-Based Awards for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 was ~~$12,501~~$6,527 ($~~11,649~~6,065 after tax or ~~$0.04~~$0.02 per basic and diluted share) and ~~$21,020~~$8,519 ($~~19,585~~7,935 after tax or ~~$0.07 per basic and diluted share), 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, 2019,~~March 31, 2020, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was ~~$61,833~~$73,265 and is expected to be recognized over a weighted-average period of 2.1 years.

~~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 Options

A summary of stock option activity for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 is as follows:



	Stock Options
Outstanding at December 31, ~~2018~~2019	~~4,271,834~~4,835,721
Granted	~~920,706~~589,993
Exercised	(~~194,480~~135,312	)
Forfeited	(~~12,525~~65,861	)
Expired	(~~15,647~~40,749	)
Outstanding at ~~June 30, 2019~~March 31, 2020	~~4,969,888~~5,183,792
Options exercisable at ~~June 30, 2019~~March 31, 2020	~~3,160,175~~3,786,186
Options expected to vest	~~1,704,441~~1,320,231

Restricted Stock Units

The fair value of RSUs vested during the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ is as follows:

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



	Three Months Ended March 31,
	2020		2019
Fair value of RSUs vested	$	18,379	$	15,333

A summary of RSU activity for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 is as follows:



	RSUs
Non-vested at December 31, ~~2018~~2019	~~1,196,566~~1,203,599
Granted	~~731,801~~866,416
Vested	(~~527,239~~526,086	)
Forfeited	(~~55,070~~32,661	)
Non-vested at ~~June 30, 2019~~March 31, 2020	~~1,346,058~~1,511,268
RSUs expected to vest	1,480,838

~~Performance Units~~

~~The fair value of earned PUs that vested during the three and six months ended June 30, 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

2016

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

Performance Units

The fair value of earned PUs that vested during the three months ended March 31, 2020 and 2019 is as follows:



	Three Months Ended March 31,
	2020		2019
Fair value of earned PUs that vested	$	10,890	$	6,503

A summary of PU activity for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 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, 2018	967,049		(299,948	)	667,101
Non-vested at December 31, 2019							1,113,691		(314,798	)	798,893
Granted	380,856		—		380,856		425,777		—		425,777
Vested	(169,523	)	—		(169,523	)	(271,452	)	—		(271,452	)
Forfeited/Performance or Market Conditions Not Achieved	(11,093	)	(14,850	)	(25,943	)	(36,961	)	(4,710	)	(41,671	)
Non-vested at June 30, 2019	1,167,289		(314,798	)	852,491
Non-vested at March 31, 2020							1,231,055		(319,508	)	911,547


(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.~~PUs.

As of ~~June 30, 2019,~~March 31, 2020, we expected 100%, 100% and 0% achievement of each of the predefined revenue, return on invested capital and Adjusted EBITDA (as defined in Note 6) targets associated with the awards of PUs made in 2020, 2019 and 2018, ~~and 2017.~~respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

f.g. Income (Loss) Per Share—Basic and Diluted

Basic income (loss) per common share is calculated by dividing income (loss) by the weighted average number of common shares outstanding. The calculation of diluted income (loss) per share is consistent with that of basic income (loss) per share but gives effect to all potential common shares (that is, securities such as stock options, RSUs, PUs, warrants or ~~PUs)~~convertible securities) that were outstanding during the period, unless the effect is antidilutive.

The calculation of basic and diluted income (loss) per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ are as follows:


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
	2019		2018			2019		2018			2020		2019
Income (loss) from continuing operations	$	92,347	$	92,263		$	122,823	$	131,652		$	64,892	$	30,476
Less: Net income (loss) attributable to noncontrolling interests	34		142			925		610			917		891
Income (loss) from continuing operations (utilized in numerator of Earnings Per Share calculation)	$	92,313	$	92,121		$	121,898	$	131,042		63,975		29,585
Income (loss) from discontinued operations, net of tax	$	128	$	(360	)	$	104	$	(822	)
(Loss) income from discontinued operations, net of tax											—		(24		)
Net income (loss) attributable to Iron Mountain Incorporated	$	92,441	$	91,761		$	122,002	$	130,220		$	63,975	$	29,561

Weighted-average shares—basic	286,925,000		285,984,000			286,727,000		285,622,000			287,840,000		286,528,000
Effect of dilutive potential stock options	148,629		237,708			190,016		243,636			51,799		231,402
Effect of dilutive potential RSUs and PUs	407,659		347,543			570,040		415,929			467,334		732,421
Weighted-average shares—diluted	287,481,288		286,569,251			287,487,056		286,281,565			288,359,133		287,491,823

Earnings (losses) per share—basic:
Income (loss) from continuing operations	$	0.32	$	0.32		$	0.43	$	0.46		$	0.22	$	0.10
Income (loss) from discontinued operations, net of tax	—		—			—		—
(Loss) income from discontinued operations, net of tax											—		—
Net income (loss) attributable to Iron Mountain Incorporated(1)	$	0.32	$	0.32		$	0.43	$	0.46		$	0.22	$	0.10

Earnings (losses) per share—diluted:
Income (loss) from continuing operations	$	0.32	$	0.32		$	0.42	$	0.46		$	0.22	$	0.10
Income (loss) from discontinued operations, net of tax	—		—			—		—
(Loss) income from discontinued operations, net of tax											—		—
Net income (loss) attributable to Iron Mountain Incorporated(1)	$	0.32	$	0.32		$	0.42	$	0.45		$	0.22	$	0.10

Antidilutive stock options, RSUs and PUs, excluded from the calculation	5,004,112		3,272,502			4,494,637		3,257,322			5,513,714		3,985,161

~~(1) Columns may not foot due to rounding.~~


(1)	Columns may not foot due to rounding.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

g.h. 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 rates for the years ending December 31, 2019 and 2018 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 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,~~March 31, 2020 and 2019 were 13.0% and ~~2018~~25.7%, respectively. The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended March 31, 2020 and 2019 were the benefits derived from the dividends paid deduction and the impacts of differences in the tax rates at which our foreign earnings are ~~as follows:~~subject, including foreign exchange gains and losses in different jurisdictions with different tax rates.

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 %

~~(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.

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)

i. Fair Value Measurements

Our financial assets or liabilities that are carried at fair value are required to be measured using inputs from the three levels of the fair value ~~hierarchy. A financial asset or liability's classification within the~~ hierarchy ~~is determined based on the lowest level input that is significant~~as disclosed in Note 2.s. to ~~the~~Notes to Consolidated Financial Statements included in our Annual Report.

The assets and liabilities carried at fair value ~~measurement.~~

~~The three levels~~measured on a recurring basis as of ~~the fair value hierarchy~~March 31, 2020 and December 31, 2019, respectively, 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).



			Fair Value Measurements at March 31, 2020 Using
Description	Total Carrying Value at March 31, 2020		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Money Market Funds(1)	$	9,194	$	—		$	9,194		$	—
Trading Securities	10,131		9,582		(2)	549		(3)	—
Derivative Assets(4)	5,388		—			5,388			—
Derivative Liabilities(4)	23,506		—			23,506			—

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



			Fair Value Measurements at December 31, 2019 Using
Description	Total Carrying Value at December 31, 2019		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Money Market Funds(1)	$	13,653	$	—		$	13,653		$	—
Trading Securities	10,732		10,168		(2)	564		(3)	—
Derivative Liabilities(4)	9,756		—			9,756			—


(1)	Money market funds are measured based on quoted prices for similar assets and/or subsequent transactions.


(2)	These trading securities are measured at fair value using unadjusted quoted market prices in active markets for identical assets that we have the ability to access at the measurement date.


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

(4)

Derivative assets and liabilities include (i) interest rate swap agreements, including forward-starting interest rate swap agreements, to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness and (ii) cross-currency swap agreements to hedge the variability of exchange rates impacts between the United States dollar and the Euro and certain of our Euro denominated subsidiaries. Our derivative financial instruments are measured using industry standard valuation models using market-based observable inputs, including interest rate curves, forward and spot prices for currencies and implied volatilities. Credit risk is also factored into the determination of the fair value of our derivative financial instruments. See Note 3 for additional information on our derivative financial instruments.

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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)~~

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

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.~~


~~(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.~~

~~(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. 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 limit our exposure to changes in interest rates on a portion of our floating rate indebtedness. As of June 30, 2019 and December 31, 2018, we had $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.

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

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

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

~~(Unaudited)~~

~~(2)~~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~~March 31, 2020 and December 31, ~~2018,~~2019, other than (i) those disclosed in Note 2.s. to Notes to Consolidated Financial Statements included in our Annual Report, (ii) those acquired in acquisitions that occurred during the ~~six~~three months ended ~~June 30, 2019 and our investment in Makespace LLC (as disclosed~~March 31, 2020, as described in Note 9)4, and (iii) the Fine Arts reporting unit, as described in Note 2.b., all of which are based on Level 3 inputs.

We account for our investment in the MakeSpace JV (the "MakeSpace Investment") as an equity method investment. The carrying value of the MakeSpace Investment at March 31, 2020 and December 31, 2019 is $14,316 and $18,570, respectively, and is presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheets.

The fair value of our long-term debt, which ~~was~~is determined based on either Level 1 inputs or Level 3 inputs, is disclosed in Note ~~4. Long-term debt~~5 and is measured at cost in our Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

i.j. Accumulated Other Comprehensive Items, Net

~~The changes in accumulated other comprehensive items, net for the three and six months ended June 30, 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 )

(1) This amount includes foreign exchange losses (gains) of $4,280 and $(1,861) for the three and six months ended June 30, 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 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)~~

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

The changes in accumulated other comprehensive items, net for the three ~~and six~~ months ended ~~June 30, 2018, respectively,~~March 31, 2020 and 2019, are as follows:


	Three Months Ended June 30, 2018									Six Months Ended June 30, 2018								Three Months Ended March 31, 2020									Three Months Ended March 31, 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			Foreign Currency Translation Adjustments			Change in Fair Value of Derivative Instruments			Total			Foreign Currency Translation Adjustments			Change in Fair Value of Derivative Instruments			Total
Beginning of Period	$	(73,897	)	$	(185	)	$	(74,082	)	$	(103,989	)	$	—	$	(103,989	)	$	(252,825	)	$	(9,756	)	$	(262,581	)	$	(264,691	)	$	(973	)	$	(265,664	)
Other comprehensive (loss) income:
Foreign currency translation adjustment~~(1)~~	(135,756		)	—			(135,756		)	(105,664		)	—		(105,664		)	(222,305		)	—			(222,305		)	17,378			—			17,378
Fair value adjustments for interest rate swap agreements	—			2,388			2,388			—			2,203		2,203
Change in fair value of derivative instruments																		—			(8,362		)	(8,362		)	—			(2,674		)	(2,674		)
Total other comprehensive (loss) income	(135,756		)	2,388			(133,368		)	(105,664		)	2,203		(103,461		)	(222,305		)	(8,362		)	(230,667		)	17,378			(2,674		)	14,704
End of Period	$	(209,653	)	$	2,203		$	(207,450	)	$	(209,653	)	$	2,203	$	(207,450	)	$	(475,130	)	$	(18,118	)	$	(493,248	)	$	(247,313	)	$	(3,647	)	$	(250,960	)

(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.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

k. Other (Income) Expense, Net

Other (income) expense, net for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ consists of the following:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Foreign currency transaction (gains) losses, net(1)	$	(19,331	)	$	(18,624	)	$	(1,634	)	$	3,161		$	(37,399	)	$	17,697
Other, net(2)	4,139			(432		)	1,652			(2,066		)	(5,327		)	(2,487		)
	$	(15,192	)	$	(19,056	)	$	18		$	1,095
Other (Income) Expense, Net													$	(42,726	)	$	15,210

(1) The gain or loss on foreign currency transactions, calculated as the difference between the historical exchange rate and the exchange rate at the applicable measurement date, ~~include~~includes gains or losses related to (i) borrowings in certain foreign currencies under our Revolving Credit Facility (as defined and discussed more fully in Note 4)5), (ii) our Euro Notes (as defined in Note 5) and (iii) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered permanently invested ~~and (iv) amounts that are paid or received on the net settlement amount from forward contracts~~ (as more fully discussed in Note ~~2.h.)~~3).

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,(2) Other, net for the three ~~and six~~ months ended ~~June 30, 2019 includes the change~~March 31, 2020, is primarily comprised of a gain on our previously held 25% equity investment in ~~estimated fair value~~OSG Records Management (Europe) Limited ("OSG"), as more fully discussed in Note 4, which is partially offset by losses on certain of ~~the noncontrolling interests associated with~~ our ~~business in India, which are accounted for as mandatorily redeemable noncontrolling interests.~~equity method investments.

l. New Accounting Pronouncements

In August 2018, the FASB issued ASU No. ~~2018-15,~~2018-13, ~~Intangibles-Goodwill~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement of our financial assets and ~~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~~liabilities among the three levels 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.fair value hierarchy. We adopted ASU ~~2018-15~~2018-13 on January 1, ~~2019.~~2020. ASU ~~2018-15~~2018-13 did not have a material impact on our consolidated financial statements.

In ~~February~~June 2016, the FASB issued ASU ~~2016-02.~~2016-13. We adopted ASU ~~2016-02~~2016-13 on January 1, ~~2019~~2020 on a modified retrospective basis. See Note 2.d. for information regarding the impact of the adoption of ASU ~~2016-02~~2016-13 on our consolidated financial statements.

~~m. Correction in Presentation~~

Subsequent to our conversion to a REIT, we have historically classified gains on sale of real estate, net of tax, as a separate line on our consolidated 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 provision (benefit) for income taxes on our consolidated 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)~~2. Summary of Significant Accounting Policies (Continued)

~~n. Immaterial Restatement~~m. Change in Presentation

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 of approximately 16,800 Euros primarily related to the years ending December 31, 2018 and 2017. We have ~~established a reserve~~historically classified our significant acquisition costs which represent operating expenditures associated with (1) the acquisition of Recall Holdings Limited ("Recall") that we completed on May 2, 2016 (the "Recall Transaction"), including: (i) advisory and professional fees to complete the Recall Transaction; (ii) costs associated with the divestments required in connection with receipt of regulatory approvals (including transitional services); and (iii) costs to integrate Recall with our existing operations, including moving, severance, facility upgrade, REIT integration and system upgrade costs, as well as certain costs associated with our shared service center initiative for ~~this matter based upon~~ our ~~estimate~~finance, human resources and information technology functions; and (2) the advisory and professional fees to complete the acquisition of ~~the amount~~IODC (collectively, "Significant Acquisition Costs"), as components 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 related tax impact. Based on our estimate of the amount of loss related to this matter that is both probable and estimable, we believe selling,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,Cost of sales. Beginning 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~~fourth quarter of ~~the amount of loss related to this matter that is both probable and estimable,~~2019, 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,present Significant Acquisition Costs as its own line item within Operating Expenses in the aggregate, would reduce net income from continuing operations by approximately $13,700 for the year ended December 31, 2017. We have 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 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 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 related notes for the three and six months ended June 30, 2018~~Operations. The prior period has been conformed to ~~reflect the impact 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)~~

presentation.

The following table sets forth the effect of the ~~immaterial restatement~~change in presentation of Significant Acquisition Costs to certain line items of our Condensed Consolidated ~~Statements~~Statement of Operations for the three ~~and six~~ months ended ~~June 30, 2018:~~March 31, 2019:

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 )



	Three Months Ended March 31, 2019
Cost of sales (excluding depreciation and amortization)	$	(898	)
Selling, general and administrative	$	(1,848	)
Significant Acquisition Costs	$	2,746

~~The following table sets forth~~

There were no Significant Acquisition Costs for the ~~effect~~three months ended March 31, 2020 as all of the ~~immaterial restatement to certain line items of our Condensed Consolidated Balance Sheet~~costs associated with the Recall Transaction and IODC were incurred 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~~2019. Significant Acquisition Costs included in ~~excess of earnings) Earnings in excess of distributions disclosed in our~~the accompanying Condensed Consolidated Statements of ~~Equity~~Operations by segment for the ~~periods~~three months 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.~~is as follows:

Prospectively, we will process an immaterial restatement of our consolidated financial 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.



	Three Months Ended March 31, 2019
Global RIM Business	$	880
Global Data Center Business	143
Corporate and Other Business	1,723
Total Significant Acquisition Costs	$	2,746

2923

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

Derivative instruments we are party to include: (i) interest rate swap agreements (which are designated as cash flow hedges) and (ii) cross-currency swap agreements (which are designated as net investment hedges).

Interest Rate Swap Agreements Designated as Cash Flow Hedges

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 March 31, 2020 and December 31, 2019, we had $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 interest rate specified in the interest rate swap agreements).

In July 2019, we entered into forward-starting interest rate swap agreements to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness once our current interest rate swap agreements expire in March 2022. The forward-starting interest rate swap agreements have $350,000 in notional value, commence in March 2022 and expire in March 2024. Under the swap agreements we will receive variable rate interest payments based upon one-month LIBOR, in exchange for the payment of fixed interest rate payments at the rates specified in the interest rate swap agreements.

We have designated these interest rate swap agreements, including the forward-starting interest rate swap agreements, as cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. At March 31, 2020 and December 31, 2019, we had a derivative liability of $23,506 and $8,774, respectively, which was recorded as a component of Other long-term liabilities in our Condensed Consolidated Balance Sheets. We have recorded the change in fair value of the interest rate swap agreements as a component of Accumulated other comprehensive items, net in our Condensed Consolidated Balance Sheets. We have recorded unrealized losses of $14,732 and $2,674 for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, cumulative net losses of $23,506 are recorded within Accumulated other comprehensive items, net associated with these cash flow hedges.

Net Investment Hedges

a. Cross-Currency Swap Agreements Designated as a Hedge of Net Investment

In August 2019, we entered into cross-currency swap agreements to hedge the variability of exchange rate impacts between the United States dollar and the Euro. Under the terms of the cross-currency swap agreements, we notionally exchanged approximately $110,000 at an interest rate of 6.0% for approximately 99,055 Euros at a weighted average interest rate of approximately 3.65%. The cross-currency swap agreements, which expire in August 2023, are designated as a hedge of net investment against certain of our Euro denominated subsidiaries and require an exchange of the notional amounts at maturity. The cross-currency swaps are marked to market at each reporting period and any changes in fair value are recognized as a component of Accumulated other comprehensive items, net. Unrealized gains are recognized as assets while unrecognized losses are recognized as liabilities. At March 31, 2020, we had a derivative asset of $5,388, which was recorded as a component of Other within Other assets, net and at December 31, 2019, we had a derivative liability of $982, which was recorded as a component of Other long-term liabilities, net in our Condensed Consolidated Balance Sheets. These amounts represent the fair value of the cross-currency swap agreements. We have recorded unrealized gains of $6,370 for the three months ended March 31, 2020 associated with these cross-currency swap agreements. As of March 31, 2020, cumulative net gains of $5,388 are recorded within 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)

b. Euro Notes Designated as a Hedge of Net Investment

In addition, we have designated a portion of our Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. For the three months ended March 31, 2020 and 2019, we designated, on average, 300,000 and 271,146 Euros, respectively, of our Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. As a result, we recorded foreign exchange gains of $6,453 and $6,141 for the three months ended March 31, 2020 and 2019, respectively, 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. As of March 31, 2020, cumulative net gains of $26,714, net of tax, are recorded in Accumulated other comprehensive items, net associated with this net investment hedge.

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.

~~Acquisitions Completed During~~

Prior to January 9, 2020, we owned a 25% equity interest in OSG. On January 9, 2020, we acquired the ~~Six Months Ended June 30, 201~~9remaining 75% equity interest in OSG for cash consideration of approximately $95,500 (the "OSG Acquisition"). The OSG Acquisition enabled us to extend our Global RIM (as defined in Note 6) Business in Russia, Ukraine, Kazakhstan, Belarus, and Armenia. The results of OSG are fully consolidated within our condensed consolidated financial statements from the closing date of the OSG Acquisition. In connection with the OSG Acquisition, our previously held 25% equity investment in OSG was remeasured to fair value at the closing date of the OSG Acquisition which resulted in a gain of approximately $10,000 during the three months ended March 31, 2020, and is included as a component of Other (income) expense, net on our Condensed Consolidated Statements of Operations. The fair value of the 25% equity investment in OSG was determined based on the purchase price of the OSG Acquisition.

~~During the six months ended June 30, 2019,~~On February 17, 2020, 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,~~Arab Emirates, we ~~completed the acquisition of six~~acquired Glenbeigh Records Management DWC-LLC, a storage and records management ~~companies and one art storage~~ company, for total cash consideration of 107,000 United Arab Emirates dirham (or approximately ~~$36,800.~~$29,100, based upon the exchange rate between the United Arab Emirates dirham and the United States dollar on the closing date of the acquisition).

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)

Purchase Price Allocation

A summary of the cumulative consideration paid and the preliminary allocation of the purchase price paid for all of our ~~2019~~2020 acquisitions through ~~June 30, 2019~~March 31, 2020 is as follows:


	Six Months Ended June 30, 2019			Three Months Ended March 31, 2020
Cash Paid (gross of cash acquired)(1)	$	39,072		$	124,614
Purchase Price Holdbacks and Other	2,394
Fair Value of Investments Applied to Acquisitions				27,276
Total Consideration	41,466			151,890
Fair Value of Identifiable Assets Acquired:
Cash	2,285			6,545
Accounts Receivable, Prepaid Expenses and Other Assets	3,164			17,375
Property, Plant and Equipment(2)	4,538			40,467
Customer Relationship Intangible Assets	15,670			60,846
Operating Lease Right-of-Use Assets	13,256			104,104
Debt Assumed				(11,479		)
Accounts Payable, Accrued Expenses and Other Liabilities	(2,124		)	(15,518		)
Operating Lease Liabilities	(13,256		)	(104,104		)
Deferred Income Taxes	(1,628		)	(6,364		)
Total Fair Value of Identifiable Net Assets Acquired	21,905			91,872
Goodwill Initially Recorded(3)	$	19,561		$	60,018


(1)	Included in cash paid for acquisitions in ~~the~~our Condensed Consolidated Statement of Cash Flows for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 is net cash acquired of ~~$2,285 and contingent and other payments, net of $7,864 related to acquisitions made in previous years.~~$6,545.


(2)	Consists primarily of leasehold improvements, racking structures and warehouse equipment. These assets are depreciated using the straight-line method with the useful lives as noted in Note 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, 2019~~March 31, 2020 primarily relate to the final assessment of the fair values of intangible assets ~~and liabilities~~ (primarily customer relationship intangible assets), property, plant and equipment (primarily ~~building, building improvements 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 acquisitions we closed in 2020 and 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 three months ended ~~June 30, 2019~~March 31, 2020 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.

3126

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(4)~~5. Debt

Long-term debt is as follows:


	June 30, 2019											December 31, 2018											March 31, 2020											December 31, 2019
	Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount			Fair Value		Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount			Fair Value		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	$	645,603		$	(11,205	)	$	634,398		$	645,603	$	348,808		$	(12,053	)	$	336,755		$	348,808
Term Loan A(1)	234,375			—			234,375			234,375		240,625			—			240,625			240,625		225,000			—			225,000			225,000		228,125			—			228,125			228,125
Term Loan B(2)	689,782			(8,118		)	681,664			668,784		693,169			(8,742		)	684,427			660,013		684,702			(7,181		)	677,521			686,000		686,395			(7,493		)	678,902			686,890
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		197,454			(1,937		)	195,517			198,435		226,924			(2,313		)	224,611			228,156
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
UK Bilateral Revolving Credit Facility (the "UK Bilateral Facility")(4)																							173,246			(1,557		)	171,689			173,246		184,601			(1,801		)	182,800			184,601
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		500,000			(2,006		)	497,994			495,000		500,000			(2,436		)	497,564			503,450
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		600,000			(3,752		)	596,248			603,000		600,000			(4,027		)	595,973			613,500
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		176,414			(1,776		)	174,638			170,681		192,058			(2,071		)	189,987			199,380
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		1,000,000			(6,065		)	993,935			992,500		1,000,000			(6,409		)	993,591			1,010,625
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		330,016			(3,302		)	326,714			289,177		336,468			(3,462		)	333,006			345,660
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		494,988			(5,218		)	489,770			443,960		527,432			(5,809		)	521,623			539,892
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		250,000			(2,649		)	247,351			242,500		250,000			(2,756		)	247,244			261,641
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
4⁷/₈% Senior Notes due 2027 (the "4⁷/₈% Notes due 2027")(5)																							1,000,000			(10,664		)	989,336			970,000		1,000,000			(11,020		)	988,980			1,029,475
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		825,000			(9,447		)	815,553			813,904		825,000			(9,742		)	815,258			859,598
4⁷/₈% Senior Notes due 2029 (the "4⁷/₈% Notes due 2029")(5)																							1,000,000			(13,742		)	986,258			939,380		1,000,000			(14,104		)	985,896			1,015,640
Real Estate Mortgages, Financing Lease Liabilities and Other	559,622			(425		)	559,197			559,622		606,702			(171		)	606,531			606,702		494,573			(297		)	494,276			494,573		523,671			(406		)	523,265			523,671
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
Accounts Receivable Securitization Program																							270,562			(241		)	270,321			270,562		272,062			(81		)	271,981			272,062
Mortgage Securitization Program(6)																							50,000			(945		)	49,055			50,000		50,000			(982		)	49,018			50,000
Total Long-term Debt	8,592,918			(79,208		)	8,513,710					8,229,430			(86,607		)	8,142,823					8,917,558			(81,984		)	8,835,574					8,751,544			(86,965		)	8,664,579
Less Current Portion	(123,527		)	—			(123,527		)			(126,406		)	—			(126,406		)			(127,557		)	—			(127,557		)			(389,013		)	—			(389,013		)
Long-term Debt, Net of Current Portion	$	8,469,391		$	(79,208	)	$	8,390,183				$	8,103,024		$	(86,607	)	$	8,016,417				$	8,790,001		$	(81,984	)	$	8,708,017				$	8,362,531		$	(86,965	)	$	8,275,566

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

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

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

~~(Unaudited)~~

~~(4) Debt (Continued)~~

(1)

Collectively, the credit agreement ~~("Credit~~(the "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 ~~$1,181,376~~$645,603 of outstanding borrowings under the Revolving Credit Facility as of ~~June 30, 2019, 1,028,900~~March 31, 2020, $580,500 was denominated in United States dollars, ~~76,800~~28,500 was denominated in Canadian dollars and ~~82,500~~40,900 was denominated in Euros. In addition, we also had various outstanding letters of credit totaling ~~$35,250.~~$4,851. The remaining amount available for borrowing under the Revolving Credit Facility as of ~~June 30, 2019~~March 31, 2020 was ~~$533,374~~$1,099,546 (which amount represents the maximum availability as of such date). The average interest rate in effect under the Credit Agreement was ~~4.0%~~2.7% as of ~~June 30, 2019.~~March 31, 2020. The average interest rate in effect under the Revolving Credit Facility as of ~~June 30, 2019~~March 31, 2020 was ~~4.0%~~2.7% and the interest rate in effect under Term Loan A as of ~~June 30, 2019~~March 31, 2020 was ~~4.2%~~2.7%.

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)

(2)

~~In connection with the 2018 First Amendment (as defined in Note 5 to Notes to Consolidated Financial Statements included in our Annual Report),~~Consists of an incremental term loan B borrowed by IMI's wholly owned subsidiary, Iron Mountain Information Management, LLC, ~~("IMIM") entered into~~with 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 theoriginal principal 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, 2019~~March 31, 2020 was ~~4.2%~~2.7%. The amount of debt for the Term Loan B reflects an unamortized original issue discount of ~~$1,468~~$1,298 and ~~$1,581~~$1,355 as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

(3)

The interest rate in effect as of ~~June 30, 2019~~March 31, 2020 was ~~5.1%~~4.4%. We had ~~329,688~~323,125 Australian dollars outstanding on the AUD Term Loan as of ~~June 30, 2019.~~March 31, 2020. The amount of debt for the AUD Term Loan reflects an unamortized original issue discount of ~~$1,458~~$981 and ~~$1,690~~$1,232 as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.


(4)	The interest rate in effect as of ~~June 30, 2019~~March 31, 2020 was ~~3.1%~~3.0%.


(5)	Collectively, the "Parent Notes".


(6)	The interest rate in effect as of ~~June 30, 2019 was 3.4%.~~


~~(7)~~	~~The interest rate in effect as of June 30, 2019~~March 31, 2020 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, 2019~~March 31, 2020 are consistent with the levels of the fair value hierarchy used to determine the fair value of our debt as of December 31, ~~2018~~2019 (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 agreements since December 31, ~~2018.~~2019 other than the modification of the Accounts Receivable Securitization Program, described below.

See Note 3 for information regarding the forward-starting interest rate swap agreements and the cross-currency swap agreements outstanding at March 31, 2020.

Accounts Receivable Securitization Program

On March 31, 2020, we amended the Accounts Receivable Securitization Program to (i) increase the maximum amount available from $275,000 to $300,000 and (ii) extend the maturity date from July 30, 2020 to July 31, 2021, at which point all obligations become due. As a result, the full amount outstanding is classified within the long-term portion of long-term debt in our Condensed Consolidated Balance Sheet as of March 31, 2020. The interest rate in effect as of March 31, 2020 was 2.0%. The full amount outstanding under the Accounts Receivable Securitization Program is classified within the current portion of long-term debt in our Condensed Consolidated Balance Sheet as of December 31, 2019. The maximum available borrowings is limited by eligible accounts receivable, as defined under the terms of the Accounts Receivable Securitization Program.

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”) in order to help manage global liquidity requirements. We currently utilize ~~two~~2 separate ~~cash pools, one~~Cash Pools, 1 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").

3328

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

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

The approximate amount of the net cash position for our QRS Cash Pool and the TRS Cash Pool and the approximate amount of the gross position and outstanding debit balances for each of these pools as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows:


	June 30, 2019							December 31, 2018							March 31, 2020							December 31, 2019
	Gross Cash Position		Outstanding Debit Balances			Net Cash Position		Gross Cash Position		Outstanding Debit Balances			Net Cash Position		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	$	356,000	$	(354,700	)	$	1,300	$	372,100	$	(369,000	)	$	3,100
TRS Cash Pool	295,500		(292,700		)	2,800		281,500		(279,300		)	2,200		358,500		(354,700		)	3,800		319,800		(301,300		)	18,500

The net cash position balances as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are reflected as cash and cash equivalents in ~~the~~our Condensed Consolidated Balance Sheets.

Letters of Credit

As of March 31, 2020, we had outstanding letters of credit totaling $35,249, of which $4,851 reduce our borrowing capacity under the Revolving Credit Facility (as described above). The letters of credit expire at various dates between April 2020 and January 2033.

Debt Covenants

The Credit Agreement, our bond 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 bond indentures or other agreements governing our indebtedness. The Credit Agreement requires that we satisfy a fixed charge coverage ratio, net total lease adjusted leverage ratio and net secured debt lease adjusted leverage ratio on a quarterly basis and our bond indentures require that, among other things, we satisfy a bond leverage ratio (not lease adjusted), as a condition to taking actions such as paying dividends and incurring indebtedness.

~~Our~~ The bond indenture EBITDA-based calculations include our consolidated subsidiaries, other than those we have designated as “Unrestricted Subsidiaries” as defined in the bond indentures. Generally, the Credit Agreement and the bond indentures use a trailing four fiscal quarter basis for purposes of the relevant calculations and require certain adjustments and exclusions for purposes of those calculations which make the calculation of financial performance for purposes of those calculations under the Credit Agreement and bond indentures not directly comparable to Adjusted EBITDA as presented herein. We are in compliance with our leverage and fixed charge coverage ratios under the Credit Agreement, our bond indentures and other agreements as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018, as well as our leverage ratio under our indentures as of June 30, 2019 and December 31, 2018 are as follows:~~

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

~~(1)~~

~~The maximum allowable leverage ratio under our indentures for the 4~~⁷/₈~~% Notes, the GBP Notes and the 5~~¹/₄% 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.

2019. Noncompliance with these leverage and fixed charge coverage ratios would have a material adverse effect on our financial ~~condition and liquidity.~~condition.

3429

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~~

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

~~The Parent Notes, the CAD Notes, the GBP Notes, and the 5~~³/₈~~% 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, which were issued by Iron Mountain (UK) PLC ("IM UK"), and the 5~~³/₈% Notes, which were issued by Iron Mountain US Holdings, Inc., which is one of the Guarantors. Canada Company and IM UK do not guarantee the Parent Notes. The subsidiaries that do not guarantee the Parent Notes, the CAD Notes, the GBP Notes, and the 5³/₈~~% Notes are referred to below as the Non-Guarantors.~~

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)~~6. Segment Information

Our ~~six~~3 reportable operating segments as of December 31, ~~2018~~2019 are described in Note 9 to Notes to Consolidated Financial Statements included in our Annual Report and are as follows:

~~North American~~

Global Records and Information Management ("Global RIM") 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, 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 2018 as described in Note 9 to Notes to Consolidated Financial Statements included in our Annual Report.2019. The operations associated with acquisitions completed during the first ~~six~~three months of ~~2019~~2020 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		Global RIM Business		Global Data Center Business		Corporate and Other Business			Total Consolidated
For the Three Months Ended June 30, 2019
For the Three Months Ended March 31, 2020
Total Revenues	$	539,273	$	96,415	$	127,327	$	199,823	$	62,291	$	41,778		$	1,066,907	$	956,419	$	67,357	$	44,955		$	1,068,731
Storage Rental	313,355		66,750		78,554		128,898		60,582		21,149			669,288		590,013		64,595		28,939			683,547
Service	225,918		29,665		48,773		70,925		1,709		20,629			397,619		366,406		2,762		16,016			385,184
Depreciation and Amortization	62,691		10,100		14,328		30,760		32,671		13,781			164,331		112,212		35,267		15,105			162,584
Depreciation	46,655		7,818		10,476		17,833		19,027		11,913			113,722		79,039		21,908		12,753			113,700
Amortization	16,036		2,282		3,852		12,927		13,644		1,868			50,609		33,173		13,359		2,352			48,884
Adjusted EBITDA	245,585		53,068		44,163		58,749		27,641		(78,264		)	350,942		391,972		30,895		(59,790		)	363,077
Total Assets(1)																10,552,140		2,538,401		475,795			13,566,336
Expenditures for Segment Assets	46,545		5,254		24,334		18,829		102,477		12,805			210,244		176,500		43,560		12,357			232,417
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
Capital Expenditures																41,698		43,089		12,357			97,144
Cash Paid for Acquisitions, Net of Cash Acquired	—		—		366		4,862		—		—			5,228		118,069		—		—			118,069
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
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs																16,733		471		—			17,204
For the Three Months Ended March 31, 2019
Total Revenues	$	539,080	$	100,031	$	133,440	$	207,527	$	54,895	$	25,850		$	1,060,823	$	945,883	$	61,536	$	46,444		$	1,053,863
Storage Rental	305,895		68,808		82,439		129,611		51,945		16,741			655,439		575,773		59,718		27,483			662,974
Service	233,185		31,223		51,001		77,916		2,950		9,109			405,384		370,110		1,818		18,961			390,889
Depreciation and Amortization	60,970		9,538		17,500		30,364		22,503		15,345			156,220		116,055		31,632		14,796			162,483
Depreciation	48,252		7,217		11,821		18,199		13,120		12,892			111,501		82,925		19,013		12,673			114,611
Amortization	12,718		2,321		5,679		12,165		9,383		2,453			44,719		33,130		12,619		2,123			47,872
Adjusted EBITDA	244,861		55,280		46,594		60,452		24,901		(64,533		)	367,555		365,836		26,011		(67,341		)	324,506
Total Assets(1)																10,785,331		2,310,001		599,002			13,694,334
Expenditures for Segment Assets	41,364		3,643		27,559		30,287		265,173		11,052			379,078		123,157		153,705		15,238			292,100
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
Capital Expenditures																51,490		121,557		11,718			184,765
Cash Paid for Acquisitions, Net of Cash Acquired	—		—		—		16,188		221,707		—			237,895		35,903		—		3,520			39,423
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs	16,242		—		2,463		178		304		—			19,187
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs and third-party commissions																35,764		32,148		—			67,912


(1)	Excludes all intercompany receivables or payables and investment in subsidiary balances.

4430

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(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, 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.~~

~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

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

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

~~(Unaudited)~~

~~(6)~~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)~~(1) (gain) loss on disposal/write-down of property, plant and equipment, net (including real estate); ~~(ii)~~(2) intangible impairments; ~~(iii)~~(3) other (income) expense, ~~(income),~~ net (which includes foreign currency transaction (gains) losses, net); ~~and (iv)~~(4) Significant Acquisition ~~Costs~~Costs; and (5) Restructuring Charges (as defined ~~below)~~in Note 9). 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,~~March 31, 2020 and 2019 ~~and 2018~~ is as follows:



	Three Months Ended March 31,
	2020			2019
Adjusted EBITDA	$	363,077		$	324,506
(Add)/Deduct:
Provision (Benefit) for Income Taxes	9,687			10,553
Other (Income) Expense, Net	(42,726		)	15,210
Interest Expense, Net	105,649			102,436
(Gain) Loss on disposal/write-down of property, plant and equipment, net	(1,055		)	602
Depreciation and amortization	162,584			162,483
Significant Acquisition Costs	—			2,746
Restructuring Charges	41,046			—
Intangible impairments	23,000			—
Income (Loss) from Continuing Operations	$	64,892		$	30,476

Three Months Ended
June 30, Six Months Ended
June 30,
2019 2018 2019 2018
Adjusted EBITDA $ 350,942
$ 367,555
$ 675,448
$ 703,130
(Add)/Deduct:
Provision (Benefit) for Income Taxes 10,646
26,057
21,199
25,934
Other (Income) Expense, Net (15,192 ) (19,056 ) 18
1,095
Interest Expense, Net 105,314
102,196
207,750
199,898
(Gain) loss on disposal/write-down of property, plant and equipment, net (8,405 ) (546 ) (7,803 ) (1,676 )
Depreciation and Amortization 164,331
156,220
326,814
316,798
Significant Acquisition Costs(1) 1,901
10,421
4,647
29,429
Income (Loss) from Continuing Operations $ 92,347
$ 92,263
$ 122,823
$ 131,652


~~(1)~~	~~As defined in Note 9 to Notes to Consolidated Financial Statements included in our Annual Report.~~

4631

Table of Contents

IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(6)~~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,~~March 31, 2020 and 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		Global RIM Business		Global Data Center Business		Corporate and Other Business		Total Consolidated
For the Three Months Ended June 30, 2019
For the Three Months Ended March 31, 2020
Records Management(1)	$	442,785	$	—	$	109,369	$	172,433	$	—	$	26,195	$	750,782	$	727,616	$	—	$	28,876	$	756,492
Data Management(1)	—		93,152		16,908		18,787		—		15,583		144,430		125,898		—		16,079		141,977
Information Destruction(1)(2)	96,488		3,263		1,050		8,603		—		—		109,404		102,905		—		—		102,905
Data Center	—		—		—		—		62,291		—		62,291		—		67,357		—		67,357
Total Revenues	$	539,273	$	96,415	$	127,327	$	199,823	$	62,291	$	41,778	$	1,066,907	$	956,419	$	67,357	$	44,955	$	1,068,731
For the Three Months Ended June 30, 2018
For the Three Months Ended March 31, 2019
Records Management(1)	$	441,401	$	—	$	113,925	$	179,194	$	—	$	11,801	$	746,321	$	701,098	$	—	$	32,298	$	733,396
Data Management(1)	—		97,768		19,393		19,227		—		14,049		150,437		133,102		—		14,146		147,248
Information Destruction(1)(2)	97,679		2,263		122		9,106		—		—		109,170		111,683		—		—		111,683
Data Center	—		—		—		—		54,895		—		54,895		—		61,536		—		61,536
Total Revenues	$	539,080	$	100,031	$	133,440	$	207,527	$	54,895	$	25,850	$	1,060,823	$	945,883	$	61,536	$	46,444	$	1,053,863
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.

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(7)~~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 our accounting policies related to the accounting for commitments and contingencies or to the matters disclosed in Note 10 to Notes to Consolidated Financial Statements included in our Annual Report. We 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 ~~$17,000~~$6,000 over the next several years, of which certain amounts would be covered by insurance or indemnity arrangements.

~~In June~~

8. Related Parties

During 2019, we ~~received~~contributed our customer contracts and certain intellectual property and other assets, including $20,000 in cash consideration to MakeSpace Labs, Inc. to form a ~~notification of assessment from tax~~joint venture entity, MakeSpace LLC, (the “MakeSpace JV”), a consumer storage services provider (the “Consumer Storage Transaction”). In connection with the Consumer Storage Transaction we also entered into a storage and ~~customs authorities in~~service agreement with the ~~Netherlands~~MakeSpace JV to provide certain storage and 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~~MakeSpace JV (the “MakeSpace Agreement”). Revenues and expenses associated with the MakeSpace Agreement are presented as a component of our Global RIM Business segment. We recognized approximately $6,800 of revenue for ~~all goods imported in a particular month~~the three months ended March 31, 2020 and ~~calculate the~~an immaterial 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 allowingrevenue 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 betweenthree months ended 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 incur31, 2019, associated with ~~this matter.~~the MakeSpace Agreement.

~~(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 2018 and the first six months of 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

4833

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IRON MOUNTAIN INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In Thousands, Except Share and Per Share Data)

(Unaudited)

~~(8) Stockholders' Equity Matters (Continued)~~9. Project Summit

~~At The Market (ATM) Equity Program~~

~~(9) Divestments~~

~~On March 19,~~In October 2019, we ~~contributed~~announced Project Summit. Project Summit focuses on simplifying our global structure by combining our core records and information management operations under one global leader and rebalancing our resources, streamlining managerial structures and leveraging our global and regional customer ~~contracts~~facing resources. We are also implementing systems and process changes designed to make our organization more agile and dynamic, streamline our organization and reallocate our resources to better align with our strategic goals as part of Project Summit. Since Project Summit was announced, we have identified additional opportunities to streamline our business and operations, as well as accelerated the timing of certain ~~intellectual property and other assets used by~~opportunities previously identified. Such opportunities include leveraging new technology capabilities to enable us to ~~operate~~adjust our ~~consumer storage business~~service delivery model and more efficiently utilize our fleet, labor and real estate, which has broadened the initial scope of Project Summit.

The activities associated with Project Summit began in the United States and Canada (the "IM Consumer Storage Assets") and approximately $20,000 in cash (gross of certain transaction expenses) (the "Cash Contribution") to a joint venture entity, Makespace LLC (the "Makespace JV"), established by us and Makespace Labs, Inc. ("Makespace"), a consumer storage services provider (the "Consumer Storage Transaction"). Upon the closing of the 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 received an equity interest of approximately 34% in the Makespace JV (the "Makespace Investment"). In 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 Makespace JV (see Note 11).

We have concluded that the divestment of the IM Consumer Storage Assets in the Consumer Storage Transaction does not meet the criteria to be reported as a discontinued operation 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. Accordingly, the revenues and expenses associated with 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, 2018 and the cash flows associated with this business are presented as a component of cash flows from continuing operations in our Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 through the closing date of the Consumer Storage Transaction and for the six months ended June 30, 2018.

~~As a result of the Consumer Storage Transaction, we recorded a gain on sale of approximately $4,200 to Other expense (income), net, in the first~~fourth quarter of 2019 ~~representing~~and are expected to be substantially complete by the ~~excess~~end of 2021. We now expect the ~~fair value~~total program benefits associated with Project Summit to be fully realized exiting 2021. Including the expanded scope of Project Summit, we now estimate that the ~~consideration received over~~implementation of Project Summit will result in total costs of approximately $450,000, which includes operating expenditures (“Restructuring Charges”) and capital expenditures. During the ~~sum~~three months ended March 31, 2020, we incurred $41,046 of ~~(i) the carrying value of our consumer storage operations~~Restructuring Charges, primarily related to employee severance costs and (ii) the Cash Contribution. At the closing date of the Consumer Storage Transaction, the fair value of the Makespace Investment was approximately $27,500. We account for the Makespace Investment as an equity method investment. The carrying value of the Makespace Investment at June 30, 2019 is $23,896, and is presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheet.professional fees.

`~~Table of Contents~~

~~IRON MOUNTAIN INCORPORATED~~

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

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

~~(Unaudited)~~

~~(10) Significant Acquisition Costs~~

~~Significant Acquisition Costs~~Restructuring Charges 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

~~Significant Acquisition Costs included in the accompanying Condensed Consolidated Statements~~Statement of Operations by segment for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~from the inception of Project Summit through March 31, 2020 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 March 31, 2020		From the inception of Project Summit through March 31, 2020
Global RIM Business	$	8,288	$	30,188
Global Data Center Business	187		493
Corporate and Other Business	32,571		58,962
Restructuring Charges	$	41,046	$	89,643

A rollforward of the accrued Restructuring Charges associated with Project Summit in our Condensed Consolidated Balance Sheet during the three months ended March 31, 2020 is as follows:



	Restructuring Charges
Balance as of December 31, 2019	$	17,777
Amounts accrued	41,046
Payments	(22,282		)
Other, including currency translation adjustments	(2,952		)
Balance as of March 31, 2020	$	33,589


10.	Subsequent Events

~~(11) Related Party Transactions~~

~~In connection with the Consumer Storage Transaction and the Makespace Investment (both~~On May 5, 2020, we declared a dividend to our stockholders of record 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 ~~our North American Records and Information Management Business segment. We recognized approximately $7,400 and $7,900~~June 15, 2020 of ~~revenue, respectively, for the three and six months ended June 30, 2019, associated with the Makespace Agreement.~~$0.6185 per share, payable on July 2, 2020.

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, 2019~~March 31, 2020 should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, included herein, and our Consolidated Financial Statements and Notes thereto for the year ended December 31, ~~2018,~~2019, included in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on February ~~14, 2019~~13, 2020 (our "Annual Report").

FORWARD-LOOKING STATEMENTS

We have made statements in this Quarterly Report on Form 10-Q ~~("Quarterly~~(this "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~~change in volume of records stored with us, ~~from existing customers,~~ (3) ~~expected 2019 consolidated organic storage rental revenue growth rate, consolidated organic total revenue growth rate and capital expenditures, (4) expectation~~expectations that profits will increase in our ~~emerging~~growth portfolio, including our higher-growth markets, ~~(5) expectation~~and that our growth portfolio will become a ~~large~~larger part of our business over time, ~~(6) statements regarding~~(4) expectations related to our ~~expectation~~revenue management programs and continuous improvement initiatives, (5) expectations related to ~~reduce~~ our leverage ratio and ~~(7)~~capital requirements, (6) expected ability to ~~close pending acquisitions.~~identify and complete acquisitions and drive returns on invested capital, (7) anticipated capital expenditures, (8) expectations and assumptions regarding the possible impact from the COVID-19 (as defined below) pandemic on us and our customers, including on our businesses, financial position, results of operations and cash flows and the goodwill associated with our reporting units and (9) expected benefits, costs and actions related to, and timing of, Project Summit (as defined and discussed below). 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:

the severity and duration of the COVID-19 pandemic and its effects on the global economy, including its effects on us, the markets we serve and our customers and the third parties with whom we do business within those markets;

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;

our ability or inability to execute our strategic growth plan, expand internationally, complete acquisitions on satisfactory terms, and to integrate acquired companies efficiently;

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

our ability to execute on Project Summit and the potential impacts of Project Summit on our ability to retain and recruit employees and execute on our strategy;

the cost and our ability 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 information 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~~the impact of executing on ~~satisfactory terms, to close pending acquisitions and to integrate acquired companies efficiently;~~

~~changes in the amount of~~ our growth ~~and recurring capital expenditures and our ability to invest according to plan;~~strategy through joint ventures;

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; and

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

Additional risks and facts that may affect us, including as a result of the COVID-19 pandemic, are set forth in our filings with the SEC, including under "Item 1A. Risk Factors" in this Quarterly Report and our Annual Report.

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.~~events or otherwise. 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 this Quarterly Report and 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~~months ended ~~June 30, 2019~~March 31, 2020 within each section.

~~IODC Acquisition~~

OnCOVID-19

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China. In January 10, 2018, we completed the acquisition of the United States operations of IODC (the "IODC Transaction"). At the closing of the IODC Transaction, we paid approximately $1,347.0 million. In February 2019, we paid approximately $31.0 million in additional purchase price associated with the execution of customer contracts from the closing through the one-year anniversary of the IODC Transaction. See Note 62020, COVID-19 spread to ~~Notes to Consolidated Financial Statements included in our Annual Report for additional information.~~

~~Divestments~~

~~a. Consumer Storage Transaction~~

~~On March 19, 2019, we contributed our customer contracts and certain intellectual property and~~ other ~~assets used by us to operate our consumer storage business in~~countries, including the United States, and ~~Canada (the "IM Consumer Storage Assets"~~the World Health Organization subsequently declared COVID-19 a pandemic. This has resulted in U.S. federal, state and local and foreign governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories and the quarantining of people who may have been exposed to the virus. We have temporarily closed certain of our offices and facilities across the world and implemented certain travel restrictions for our employees, which have disrupted how we operate our business. The preventative and protective actions that the governments have ordered, or we have implemented as an organization, have resulted in a period of reduced operations and business disruption for us, our customers and other third parties with which we do business. The effects of the pandemic, including the effects on the economy, and the preventative and protective actions experienced to date include, but are not limited to, a decline in our service revenues, limited delays in cash collections from customers and the incurrence of incremental costs as a result of such protective actions. The broader impacts of the COVID-19 pandemic on our financial position, results of operations and cash flows remain uncertain and difficult to predict as information is rapidly evolving, and the severity and duration of the COVID-19 pandemic is still unknown, as is our visibility to the COVID-19 pandemic’s effect on the markets we serve and our customers within those markets.

Project Summit

In October 2019, we announced our global program designed to better position us for future growth and achievement of our strategic objectives ("Project Summit"). Project Summit focuses on simplifying our global structure by combining our core records and information management operations under one global leader and rebalancing our resources, streamlining managerial structures and leveraging our global and regional customer facing resources. We are also implementing systems and process changes designed to make our organization more agile and dynamic, streamline our organization and reallocate our resources to better align with our strategic goals as part of Project Summit. Since Project Summit was announced, we have identified additional opportunities to streamline our business and operations, as well as accelerated the timing of certain opportunities previously identified. Such opportunities include leveraging new technology capabilities to enable us to adjust our service delivery model and more efficiently utilize our fleet, labor and real estate, which has broadened the initial scope of Project Summit.

The activities associated with Project Summit began in the fourth quarter of 2019 and are expected to be substantially complete by the end of 2021. We now expect the total program benefits associated with Project Summit to be fully realized exiting 2021. Including the expanded scope of Project Summit described above, we now estimate that Project Summit will improve annual Adjusted EBITDA (as defined below) by approximately $375.0 million exiting 2021, an increase from our original estimate of $200.0 million. In addition, we now expect Project Summit to improve annual Adjusted EBITDA by approximately $150.0 million in 2020, an increase from our original estimate of $80.0 million. We will continue to evaluate our overall operating model, as well as various opportunities and initiatives, including those associated with real estate consolidation, system implementation and process changes, which could result in the identification and implementation of additional actions associated with Project Summit and incremental costs and benefits.

Including the expanded scope of Project Summit described above, we now estimate that the implementation of Project Summit will result in total costs (including operating expenditures ("Restructuring Charges") and capital expenditures) of approximately ~~$20.0~~$450.0 million, a $210.0 million increase from our original estimate of $240.0 million, of which we expect to incur $240.0 million in ~~cash (gross~~2020. The following table presents (in thousands) the total costs related to Project Summit, comprised of ~~certain transaction expenses) (the "Cash Contribution")~~Restructuring Charges, primarily related to ~~a joint venture entity, Makespace LLC (the "Makespace JV"), established by us~~employee severance costs and ~~Makespace Labs, Inc. ("Makespace"), a consumer storage services provider (the "Consumer Storage Transaction"). Upon~~professional fees, and capital expenditures for both the ~~closing~~three months ended March 31, 2020 and from the inception of ~~the Consumer Storage Transaction on~~Project Summit through 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 received an equity interest of approximately 34% in the Makespace JV (the "Makespace Investment").31, 2020.

~~As described in~~



	For the Three Months Ended March 31, 2020		From the inception of Project Summit through March 31, 2020
Restructuring Charges	$	41,046	$	89,643
Capital Expenditures associated with Project Summit	1,278		1,278
Total	$	42,324	$	90,921

See Note 9 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for more information on the ~~divestment~~Restructuring Charges.

During the fourth quarter of ~~the IM Consumer Storage Assets in the Consumer Storage Transaction does not meet the criteria to be reported~~2019, as a discontinued operations in our consolidated financial statements. In 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 Makespace JV (the "Makespace Agreement"). Revenues and expenses associated with the Makespace Agreement are presented as a component of 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 valuerealignment of our ~~consumer storage operations~~global managerial structure and ~~(ii) the Cash Contribution.~~

~~b. IMFS Divestment~~

~~On September 28, 2018, we sold substantially all of the assets~~changes to our internal financial reporting associated with Project Summit, we reassessed the composition of our ~~fulfillment services business in the United States for total consideration of approximately $3.0 million (the "IMFS Divestment"). As described~~reportable operating segments and reporting units, as discussed 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 our acquisition of Recall Holdings Limited ("Recall") (the "Recall Transaction") and acquisition expenditures associated with the IODC Transaction to be approximately $405.0 million, the substantial majority of which was incurred prior to the end of 2018. From January 1, 2015 through June 30, 2019, we have incurred cumulative operating and capital expenditures associated with the Recall Transaction and the IODC Transaction of $394.1 million, including $319.2 million of Significant Acquisition Costs (as defined in Note 92.h. to Notes to Consolidated Financial Statements included in our Annual ~~Report)~~Report. As a result of the managerial structure changes associated with Project Summit, we now have the following reportable operating segments: (i) Global Records and ~~$74.9 million~~Information Management ("Global RIM") Business (which consists of ~~capital expenditures. We expect the remaining amount~~our former North American Records and Information Management Business (excluding our technology escrow services business, which is now included as a component of our Corporate and Other Business), North American Data Management Business, Western European Business and Other International Business segments); (ii) Global Data Center Business; and (iii) Corporate and Other Business (which includes our Adjacent Businesses and our technology escrow services business). As a result of these changes, previously reported segment information has been restated to conform to the current presentation.

Change in Presentation

We have historically classified our significant acquisition costs which represent operating expenditures associated with (1) the acquisition of Recall Holdings Limited ("Recall") that we completed on May 2, 2016 (the "Recall Transaction"), including: (i) advisory and ~~capital expenditures will be primarily related~~professional fees to ~~moving~~complete the Recall Transaction; (ii) costs associated with the divestments required in connection with receipt of regulatory approvals (including transitional services); and (iii) costs to integrate Recall with our existing operations, including moving, severance, facility ~~consolidation~~upgrade, REIT integration and system upgrade ~~costs.~~

~~Immaterial Restatement~~

~~In June~~costs, as well as certain costs associated with our shared service center initiative for our finance, human resources and information technology functions; and (2) the advisory and professional fees to complete the acquisition of IO Data Centers, LLC ("IODC") (collectively, "Significant Acquisition Costs"), as components of Selling, general and administrative expenses and Cost of Sales. Beginning in the fourth quarter of 2019, we 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, certainpresent Significant Acquisition Costs as its own line ~~items~~item within Operating Expenses in our Condensed Consolidated Statements of ~~Operations~~Operations. The prior period has been confirmed to this presentation.

There were no Significant Acquisition Costs for the three ~~and six~~ months ended June 30, 2018 have been restated to reflect the immaterial restatement. See Note 2.n. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding the effectMarch 31, 2020 as all of the ~~immaterial restatement on certain line items in our Condensed Consolidated Statements~~costs associated with the Recall Transaction and IODC were incurred as of ~~Operations~~December 31, 2019. Significant Acquisition Costs for the three ~~and six~~ months ended ~~June 30, 2018.~~March 31, 2019 was approximately $2.7 million.

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: (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; and (4) consulting ~~services; and (5) cloud-related data protection, preservation, restoration and recovery.~~services. 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,~~IT, 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.

Trends in facility occupancy costs are impacted by the total number of facilities we occupy, the mix of properties we own versus properties we occupy under leases, fluctuations in per square foot occupancy costs, and the levels of utilization of these properties. Trends in total wages and benefits in dollars and as a percentage of total consolidated revenue are influenced by changes in headcount and compensation levels, achievement of incentive compensation targets, workforce productivity and variability in costs associated with medical insurance and workers' compensation.

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,~~operations, which may result in an increase in selling, general and administrative expenses as a percentage of consolidated revenue as our international operations become a larger percentage of our consolidated results.

Our consolidated revenues and expenses are subject to the net effect of foreign currency translation related to our 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 ~~2018~~2019 results at the ~~2019~~2020 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:

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
2019 2018 2019 2018
Australian dollar 3.4 % 3.8 % $ 0.700
$ 0.757
(7.5 )%
Brazilian real 2.6 % 2.9 % $ 0.255
$ 0.278
(8.3 )%
British pound sterling 6.4 % 6.8 % $ 1.285
$ 1.361
(5.6 )%
Canadian dollar 5.7 % 6.0 % $ 0.748
$ 0.775
(3.5 )%
Euro 7.5 % 7.2 % $ 1.124
$ 1.192
(5.7 )%


	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		Percentage of United States Dollar-Reported Revenue for the Three Months Ended March 31,				Average Exchange Rates for the Three Months Ended March 31,				Percentage Strengthening / (Weakening) of Foreign Currency
	2019		2018		2019		2018		Percentage Strengthening / (Weakening) of Foreign Currency		2020		2019		2020		2019		Percentage Strengthening / (Weakening) of Foreign Currency
Australian dollar	3.4	%	3.8	%	$	0.706	$	0.771	(8.4	)%	3.1	%	3.4	%	$	0.658	$	0.712	(7.6	)%
Brazilian real	2.6	%	3.0	%	$	0.260	$	0.293	(11.3	)%	2.2	%	2.7	%	$	0.226	$	0.265	(14.7	)%
British pound sterling	6.5	%	6.8	%	$	1.294	$	1.376	(6.0	)%	6.1	%	6.6	%	$	1.280	$	1.302	(1.7	)%
Canadian dollar	5.7	%	6.0	%	$	0.750	$	0.783	(4.2	)%	5.6	%	5.8	%	$	0.746	$	0.752	(0.8	)%
Euro	7.5	%	7.1	%	$	1.130	$	1.211	(6.7	)%	7.2	%	7.5	%	$	1.103	$	1.136	(2.9	)%

The percentage of United States dollar-reported revenues for all other foreign currencies was ~~12.6%~~14.0% and 12.7% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 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: (1) (gain) loss on disposal/write-down of property, plant and equipment, net (including real estate); (2) intangible impairments; (3) other (income) expense, ~~(income),~~ net (which includes foreign currency transaction (gains) losses, net); ~~and~~ (4) Significant Acquisition ~~Costs.~~Costs; and (5) Restructuring Charges. 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~~flows 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,
2019 2018 2019 2018
Income (Loss) from Continuing Operations $ 92,347
$ 92,263
$ 122,823
$ 131,652
Add/(Deduct):

Provision (Benefit) for Income Taxes 10,646
26,057
21,199
25,934
Other (Income) Expense, Net (15,192 ) (19,056 ) 18
1,095
Interest Expense, Net 105,314
102,196
207,750
199,898
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment, Net (8,405 ) (546 ) (7,803 ) (1,676 )
Depreciation and Amortization 164,331
156,220
326,814
316,798
Significant Acquisition Costs 1,901
10,421
4,647
29,429
Adjusted EBITDA $ 350,942
$ 367,555
$ 675,448
$ 703,130



	Three Months Ended March 31,
	2020			2019
Income (Loss) from Continuing Operations	$	64,892		$	30,476
Add/(Deduct):
Provision (Benefit) for Income Taxes	9,687			10,553
Other (Income) Expense, Net	(42,726		)	15,210
Interest Expense, Net	105,649			102,436
(Gain) Loss on disposal/write-down of property, plant and equipment, net	(1,055		)	602
Depreciation and amortization	162,584			162,483
Significant Acquisition Costs	—			2,746
Restructuring Charges	41,046			—
Intangible impairments	23,000			—
Adjusted EBITDA	$	363,077		$	324,506

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, net (including real estate); (2) intangible impairments; (3) other (income) expense, ~~(income),~~ net (which includes foreign currency transaction (gains) losses, net); (4) Significant Acquisition Costs; (5) Restructuring Charges; and ~~(5)~~(6) 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 March 31,
	2019			2018			2019			2018			2020			2019
Reported EPS—Fully Diluted from Continuing Operations	$	0.32		$	0.32		$	0.42		$	0.46		$	0.22		$	0.10
Add/(Deduct):
Income (Loss) Attributable to Noncontrolling Interests	—			—			—			—			—			—
Other (Income) Expense, Net	(0.05		)	(0.07		)	—			—			(0.15		)	0.05
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment, Net	(0.03		)	—			(0.03		)	(0.01		)
(Gain) Loss on disposal/write-down of property, plant and equipment, net													—			—
Significant Acquisition Costs	0.01			0.04			0.02			0.10			—			0.01
Restructuring Charges													0.14			—
Intangible impairments													0.08			—
Tax Impact of Reconciling Items and Discrete Tax Items(1)	(0.01		)	0.01			(0.01		)	(0.05		)	(0.02		)	—
Adjusted EPS—Fully Diluted from Continuing Operations(2)	$	0.23		$	0.30		$	0.40		$	0.51		$	0.27		$	0.17

(1)

The difference between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 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,~~March 31, 2020 and 2019 was 17.1% and ~~2018 was 17.7% and 22.0%~~18.9%, 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, 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, ~~(income),~~ net (which includes foreign currency transaction (gains) losses, net); (4) real estate financing lease depreciation; (5) Significant Acquisition Costs; (6) Restructuring Charges; (7) the tax impact of reconciling items and discrete tax items; ~~(7)~~(8) (income) loss ~~(income)~~ from discontinued operations, net of tax; and ~~(8)~~(9) 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 March 31,
	2019			2018			2019			2018			2020			2019
Net Income (Loss)	$	92,475		$	91,903		$	122,927		$	130,830		$	64,892		$	30,452
Add/(Deduct):
Real Estate Depreciation(1)	74,161			69,908			147,240			139,441			76,587			73,079
Gains on Sale of Real Estate, Net of Tax	(30,512		)	—			(30,512		)	—			(492		)	—
Data Center Lease-Based Intangible Assets Amortization(2)	11,372			7,563			23,981			18,401			11,353			12,609
FFO (Nareit)	147,496			169,374			263,636			288,672			152,340			116,140
Add/(Deduct):
(Gain) Loss on Disposal/Write-Down of Property, Plant and Equipment (Excluding Real Estate), Net	27,587			(546		)	28,189			(1,676		)
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net													(244		)	602
Other (Income) Expense, Net(3)	(15,192		)	(19,056		)	18			1,095			(42,726		)	15,210
Real Estate Financing Lease Depreciation	3,113			3,503			6,617			6,949			3,163			3,504
Significant Acquisition Costs	1,901			10,421			4,647			29,429			—			2,746
Restructuring Charges													41,046			—
Intangible impairments													23,000			—
Tax Impact of Reconciling Items and Discrete Tax Items(4)	(10,168		)	2,002			(10,144		)	(15,008		)	(6,812		)	(709		)
(Income) Loss from Discontinued Operations, Net of Tax(5)	(128		)	360			(104		)	822
Loss (Income) from Discontinued Operations, Net of Tax(5)													—			24
FFO (Normalized)	$	154,609		$	166,058		$	292,859		$	310,283		$	169,767		$	137,517


(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~~Data Center In-Place Lease Intangible Assets and ~~data center tenant relationship intangible assets~~Data Center Tenant Relationship Intangible Assets as discussed in Note ~~2.b.~~2.i. to Notes to ~~Condensed~~ Consolidated Financial Statements included in ~~this Quarterly~~our Annual Report.

(3)

Includes foreign currency transaction (gains) losses, net of ~~$(19.3)~~$(37.4) million and ~~$(1.6)~~$17.7 million infor the three ~~and six~~ months ended ~~June 30~~March 31, 2020 and 2019, ~~respectively, and $(18.6) million and $3.2 million in the three and six months ended June 30, 2018,~~ respectively. See Note 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.~~Report.

(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 for income taxes of ~~$(5.9)~~$0.0 million and ~~$(6.5)~~$(0.6) million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~respectively, and $2.9 million and $(10.6) million for the three and six months ended June 30, 2018,~~ respectively.


(5)	Net of a de minimis tax benefit for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

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.~~therein and should be read in conjunction with the disclosure below which addresses updates in light of the COVID-19 pandemic.

Impairment of Tangible and Intangible Assets

Goodwill and other indefinite-lived intangible assets not subject to amortization: Goodwill and intangible assets with indefinite lives are not amortized but are reviewed annually for impairment, or more frequently if impairment indicators arise. Other than goodwill, we currently have no intangible assets that have indefinite lives and which are not amortized. We have ~~determined~~selected October 1 as our annual goodwill impairment review date. We performed our annual goodwill impairment review as of October 1, 2019 and concluded that ~~no material changes concerning our critical accounting policies have occurred since~~as of October 1, 2019 goodwill was not impaired. As of December 31, ~~2018, other than~~2019, no factors were identified that would alter our October 1, 2019 goodwill impairment analysis. Our reporting units as of December 31, 2019 are described in detail in Note 2.h. to Notes to Consolidated Financial Statements included in our Annual Report. The goodwill associated with acquisitions completed during the ~~adoption~~first three months of ~~Accounting Standards Update No. 2016-02,~~ ~~Leases (Topic 842),~~ ~~as amended ("ASU 2016-02"), as~~2020 (which are described in Note ~~2.d.~~4 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report) has been incorporated into our reporting units as they existed as of December 31, 2019. There were no other changes to the composition of our reporting units for the three months ended March 31, 2020.

During the first quarter of 2020, we concluded that we had a triggering event related to our Fine Arts reporting unit, requiring us to perform an interim goodwill impairment test. The primary factor contributing to our conclusion was the expected impact of the COVID-19 pandemic to this particular business and its customers and revenue sources, which caused us to believe it was more likely than not that the carrying value of our Fine Arts reporting unit exceeded its fair value. During the first quarter of 2020, we performed an interim goodwill impairment test for our Fine Arts reporting unit utilizing a discounted cash flow model, with updated assumptions on future revenues, operating expenditures and capital expenditures. As a result of the interim goodwill impairment test, we concluded that the fair value of the Fine Arts reporting unit was less than its carrying value, primarily due to near-term revenue declines that are unable to be fully mitigated by the cost reduction measures we have taken. Therefore, we recorded a $23.0 million impairment charge on the goodwill associated with this reporting unit during the first quarter of 2020. The remaining goodwill for this reporting unit as of March 31, 2020, is approximately $15.0 million. As disclosed in our Annual Report, our Global Data Center reporting unit had an estimated fair value that exceeded its carrying value by less than 20%. At March 31, 2020, we determined we did not have a triggering event requiring an interim impairment test on the goodwill associated with our Global Data Center reporting unit. Additionally, we concluded that, as of March 31, 2020, we did not have a triggering event requiring an interim impairment test on the goodwill associated with our other reporting units.

Reporting unit valuations have generally been determined using a combined approach based on the present value of future cash flows (the “Discounted Cash Flow Model”) and market multiples. There are inherent uncertainties and judgments involved when determining the fair value of our reporting units for purposes of our annual impairment testing or upon a triggering event. The success of each of these businesses and the achievement of certain key assumptions developed by management and used in the Discounted Cash Flow Model are contingent upon various factors, which may be impacted by the economic effects of the COVID-19 pandemic. Such factors include, but are not limited to: (i) our ability to maintain, or grow, storage rental and service revenues in line with current expectations and (ii) our ability to manage our fixed and variable costs in line with potential future revenue declines. These factors are incremental to those previously outlined in our Annual Report, which included, but were not limited to: (i) achieving growth from existing customers, (ii) sales to new customers, (iii) increased market penetration and (iv) accurately timing the capital investments related to expansions. In addition, the discount rates utilized in our valuation models could be impacted by changes in the underlying interest rates and risk premiums which could also result in future goodwill impairments. However, the duration and severity of the COVID-19 pandemic, as well as the related economic impact on both our business and the businesses of our customers, remain uncertain as of the filing of this Quarterly Report. As such, the current assumptions we used in determining the fair values of our reporting units may materially change as we gain additional visibility into the impact to our business and our customers’ businesses. If our reporting units are not able to meet the assumptions we used in the Discounted Cash Flow Model, or there are any future adverse market conditions that are not currently known or are more severe than we currently expect, including relating to the COVID-19 pandemic, it could lead to a fair value that is less than the carrying value in any one of our reporting units and cause future goodwill impairments.

Recent Accounting Pronouncements

See Note 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~~March 31, 2020 to the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 (in thousands):

Three Months Ended
June 30,

Dollar
Change

Percentage
Change
2019 2018
Revenues $ 1,066,907
$ 1,060,823
$ 6,084
0.6 %
Operating Expenses 873,792
859,363
14,429
1.7 %
Operating Income 193,115
201,460
(8,345 ) (4.1 )%
Other Expenses, Net 100,768
109,197
(8,429 ) (7.7 )%
Income from Continuing Operations 92,347
92,263
84
0.1 %
Income (Loss) from Discontinued Operations, Net of Tax 128
(360 ) 488
(135.6 )%
Net Income 92,475
91,903
572
0.6 %
Net Income (Loss) Attributable to Noncontrolling Interests 34
142
(108 ) (76.1 )%
Net Income Attributable to Iron Mountain Incorporated $ 92,441
$ 91,761
$ 680
0.7 %
Adjusted EBITDA(1) $ 350,942
$ 367,555
$ (16,613 ) (4.5 )%
Adjusted EBITDA Margin(1) 32.9 % 34.6 %


	Six Months Ended June 30,												Three Months Ended March 31,
	Six Months Ended June 30,						Dollar Change				Percentage Change		Three Months Ended March 31,								Dollar Change				Percentage Change
	2019			2018						2020				2019							Dollar Change				Percentage Change
Revenues	$	2,120,770		$	2,103,281		Dollar Change	$	17,489		Percentage Change			0.8	%	$	1,068,731			$	1,053,863			$	14,868		1.4	%
Operating Expenses	1,768,980			1,744,702			24,278				1.4	%	931,229				895,188				36,041				4.0	%
Operating Income	351,790			358,579			(6,789		)		(1.9	)%	137,502				158,675				(21,173		)		(13.3	)%
Other Expenses, Net	228,967			226,927			2,040				0.9	%	72,610				128,199				(55,589		)		(43.4	)%
Income from Continuing Operations	122,823			131,652			(8,829		)		(6.7	)%	64,892				30,476				34,416				112.9	%
Income (Loss) from Discontinued Operations, Net of Tax	104			(822		)	926				(112.7	)%
(Loss) Income from Discontinued Operations, Net of Tax													—				(24		)		24				(100.0	)%
Net Income	122,927			130,830			(7,903		)		(6.0	)%	64,892				30,452				34,440				113.1	%
Net Income Attributable to Noncontrolling Interests	925			610			315				51.6	%
Net Income (Loss) Attributable to Noncontrolling Interests													917				891				26				2.9	%
Net Income Attributable to Iron Mountain Incorporated	$	122,002		$	130,220		$	(8,218	)		(6.3	)%	$	63,975			$	29,561			$	34,414			116.4	%
Adjusted EBITDA(1)	$	675,448		$	703,130		$	(27,682	)		(3.9	)%	$	363,077			$	324,506			$	38,571			11.9	%
Adjusted EBITDA Margin(1)	31.8		%	33.4		%							34.0		%		30.8		%


(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~~consist of the following (in thousands):

Three Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency(1)

Organic
Growth(2)
2019 2018
Storage Rental $ 669,288
$ 655,439
$ 13,849
2.1 % 4.6 % 2.4 %
Service 397,619
405,384
(7,765 ) (1.9 )% 0.7 % (2.0 )%
Total Revenues $ 1,066,907
$ 1,060,823
$ 6,084
0.6 % 3.1 % 0.7 %

Six Months Ended
June 30, Percentage Change
Dollar
Change Actual Constant
Currency(1) Organic
Growth(2)
2019 2018
Storage Rental $ 1,332,262
$ 1,306,588
$ 25,674
2.0 % 4.8 % 2.2 %
Service 788,508
796,693
(8,185 ) (1.0 )% 2.1 % (0.2 )%
Total Revenues $ 2,120,770
$ 2,103,281
$ 17,489
0.8 % 3.8 % 1.3 %



	Three Months Ended March 31,							Percentage Change
	Three Months Ended March 31,				Dollar Change			Actual		Constant Currency(1)		Organic Growth(2)
	2020		2019		Dollar Change			Actual		Constant Currency(1)		Organic Growth(2)
Storage Rental	$	683,547	$	662,974	$	20,573		3.1	%	4.9	%	3.0	%
Service	385,184		390,889		(5,705		)	(1.5	)%	0.3	%	(2.3	)%
Total Revenues	$	1,068,731	$	1,053,863	$	14,868		1.4	%	3.2	%	1.0	%


(1)	Constant currency growth rates are calculated by translating the ~~2018~~2019 results at the ~~2019~~2020 average exchange rates.


(2)	Our 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. Our organic revenue growth rate includes the impact of acquisitions of customer relationships.

Storage Rental Revenues

In the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, the increase in reported consolidated storage rental revenues was driven by ~~the favorable impact of acquisitions/divestitures and~~ consolidated organic storage rental revenue growth and the favorable impact of acquisitions/divestitures, partially offset by unfavorable fluctuations in foreign currency exchange rates. The net impact of acquisitions/divestitures contributed ~~2.6%~~1.9% to the reported storage rental revenue growth rates for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the prior year period, primarily driven by acquisitions in our Global ~~Data Center~~RIM Business segment. While our core storage business remains stable in spite of the COVID-19 pandemic, we have experienced some decreases in new storage volume. Organic storage rental revenue growth of ~~2.2%~~3.0% in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the prior year period was driven by organic storage rental revenue growth of ~~1.6%~~2.1% in our ~~North American Records and Information Management~~Global RIM Business segment ~~due to revenue management partially offset~~primarily driven by volume decreases, as well as organic storage rental revenue growth of 2.8% and 4.2% in our Western European Business and Other International Business segments, respectively, primarily 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%~~8.7% for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 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, partially offset by the impact of revenue management.increased customer leasing activity. Excluding the impact of acquisitions/divestitures, ~~global records management~~our Global RIM Business segment net volumes as of ~~June 30, 2019 increased~~March 31, 2020 decreased by ~~0.4%~~0.6% over the ending volume as of ~~June 30, 2018.~~March 31, 2019. Including the impact of acquisitions/divestitures, ~~global records management~~our Global RIM Business segment net volumes as of ~~June 30, 2019~~March 31, 2020 increased by ~~1.4%~~2.2% over the ending volume ~~at June 30, 2018, supported by net volume increases~~as of 1.9% and 6.5% in our Western European Business and Other International Business segments, respectively, partially offset by a net volume decrease of 1.0% in our North American Records and Information Management Business segment.March 31, 2019. Foreign currency exchange rate fluctuations decreased our reported storage rental revenue growth rate for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 by ~~2.8%~~1.8%, compared to the prior year period.

Service Revenues

In the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, the decrease in reported consolidated service revenues was driven by negative organic service revenue growth and unfavorable fluctuations in foreign currency exchange rates, ~~and negative organic service revenue growth,~~ partially offset by the favorable impact of acquisitions/divestitures. Foreign currency exchange rate fluctuations decreased our reported service revenue growth rate for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 by ~~3.1%~~1.8%, compared to the prior year period. Our reported consolidated service revenues during the three months ended March 31, 2020 also was impacted by the COVID-19 pandemic. Our operations in countries, such as China, that saw a peak in COVID-19 cases during the three months ended March 31, 2020, are limited, and as a result, the majority of our business did not experience service revenue declines until mid-to-late March 2020. However, we did experience decreases, primarily in our service activity, and particularly in regions where governments have imposed restrictions on non-essential business operations. In April 2020, we experienced service activity declines of approximately 40% when compared to April 2019. In the three months ended ~~June 30, 2019,~~March 31, 2020, organic service revenue growth was negative ~~2.0%~~2.3% compared to the prior year period, primarily driven by negative organic service revenue growth of ~~2.1%~~1.8% in our ~~North American Records and Information Management~~Global RIM Business segment ~~primarily due to recent declines in~~reflecting lower 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~~reduced retrieval/re-file and related transportation activity, partially offset 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~~secure shredding revenue 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 contributed ~~2.3%~~2.6% to the reported service revenue growth rates for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to the prior year period.

Total Revenues

For the reasons stated above, our reported consolidated revenues increased ~~$6.1~~$14.9 million, or ~~0.6%~~1.4%, to ~~$1,066.9 million and $17.5 million, or 0.8%, to $2,120.8~~$1,068.7 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020 from ~~$1,060.8 million and $2,103.3~~$1,053.9 million for ~~the~~ three ~~and six~~ months ended ~~June 30, 2018, respectively.~~March 31, 2019. The net impact of acquisitions/divestitures contributed ~~2.5%~~2.2% to the reported consolidated revenue growth rate for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the prior year period. Consolidated organic revenue growth was ~~1.3%~~1.0% in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the prior year period. Foreign currency exchange rate fluctuations decreased our reported consolidated revenue growth rate for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 by ~~3.0%~~1.8%, compared to the prior year period.

Organic Growth—Eight-Quarter Trend


	2017				2018								2019				2018						2019								2020
	Third Quarter		Fourth Quarter		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter		Second Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter
Storage Rental Revenue	3.5	%	4.2	%	3.7	%	1.9	%	2.3	%	1.9	%	2.0	%	2.4	%	1.9	%	2.3	%	1.9	%	2.0	%	2.4	%	3.0	%	2.5	%	3.0	%
Service Revenue	(0.2	)%	(0.1	)%	1.4	%	7.6	%	7.1	%	6.1	%	1.8	%	(2.0	)%	7.6	%	7.1	%	6.1	%	1.8	%	(2.0	)%	(3.0	)%	(0.7	)%	(2.3	)%
Total Revenues	2.0	%	2.5	%	2.8	%	4.1	%	4.1	%	3.5	%	1.9	%	0.7	%	4.1	%	4.1	%	3.5	%	1.9	%	0.7	%	0.7	%	1.3	%	1.0	%

~~We expect our consolidated organic storage rental revenue growth rate for 2019 to be approximately 2.2% to 2.8% and our consolidated organic total revenue growth rate to be approximately 1.3% to 2.0%.~~ During the past eight quarters, our organic storage rental revenue growth rate has ranged between 1.9% and ~~4.2%~~3.0%. Consolidated organic storage rental revenue growth and consolidated total organic revenue growth ~~for the second quarter of 2018~~ were ~~negatively impacted~~benefited by ~~0.8%~~(i) 0.3% and ~~0.5%~~0.2%, respectively, related to a $4.2 million customer termination fee in our Global Data Center Business segment in the second quarter of 2017. Consolidated organic storage rental revenue growth and consolidated total organic revenue growth for the second quarter of 2019 ~~were benefited by 0.3% and 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~~segment, (ii) 0.3% and 0.2%, respectively, for the third ~~and fourth quarters~~quarter of 2019 related to ~~this~~a $1.7 million customer lease modification fee ~~which will total approximately $5.4 million~~in our Global Data Center Business segment and (iii) 0.3% and 0.2%, respectively, for the ~~full year 2019.~~fourth quarter of 2019 related to a $2.0 million customer lease modification fee in our Global Data Center Business segment. Our organic storage rental revenue growth rates have ~~declined~~increased over the past two fiscal years, as organic storage rental revenue growth for full year ~~2017~~2018 and ~~2018~~2019 was ~~3.9%~~2.4% and ~~2.4%~~2.5%, respectively. At various points in the economic cycle, organic storage rental revenue growth may be influenced by changes in pricing and volume. In 2018 and ~~in the six months ended June 30,~~ 2019, we experienced ~~modest~~relatively steady net volume ~~declines~~ in our ~~North American Records and Information Management~~Global RIM Business ~~and North American Data Management Business segments,~~segment, with organic storage rental revenue growth coming primarily from revenue ~~management~~management. While our core storage business remains stable in ~~these segments~~spite of the COVID-19 pandemic, we have experienced some decreases in new storage volume. The impact that the pandemic will have on our future organic storage rental revenue growth remains uncertain and ~~volume growth in our Western European Business~~will be dependent on the severity and ~~Other International Business segments. Within these business segments, we expect these trends to continue into~~duration of the ~~next few years.~~COVID-19 pandemic.

The organic growth rate for service revenue is inherently more volatile than the 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 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~~Global RIM Business and Western European Business segments, as well as continued declines in service revenue activity levels in our North American Data Management Business segment, as the storage business becomes more archival in nature and tape volumes decline.segment. The ~~recent~~ increases in organic service revenue growth rates of 7.6%, 7.1% and 6.1% in the second, third and fourth quarters of 2018 reflect a strong contribution from our secure shredding business, which benefited from higher recycled paper prices, higher destruction activity and acquisitions of customer relationships. Organic service revenue growth declined to 1.8%, negative 2.0%, negative 3.0% and ~~(2.0)%~~negative 0.7% for the first, second, third and ~~second quarter~~fourth quarters of 2019, respectively, reflecting declining recycled paper prices and moderation of destruction activity compared to previous quarters. WeOrganic service revenue growth declined to negative 2.3% in the first quarter of 2020, reflecting continued weakness in recycled paper prices and to a lesser extent, recycled paper volume decline. The severity of future service level declines are currently uncertain and are dependent on the duration and severity of the COVID-19 pandemic, the resulting government and business actions and the duration and strength of any ensuing economic recovery that may follow, specifically within the markets in which we operate and among our customers. As restrictions associated with the COVID-19 pandemic are relaxed, we expect ~~these trends~~our service activity levels to gradually return. However, we expect the declines in organic service revenue growth rates to continue ~~throughout 2019.~~into the second quarter and potentially beyond.

OPERATING EXPENSES

COVID-19

A significant portion of our cost base is fixed, particularly with regard to our storage business. However, at lower service activity levels, we do have a number of options to manage our costs and capital expenditures. In light of the COVID-19 pandemic, we have taken certain actions, which were initiated in late March 2020 but primarily took place in April 2020, including, but not limited to: (i) the termination of nearly all of our temporary and contract workers; (ii) reductions in our full-time and part-time work forces; (iii) the introduction of furloughs, reduced hours or other temporary reduction measures impacting approximately one-third of our global workforce; (iv) the deferral of certain previously planned non-essential capital investments and (v) the implementation of a temporary freeze on future acquisitions. While we have implemented cost savings measures to address the decreased level of service activity, we continue to incur costs, such as labor, vehicle and facility costs for service operations that are not being fully utilized, as well as increased costs due to COVID-19-related actions such as heightened safety and cleaning procedures and the purchase of personal protective equipment for employees. In addition, we can provide no assurance that the cost savings measures we have taken, or may take in future periods, will be sufficient to offset any future service level declines, and we continue to evaluate additional cost saving measures as additional information regarding the COVID-19 pandemic and the related economic downturn become known.

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

Dollar
Change
Actual
Constant
Currency

2019 2018 2019 2018
Labor $ 206,623
$ 207,099
$ (476 ) (0.2 )% 3.0 % 19.4 % 19.5 % (0.1 )%
Facilities 176,950
162,450
14,500
8.9 % 11.9 % 16.6 % 15.3 % 1.3 %
Transportation 41,959
40,084
1,875
4.7 % 7.5 % 3.9 % 3.8 % 0.1 %
Product Cost of Sales and Other 38,277
40,004
(1,727 ) (4.3 )% (0.5 )% 3.6 % 3.8 % (0.2 )%
Significant Acquisition Costs 1,293
1,827
(534 ) (29.2 )% (28.0 )% 0.1 % 0.2 % (0.1 )%
Total Cost of Sales $ 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
														Three Months Ended March 31,												Percentage Change						% of Consolidated Revenues					Percentage Change (Favorable)/ Unfavorable
					Dollar Change				Percentage Change		Actual			Three Months Ended March 31,								Constant Currency				Dollar Change				Actual		% of Consolidated Revenues							Constant Currency
	2019		2018					2019			Actual		2018			2020			2019			Constant Currency							2020				2019						Constant Currency
Labor	$	411,914	$	416,006	Dollar Change			$	(4,092	)		(1.0	)%		2.8	%	19.4	%				19.8	%	(0.4	)%	Dollar Change	$	203,846		Actual		$	205,291		$	(1,445	)		(0.7	)%		1.6	%		19.1	%	19.5	%	(0.4	)%
Facilities	351,669		324,562		27,107				8.4	%		11.7	%		16.6	%	15.4	%		1.2	%	184,532			174,719				9,813				5.6	%	7.6	%		17.3	%		16.6	%		0.7	%
Transportation	82,999		78,357		4,642				5.9	%		9.3	%		3.9	%	3.7	%		0.2	%	38,938			41,040				(2,102		)		(5.1	)%	(3.5	)%		3.6	%		3.9	%		(0.3	)%
Product Cost of Sales and Other	77,873		79,137		(1,264		)		(1.6	)%		2.7	%		3.7	%	3.8	%		(0.1	)%	39,605			39,596				9				—	%	2.6	%		3.7	%		3.8	%		(0.1	)%
Significant Acquisition Costs	2,191		2,123		68				3.2	%		7.8	%		0.1	%	0.1	%		—	%
Total Cost of Sales	$	926,646	$	900,185	$	26,461			2.9	%		6.6	%		43.7	%	42.8	%		0.9	%	$	466,921		$	460,646			$	6,275			1.4	%	3.5	%		43.7	%		43.7	%		—	%

Labor

Labor expenses decreased to ~~19.4%~~19.1% of consolidated revenues in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~19.8%~~19.5% in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The decrease in labor expenses as a percentage of consolidated revenues was primarily driven by ~~improvements across~~lower labor expenses in our ~~North American Records and Information Management~~Global RIM Business ~~North American Data Management Business, Western European Business and Other International Business segments,~~segment, partially attributable to benefits from Project Summit and ongoing cost management ~~initiatives.~~actions. On a constant dollar basis, labor expenses for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 increased by ~~$11.1~~$3.2 million, or ~~2.8%~~1.6%, compared to the prior year period, primarily driven by recent 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 ManagementGlobal RIM Business segment.

Facilities

Facilities expenses increased to ~~16.6%~~17.3% of consolidated revenues in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~15.4%~~16.6% in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The ~~120~~70 basis point increase in facilities expenses as a percentage of consolidated revenues was driven ~~primarily~~ by increases in rent expense, in part due to recent acquisitions in our Global ~~Data Center~~RIM Business segment, as well as property taxes and ~~our Adjacent Businesses operating segment within our Corporate and Other Business segment.~~insurance, partially offset by lower building maintenance costs. On a constant dollar basis, facilities expenses for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 increased by ~~$36.9~~$13.0 million, or ~~11.7%~~7.6%, compared to the prior year ~~period, driven by higher rent expense, insurance costs and building maintenance, in part driven by the acquisitions mentioned above.~~period.

Transportation

Transportation expenses ~~increased~~decreased to ~~3.9%~~3.6% of consolidated revenues in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~3.7%~~3.9% in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The ~~increase~~decrease in transportation expenses as a percentage of consolidated revenues was primarily driven by ~~increases in third party~~lower third-party carrier ~~expenses,~~costs, in part due to ~~recent acquisitions in our Adjacent Businesses operating segment within our Corporate and Other Business segment.~~lower service revenue activity levels. On a constant dollar basis, transportation expenses for the ~~six~~three months ended ~~June 30, 2019 increased~~March 31, 2020 decreased by ~~$7.1~~$1.4 million, or ~~9.3%~~3.5%, compared to the prior year ~~period, primarily driven by acquisitions in our Adjacent Businesses operating segment within our Corporate and Other Business segment.~~period.

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, were 3.7% of consolidated revenues for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to 3.8% in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. On a constant dollar basis, product cost of sales and other increased by ~~$2.0~~$1.0 million, or ~~2.7%~~2.6%, compared to the prior year ~~period, primarily driven by special project costs.~~period.

~~Significant Acquisition Costs~~

Significant Acquisition Costs included in cost of sales were $2.2 million and $2.1 million in the six months ended June 30, 2019 and 2018, respectively, and primarily consisted of employee severance costs and facility integration costs associated with the Recall 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 March 31,											Percentage Change						% of Consolidated Revenues						Percentage Change (Favorable)/ Unfavorable
																																		Percentage Change
					Dollar Change				Percentage Change		Actual			Constant Currency																Dollar Change				Actual			Constant Currency
	2019		2018					2019			Actual		2018				2020						2019						2020					Actual		2019
General and Administrative	$	143,842	$	137,481	Dollar Change			$	6,361			4.6	%	Constant Currency		7.1	%		13.5	%				13.0	%	0.5	%	$	129,198	Dollar Change			$	151,332			Constant Currency	$	(22,134	)		(14.6	)%		(13.2	)%		12.1	%	14.4	%	(2.3	)%
Sales, Marketing & Account Management	62,536		63,537		(1,001		)		(1.6	)%		0.6	%		5.9	%		6.0	%			(0.1	)%
Sales, Marketing and Account Management																							59,459			66,170				(6,711		)		(10.1	)%		(8.8	)%		5.6	%		6.3	%		(0.7	)%
Information Technology	42,029		37,248		4,781				12.8	%		14.5	%		3.9	%		3.5	%		0.4	%	43,879			46,171				(2,292		)		(5.0	)%		(4.0	)%		4.1	%		4.4	%		(0.3	)%
Bad Debt Expense	3,749		5,365		(1,616		)		(30.1	)%		(29.2	)%		0.4	%		0.5	%		(0.1	)%	6,197			5,038				1,159				23.0	%		23.5	%		0.6	%		0.5	%		0.1	%
Significant Acquisition Costs	608		8,594		(7,986		)		(92.9	)%		(92.8	)%		0.1	%		0.8	%		(0.7	)%
Total Selling, General and Administrative Expenses	$	252,764	$	252,225	$	539			0.2	%		2.4	%		23.7	%		23.8	%		(0.1	)%	$	238,733		$	268,711			$	(29,978	)		(11.2	)%		(9.8	)%		22.3	%		25.5	%		(3.2	)%

Six Months Ended
June 30, Percentage Change % of
Consolidated
Revenues Percentage
Change
(Favorable)/
Unfavorable

Dollar
Change Actual Constant
Currency
2019 2018 2019 2018
General and Administrative $ 295,174
$ 281,214
$ 13,960
5.0 % 7.8 % 13.9 % 13.4 % 0.5 %
Sales, Marketing & Account Management 128,706
132,410
(3,704 ) (2.8 )% (0.5 )% 6.1 % 6.3 % (0.2 )%
Information Technology 88,200
76,752
11,448
14.9 % 16.9 % 4.2 % 3.6 % 0.6 %
Bad Debt Expense 8,787
11,713
(2,926 ) (25.0 )% (23.5 )% 0.4 % 0.6 % (0.2 )%
Significant Acquisition Costs 2,456
27,306
(24,850 ) (91.0 )% (90.9 )% 0.1 % 1.3 % (1.2 )%
Total Selling, General and Administrative Expenses $ 523,323
$ 529,395
$ (6,072 ) (1.1 )% 1.2 % 24.7 % 25.2 % (0.5 )%

General and Administrative

General and administrative expenses ~~increased~~decreased to ~~13.9%~~12.1% of consolidated revenues in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~13.4%~~14.4% in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The ~~increase~~decrease in general and administrative expenses as a percentage of consolidated revenues was driven ~~mainly~~ by ~~higher compensation~~benefits from Project Summit and professional fees within the Corporate and Other Business segment, primarily associated with our new global operations support team that is tasked with driving operational improvements, and acquisitions in the Global Data Center Business segment.ongoing cost management actions. On a constant dollar basis, general and administrative expenses for the ~~six~~three months ended ~~June 30, 2019 increased~~March��31, 2020 decreased by ~~$21.4~~$19.6 million, or ~~7.8%~~13.2%, compared to the prior year ~~period, primarily driven by increases in compensation and professional fees related to our global operations support team.~~period.

Sales, Marketing &and Account Management

S~~ales,~~

Sales, marketing and account management expenses decreased to ~~6.1%~~5.6% of consolidated revenues in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to 6.3% in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. 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 lower commissions expense~~benefits from Project Summit and ~~marketing costs.~~ongoing cost management actions. On a constant dollar basis, sales, marketing and account management expenses for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 decreased by ~~$0.6~~$5.7 million, or ~~0.5%~~8.8%, compared to the prior year ~~period, primarily driven by lower marketing costs.~~period.

Information Technology

Information technology expenses ~~increased~~decreased to ~~4.2%~~4.1% of consolidated revenues in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~3.6%~~4.4% in the ~~six~~three months ended ~~June 30, 2018. Information~~March 31, 2019. The decrease in information technology expenses as a percentage of consolidated revenues ~~reflect an increase in professional fees~~was driven by benefits from Project Summit and ~~compensation, primarily related to information security costs and investments in innovation and product development.~~ongoing cost management actions. On a constant dollar basis, information technology expenses for the ~~six~~three months ended ~~June 30, 2019 increased~~March 31, 2020 decreased by ~~$12.7~~$1.8 million, or ~~16.9%~~4.0%, compared to the prior year ~~period, primarily driven by an increase in professional fees and compensation, primarily related to information security costs and investments in innovation and product development.~~period.

Bad Debt Expense

We maintain an allowance for doubtful accounts based on reasonable and supportable forecasts for expected future collectability of our outstanding receivables that is calculated based on our past loss experience, current and prior trends in our aged receivables, current economic and macroeconomic conditions, and specific circumstances of individual receivable balances. We ~~continue to~~continually monitor our customers' payment activity and make adjustments ~~based on their financial condition and in light of historical and expected trends.~~to the allowance as necessary. Bad debt expense for the ~~six~~three months ended ~~June 30, 2019 decreased~~March 31, 2020 increased by ~~$2.7~~$1.2 million on a constant dollar basis compared to the prior year period, primarily driven by ~~lower~~higher bad debt expense ~~associated with~~in our ~~North American Records and Information Management~~Global RIM Business ~~and Other International Business segments.~~segment.

~~Significant Acquisition Costs~~

Significant Acquisition Costs included in selling, general and administrative expenses were $2.5 million and $27.3 million in the six months ended June 30, 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 depreciation 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 lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Depreciation expense ~~increased $3.4~~decreased $0.9 million, or ~~1.5%~~0.8%, on a reported dollar basis for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. 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 ~~$6.6~~$1.0 million, or ~~7.2%~~2.1%, on a reported dollar basis for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the ~~six~~three months ended ~~June 30, 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.March 31, 2019.

~~Consolidated gain on disposal/write-down of property, plant and equipment, net,~~Restructuring Charges

Restructuring Charges for the three ~~and six~~ months ended ~~June 30, 2019 was~~March 31, 2020 were approximately ~~$8.4~~$41.0 million and ~~$7.8 million, respectively.~~ primarily consisted of employee severance costs and professional fees associated with Project Summit.

Intangible impairments

The ~~gain~~intangible impairment charge for the ~~six~~three months ended ~~June 30, 2019 consisted primarily of gains associated with the sale of certain land~~March 31, 2020 was $23.0 million 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)related to the write-down of ~~certain property, plant and equipment in~~goodwill associated with our ~~North American Records and Information Management Business of approximately $3.1 million.~~Fine Arts reporting unit, as discussed above.

OTHER EXPENSES, NET

Interest Expense, Net

Consolidated interest expense, net increased ~~$7.9~~$3.2 million, or ~~3.9%~~3.1%, to ~~$207.8~~$105.6 million in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 from ~~$199.9~~$102.4 million in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. This increase was a result of higher average debt outstanding during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. See Note 45 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our indebtedness.

Other (Income) Expense, Net

Other (income) expense, net consists of the following (in thousands):


	Three Months Ended June 30,						Dollar Change				Six Months Ended June 30,								Dollar Change			Three Months Ended March 31,								Dollar Change
	2019			2018						2019				2018				2020					2019							Dollar Change
Foreign currency transaction (gains) losses, net	$	(19,331	)	$	(18,624	)	Dollar Change	$	(707	)		$	(1,634	)		$	3,161		Dollar Change			$	(4,795	)	$	(37,399	)		$	17,697			$	(55,096	)
Other, net	4,139			(432		)	4,571				1,652				(2,066		)		3,718			(5,327		)		(2,487		)		(2,840		)
	$	(15,192	)	$	(19,056	)	$	3,864			$	18			$	1,095			$	(1,077	)
Other (Income) Expense, Net																						$	(42,726	)		$	15,210			$	(57,936	)

Foreign Currency Transaction (Gains) Losses

We recorded net foreign currency transaction gains of ~~$(1.6)~~$37.4 million in the ~~six~~three months ended ~~June 30,~~March 31, 2020, 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, 2019 on our intercompany balances with and between certain of our subsidiaries.

We recorded net foreign currency transaction losses of $17.7 million in the three months ended March 31, 2019, based on period-end exchange rates. These ~~gains~~losses 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~~

Other, net

Included in Other, net is a gain of approximately $10.0 million recorded in connection with our acquisition of the remaining 75% equity interest in OSG Records Management (Europe) Limited ("OSG" and such acquisition, the "OSG Acquisition"), as our previously held 25% equity investment in OSG was remeasured to fair value at the closing date of the OSG Acquisition, which is 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.~~equity method investments.

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).

~~Other, net~~

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 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report) of approximately $4.2 million. In addition, Other, net for the three and six months ended June 30, 2019 includes the change in estimated fair value of the noncontrolling interests associated with 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 years ending December 31, 2019 and 2018 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 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 and our domestic taxable REIT subsidiaries, 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.

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 %

~~(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:~~EBITDA (in thousands):

Three Months Ended
June 30,
Dollar
Change
Percentage Change
2019 2018
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 $ 350,942
$ 367,555
$ (16,613 ) (4.5 )%
Adjusted EBITDA Margin 32.9 % 34.6 %


	Six Months Ended June 30,						Dollar Change				Percentage Change		Three Months Ended March 31,								Dollar Change			Percentage Change
	2019			2018						2020				2019							Dollar Change			Percentage Change
Income (Loss) from Continuing Operations	122,823			$	131,652		Dollar Change	$	(8,829	)	Percentage Change			(6.7	)%	$	64,892			$	30,476		$	34,416		112.9	%
Income (Loss) from Continuing Operations as a percentage of Consolidated Revenue	5.8		%	6.3		%							6.1		%		2.9		%
Adjusted EBITDA	$	675,448		$	703,130		$	(27,682	)		(3.9	)%	$	363,077			$	324,506			$	38,571		11.9	%
Adjusted EBITDA Margin	31.8		%	33.4		%							34.0		%		30.8		%

Consolidated Adjusted EBITDA for the ~~six~~three months ended ~~June 30, 2019 decreased~~March 31, 2020 increased by ~~$27.7~~$38.6 million, or ~~approximately 3.9%~~11.9%, and consolidated Adjusted EBITDA Margin ~~decreased~~increased by ~~160~~320 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~~due to lower selling, general and ~~higher overhead~~administrative expenses ~~associated with the growth of our data center business.~~reflecting benefits from Project Summit and ongoing cost management actions.

~~(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX~~

Loss from discontinued operations, net of tax was $0.8 million for the six months ended June 30, 2018, primarily related to the costs associated with the Recall Divestments (as discussed in Note 13 to Notes to Consolidated Financial Statements in our Annual Report).

~~NONCONTROLLING INTERESTS~~

For the six months ended June 30, 2019 and 2018, net income attributable to noncontrolling interests resulted in a decrease in net income attributable to IMI of $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~~

Global RIM Business

Three Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 313,355
$ 305,895
$ 7,460
2.4 % 2.8 % 1.8 %
Service 225,918
233,185
(7,267 ) (3.1 )% (2.7 )% (2.1 )%
Segment Revenue $ 539,273
$ 539,080
$ 193
— % 0.4 % 0.1 %
Segment Adjusted EBITDA(1) $ 245,585
$ 244,861
$ 724

Segment Adjusted EBITDA Margin(2) 45.5 % 45.4 %


	Six Months Ended June 30,										Percentage Change								Three Months Ended March 31,												Percentage Change
	Six Months Ended June 30,						Dollar Change				Actual			Constant Currency			Organic Growth		Three Months Ended March 31,								Dollar Change				Actual		Constant Currency		Organic Growth
	2019			2018						2020				Constant Currency		2019											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	620,341		$	610,714		Dollar Change			$	Actual		9,627			1.6	Organic Growth		%		2.0	%		1.6	%	$	590,013			$	575,773		$	14,240		2.5	%	4.5	%	2.1	%
Service	446,312			455,209			(8,897		)		(2.0	)%		(1.5	)%		—	%	366,406				370,110				(3,704		)		(1.0	)%	0.9	%	(1.8	)%
Segment Revenue	$	1,066,653		$	1,065,923		$	730			0.1	%		0.5	%		0.9	%	$	956,419			$	945,883			$	10,536			1.1	%	3.1	%	0.6	%
Segment Adjusted EBITDA(1)	$	469,268		$	470,599		$	(1,331	)										$	391,972			$	365,836			$	26,136
Segment Adjusted EBITDA Margin(2)	44.0		%	44.1		%													41.0		%		38.7		%


(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~~three months ended ~~June 30, 2019,~~March 31, 2020, reported revenue in our ~~North American Records and Information Management~~Global RIM Business segment increased ~~0.1%~~1.1%, compared to the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, due to organic revenue growth ~~offset by~~and the ~~unfavorable~~favorable net impact of acquisitions/dispositions, ~~(due to the IMFS Divestment) and~~partially offset by unfavorable fluctuations in foreign currency exchange rates. Organic revenue growth of ~~0.9%~~0.6% was primarily the result of organic storage rental revenue growth of ~~1.6%~~2.1% driven by revenue ~~management, partially offset by volume decreases.~~management. In addition, ~~flat~~negative organic service revenue growth of 1.8% was driven by lower recycled paper prices and reduced

retrieval/re-file and related transportation activity, partially offset by growth in our secure shredding 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. InThe net impact of acquisitions/divestitures contributed 2.5% to the reported revenue growth rate for the three months ended ~~June 30, 2019, organic service~~March 31, 2020, compared to the prior year period. Foreign currency exchange rate fluctuations decreased our reported revenue growth ~~was negative 2.1% primarily due~~rate for the three months ended March 31, 2020 by 2.0%, compared to ~~recent declines in recycled paper prices and lower destruction activity.~~the prior year period. Adjusted EBITDA ~~margin decreased 10~~Margin increased 230 basis points during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the ~~six months ended June 30, 2018,~~prior year period, primarily driven by ~~higher labor~~lower selling, general and ~~transportation costs in our secure shredding business~~administrative expenses reflecting benefits from Project Summit and ~~increased facility rent expense, partially offset by lower commissions expense.~~ongoing cost management actions.

~~North American~~Global Data ~~Management~~Center Business

Three Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 66,750
$ 68,808
$ (2,058 ) (3.0 )% (2.7 )% (2.1 )%
Service 29,665
31,223
(1,558 ) (5.0 )% (4.7 )% (6.5 )%
Segment Revenue $ 96,415
$ 100,031
$ (3,616 ) (3.6 )% (3.4 )% (3.5 )%
Segment Adjusted EBITDA(1) $ 53,068
$ 55,280
$ (2,212 )
Segment Adjusted EBITDA Margin(2) 55.0 % 55.3 %

Six Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 133,322
$ 138,054
$ (4,732 ) (3.4 )% (3.1 )% (2.5 )%
Service 59,840
61,941
(2,101 ) (3.4 )% (3.1 )% (4.9 )%
Segment Revenue $ 193,162
$ 199,995
$ (6,833 ) (3.4 )% (3.1 )% (3.2 )%
Segment Adjusted EBITDA(1) $ 103,620
$ 109,132
$ (5,512 )
Segment Adjusted EBITDA Margin(2) 53.6 % 54.6 %



	Three Months Ended March 31,								Percentage Change
	Three Months Ended March 31,						Dollar Change		Actual		Constant Currency		Organic Growth
	2020			2019			Dollar Change		Actual		Constant Currency		Organic Growth
Storage Rental	$	64,595		$	59,718		$	4,877	8.2	%	8.6	%	8.7	%
Service	2,762			1,818			944		51.9	%	52.3	%	53.4	%
Segment Revenue	$	67,357		$	61,536		$	5,821	9.5	%	9.9	%	9.9	%
Segment Adjusted EBITDA(1)	$	30,895		$	26,011		$	4,884
Segment Adjusted EBITDA Margin(2)	45.9		%	42.3		%


(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~~three months ended June 30, 2019, reported revenue in our North American Data Management Business segment decreased 3.4%, compared to the six months ended June 30, 2018, primarily due to negative organic revenue growth. The negative organic revenue growth of 3.2% was primarily attributable to a decline in organic service revenue growth of 4.9% due to continued declines in service revenue activity levels as the business becomes more archival in nature and tape volumes decrease, as well as a decline in organic storage rental revenue of 2.5%, primarily attributable to volume decreases, partially offset by the impact of revenue management. Adjusted EBITDA margin decreased 100 basis points during the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily associated with investments in new products and services, as well as lower revenue not being offset by lower fixed costs.

~~Western European Business~~

Three Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 78,554
$ 82,439
$ (3,885 ) (4.7 )% 0.8 % 2.4 %
Service 48,773
51,001
(2,228 ) (4.4 )% 1.0 % 1.2 %
Segment Revenue $ 127,327
$ 133,440
$ (6,113 ) (4.6 )% 0.9 % 1.9 %
Segment Adjusted EBITDA(1) $ 44,163
$ 46,594
$ (2,431 )
Segment Adjusted EBITDA Margin(2) 34.7 % 34.9 %

Six Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 159,249
$ 166,391
$ (7,142 ) (4.3 )% 2.0 % 2.8 %
Service 96,831
101,124
(4,293 ) (4.2 )% 2.0 % 2.1 %
Segment Revenue $ 256,080
$ 267,515
$ (11,435 ) (4.3 )% 2.0 % 2.5 %
Segment Adjusted EBITDA(1) $ 83,372
$ 90,560
$ (7,188 )
Segment Adjusted EBITDA Margin(2) 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, 2019, reported revenue in our Western European Business segment decreased 4.3%, compared to the six months ended June 30, 2018, due to unfavorable fluctuations in foreign currency exchange rates, partially offset by organic revenue growth. Organic revenue growth was 2.5%, primarily attributable to organic storage rental revenue growth of 2.8%, primarily associated with volume increases and, to a lesser extent, revenue management, as well as organic service revenue growth of 2.1%, reflecting higher destruction activity. For the six months ended June 30, 2019, foreign currency exchange rate fluctuations decreased our reported revenues for the Western European Business segment by 6.3% compared to the prior year period due to the weakening of the British pound sterling and Euro against the United States dollar. Adjusted EBITDA margin decreased 130 basis points during the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily driven by higher facilities costs, compensation and higher professional fees. The higher facilities costs reflect increased rent and utility costs, partially offset by lower property taxes.

~~Other International Business~~

Three Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 128,898
$ 129,611
$ (713 ) (0.6 )% 7.0 % 3.7 %
Service 70,925
77,916
(6,991 ) (9.0 )% (0.4 )% (2.0 )%
Segment Revenue $ 199,823
$ 207,527
$ (7,704 ) (3.7 )% 4.3 % 1.6 %
Segment Adjusted EBITDA(1) $ 58,749
$ 60,452
$ (1,703 )
Segment Adjusted EBITDA Margin(2) 29.4 % 29.1 %

Six Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 258,371
$ 261,358
$ (2,987 ) (1.1 )% 7.8 % 4.2 %
Service 142,408
156,936
(14,528 ) (9.3 )% 0.4 % (1.3 )%
Segment Revenue $ 400,779
$ 418,294
$ (17,515 ) (4.2 )% 5.1 % 2.1 %
Segment Adjusted EBITDA(1) $ 116,873
$ 121,199
$ (4,326 )
Segment Adjusted EBITDA Margin(2) 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, 2019, reported revenue in our Other International Business segment decreased 4.2% compared to the six months ended June 30, 2018, due to unfavorable fluctuations in foreign currency exchange rates, partially offset by organic revenue growth and the favorable impact of acquisitions/divestitures. Organic revenue growth was 2.1%, supported by 4.2% organic storage rental revenue growth, primarily due to volume increases and, to a lesser extent, revenue management, partially offset by negative 1.3% organic service revenue growth, primarily due to a decrease in project activity. The net impact of acquisitions/divestitures contributed 3.0% to reported revenue growth for the six months ended June 30, 2019, compared to the prior year period. For the six months ended June 30, 2019, foreign currency exchange rate fluctuations decreased our reported revenues for the Other International Business segment by 9.3% compared to the prior year period primarily due to the weakening of the Australian dollar and Brazilian real against the United States dollar. Adjusted EBITDA margin increased 20 basis points for the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily due to compensation growing at a lower rate than revenue and a decrease in transportation costs, partially offset by higher facilities costs, mainly rent expense and building maintenance costs.

~~Global Data Center Business~~

Three Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 60,582
$ 51,945
$ 8,637
16.6 % 17.2 % 8.4 %
Service 1,709
2,950
(1,241 ) (42.1 )% (42.1 )% (45.4 )%
Segment Revenue $ 62,291
$ 54,895
$ 7,396
13.5 % 14.0 % 5.5 %
Segment Adjusted EBITDA(1) $ 27,641
$ 24,901
$ 2,740

Segment Adjusted EBITDA Margin(2) 44.4 % 45.4 %

Six Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 120,300
$ 97,440
$ 22,860
23.5 % 23.9 % 5.7 %
Service 3,527
4,058
(531 ) (13.1 )% (13.1 )% (23.7 )%
Segment Revenue $ 123,827
$ 101,498
$ 22,329
22.0 % 22.4 % 4.5 %
Segment Adjusted EBITDA(1) $ 53,652
$ 45,691
$ 7,961

Segment Adjusted EBITDA Margin(2) 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, 2019,~~March 31, 2020, reported revenue in our Global Data Center Business segment increased ~~22.0%~~9.5% compared to the ~~six~~three months ended ~~June 30, 2018, primarily~~March 31, 2019, due to the impact of acquisitions (see Note 6 of Notes to Consolidated Financial Statements included in our Annual Report for additional acquisition details). The impact of acquisitions contributed 17.9% to the reportedorganic revenue growth, ~~rate~~partially offset by unfavorable fluctuations in ~~our Global Data Center Business segment for the six months ended June 30, 2019 compared to the prior year period.~~foreign currency exchange rates. Organic storage rental revenue growth in our Global Data Center Business segment was ~~5.7%~~8.7% for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 compared to the prior year period, ~~primarily related to a $1.7 million lease modification fee that benefited organic storage rental revenue growth by 1.7%. For~~reflecting increased customer leasing activity. Adjusted EBITDA Margin increased 360 basis points during the three months ended ~~June 30, 2019 the impact of the modification fee benefited organic storage rental revenue growth by 3.2%. Adjusted EBITDA increased $8.0 million for the six months ended June 30, 2019~~March 31, 2020 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 that operate at lower margins and increased overhead to support the growth of this business.ongoing cost management actions.

Corporate and Other Business

Three Months Ended
June 30, Percentage Change

Dollar
Change
Actual
Constant
Currency

Organic
Growth
2019 2018
Storage Rental $ 21,149
$ 16,741
$ 4,408
26.3 % 27.6 % 3.0 %
Service 20,629
9,109
11,520
126.5 % 132.5 % 14.9 %
Segment Revenue $ 41,778
$ 25,850
$ 15,928
61.6 % 64.2 % 7.1 %
Segment Adjusted EBITDA(1) $ (78,264 ) $ (64,533 ) $ (13,731 )
Segment Adjusted EBITDA(1) as a percentage of Consolidated Revenue (7.3 )% (6.1 )%


	Six Months Ended June 30,										Percentage Change								Three Months Ended March 31,												Percentage Change
	Six Months Ended June 30,						Dollar Change				Actual			Constant Currency			Organic Growth		Three Months Ended March 31,								Dollar Change				Actual		Constant Currency		Organic Growth
	2019			2018						2020				Constant Currency		2019											Dollar Change				Actual		Constant Currency		Organic Growth
Storage Rental	$	40,679		$	32,631		Dollar Change			$	Actual		8,048			24.7	Organic Growth		%		26.0	%		4.8	%	$	28,939			$	27,483		$	1,456		5.3	%	5.5	%	8.1	%
Service	39,590			17,425			22,165				127.2	%		135.7	%		13.4	%	16,016				18,961				(2,945		)		(15.5	)%	(14.8	)%	(17.1	)%
Segment Revenue	$	80,269		$	50,056		$	30,213			60.4	%		63.5	%		7.7	%	$	44,955			$	46,444			$	(1,489	)		(3.2	)%	(2.8	)%	(2.2	)%
Segment Adjusted EBITDA(1)	$	(151,337	)	$	(134,051	)	$	(17,286	)										$	(59,790	)		$	(67,341	)		$	7,551
Segment Adjusted EBITDA(1) as a percentage of Consolidated Revenue	(7.1		)%	(6.4		)%													(5.6		)%		(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~~

For the ~~six~~three months ended ~~June 30, 2019, Adjusted EBITDA~~March 31, 2020, reported revenue in ~~the Corporate and Other Business segment as a percentage of consolidated revenues decreased 70 basis points compared to the six months ended June 30, 2018. Adjusted EBITDA in the~~our Corporate and Other Business segment decreased ~~$17.3 million in the six months ended June 30, 2019~~3.2% compared to the ~~six~~prior year period, primarily due to negative organic service revenue growth. The negative service revenue organic growth reflects lower service activity levels in our Fine Arts business. Adjusted EBITDA in our Corporate and Other Business segment increased $7.6 million for the three months ended ~~June 30, 2018, primarily driven by higher compensation~~March 31, 2020 compared to the prior year period reflecting benefits from Project Summit 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.ongoing cost management actions.

Liquidity and Capital Resources

COVID-19

While we have broad geographic and customer diversification with operations in more than 50 countries, and no single customer accounting for more than 1% of our revenue during the three months ended March 31, 2020, COVID-19 is a global pandemic impacting numerous industries and geographies. While we do not currently believe that the implications of the COVID-19 pandemic have had a material adverse impact on our ability to collect our accounts receivable, global economic conditions related to the COVID-19 pandemic may have a material adverse effect on our customers, which could impact our future ability to collect our accounts receivable. We continue to monitor the credit worthiness of our customers and customer payment trends, as well as the related impact on our liquidity.

Project Summit

As disclosed above, in October 2019, we announced Project Summit. We now estimate that the implementation of Project Summit will result in total costs of $450.0 million. During the three months ended March 31, 2020, we incurred approximately $42.3 million of costs related to Project Summit which were comprised of $41.0 million of Restructuring Charges, primarily related to employee severance costs and professional fees, and $1.3 million of capital expenditures.

Cash Flows

The following is a summary of our cash balances and cash flows (in thousands) as of and for the ~~six~~three months ended ~~June 30,~~March 31,

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



	2020			2019
Cash Flows from Operating Activities - Continuing Operations	$	125,415		$	117,067
Cash Flows from Investing Activities - Continuing Operations	(231,171		)	(311,217		)
Cash Flows from Financing Activities - Continuing Operations	73,758			187,736
Cash and Cash Equivalents, including Restricted Cash, End of Period	152,684			161,475

a. Cash Flows from Operating Activities

For the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, net cash flows provided by operating activities increased by ~~$35.9~~$8.3 million compared to the prior year period, primarily due to a decrease in cash used in working capital of ~~$40.5~~$13.1 million, primarily related to the timing of collections of accounts receivable and certain prepaid and accrued expenses, partially offset by a decrease in net income (including non-cash charges) of ~~$4.6~~$4.8 million.

b. Cash Flows from Investing Activities

Our significant investing activities during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 are highlighted below:

We paid cash for acquisitions (net of cash acquired) of ~~$44.7~~$118.1 million, primarily funded by borrowings under our revolving credit facility (the "Revolving Credit Facility").

We paid cash for capital expenditures of ~~$367.1~~$97.1 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 isare included in the Capital Expenditures section below.

We acquired customer relationships and incurred both (i) customer inducements (which consist primarily of permanent withdrawal 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~~three months ended ~~June 30, 2019~~March 31, 2020 of ~~$33.4~~$1.7 million, ~~$5.8~~$4.3 million and ~~$51.3~~$11.1 million, respectively.

~~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.~~

c. Cash Flows from Financing Activities

Our significant financing activities during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 included:

Net proceeds of ~~$395.2~~$268.7 million primarily associated with ~~the~~ borrowings ~~and repayments on~~under our Revolving Credit Facility.

Payment of dividends in the amount of ~~$353.4~~$181.3 million on our common stock.

Capital Expenditures

The following table presents our capital spend for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ organized by the type of the spending as described in our Annual ~~Report:~~Report (in thousands):


	Six Months Ended June 30,					Three Months Ended March 31,

Nature of Capital Spend (in thousands)	2019		2018
Nature of Capital Spend						2020		2019
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
Real Estate						$	17,431	$	14,836
Non-Real Estate						6,739		8,825
Data Center						36,952		131,078
Innovation~~(1)~~	10,680		4,587			99		4,781
Total Growth Investment Capital Expenditures	305,302		157,763			61,221		159,520
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
Real Estate						7,435		10,699
Non-Real Estate						4,120		4,496
Data Center						1,449		662
Total Recurring Capital Expenditures	43,430		39,793			13,004		15,857
Total Capital Spend (on accrual basis)	348,732		197,556			74,225		175,377
Net increase (decrease) in prepaid capital expenditures	410		(1,733		)	1,335		1,069
Net decrease (increase) in accrued capital expenditures	17,989		21,778			21,584		8,319
Total Capital Spend (on cash basis)	$	367,131	$	217,601		$	97,144	$	184,765

~~For the year ending December 31, 2019, excluding~~

Excluding capital expenditures associated with potential future acquisitions, opportunistic real estate investments and capital expenditures associated with ~~the integrations of Recall and IODC,~~Project Summit, we expect our recurring capital expenditures on real estate and non-real estate, as well as non-real estate growth investment capital expenditures, to be approximately $90.0 million to $110.0 million, our capital expenditures on our Global Data Center Business to be approximately $275.0 million and our capital expenditures on real estate growth investment and innovation to be approximately $90.0 million to $115.0 million in the ~~following:~~year ending December 31, 2020.


~~(1)~~	~~Growth investment capital expenditures on real estate and innovation to be approximately $175.0 million;~~


~~(2)~~	~~Recurring capital expenditures on real estate and non-real estate, as well as non-real estate growth investment capital expenditures, to be approximately $145.0 million to $155.0 million; and~~


~~(3)~~	~~Capital expenditures on our data center business to be approximately $300.0 million.~~

Dividends

~~See Note 8~~

On May 5, 2020, we declared a dividend to ~~Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for a listing~~our stockholders of ~~dividends that were declared during the first six months~~record as of ~~2019 and fiscal year 2018.~~June 15, 2020 of $0.6185 per share, payable on July 2, 2020.

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~~March 31, 2020 is related to cash and cash equivalents. See Note ~~2.h.~~2.i. to Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report for information on our money market funds and time deposits.

Long-term debt as of ~~June 30, 2019~~March 31, 2020 is as follows (in thousands):


	June 30, 2019									March 31, 2020
	Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount			Debt (inclusive of discount)			Unamortized Deferred Financing Costs			Carrying Amount
Revolving Credit Facility	$	1,181,376		$	(12,548	)	$	1,168,828		$	645,603		$	(11,205	)	$	634,398
Term Loan A	234,375			—			234,375			225,000			—			225,000
Term Loan B	689,782			(8,118		)	681,664			684,702			(7,181		)	677,521
Australian Dollar Term Loan	230,048			(2,691		)	227,357			197,454			(1,937		)	195,517
UK Bilateral Revolving Credit Facility	177,762			(2,030		)	175,732			173,246			(1,557		)	171,689
4³/₈% Senior Notes due 2021(1)	500,000			(3,295		)	496,705			500,000			(2,006		)	497,994
6% Senior Notes due 2023(1)	600,000			(4,576		)	595,424			600,000			(3,752		)	596,248
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
5³/₈% CAD Senior Notes due 2023 (the "CAD Notes")										176,414			(1,776		)	174,638
5³/₄% Senior Subordinated Notes due 2024 (the "5³/₄% Notes)(1)										1,000,000			(6,065		)	993,935
3% Euro Senior Notes due 2025(1)	341,128			(3,781		)	337,347			330,016			(3,302		)	326,714
3⁷/₈% GBP Senior Notes due 2025 (the "GBP Notes")	507,891			(6,074		)	501,817			494,988			(5,218		)	489,770
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			(11,731		)	988,269
5³/₈% Senior Notes due 2026 (the "5³/₈% Notes")										250,000			(2,649		)	247,351
4⁷/₈% Senior Notes due 2027 (the "4⁷/₈% Notes due 2027")(1)										1,000,000			(10,664		)	989,336
5¹/₄% Senior Notes due 2028 (the "5¹/₄% Notes")(1)	825,000			(10,333		)	814,667			825,000			(9,447		)	815,553
4⁷/₈% Senior Notes due 2029 (the "4⁷/₈% Notes due 2029")(1)										1,000,000			(13,742		)	986,258
Real Estate Mortgages, Financing Lease Liabilities and Other	559,622			(425		)	559,197			494,573			(297		)	494,276
Accounts Receivable Securitization Program	254,962			(149		)	254,813			270,562			(241		)	270,321
Mortgage Securitization Program	50,000			(1,055		)	48,945			50,000			(945		)	49,055
Total Long-term Debt	8,592,918			(79,208		)	8,513,710			8,917,558			(81,984		)	8,835,574
Less Current Portion	(123,527		)	—			(123,527		)	(127,557		)	—			(127,557		)
Long-term Debt, Net of Current Portion	$	8,469,391		$	(79,208	)	$	8,390,183		$	8,790,001		$	(81,984	)	$	8,708,017


(1)	Collectively, the "Parent Notes".

See Note 4 to Notes to Consolidated Financial Statements included in our Annual Report and Note 45 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our long-term debt.

Accounts Receivable Securitization Program

On March 31, 2020, we amended the Accounts Receivable Securitization Program to (i) increase the maximum amount available from $275.0 million to $300.0 million and (ii) extend the maturity date from July 30, 2020 to July 31, 2021, at which point all obligations become due. As a result, the full amount outstanding is classified within the long-term portion of long-term debt in our Condensed Consolidated Balance Sheet as of March 31, 2020. The interest rate in effect as of March 31, 2020 was 2.0%. The full amount outstanding under the Accounts Receivable Securitization Program is classified within the current portion of long-term debt in our Condensed Consolidated Balance Sheet as of December 31, 2019. The maximum available borrowings is limited by eligible accounts receivable, as defined under the terms of the Accounts Receivable Securitization Program.

Letters of Credit

As of March 31, 2020, we had outstanding letters of credit totaling $35.2 million, of which $4.9 million reduce our borrowing capacity under the Revolving Credit Facility. The letters of credit expire at various dates between April 2020 and January 2033.

Debt Covenants

The Credit Agreement (as defined in Note 5 to Notes of Condensed Consolidated Financial Statements included in this Quarterly Report), our bond 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 bond indentures or other agreements governing our indebtedness. The Credit Agreement requires that we satisfy a fixed charge coverage ratio, net total lease adjusted leverage ratio and net secured debt lease adjusted leverage ratio on a quarterly basis and our bond indentures require that, among other things, we satisfy a bond leverage ratio (not lease adjusted), as a condition to taking actions such as paying dividends and incurring indebtedness.

The Credit Agreement uses EBITDAR-based calculations and the bond indentures use EBITDA-based calculations as the primary measures of financial performance ~~including~~for purposes of calculating leverage and fixed charge coverage ratios. The bond indenture EBITDA-based calculations include our consolidated subsidiaries, other than those we have designated as “Unrestricted Subsidiaries” as defined in the bond indentures. Generally, the Credit Agreement and the bond indentures use a trailing four fiscal quarter basis for purposes of the relevant calculations and require certain adjustments and exclusions for purposes of those calculations which make the calculation of financial performance for purposes of those calculations under the Credit Agreement and bond indentures not directly comparable to Adjusted EBITDA as presented herein. These adjustments can be significant. The calculation of financial performance under the Credit Agreement and the 4⁷/₈% Notes due 2029 includes (subject to specified exceptions and caps), for example, adjustments for non-cash charges and for expected benefits associated with (i) completed acquisitions, (ii) certain executed lease agreements associated with our data center business that have yet to commence, and (iii) restructuring and other strategic initiatives, such as Project Summit. The calculation of financial performance under our other bond indentures includes, for example, adjustments for non-cash charges and for expected benefits associated with (i) completed acquisitions, and (ii) to exclude the effects of events that are extraordinary, unusual or non-recurring, such as the COVID-19 pandemic.

Our leverage and fixed charge coverage ratios under the Credit Agreement as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, as well as our leverage ratio under our indentures as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows:


	June 30, 2019	December 31, 2018	Maximum/Minimum Allowable	March 31, 2020	December 31, 2019	Maximum/Minimum Allowable
Net total lease adjusted leverage ratio	5.8	5.6	Maximum allowable of 6.5	5.6	5.7	Maximum allowable of 6.5
Net secured debt lease adjusted leverage ratio	2.8	2.6	Maximum allowable of 4.0	2.4	2.3	Maximum allowable of 4.0
Bond leverage ratio (not lease adjusted)	6.1	5.8	Maximum allowable of 6.5-7.0(1)	5.9	5.9	Maximum allowable of 6.5-7.0(1)
Fixed charge coverage ratio	2.2	2.2	Minimum allowable of 1.5	2.2	2.2	Minimum allowable of 1.5

(1)

The maximum ~~allowable~~ leverage ratio permitted under our indentures for the 4⁷/₈% Notes due 2029, the 4⁷/₈% Notes due 2027, the GBP Notes and the 5¹/₄% Notes is 7.0, while the maximum ~~allowable~~ leverage ratio permitted 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~~permitted ratio under our indentures and still remain in compliance with the covenant.

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.

Supplemental Guarantor Information

In March 2020, the SEC released Rule Release No. 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities ("Rule 33-10762”). Rule 33-10762 simplifies the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rules 3-10 and 3-16, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities (which we previously included within the notes to our financial statements included in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q) if certain conditions are met. The ~~Market (ATM)~~ amendments in Rule 33-10762 are generally effective for filings on or after January 4, 2021, with early application permitted. We adopted the new disclosure requirements permitted under Rule 33-10762 effective for the period ending March 31, 2020.

The Parent Notes, the CAD Notes, the GBP Notes, and the 5³/₈% Notes (collectively, the "Notes") are guaranteed on an unsecured basis by IMI's wholly owned U.S. subsidiaries that represent the substantial majority of its U.S. operations (the "Guarantors"). In addition, IMI guarantees the CAD Notes, which were issued by Iron Mountain Canada Operations ULC ("Canada Company"), the GBP Notes, which were issued by Iron Mountain (UK) PLC ("IM UK"), and the 5³/₈% Notes, which were issued by Iron Mountain US Holdings, Inc., which is one of the Guarantors. The guarantees of the Notes by the Guarantors and IMI are joint and several and full and unconditional. IMI's subsidiaries that do not guarantee the Parent Notes, the CAD Notes, the GBP Notes, and the 5³/₈% Notes are referred to below as the Non-Guarantors.

The Notes and the guarantees thereof, other than the 5³/₄% Notes and the guarantees thereof, are unsecured senior debt obligations and rank pari passu in right of payment with all existing and future senior debt of IMI and the Guarantors (and Canada Company and IM UK in the case of the CAD Notes and the GBP Notes, respectively) and rank senior in right of payment to all existing and future subordinated debt of IMI and the Guarantors (and Canada Company and IM UK in the case of the CAD Notes and the GBP Notes, respectively). The 5³/₄% Notes and guarantees thereof are unsecured senior subordinated obligations and rank behind all of IMI's and the Guarantors' current and future senior indebtedness, pari passu with IMI's and the Guarantors' future senior subordinated indebtedness and senior in right of payment to all existing and future subordinated debt of IMI and the Guarantors. The Notes and the guarantees by the Guarantors are effectively subordinated to IMI's, Canada Company's, IM UK's and the Guarantors' secured indebtedness, to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to the indebtedness and other liabilities of the Non-Guarantors. The Non-Guarantors are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the Notes, or to make any funds available therefor. Any right that IMI or the Guarantors have to receive any assets of any of the Non-Guarantors upon the bankruptcy, liquidation or reorganization of any Non-Guarantor, and, consequently, the rights of holders of the Notes to realize proceeds from the bankruptcy, liquidation or reorganization of any Non-Guarantor, would be effectively subordinated to the claims of such Non-Guarantors' creditors, including trade creditors, and holders of preferred equity interests, if any, of such Non-Guarantor. Accordingly, in the event of a bankruptcy, liquidation or reorganization of any of the Non-Guarantors, the Non-Guarantors will pay the holders of their debts, including trade creditors, and holders of preferred equity interests, if any, before they will be able to distribute any of their assets to IMI or any of the Guarantors.

The indentures governing the Notes (the "Indentures") generally provide that the guarantees of a Guarantor will automatically be released, in the event certain conditions as defined in the Indentures being met, including, but not limited to, (i) the sale or other disposition of capital stock or all or substantially all of the assets of a Guarantor by way of consolidation, merger or otherwise to a person that is not (either before or after giving effect to such transaction) IMI or a restricted subsidiary, as defined in the applicable Indenture; and (ii) if IMI designates any restricted subsidiary that is a Guarantor as an unrestricted subsidiary in accordance with the terms of the applicable Indenture.

The following tables present summarized financial information for IMI and the Guarantor entities, on a combined basis after elimination of (i) intercompany transactions and balances among IMI and the Guarantor entities and (ii) equity in earnings from, and any investments in, any subsidiary that is a Non-Guarantor:



	March 31, 2020		December 31, 2019
Current Assets(1)	$	702,492	$	675,960
Non-Current Assets	7,743,441		7,805,611
Current Liabilities	986,766		1,048,650
Non-Current Liabilities	7,897,015		7,680,961



	Three Months Ended March 31, 2020
Total Revenues(2)	$	661,755
Total Operating Expenses(3)	598,321
Operating Income	63,434
(Loss) Income from Continuing Operations	(9,146		)
Net (Loss) Income	(9,146		)
Net (Loss) Income Attributable to Iron Mountain Incorporated	(9,146		)


(1)	Current assets include intercompany receivables due from the Non-Guarantors of approximately $333.7 million and $319.8 million as of March 31, 2020 and December 31, 2019, respectively.


(2)	Included in total revenues during the three months ended March 31, 2020 are revenues of approximately $1.2 million generated from the Non-Guarantors.


(3)	Included in total operating expenses during the three months ended March 31, 2020 are cost of sales of $4.8 million incurred in their transactions with the Non-Guarantors.

Derivative Instruments

In July 2019, we entered into forward-starting interest rate swap agreements to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness once our current interest rate swap agreements expire in March 2022. The forward-starting interest rate swap agreements have $350.0 million in notional value, commence in March 2022 and expire in March 2024. Under the swap agreements we will receive variable rate interest payments based upon one-month LIBOR, in exchange for the payment of fixed interest rate payments at the rates specified in the interest rate swap agreements. We have designated these interest rate swap agreements as cash flow hedges.

See Note 3 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information on our derivative instruments.

Equity ~~Program~~Financing

As described in greater detail in Note 12 to Notes to Consolidated Financial Statements included in our Annual Report, we entered into a 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~~During the three months ended March 31, 2020, there were no shares of common stock sold under the At ~~the Market (ATM) Equity Program during the six months ended June 30, 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.~~Program. As of ~~June 30, 2019,~~March 31, 2020, 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.

~~Forward-Starting Interest Rate Swap Agreements~~

Acquisitions

In July 2019, we entered into forward-starting interest rate swap agreements to limit our exposure to changes in interest rates on a portion of our 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 forward-starting interest rate swap agreements have $350.0 million in notional value, commence in March 2022 and expire in March 2024. Under the swap agreements we will receive variable rate interest payments based upon one-month LIBOR, in exchange for the payment of fixed interest rate payments at the rates specified in the interest rate swap agreements. We have designated these interest rate swap agreements as cash flow hedges beginning in the third quarter of 2019.

~~Acquisitions~~

See Note 34 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for information regarding our ~~2019~~2020 acquisitions.

~~Included~~a. OSG Acquisition

On January 9, 2020, we completed the OSG Acquisition for cash consideration of approximately $95.5 million. The OSG Acquisition enabled us to extend our Global RIM Business in ~~Significant~~Russia, Ukraine, Kazakhstan, Belarus, and Armenia. The results of OSG are fully consolidated within our condensed consolidated financial statements from the closing date of the OSG Acquisition.

b. Glenbeigh Acquisition ~~Costs are certain costs associated with~~

On February 17, 2020, in order to enhance our existing operations in the ~~Recall Transaction~~United Arab Emirates, we acquired Glenbeigh Records Management DWC-LLC, a storage and records management company, for total cash consideration of 107.0 million United Arab Emirates dirham (or approximately $29.1 million, based upon the exchange rate between the United Arab Emirates dirham and the ~~IODC Transaction. This amount consists~~United States dollar on the closing date of ~~(i) Significant Acquisition Costs~~the acquisition).

c. MakeSpace Capital Contribution

In the second quarter of 2020, we committed to participate in a round of equity funding for MakeSpace LLC (the “MakeSpace JV”) whereby we would contribute $36.0 million of the $45.0 million being raised (the “Additional Investment”). Our first contribution of the Additional Investment of $7.0 million was made in May 2020. We have committed to make the remaining contributions as follows: $3.0 million during the fourth quarter of 2020 and ~~(ii) capital expenditures~~then an additional $6.5 million in each of January 2021, April 2021, July 2021 and October 2021. Prior to ~~integrate Recall with~~the Additional Investment, our ~~existing operations. We currently estimate total acquisition and integration expenditures associated with~~equity interest in the ~~Recall Transaction and acquisition expenditures associated with~~MakeSpace JV was approximately 34% (the "Initial MakeSpace Investment"), which we account for as an equity method investment. After the ~~IODC Transaction to~~Additional Investment, our equity interest in the MakeSpace JV will be approximately ~~$405.0 million, the substantial majority of which was incurred prior to the end of 2018.~~46%.

The carrying value of the Initial MakeSpace Investment at March 31, 2020 and December 31, 2019 was $14.3 million and $18.6 million, respectively, and is presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheets.

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 (in thousands):

Cumulative Total Through
June 30, 2019

Six Months Ended
June 30, 2019

Six Months Ended
June 30, 2018
Significant Acquisition Costs $ 319,171
$ 4,647
$ 29,429
Recall Capital Expenditures 74,890
1,353
7,245
Total $ 394,061
$ 6,000
$ 36,674

Contractual Obligations

We expect to meet our cash flow requirements for the next twelve months by utilizing cash on hand, cash generated from operations, 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 resources described above. We are currently operating above our long-term targeted leverage ratio and expect to reduce our leverage ratio over time through business growth and effective capital allocation 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, 2019~~March 31, 2020 (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 that occurred during the quarter ended ~~June 30, 2019~~March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In March 2020, many of our employees began working remotely due to the COVID-19 pandemic. We have not implemented any material changes in our internal control over financial reporting due to the changes in the way we are working. We are monitoring and assessing the effects of the COVID-19 pandemic to determine any potential impacts on the design and operating effectiveness of our internal controls over financial reporting.

Part II. Other Information

Item 1A. Risk Factors

We face many risks. You should carefully consider the risks and uncertainties described below and under “Forward Looking Statements” in this Quarterly Report on Form 10-Q as well as in Part I, Item 1A under the heading “Risk Factors” and the information contained under the heading “Cautionary Note Regarding Forward Looking Statements” in our Annual Report, and the other information included or incorporated by reference in this Quarterly Report on Form 10-Q and in other documents that we file with the SEC from time to time before making an investment decision regarding our securities. If any of the events or circumstances described in such risks and uncertainties actually occurs, our businesses, financial condition or results of operations could suffer and the trading price of our debt or equity securities could decline.

The COVID-19 pandemic may have a material adverse effect on our business operations, results of operations, cash flows and financial position.

Our service revenues, and to a lesser extent, our storage rental revenues, have been and may continue to be adversely affected.

As a result of the COVID-19 pandemic, U.S. federal, state and local and foreign governments have placed restrictions on physical movement, travel and certain other activities. In response, we have temporarily closed certain of our offices and facilities. While in certain geographies with governmental restrictions in place, we have been designated as an essential business and are permitted to continue to serve certain industries, such as the healthcare and finance sectors, we are not able to serve all our customers in these geographies. In addition, many of our customers are implementing stay-at-home measures and other restrictions that reduce the demand for our routine services. As a result, we have experienced, and may continue to experience, a decrease in our service activity and revenues, particularly in regions where governments have imposed restrictions on continued business operations. While we have implemented cost savings measures to address this decrease, we continue to incur costs for service operations that are not being fully utilized. Thus far, the COVID-19 pandemic has had a minor negative impact on our storage rental revenues, though we have experienced a slowdown in both organic volume growth and in onboarding volumes from new sales.

We expect these trends to continue during the COVID-19 pandemic. In addition, our customers’ shift from paper and tape storage to alternative technologies may accelerate as a result of the pandemic.

If our customers’ liquidity is impacted by the COVID-19 pandemic, it may have an adverse effect on our financial situation.

While the COVID-19 pandemic so far has had limited impact on cash collections from our customers or on our ability to expand on our revenue management program, this may change if our customers’ liquidity situation becomes more constrained based on a continuation or worsening of current economic conditions. Our inability to collect cash from our customers or expand on our revenue management program could have a material adverse impact on our own liquidity and financial situation.

Our employees’ working from home arrangements and travel restrictions could negatively impact our business operations.

Many of our employees are currently working remotely, and some of our operations are being run with limited personnel. We also have implemented travel restrictions for our employees, which have disrupted how we operate our business. An extended period of remote work arrangements or operating with limited personnel could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, impair our ability to manage our business and negatively impact our internal controls over financial reporting.

Some of the risks we faced before the emergence of COVID-19 have been, and may continue to be, exacerbated as a result of the COVID-19 pandemic.

Our business is subject to numerous risks as discussed in “Item 1A. Risk Factors” in our Annual Report. Some of these risks have been or may be exacerbated by the effects of the COVID-19 pandemic. For example, our ability to execute on our growth strategy in general and grow our data center business may be negatively impacted by delays in investments in acquisitions, capital and other expenditures, as well as delays in our data center construction. Furthermore, if as a result of the COVID-19 pandemic our revenues, cash flows and/or Adjusted EBITDA continue to decline or we incur additional indebtedness, we may be unable to make required payments on our debt or to satisfy the financial and other covenants contained in our Credit Agreement and indentures. If our revenues, cash flows and/or Adjusted EBITDA are negatively impacted in a material way, we may decide to suspend or decrease our future dividend payments, which could impact our ability to satisfy our REIT distribution requirements and jeopardize our qualification for taxation as a REIT.

In addition, if the COVID-19 pandemic continues to disrupt the credit and financial markets or impacts our credit ratings, our ability to access capital on favorable terms, if at all, could be adversely affected, which could have an adverse effect on our liquidity needs. Our reputation could also be harmed if we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate. Any exacerbation of the risks discussed in our Annual Report could have a material adverse effect on our business and financial condition.

The future impacts of COVID-19 are highly unpredictable.

The COVID-19 pandemic is quickly evolving and the extent to which it continues to impact us will depend on numerous factors that we are currently unable to predict, including: the severity of the COVID-19 pandemic; the duration or re-emergence of outbreaks; the continuation and/or expansion of restrictions imposed by governments and businesses; the impact of the pandemic on economic activity and the strength and duration of any economic recovery; the health of our workforce; our ability to meet staffing needs for critical functions; and the impact on our customers, suppliers, vendors, and other business partners, and their respective financial condition. Furthermore, even as governmental and private entity restrictions are lifted, our ability to resume normal business operations may be delayed, and our actions to manage costs, in part through reductions in workforce and furloughs, may make it more challenging to meet any increased customer demand following the pandemic.

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, 2019,~~March 31, 2020, nor did we repurchase any shares of our common stock during the three months ended ~~June 30, 2019.~~March 31, 2020.

Item 5. Other Information

Disclosure Pursuant to Section 13(r) of the Exchange Act

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act require an issuer to disclose in its annual and quarterly reports whether it or any of its affiliates have knowingly engaged in certain activities, including specified activities or transactions relating to the Government of Iran (as defined in section 560.304 of title 31 of the Code of Federal Regulations) and to persons designated under Executive Order No. 13382 (70 Fed. Reg. 38567). In the quarter ended March 31, 2020, we determined that one of our non-U.S. subsidiaries provided limited hard copy record, electronic media (e.g., CD), box and container storage and handling services during such quarter, and in prior periods since the reporting requirement took effect, to at least one Government of Iran entity and one entity designated under Executive Order No. 13382 - both located outside of Iran.

In each case, the customer relationship commenced at a time when U.S. sanctions law did not limit dealings with entities determined to be part of the Government of Iran or designated under Executive Order No. 13382 by non-U.S. entities owned or controlled by U.S. persons. Each relationship automatically continued from year to year without any affirmative step being taken by either party.

In the quarter ended March 31, 2020, the gross revenues from services provided to these entities were approximately $3,000 in the aggregate. The gross revenues attributable to the services provided to these entities over the course of the engagements (since 2004 in one instance and since 2008 in the other) were approximately $100,000 to $200,000 in the aggregate. It is not possible to determine the exact amount of profits attributable to these services, but the net profits are less than the associated revenues.

We have notified the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) of these limited activities and initiated an internal investigation. We plan to submit a more detailed report to OFAC at the conclusion of our investigation and will cooperate with OFAC in its review of this matter. We are in the process of terminating our relationships with these entities and do not intend to provide any services to these entities in the future, except to the extent authorized by OFAC.

In the course of our ongoing investigation, we have identified two additional customer relationships between one of our non-U.S. subsidiaries and entities designated under Executive Order No. 13382 and Executive Order No. 13224. Neither of these customer relationships are active and ongoing. Over their duration, these additional relationships generated revenue of approximately $50,000 to $100,000. We are reviewing, and intend to enhance, as necessary or appropriate, our policies and processes designed to identify transactions associated with restricted parties, and comply with the disclosure requirements of Section 13(r) of the Exchange Act.

Item 6. Exhibits

(a) Exhibits

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



Exhibit No.			Description
22.0			List of Guarantor Subsidiaries. (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.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the 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~~Taxonomy 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 Senior Vice President, Chief Accounting Officer

Dated: ~~August 1, 2019~~May 7, 2020

8166



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



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



	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



	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



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



	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	%



			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			—



	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	)



	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	)



	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



	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



	Cumulative Total Through June 30, 2019		Six Months Ended June 30, 2019		Six Months Ended June 30, 2018
Significant Acquisition Costs	$	319,171	$	4,647	$	29,429
Recall Capital Expenditures	74,890		1,353		7,245
Total	$	394,061	$	6,000	$	36,674