Table of Contents


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 September 30, 2019
2020
OR
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 INCORPORATEDINCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
Delaware23-2588479
(State or other Jurisdiction of

Incorporation or Organization)
(I.R.S. Employer

Identification No.)
One Federal Street,, Boston,, Massachusetts02110
(Address of Principal Executive Offices, Including Zip Code)

(617) (617) 535-4766
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueIRMNYSE

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 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 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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueIRMNYSE
As of October 25, 2019,30, 2020, the registrant had 287,143,406288,171,345 outstanding shares of common stock, $.01 par value.


Table of Contents
IRON MOUNTAIN INCORPORATED
Index

Page
Page
Item 1—Unaudited Condensed Consolidated Financial Statements
3
Condensed Consolidated Balance Sheets at September 30, 20192020 and December 31, 20182019
3
Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 20192020 and 20182019
4
Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 20192020 and 20182019
5
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 20192020 and 20182019
6
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 20192020
7
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 20182019
8
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20192020 and 20182019
9
Notes to Condensed Consolidated Financial Statements (Unaudited)
10
5333
8357
84
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds
8458
8458
8559

2
Table of Contents
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)
September 30, 2019 December 31, 2018 September 30, 2020December 31, 2019
ASSETS   
ASSETS 
Current Assets:   
Current Assets: 
Cash and cash equivalents$186,778
 $165,485
Cash and cash equivalents$151,972 $193,555 
Accounts receivable (less allowances of $44,873 and $43,584 as of September 30, 2019 and December 31, 2018, respectively)821,926
 846,889
Accounts receivable (less allowances of $53,788 and $42,856 as of September 30, 2020 and December 31, 2019, respectively) (see Note 2.d.)Accounts receivable (less allowances of $53,788 and $42,856 as of September 30, 2020 and December 31, 2019, respectively) (see Note 2.d.)791,859 850,701 
Prepaid expenses and other195,189
 195,740
Prepaid expenses and other190,194 192,083 
Total Current Assets1,203,893
 1,208,114
Total Current Assets1,134,025 1,236,339 
Property, Plant and Equipment:   
Property, Plant and Equipment: 
Property, plant and equipment7,868,457
 7,600,949
Property, plant and equipment8,100,871 8,048,906 
Less—Accumulated depreciation(3,311,738) (3,111,392)Less—Accumulated depreciation(3,641,804)(3,425,869)
Property, Plant and Equipment, Net4,556,719
 4,489,557
Property, Plant and Equipment, Net4,459,067 4,623,037 
Other Assets, Net:   
Other Assets, Net: 
Goodwill4,421,995
 4,441,030
Goodwill4,461,529 4,485,209 
Customer relationships, customer inducements and data center lease-based intangibles1,415,287
 1,506,522
Customer relationships, customer inducements and data center lease-based intangibles1,317,399 1,393,183 
Operating lease right-of-use assets (see Note 2.d.)1,765,496
 —
Operating lease right-of-use assets (see Note 2.e.)Operating lease right-of-use assets (see Note 2.e.)1,963,019 1,869,101 
Other213,777
 211,995
Other347,621 209,947 
Total Other Assets, Net7,816,555
 6,159,547
Total Other Assets, Net8,089,568 7,957,440 
Total Assets$13,577,167
 $11,857,218
Total Assets$13,682,660 $13,816,816 
LIABILITIES AND EQUITY   
LIABILITIES AND EQUITY 
Current Liabilities:   
Current Liabilities: 
Current portion of long-term debt$394,822
 $126,406
Current portion of long-term debt$392,586 $389,013 
Accounts payable289,940
 318,765
Accounts payable302,618 324,708 
Accrued expenses and other current liabilities (includes current portion of operating lease liabilities,
see Note 2.d.)
888,021
 780,781
Accrued expenses and other current liabilities (includes current portion of operating lease liabilities; see Note 2.e.)Accrued expenses and other current liabilities (includes current portion of operating lease liabilities; see Note 2.e.)951,269 961,752 
Deferred revenue257,328
 264,823
Deferred revenue244,430 274,036 
Total Current Liabilities1,830,111
 1,490,775
Total Current Liabilities1,890,903 1,949,509 
Long-term Debt, net of current portion8,220,347
 8,016,417
Long-term Debt, net of current portion8,618,856 8,275,566 
Long-term Operating Lease Liabilities, net of current portion (see Note 2.d.)1,626,907
 —
Long-term Operating Lease Liabilities, net of current portion (see Note 2.e.)Long-term Operating Lease Liabilities, net of current portion (see Note 2.e.)1,818,844 1,728,686 
Other Long-term Liabilities130,290
 111,331
Other Long-term Liabilities158,507 143,018 
Deferred Rent (see Note 2.d.)—
 121,864
Deferred Income Taxes189,564
 183,836
Deferred Income Taxes194,638 188,128 
Commitments and Contingencies (see Note 8)


 


Commitments and Contingencies (see Note 7)Commitments and Contingencies (see Note 7)
Redeemable Noncontrolling Interests68,099
 70,532
Redeemable Noncontrolling Interests63,666 67,682 
Equity:   
Equity:  
Iron Mountain Incorporated Stockholders' 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 287,135,194 and 286,321,009 shares as of September 30, 2019 and December 31, 2018, respectively)2,871
 2,863
Preferred stock (par value $0.01; authorized 10,000,000 shares; NaN issued and outstanding)Preferred stock (par value $0.01; authorized 10,000,000 shares; NaN issued and outstanding)0 0 
Common stock (par value $0.01; authorized 400,000,000 shares; issued and outstanding 288,162,966 and 287,299,645 shares as of September 30, 2020 and December 31, 2019, respectively)Common stock (par value $0.01; authorized 400,000,000 shares; issued and outstanding 288,162,966 and 287,299,645 shares as of September 30, 2020 and December 31, 2019, respectively)2,882 2,873 
Additional paid-in capital4,287,964
 4,263,348
Additional paid-in capital4,335,799 4,298,566 
(Distributions in excess of earnings) Earnings in excess of distributions(2,433,802) (2,139,493)(Distributions in excess of earnings) Earnings in excess of distributions(3,018,144)(2,574,896)
Accumulated other comprehensive items, net(346,203) (265,664)Accumulated other comprehensive items, net(383,178)(262,581)
Total Iron Mountain Incorporated Stockholders' Equity1,510,830
 1,861,054
Total Iron Mountain Incorporated Stockholders' Equity937,359 1,463,962 
Noncontrolling Interests1,019
 1,409
Noncontrolling Interests(113)265 
Total Equity1,511,849
 1,862,463
Total Equity937,246 1,464,227 
Total Liabilities and Equity$13,577,167
 $11,857,218
Total Liabilities and Equity$13,682,660 $13,816,816 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3
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IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except Per Share Data)
(Unaudited)
 Three Months Ended
September 30,
 20202019
Revenues:  
Storage rental$696,294 $673,318 
Service340,353 388,906 
Total Revenues1,036,647 1,062,224 
Operating Expenses:
Cost of sales (excluding depreciation and amortization)434,505 449,372 
Selling, general and administrative232,095 237,151 
Depreciation and amortization157,252 157,561 
Significant Acquisition Costs (see Note 2.o.)0 3,950 
Restructuring Charges (see Note 10)48,371 0 
(Gain) Loss on disposal/write-down of property, plant and equipment, net (see Note 2.l.)(75,840)(9,284)
Total Operating Expenses796,383 838,750 
Operating Income (Loss)240,264 223,474 
Interest Expense, Net (includes interest income of $2,476 and $1,558 for the three months ended September 30, 2020 and 2019, respectively)104,303 106,677 
Other Expense (Income), Net83,465 (13,415)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes52,496 130,212 
Provision (Benefit) for Income Taxes13,934 21,928 
Income (Loss) from Continuing Operations38,562 108,284 
Income (Loss) from Discontinued Operations, Net of Tax0 0 
Net Income (Loss)38,562 108,284 
Less: Net Income (Loss) Attributable to Noncontrolling Interests168 609 
Net Income (Loss) Attributable to Iron Mountain Incorporated$38,394 $107,675 
Earnings (Losses) per Share—Basic:  
Income (Loss) from Continuing Operations$0.13 $0.37 
Total Income (Loss) from Discontinued Operations, Net of Tax$0 $0 
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.13 $0.37 
Earnings (Losses) per Share—Diluted:  
Income (Loss) from Continuing Operations$0.13 $0.37 
Total Income (Loss) from Discontinued Operations, Net of Tax$0 $0 
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.13 $0.37 
Weighted Average Common Shares Outstanding—Basic288,403 287,152 
Weighted Average Common Shares Outstanding—Diluted288,811 287,691 
 Three Months Ended
September 30,
 2019 2018
Revenues: 
  
Storage rental$673,318

$656,973
Service388,906

404,018
Total Revenues1,062,224

1,060,991
Operating Expenses: 
  
Cost of sales (excluding depreciation and amortization)451,317

448,018
Selling, general and administrative239,156
 259,929
Depreciation and amortization157,561
 157,797
(Gain) Loss on disposal/write-down of property, plant and equipment, net
(see Notes 2.j. and 2.m.)
(9,284) (388)
Total Operating Expenses838,750

865,356
Operating Income (Loss)223,474

195,635
Interest Expense, Net (includes Interest Income of $1,558 and $1,382 for the three months ended September 30, 2019 and 2018, respectively)106,677
 103,938
Other (Income) Expense, Net(13,415)
325
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes130,212
 91,372
Provision (Benefit) for Income Taxes21,928
 14,023
Income (Loss) from Continuing Operations108,284

77,349
(Loss) Income from Discontinued Operations, Net of Tax—
 (11,605)
Net Income (Loss)108,284
 65,744
Less: Net Income (Loss) Attributable to Noncontrolling Interests609
 (125)
Net Income (Loss) Attributable to Iron Mountain Incorporated$107,675

$65,869
Earnings (Losses) per Share—Basic: 
  
Income (Loss) from Continuing Operations$0.37
 $0.27
Total (Loss) Income from Discontinued Operations, Net of Tax$—
 $(0.04)
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.37
 $0.23
Earnings (Losses) per Share—Diluted: 
  
Income (Loss) from Continuing Operations$0.37
 $0.27
Total (Loss) Income from Discontinued Operations, Net of Tax$—
 $(0.04)
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.37
 $0.23
Weighted Average Common Shares Outstanding—Basic287,152
 286,159
Weighted Average Common Shares Outstanding—Diluted287,691
 286,982

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

4
Table of Contents
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except Per Share Data)
(Unaudited)
 Nine Months Ended
September 30,
 20202019
Revenues:  
Storage rental$2,056,797 $2,005,580 
Service1,030,820 1,177,414 
Total Revenues3,087,617 3,182,994 
Operating Expenses:
Cost of sales (excluding depreciation and amortization)1,308,119 1,373,827 
Selling, general and administrative712,775 758,018 
Depreciation and amortization483,686 484,375 
Significant Acquisition Costs (see Note 2.o.)0 8,597 
Restructuring Charges (see Note 10)128,715 0 
Intangible impairments (see Note 2.b.)23,000 0 
(Gain) Loss on disposal/write-down of property, plant and equipment, net (see Note 2.l.)(78,170)(17,087)
Total Operating Expenses2,578,125 2,607,730 
Operating Income (Loss)509,492 575,264 
Interest Expense, Net (includes interest income of $6,491 and $4,804 for the nine months ended September 30, 2020 and 2019, respectively)313,408 314,427 
Other Expense (Income), Net66,439 (13,397)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes129,645 274,234 
Provision (Benefit) for Income Taxes33,304 43,127 
Income (Loss) from Continuing Operations96,341 231,107 
Income (Loss) from Discontinued Operations, Net of Tax0 104 
Net Income (Loss)96,341 231,211 
Less: Net Income (Loss) Attributable to Noncontrolling Interests1,058 1,534 
Net Income (Loss) Attributable to Iron Mountain Incorporated$95,283 $229,677 
Earnings (Losses) per Share—Basic:
Income (Loss) from Continuing Operations$0.33 $0.80 
Total Income (Loss) from Discontinued Operations, Net of Tax$0 $0 
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.33 $0.80 
Earnings (Losses) per Share—Diluted:
Income (Loss) from Continuing Operations$0.33 $0.80 
Total Income (Loss) from Discontinued Operations, Net of Tax$0 $0 
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.33 $0.80 
Weighted Average Common Shares Outstanding—Basic288,105 286,869 
Weighted Average Common Shares Outstanding—Diluted288,471 287,555 
 Nine Months Ended
September 30,
 2019 2018
Revenues: 
  
Storage rental$2,005,580
 $1,963,561
Service1,177,414
 1,200,711
Total Revenues3,182,994
 3,164,272
Operating Expenses:  

Cost of sales (excluding depreciation and amortization)1,377,963
 1,348,203
Selling, general and administrative762,479
 789,324
Depreciation and amortization484,375
 474,595
(Gain) Loss on disposal/write-down of property, plant and equipment, net
(see Notes 2.j. and 2.m.)
(17,087) (2,064)
Total Operating Expenses2,607,730
 2,610,058
Operating Income (Loss)575,264
 554,214
Interest Expense, Net (includes Interest Income of $4,804 and $5,048 for the nine months ended September 30, 2019 and 2018, respectively)314,427
 303,836
Other (Income) Expense, Net(13,397) 1,420
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes274,234
 248,958
Provision (Benefit) for Income Taxes43,127
 39,957
Income (Loss) from Continuing Operations231,107
 209,001
Income (Loss) from Discontinued Operations, Net of Tax104
 (12,427)
Net Income (Loss)231,211
 196,574
Less: Net Income (Loss) Attributable to Noncontrolling Interests1,534
 485
Net Income (Loss) Attributable to Iron Mountain Incorporated$229,677
 $196,089
Earnings (Losses) per Share—Basic: 
  
Income (Loss) from Continuing Operations$0.80
 $0.73
Total (Loss) Income from Discontinued Operations, Net of Tax$—
 $(0.04)
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.80
 $0.69
Earnings (Losses) per Share—Diluted: 
  
Income (Loss) from Continuing Operations$0.80
 $0.73
Total (Loss) Income from Discontinued Operations, Net of Tax$—
 $(0.04)
Net Income (Loss) Attributable to Iron Mountain Incorporated$0.80
 $0.68
Weighted Average Common Shares Outstanding—Basic286,869
 285,801
Weighted Average Common Shares Outstanding—Diluted287,555
 286,515

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


5
Table of Contents
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Thousands)
(Unaudited)
 Three Months Ended
September 30,
 20202019
Net Income (Loss)$38,562 $108,284 
Other Comprehensive Income (Loss):  
Foreign Currency Translation Adjustment44,883 (83,595)
Change in Fair Value of Derivative Instruments(184)(1,496)
Total Other Comprehensive Income (Loss)44,699 (85,091)
Comprehensive Income (Loss)83,261 23,193 
Comprehensive Income (Loss) Attributable to Noncontrolling Interests522 (100)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated$82,739 $23,293 
 
Three Months Ended
September 30,
 2019 2018
Net Income (Loss)$108,284
 $65,744
Other Comprehensive (Loss) Income: 
  
Foreign Currency Translation Adjustment(83,595) (24,769)
Change in Fair Value of Derivative Instruments(1,496) 1,980
Total Other Comprehensive (Loss) Income(85,091) (22,789)
Comprehensive Income (Loss)23,193
 42,955
Comprehensive (Loss) Income Attributable to Noncontrolling Interests(100) (2,104)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated$23,293
 $45,059
Nine Months Ended
September 30,		 Nine Months Ended
September 30,
2019 2018 20202019
Net Income (Loss)$231,211
 $196,574
Net Income (Loss)$96,341 $231,211 
Other Comprehensive (Loss) Income: 
  
Other Comprehensive (Loss) Income:  
Foreign Currency Translation Adjustment(71,195) (132,290)Foreign Currency Translation Adjustment(109,742)(71,195)
Change in Fair Value of Derivative Instruments(9,101) 4,183
Change in Fair Value of Derivative Instruments(11,507)(9,101)
Total Other Comprehensive (Loss) Income(80,296) (128,107)Total Other Comprehensive (Loss) Income(121,249)(80,296)
Comprehensive Income (Loss)150,915
 68,467
Comprehensive (Loss) IncomeComprehensive (Loss) Income(24,908)150,915 
Comprehensive Income (Loss) Attributable to Noncontrolling Interests1,777
 (3,351)Comprehensive Income (Loss) Attributable to Noncontrolling Interests406 1,777 
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated$149,138
 $71,818
Comprehensive (Loss) Income Attributable to Iron Mountain IncorporatedComprehensive (Loss) Income Attributable to Iron Mountain Incorporated$(25,314)$149,138 
The accompanying notes are an integral part of these condensed consolidated financial statements.


6
Table of Contents
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Thousands, except Share Data)
(Unaudited)
Three Month Period Ended September 30, 2020
 Iron Mountain Incorporated Stockholders' Equity
 Common StockAdditional
Paid-in Capital		(Distributions in Excess of Earnings) Earnings in Excess of DistributionsNoncontrolling
Interests
 TotalSharesAmountsAccumulated
Other
Comprehensive
Items, Net		Redeemable Noncontrolling Interests
Balance, June 30, 2020$1,024,331 288,142,703 $2,881 $4,325,803 $(2,876,861)$(427,523)$31 $63,512 
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation9,997 20,263 1 9,996 — — — — 
Parent cash dividends declared (see Note 8)(179,677)— — — (179,677)— — — 
Foreign currency translation adjustment44,529 — — — — 44,529 — 354 
Change in fair value of derivative instruments(184)— — — — (184)— — 
Net income (loss)38,250 — — — 38,394 — (144)312 
Noncontrolling interests dividends— — — — — — — (512)
Balance, September 30, 2020$937,246 288,162,966 $2,882 $4,335,799 $(3,018,144)$(383,178)$(113)$63,666 
Nine Month Period Ended September 30, 2020
 Iron Mountain Incorporated Stockholders' Equity
 Common StockAdditional
Paid-in Capital		(Distributions in Excess of Earnings) Earnings in Excess of DistributionsNoncontrolling
Interests
 TotalSharesAmountsAccumulated
Other
Comprehensive
Items, Net		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 compensation34,639 863,321 9 34,630 — — — — 
Change in equity related to redeemable noncontrolling interests2,603 — — 2,603 — — — (2,603)
Parent cash dividends declared
(see Note 8)		(538,531)— — — (538,531)— — — 
Foreign currency translation adjustment(109,090)— — — — (109,090)— (652)
Change in fair value of derivative instruments(11,507)— — — — (11,507)— — 
Net income (loss)94,905 — — — 95,283 — (378)1,436 
Noncontrolling interests dividends— — — — — — — (2,197)
Balance, September 30, 2020$937,246 288,162,966 $2,882 $4,335,799 $(3,018,144)$(383,178)$(113)$63,666 
Three Month Period Ended September 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, June 30, 2019$1,658,981
 287,061,769
 $2,870
 $4,281,584
 $(2,364,812) $(261,821) $1,160
  $73,113
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation6,381
 73,425
 1
 6,380
 —
 —
 —
  —
Change in equity related to redeemable noncontrolling interests—
 —
 —
 —
 —
 —
 —
  (4,590)
Parent cash dividends declared (see Note 9)(176,665) —
 —
 —
 (176,665) —
 —
  —
Foreign currency translation adjustment(82,886) —
 —
 —
 —
 (82,886) —
  (709)
Change in fair value of derivative instruments(1,496) —
 —
 —
 —
 (1,496) —
  —
Net income (loss)107,534
 —
 —
 —
 107,675
 —
 (141)  750
Noncontrolling interests dividends—
 —
 —
 —
 —
 —
 —
  (465)
Balance, September 30, 2019$1,511,849
 287,135,194
 $2,871
 $4,287,964
 $(2,433,802) $(346,203) $1,019
  $68,099
                 
Nine Month Period Ended September 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 compensation26,078
 814,185
 8
 26,070
 —
 —
 —
  —
Change in equity related to redeemable noncontrolling interests(1,454) —
 —
 (1,454) —
 —
 —
  (3,136)
Parent cash dividends declared (see Note 9)(529,767) —
 —
 —
 (529,767) —
 —
  —
Foreign currency translation adjustment(71,438) —
 —
 —
 —
 (71,438) —
  243
Change in fair value of derivative instruments(9,101) —
 —
 —
 —
 (9,101) —
  —
Net income (loss)229,287
 —
 —
 —
 229,677
 —
 (390)  1,924
Noncontrolling interests dividends—
 —
 —
 —
 —
 —
 —
  (1,464)
Balance, September 30, 2019$1,511,849
 287,135,194
 $2,871
 $4,287,964
 $(2,433,802) $(346,203) $1,019
  $68,099

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


7
Table of Contents
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Thousands, except Share Data)
(Unaudited)
Three Month Period Ended September 30, 2019
 Iron Mountain Incorporated Stockholders' Equity
 Common StockAdditional
Paid-in Capital		(Distributions in Excess of Earnings) Earnings in Excess of DistributionsNoncontrolling
Interests
 TotalSharesAmountsAccumulated
Other
Comprehensive
Items, Net		Redeemable Noncontrolling Interests
Balance, June 30, 2019$1,658,981 287,061,769 $2,870 $4,281,584 $(2,364,812)$(261,821)$1,160 $73,113 
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation6,381 73,425 1 6,380 — — — — 
Change in equity related to redeemable noncontrolling interests— — — — — — — (4,590)
Parent cash dividends declared (see Note 8)(176,665)— — — (176,665)— — — 
Foreign currency translation adjustment(82,886)— — — — (82,886)— (709)
Change in fair value of derivative instruments(1,496)— — — — (1,496)— — 
Net income (loss)107,534 — — — 107,675 — (141)750 
Noncontrolling interests dividends— — — — — — — (465)
Balance, September 30, 2019$1,511,849 287,135,194 $2,871 $4,287,964 $(2,433,802)$(346,203)$1,019 $68,099 
Nine Month Period Ended September 30, 2019
Iron Mountain Incorporated Stockholders' Equity
Common StockAdditional
Paid-in Capital		(Distributions in Excess of Earnings) Earnings in Excess of DistributionsNoncontrolling
Interests
TotalSharesAmountsAccumulated
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 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 compensation26,078 814,185 8 26,070 — — — — 
Change in equity related to redeemable noncontrolling interests(1,454)— — (1,454)— — — (3,136)
Parent cash dividends declared (see Note 8)(529,767)— — — (529,767)— — — 
Foreign currency translation adjustment(71,438)— — — — (71,438)— 243 
Change in fair value of derivative instruments(9,101)— — — — (9,101)— — 
Net income (loss)229,287 — — — 229,677 — (390)1,924 
Noncontrolling interests dividends— — — — — — — (1,464)
Balance, September 30, 2019$1,511,849 287,135,194 $2,871 $4,287,964 $(2,433,802)$(346,203)$1,019 $68,099 
Three Month Period Ended September 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, June 30, 2018$2,035,874
 286,099,227
 $2,861
 $4,256,894
 $(2,017,938) $(207,450) $1,507
  $95,340
Issuance of shares under employee stock purchase plan and option plans and stock-based compensation6,742
 121,831
 1
 6,741
 —
 —
 —
  —
Change in value of redeemable noncontrolling interests(2,448) —
 —
 (2,448) —
 —
 —
  2,448
Parent cash dividends declared (see Note 9)(169,186) —
 —
 —
 (169,186) —
 —
  —
Foreign currency translation adjustment(22,791) —
 —
 —
 —
 (22,790) (1)  (1,978)
Change in fair value of derivative instruments1,980
 —
 —
 —
 —
 1,980
 —
  —
Net income (loss)65,853
 —
 —
 —
 65,869
 —
 (16)  (109)
Noncontrolling interests dividends—
 —
 —
 —
 —
 —
 —
  (956)
Balance, September 30, 2018$1,916,024
 286,221,058
 $2,862
 $4,261,187
 $(2,121,255) $(228,260) $1,490
  $94,745
                 
Nine Month Period Ended September 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 compensation20,547
 662,389
 7
 20,540
 —
 —
 —
  —
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 9)8,716
 273,486
 2
 8,714
 —
 —
 —
  —
Changes in value of redeemable noncontrolling interests(8,799) —
 —
 (8,799) —
 —
 —
  8,799
Parent cash dividends declared (see Note 9)(507,437) —
 —
 —
 (507,437) —
 —
  —
Foreign currency translation adjustment(128,303) —
 —
 —
 —
 (128,454) 151
  (3,987)
Change in fair value of derivative instruments4,183
 —
 —
 —
 —
 4,183
 —
  —
Net income (loss)196,024
 —
 —
 —
 196,089
 —
 (65)  550
Noncontrolling interests dividends—
 —
 —
 —
 —
 —
 —
  (2,035)
Balance, September 30, 2018$1,916,024
 286,221,058
 $2,862
 $4,261,187
 $(2,121,255) $(228,260) $1,490
  $94,745

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


8
Table of Contents
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 Nine Months Ended September 30,
 20202019
Cash Flows from Operating Activities: 
Net income (loss)$96,341 $231,211 
Loss (income) from discontinued operations0 (104)
Adjustments to reconcile net income (loss) to cash flows from operating activities:  
Depreciation334,780 336,485 
Amortization (includes amortization of deferred financing costs and discounts of $13,150 and $12,286 for the nine months ended September 30, 2020 and 2019, respectively)162,057 160,176 
Intangible impairments (see Note 2.b.)23,000 0 
Revenue reduction associated with amortization of customer inducements and above- and below-market leases7,612 10,417 
Stock-based compensation expense35,618 28,140 
(Benefit) provision for deferred income taxes(3,074)2,643 
Loss on early extinguishment of debt68,300 0 
(Gain) loss on disposal/write-down of property, plant and equipment, net(78,170)(17,087)
Foreign currency transactions and other, net4,043 (25,283)
(Increase) decrease in assets(10,219)(24,121)
(Decrease) increase in liabilities(13,070)(54,332)
Cash Flows from Operating Activities - Continuing Operations627,218 648,145 
Cash Flows from Operating Activities - Discontinued Operations0 0 
Cash Flows from Operating Activities627,218 648,145 
Cash Flows from Investing Activities:  
Capital expenditures(309,162)(533,614)
Cash paid for acquisitions, net of cash acquired(118,581)(56,499)
Acquisition of customer relationships(3,529)(42,990)
Customer inducements(8,269)(7,429)
Contract fulfillment costs and third-party commissions(30,705)(63,090)
Investments in joint ventures(6,850)(19,222)
Proceeds from sales of property and equipment and other, net116,965 82,148 
Cash Flows from Investing Activities - Continuing Operations(360,131)(640,696)
Cash Flows from Investing Activities - Discontinued Operations0 5,061 
Cash Flows from Investing Activities(360,131)(635,635)
Cash Flows from Financing Activities:  
Repayment of revolving credit facility, term loan facilities and other debt(7,354,790)(12,690,691)
Proceeds from revolving credit facility, term loan facilities and other debt7,090,842 12,256,276 
Early redemption of senior notes, including call premiums(2,942,554)0 
Net proceeds from sales of senior notes3,465,000 987,500 
Debt repayment and equity distribution to noncontrolling interests(2,197)(1,464)
Parent cash dividends(537,853)(528,908)
Net (payments) proceeds associated with employee stock-based awards(979)(2,059)
Payment of debt financing costs and other(24,643)(769)
Cash Flows from Financing Activities - Continuing Operations(307,174)19,885 
Cash Flows from Financing Activities - Discontinued Operations0 0 
Cash Flows from Financing Activities(307,174)19,885 
Effect of Exchange Rates on Cash and Cash Equivalents(1,496)(11,102)
(Decrease) increase in Cash and Cash Equivalents(41,583)21,293 
Cash and Cash Equivalents, including Restricted Cash, Beginning of Period193,555 165,485 
Cash and Cash Equivalents, including Restricted Cash, End of Period$151,972 $186,778 
Supplemental Information:  
Cash Paid for Interest$357,897 $342,139 
Cash Paid for Income Taxes, Net$27,430 $54,446 
Non-Cash Investing and Financing Activities:  
Financing Leases (see Note 2.e.)$34,889 $20,699 
Accrued Capital Expenditures$58,175 $78,329 
Fair Value of Investments Applied to Acquisitions (see Note 4)$27,276 $0 
Accrued Purchase Price and Other Holdbacks$0 $4,135 
Dividends Payable$186,699 $182,859 
 Nine Months Ended
September 30,
 2019 2018
Cash Flows from Operating Activities:   
Net income (loss)$231,211
 $196,574
Loss (income) from discontinued operations(104) 12,427
Adjustments to reconcile net income (loss) to cash flows from operating activities: 
  
Depreciation336,485
 337,923
Amortization (includes amortization of deferred financing costs and discounts of $12,286 and $11,537 for the nine months ended September 30, 2019 and 2018, respectively)160,176
 148,209
Revenue reduction associated with amortization of customer inducements and above- and below-market leases10,417
 12,430
Stock-based compensation expense28,140
 23,352
Provision (benefit) for deferred income taxes2,643
 (2,699)
(Gain) loss on disposal/write-down of property, plant and equipment, net (see Note 2.j.)(17,087) (2,064)
Foreign currency transactions and other, net(25,283) (1,271)
(Increase) decrease in assets(24,121) (24,247)
(Decrease) increase in liabilities(54,332) (75,096)
Cash Flows from Operating Activities - Continuing Operations648,145
 625,538
Cash Flows from Operating Activities - Discontinued Operations—
 (995)
Cash Flows from Operating Activities648,145
 624,543
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)(533,614) (329,953)
Cash paid for acquisitions, net of cash acquired(56,499) (1,711,011)
Acquisition of customer relationships(42,990) (38,829)
Customer inducements(7,429) (6,212)
Contract fulfillment costs and third-party commissions(63,090) (18,520)
Net proceeds from divestments—
 1,019
Investments in joint ventures (see Note 10)(19,222) —
Proceeds from sales of property and equipment and other, net82,148
 713
Cash Flows from Investing Activities - Continuing Operations(640,696) (2,102,793)
Cash Flows from Investing Activities - Discontinued Operations5,061
 —
Cash Flows from Investing Activities(635,635) (2,102,793)
Cash Flows from Financing Activities: 
  
Repayment of revolving credit facility, term loan facilities and other debt(12,690,691) (11,226,171)
Proceeds from revolving credit facility, term loan facilities and other debt12,256,276
 12,437,017
Net proceeds from sales of senior notes987,500
 —
Debt repayment and equity distribution to noncontrolling interests(1,464) (2,035)
Parent cash dividends(528,908) (505,403)
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(2,059) (2,800)
Payment of debt financing and stock issuance costs(769) (15,957)
Cash Flows from Financing Activities - Continuing Operations19,885
 769,559
Cash Flows from Financing Activities - Discontinued Operations—
 —
Cash Flows from Financing Activities19,885
 769,559
Effect of Exchange Rates on Cash and Cash Equivalents(11,102) (19,332)
Increase (decrease) in Cash and Cash Equivalents21,293
 (728,023)
Cash and Cash Equivalents, including Restricted Cash, Beginning of Period165,485
 925,699
Cash and Cash Equivalents, including Restricted Cash, End of Period$186,778
 $197,676
    
Supplemental Information: 
  
Cash Paid for Interest$342,139
 $322,986
Cash Paid for Income Taxes, Net$54,446
 $49,061
Non-Cash Investing and Financing Activities: 
  
Financing Leases (see Note 2.d.)$20,699
 $56,493
Accrued Capital Expenditures$78,329
 $60,062
Accrued Purchase Price and Other Holdbacks$4,135
 $27,919
Dividends Payable$182,859
 $174,136
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(1)1.    General

The interimunaudited 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 storage of physical records and data backup media, information management solutions and enterprise-class colocation and wholesale data center space that help organizations in various locations throughout North America, Europe, Latin America, Asia and Africa. 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 flexible deployment options, including both colocation and wholesale space.
The unaudited condensed consolidated financial statements, have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted pursuant to those rules and regulations, but we believe that the disclosures included herein are adequate to make the information presented not misleading. The 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.

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, 20182019 included in our Annual Report on Form 10-K filed with the SEC on February 14, 201913, 2020 (our "Annual Report").

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

OnIn January 10, 2018,2020, the World Health Organization declared a novel strain of coronavirus ("COVID-19") a pandemic. This resulted in U.S. federal, state and local and foreign governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings and stay-at-home orders and advisories. In response, we completedtemporarily closed certain of our offices and facilities across the acquisitionworld and implemented certain travel restrictions for our employees. The preventative and protective actions that governments have ordered, or we have implemented as an organization, have resulted in a period of IO Data Centers, LLC ("IODC"reduced service operations and business disruption for us, our customers and other third parties with which we do business. Currently, certain of the restrictions have been lifted; however, other restrictions still remain and 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”) (the "IODC Transaction"). See Note 4.

, remain uncertain and difficult to predict as information continues to rapidly evolve, and the severity and duration of the pandemic remains unknown, as is our visibility of its effect on the markets we serve and our customers within those markets.
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.

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 andRestricted cash equivalents are carriedwas less than $5,000 at cost, which approximates fair value.
Atboth September 30, 20192020 and December 31, 2018, we had $8,057 and $15,141, respectively, of restricted cash held by certain financial institutions related to bank guarantees.2019.

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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)

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 September 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, 20182019 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 10 for additional information.
The goodwill associated with acquisitions completed during the first nine months of 2019 (which are described2020 (described in Note 4) has been incorporated into our reporting units as they existed as of December 31, 2018.2019.

During the first quarter of 2020, we concluded that we had a triggering event related to our Fine Arts reporting unit, requiring us to perform an interim goodwill impairment test. The primary factor contributing to our conclusion was the expected impact of the COVID-19 pandemic to this particular business and its customers and revenue sources, which caused us to believe it was more likely than not that the carrying value of our Fine Arts reporting unit exceeded its fair value. During the first quarter of 2020, we performed an interim goodwill impairment test for our Fine Arts reporting unit utilizing a discounted cash flow model, with updated assumptions on future revenues, operating expenditures and capital expenditures. We concluded that the fair value of our Fine Arts reporting unit was less than its carrying value, and, therefore, we recorded a $23,000 impairment charge on the goodwill associated with this reporting unit during the first quarter of 2020. Factors that may impact these assumptions include, but are not limited to: (i) our ability to maintain, or grow, storage rental and service revenues in line with current expectations and (ii) our ability to manage our fixed and variable costs in line with potential future revenue declines.

During the second and third quarters of 2020, for each of our reporting units, no factors were identified that would alter our interim goodwill impairment analysis performed during the first quarter of 2020, or change the conclusions reached at that time. Any material adverse changes to our businesses that negatively impact their fair values could result in future goodwill impairments.

The changes in the carrying value of goodwill attributable to each reportable operating segment for the nine months ended September 30, 20192020 are as follows:
Global RIM BusinessGlobal Data Center BusinessCorporate and Other BusinessTotal
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 period51,319 0 0 51,319 
Goodwill impairment0 0 (23,000)(23,000)
Fair value and other adjustments(4,131)0 403 (3,728)
Currency effects(54,428)6,026 131 (48,271)
Goodwill balance, net accumulated amortization as of
September 30, 2020		$3,935,661 $430,594 $95,274 $4,461,529 
Accumulated goodwill impairment balance as of
September 30, 2020		$132,409 $0 $26,011 $158,420 
 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 year5,109
 —
 675
 10,333
 —
 —
 16,117
Non-deductible goodwill acquired during the year—
 —
 5,011
 4,638
 —
 1,904
 11,553
Fair value and other adjustments(1)55
 —
 (1,012) 1,321
 258
 (417) 205
Currency effects5,501
 1,495
 (15,717) (32,461) (5,182) (546) (46,910)
Goodwill balance, net accumulated amortization as of September 30, 2019$2,262,460
 $494,986
 $370,763
 $802,054
 $421,032
 $70,700
 $4,421,995
Accumulated Goodwill Impairment Balance as of December 31, 2018$85,909
 $—
 $46,500
 $—
 $—
 $3,011
 $135,420
Accumulated Goodwill Impairment Balance as of September 30, 2019$85,909
 $—
 $46,500
 $—
 $—
 $3,011
 $135,420

(1)Total fair value and other adjustments primarily include $867 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 $662 of net cash received related to certain acquisitions completed in 2018.



11
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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)

c.    Revenues
Finite-lived Intangible Assets and Liabilities
Finite-lived intangible assets and liabilities are primarily comprisedContract fulfillment costs consist of the costs of the initial intake of customer relationship intangible assets, customer inducementsrecords into physical storage and data center intangible assets and liabilities (which include data center in-place lease intangible assets, data center tenant relationship intangible assets, data center above-market in-place lease intangible assets and data center below-market in-place lease intangible assets). Since December 31, 2018, there have been no changes to our accounting policies related to the accounting for any of our finite-lived intangible assets and liabilities as disclosed in Note 2.i. to Notes to Consolidated Financial Statements included in our Annual Report.

The gross carrying amount and accumulated amortization of our finite-lived intangible assetscapitalized commissions asset (collectively, "Contract Fulfillment Costs"), which as of September 30, 20192020 and December 31, 20182019, are as follows:
September 30, 2020December 31, 2019
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Contract Fulfillment Costs$123,795 $(57,538)$66,257 $109,232 $(50,757)$58,475 
 September 30, 2019 December 31, 2018
 Gross Carrying
Amount		 Accumulated
Amortization		 Net Carrying
Amount		 Gross Carrying
Amount		 Accumulated
Amortization		 Net Carrying
Amount
Assets:           
Customer relationship intangible assets$1,747,535
 $(529,164) $1,218,371
 $1,718,919
 $(455,705) $1,263,214
Customer inducements53,097
 (30,298) 22,799
 56,478
 (34,181) 22,297
Data center lease-based intangible assets(1)264,382
 (90,265) 174,117
 271,818
 (50,807) 221,011
Third-party commissions asset(2)31,708
 (3,001) 28,707
 30,071
 (1,089) 28,982
 $2,096,722
 $(652,728) $1,443,994
 $2,077,286
 $(541,782) $1,535,504
Liabilities:           
Data center below-market leases$12,720
 $(3,424) $9,296
 $12,318
 $(1,642) $10,676

Deferred revenue liabilities are reflected in our Condensed Consolidated Balance Sheets as follows:
DescriptionSeptember 30, 2020December 31, 2019
Deferred revenue - Current$244,430 $274,036 
Deferred revenue - Long-term35,187 36,029 

Data Center Lessor Considerations

Our Global Data Center Business features storage rental provided to customers at contractually specified rates over a fixed contractual period, which are accounted for in accordance with ASU 2016-02. Storage rental revenue, including revenue associated with power and connectivity, associated with our Global Data Center Business for the three and nine months ended September 30, 2020 and 2019 are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Storage rental revenue(1)$68,416 $62,001 $196,823 $182,301 

(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 September 30, 2019 and December 31, 2018. The third-party commissions asset is primarily comprised of additional payments associated with the execution of future customer contracts through the one-year anniversary of the acquisition of IODC, as described in Note 4.

Other finite-lived intangible assets, including trade names, noncompetition agreements(1)Revenue associated with power and trademarks, are capitalizedconnectivity included within storage rental revenue was $12,033 and amortized$34,986 for the three and are included in depreciationnine months ended September 30, 2020, respectively, and amortization in the accompanying Condensed Consolidated Statements of Operations$12,001 and $31,031 for the three and nine months ended September 30, 2019, and 2018. The other finite-lived intangible assets as of September 30, 2019 and December 31, 2018 are as follows:respectively.
 September 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)$19,842
 $(17,385) $2,457
 $20,310
 $(14,798) $5,512


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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(2)2.    Summary of Significant Accounting Policies (Continued)

d.    Accounts Receivable
Amortization expense associated with finite-lived intangible
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.

On January 1, 2020 we adopted ASU 2016-13 on a modified retrospective basis for all financial assets revenue reductionmeasured at amortized cost. The adoption of ASU 2016-13 did not result in a material impact on our consolidated financial statements. We now calculate and monitor our allowance considering future potential economic and macroeconomic conditions and reasonable and supportable forecasts for expected future collectability of our outstanding receivables, in addition to considering our past loss experience, current and prior trends in our aged receivables and credit memo activity. Our considerations when calculating our allowance include, but are not limited to, the following: the location of our businesses, the composition of our customer base, our product and service lines, potential future economic unrest, and potential future macroeconomic factors, including natural disasters and any impacts associated with the amortizationCOVID-19 pandemic. Continued adjustments will be made should there be any material change to reasonable and supportable forecasts that may impact our likelihood of collection, as it becomes evident. Our highly diverse global customer inducements and netbase, with no single customer accounting for more than 1% of revenue reduction associated withduring the amortization of data center above-market leases and data center below-market leases for the three and nine months ended September 30, 2019 and 2018 are as follows:2020, limits our exposure to concentration of credit risk.
  
Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2019 2018 2019 2018
Amortization expense included in depreciation and amortization associated with:        
Customer relationship and customer inducement intangible assets $29,064
 $26,782
 $85,228
 $84,401
Data center in-place leases and tenant relationships 11,356
 12,036
 35,337
 30,437
Third-party commissions asset and other finite-lived intangible assets 2,515
 642
 5,456
 3,486
Revenue reduction associated with amortization of:        
Customer inducements $2,303
 $3,229
 $7,641
 $8,782
Data center above-market leases and data center below-market leases 936
 1,276
 2,776
 3,648

c.    Revenues

Since December 31, 2018, there have been no changes to our accounting policies related to the accountingThe rollforward of allowance 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")doubtful accounts and capitalized commissions asset (collectively, "Contract Fulfillment Costs") as of September 30, 2019 and December 31, 2018 are as follows:
    September 30, 2019 December 31, 2018
Description 
Location in
Balance Sheet
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Intake Costs asset Other (within Other Assets, Net) $37,938
 $(20,974) $16,964
 $39,748
 $(24,504) $15,244
Capitalized commissions asset Other (within Other Assets, Net) 56,585
 (21,933) 34,652
 58,424
 (34,637) 23,787


Amortization expense associated with the Intake Costs asset and capitalized commissions assetcredit memo reserves for the three and nine months ended September 30, 2019 and 2018 are2020 is as follows:
Balance at December 31, 2019$42,856 
Credit memos charged to revenue42,713 
Allowance for bad debts charged to expense25,715 
Deductions and other(1)(57,496)
Balance at September 30, 2020$53,788 

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 2019 2018 2019 2018
Intake Costs asset$2,250
 $2,294
 $7,764
 $7,915
Capitalized commissions asset4,224
 3,053
 14,105
 10,433
(1)Primarily consists of the issuance of credit memos, the write-off of accounts receivable and the impact associated with currency translation adjustments.



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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)

e.    Leases
Deferred revenue liabilities are reflected as follows in our Condensed Consolidated Balance Sheets:
Description Location in Balance Sheet September 30, 2019 December 31, 2018
Deferred revenue - Current Deferred revenue $257,328
 $264,823
Deferred revenue - Long-term Other Long-term Liabilities 26,572
 26,401


Data Center Lessor Considerations

Our data center business features storage rental provided to customers at contractually specified rates over a fixed contractual period. Prior to January 1, 2019, our data center revenue contracts were accounted for in accordance with Accounting Standards Codification (“ASC”) No. 840, Leases ("ASC 840"). On January 1, 2019, we adopted ASU 2016-02, as described in more detail in Note 2.d. Beginning on January 1, 2019, our data center revenue contracts are accounted for in accordance with ASU 2016-02. ASU 2016-02 provides a practical expedient which allows lessors to account for nonlease components (such as power and connectivity, in the case of our data center business) with the related lease component if both the timing and pattern of transfer are the same for nonlease components and the lease component, and the lease component would be classified as an operating lease. The single combined component is accounted for under ASU 2016-02 if the lease component is the predominant component and is accounted for under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), if the nonlease components are the predominant components. We have elected to take this practical expedient. Storage rental revenue associated with our data center business was approximately $62,000 and $182,300 for the three and nine months ended September 30, 2019, respectively, which includes approximately $12,000 and $31,000 of revenue associated with power and connectivity for the three and nine months ended September 30, 2019, respectively. The revenue related to the service component of our data center business remains unchanged from the adoption of ASU 2016-02 and is recognized in the period the related services are provided. Our accounting treatment for data center revenue was not significantly impacted by the adoption of ASU 2016-02.

The future minimum lease payments we expect to receive under non-cancellable data center operating leases, for which we are the lessor, excluding month to month leases, for the next five years are as follows:
Year Future minimum lease payments
2019 (excluding the nine months ended September 30, 2019) $58,381
2020 177,528
2021 118,980
2022 83,677
2023 67,569

d. Leases

We lease facilities for certain of our warehouses, data centers and office space. We also have land leases, including those on which certain of our facilities are located. Operating and financing lease right-of-use assets and lease liabilities as of September 30, 2020 and December 31, 2019 are as follows:
DescriptionSeptember 30, 2020December 31, 2019
Assets:
Operating lease right-of-use assets$1,963,019 $1,869,101 
Financing lease right-of-use assets, net of accumulated depreciation(1)306,640 327,215 
Liabilities:
Current
Operating lease liabilities$236,019 $223,249 
Financing lease liabilities(1)42,620 46,582 
Long-term
Operating lease liabilities1,818,844 1,728,686 
Financing lease liabilities(1)311,387 320,600 


(1)Financing lease right-of-use assets, current financing lease liabilities and long-term financing lease liabilities are included within Property, Plant and Equipment, Net, Current portion of long-term debt and Long-term Debt, net of current portion, respectively, within our Condensed Consolidated Balance Sheets.
The majority of our leased facilities are classified as operating leases that, on average, have initial lease terms 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 exercisecomponents of the lease renewal optionexpense for the three and nine months ended September 30, 2020 and 2019 are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
Description2020201920202019
Operating lease cost(1)$122,737 $114,727 $365,303 $343,282 
Financing lease cost:
Depreciation of financing lease right-of-use assets$12,973 $14,679 $38,495 $45,950 
Interest expense for financing lease liabilities4,891 4,905 14,664 15,972 

(1)    Operating lease cost, the majority of which is at our sole discretion and may contain fixed rent, fair market value based rent or Consumer Price Index rent escalation clauses. We 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 lifeCost of the lease and any fair market value or Consumer Price Index rent escalations are recognized assales, includes variable lease expense incosts of $27,486 and $82,287 for the period in whichthree and nine months ended September 30, 2020, respectively, and $26,121 and $78,712 for the obligationthree and nine months ended September 30, 2019, respectively.

Other information: Supplemental cash flow information relating to our leases for the nine months ended September 30, 2020 and 2019 is incurred. In addition, we lease certain vehicles and equipment. Vehicle and equipment leases have lease terms ranging from one to seven years.as follows:

Nine Months Ended September 30,
Cash paid for amounts included in measurement of lease liabilities:20202019
Operating cash flows used in operating leases$266,619 $252,277 
Operating cash flows used in financing leases (interest)14,664 15,972 
Financing cash flows used in financing leases36,008 44,808 
Operating Lease Non-cash items:
Operating lease modifications and reassessments$89,727 $42,418 
New operating leases (including acquisitions)173,635 117,193 
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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)

f.    Stock-Based Compensation
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 (Distributions in excess of earnings) Earnings in excess of distributions 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 September 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 No. 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.

15
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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)

Operating and financing lease right-of-use assets and lease liabilities as of September 30, 2019 and January 1, 2019 (date of adoption of ASU 2016-02) are as follows:
Description Location in Balance Sheet September 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 $1,765,496
 $1,825,721
Financing lease right-of-use assets, net of accumulated depreciation(2) Property, Plant and Equipment, Net 327,264
 361,078
Total   $2,092,760
 $2,186,799
Liabilities:      
Current      
   Operating lease liabilities Accrued expenses and other current liabilities $216,176
 $209,911
   Financing lease liabilities Current portion of long-term debt 47,112
 50,437
      Total current lease liabilities   263,288
 260,348
Long-term      
   Operating lease liabilities Long-term Operating Lease Liabilities, net of current portion 1,626,907
 1,685,771
   Financing lease liabilities Long-term Debt, net of current portion 318,986
 350,263
      Total long-term lease liabilities   1,945,893
 2,036,034
Total   $2,209,181
 $2,296,382

(1) At September 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 September 30, 2019, these assets are comprised of approximately 64% real estate related assets and 36% non-real estate related assets.


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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 components of the lease expense for the three and nine months ended September 30, 2019 are as follows:
Description Location in Statement of Operations Three Months Ended
September 30, 2019		 Nine Months Ended September 30, 2019
Operating lease cost(1) Cost of sales and Selling, general and administrative $114,727
 $343,282
Financing lease cost:      
Depreciation of financing lease right-of-use assets Depreciation and amortization $14,679
 $45,950
Interest expense for financing lease liabilities Interest Expense, Net 4,905
 15,972
Total financing lease cost   $19,584
 $61,922

(1) Of the $114,727 incurred for the three months ended September 30, 2019, $111,423 is included within Cost of sales and $3,304 is included within Selling, general and administrative expenses. Of the $343,282 incurred for the nine months ended September 30, 2019, $333,742 is included within Cost of sales and $9,540 is included within Selling, general and administrative expenses. Operating lease cost includes variable lease costs of $26,121 and $78,712 for the three and nine months ended September 30, 2019, respectively.

We sublease certain real estate to third parties. We recognized sublease income of $1,667 and $5,221 for the three and nine months ended September 30, 2019, respectively.
Weighted average remaining lease terms and discount rates as of September 30, 2019 are as follows:
Remaining Lease Term
Operating leases11.0 Years
Financing leases11.0 Years
 Discount Rate
Operating leases7.1%
Financing leases5.6%



17
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 estimated minimum future lease payments as of September 30, 2019, are as follows:
Year Operating Leases(1) 
Sublease
Income
 Financing Leases(1)
2019 (excluding the nine months ended September 30, 2019) $87,009
 $(1,646) $32,386
2020 323,448
 (7,520) 57,887
2021 298,656
 (5,185) 52,685
2022 274,021
 (4,905) 46,358
2023 248,066
 (4,795) 38,695
Thereafter 1,505,195
 (10,673) 292,903
Total minimum lease payments 2,736,395
 $(34,724) 520,914
Less amounts representing interest or imputed interest (893,312)  
 (154,816)
Present value of lease obligations $1,843,083
  
 $366,098


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 September 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 September 30, 2019, we do not have any material operating or financing leases that are signed but have not yet commenced and we have certain leases with related parties which are not material to our consolidated financial statements.

18
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 nine months ended September 30, 2019 is as follows:
Cash paid for amounts included in measurement of lease liabilities: Nine Months Ended
September 30, 2019
Operating cash flows used in operating leases $252,277
Operating cash flows used in financing leases (interest) 15,972
Financing cash flows used in financing leases 44,808
Non-cash items:  
Operating lease modifications and reassessments $42,418
New operating leases (including acquisitions) 117,193
New financing leases, modifications and reassessments 20,699

e.    Stock-Based Compensation
We record stock-basedStock-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,(collectively, "Employee Stock-Based Awards"). There have been no significant changes to our accounting policies, assumptions and valuation methodologies related to the accounting for our Employee Stock-Based Awards as disclosed in Note 2.n. to Notes to Consolidated Financial Statements included in our Annual Report.
For our Employee Stock-Based Awards made on or after February 20, 2019, we have included the following retirement provision: Upon an employee’s retirement on or after attaining age 58, if the sum of (i) the award recipient’s age at retirement and (ii) the award recipient’s years of service with the company totals at least 70, the award recipient is entitled to continued vesting of any outstanding Employee Stock-Based Awards which include the 2019 Retirement Criteria subsequent to their retirement, provided that, for awards granted in the year of retirement, their retirement occurs on or after July 1st (the “2019 Retirement Criteria”). Accordingly, (i) grants of Employee Stock-Based Awards to an employee who has met the 2019 Retirement Criteria on or before the date of grant, or will meet the Retirement Criteria before July 1st of the year of the grant, will be expensed between the date of grant and July 1st of the grant year and (ii) grants of Employee Stock-Based Awards to employees who will meet the 2019 Retirement Criteria during the award’s normal vesting period will be expensed between the date of grant and the date upon which the award recipient meets the 2019 Retirement Criteria. Stock options and RSUs granted to recipients who meet the 2019 Retirement Criteria will continue vesting on the original vesting schedule, and the stock options will remain exercisable up to three years after retirement, or the original expiration date of the stock options, if earlier. PUs granted to recipients who meet the 2019 Retirement Criteria will continue to vest and be delivered in accordance with the original vesting schedule of the applicable PU award and remain subject to the same performance conditions.
Stock-based compensation expense for Employee Stock-Based Awards for the three and nine months ended September 30, 2020 and 2019 was $7,120 ($6,632 after tax or $0.02 per basic and diluted share) and $28,140 ($26,216 after tax or $0.09 per basic and diluted share), respectively, and for the three and nine months ended September 30, 2018 was $7,279 ($6,734 after tax or $0.02 per basic and diluted share) and $23,352 ($21,599 after tax or $0.08 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 follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Stock-based compensation expense$8,946 $7,120 $35,618 $28,140 

As of September 30, 2019,2020, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $50,152$49,492.

Restricted Stock Units and Performance Units

The fair value of RSUs and earned PUs that vested during the three and nine months ended September 30, 2020 and 2019 is as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2020201920202019
Fair value of RSUs vested$2,766 $3,092 $24,411 $20,802 
Fair value of earned PUs that vested1,370 1,176 12,421 7,679 
As of September 30, 2020, we expected to be recognized over a weighted-average period100% achievement of 1.9 years.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.

19
15
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)

g.    Income (Loss) Per Share—Basic and Diluted
Stock Options
A summary of stock option activity for the nine months ended September 30, 2019 is as follows:
Stock Options
Outstanding at December 31, 20184,271,834
Granted920,706
Exercised(236,704)
Forfeited(13,542)
Expired(16,715)
Outstanding at September 30, 20194,925,579
Options exercisable at September 30, 20193,128,621
Options expected to vest1,716,446

Restricted Stock Units
The fair valuecalculation of RSUs vested duringbasic and diluted income (loss) per share for the three and nine months ended September 30, 2020 and 2019 and 2018 isare as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2020201920202019
Income (loss) from continuing operations$38,562 $108,284 $96,341 $231,107 
Less: Net income (loss) attributable to noncontrolling interests168 609 1,058 1,534 
Income (loss) from continuing operations (utilized in numerator of Earnings Per Share calculation)38,394 107,675 95,283 229,573 
Income (loss) from discontinued operations, net of tax0 0 0 104 
Net income (loss) attributable to Iron Mountain Incorporated$38,394 $107,675 $95,283 $229,677 
Weighted-average shares—basic288,403,000 287,152,000 288,105,000 286,869,000 
Effect of dilutive potential stock options14,758 93,752 28,723 157,928 
Effect of dilutive potential RSUs and PUs392,943 445,081 337,588 528,387 
Weighted-average shares—diluted288,810,701 287,690,833 288,471,311 287,555,315 
Earnings (losses) per share—basic:    
Income (loss) from continuing operations$0.13 $0.37 $0.33 $0.80 
Income (loss) from discontinued operations, net of tax0 0 0 0 
Net income (loss) attributable to Iron Mountain Incorporated$0.13 $0.37 $0.33 $0.80 
Earnings (losses) per share—diluted:  
Income (loss) from continuing operations$0.13 $0.37 $0.33 $0.80 
Income (loss) from discontinued operations, net of tax0 0 0 0 
Net income (loss) attributable to Iron Mountain Incorporated$0.13 $0.37 $0.33 $0.80 
Antidilutive stock options, RSUs and PUs, excluded from the calculation5,529,126 4,782,661 5,959,693 4,590,645 
16
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
Fair value of RSUs vested$3,092
 $3,189
 $20,802
 $19,195
A summary of RSU activity for the nine months ended September 30, 2019 is as follows:
RSUs
Non-vested at December 31, 20181,196,566
Granted752,555
Vested(611,828)
Forfeited(81,437)
Non-vested at September 30, 20191,255,856

Performance Units
The fair value of earned PUs that vested during the three and nine months ended September 30, 2019 and 2018 is as follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
Fair value of earned PUs that vested$1,176
 $84
 $7,679
 $3,117


20
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)

h.    Income Taxes
A summary
We provide for income taxes during interim periods based on our estimate of PU activitythe effective tax rate for the year.

Our effective tax rates for the three and nine months ended September 30, 2020 and 2019 are as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Effective Tax Rate(1)26.5 %16.8 %25.7 %15.7 %


(1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and nine months ended September 30, 2020 and 2019 were the benefit derived from the dividends paid deduction and the impact of differences in the tax rates at which our foreign earnings are subject, including foreign exchange gains and losses in different jurisdictions with different tax rates. In addition, for the three and nine months ended September 30, 2020, the costs associated with Project Summit (as defined in Note 10) are more heavily weighted to our United States qualified REIT subsidiaries, and, therefore, provide no tax benefit.

i.    Fair Value Measurements

The assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2020 and December 31, 2019 are as follows:
  Fair Value Measurements at September 30, 2020 Using
DescriptionTotal Carrying
Value at
September 30, 2020		Quoted prices
in active
markets
(Level 1)		Significant other
observable
inputs
(Level 2)		Significant
unobservable
inputs
(Level 3)
Money Market Funds$15,030 $0 $15,030 $0 
Trading Securities11,452 11,095  357  0 
Derivative Assets4,346 0 4,346 0 
Derivative Liabilities25,609 0 25,609 0 
  Fair Value Measurements at December 31, 2019 Using
DescriptionTotal Carrying
Value at
December 31, 2019		Quoted prices
in active
markets
(Level 1)		Significant other
observable
inputs
(Level 2)		Significant
unobservable
inputs
(Level 3)
Money Market Funds$13,653 $0 $13,653 $0 
Trading Securities10,732 10,168  564  0 
Derivative Liabilities9,756 0 9,756 0 

There were no material items that are measured at fair value on a non-recurring basis at September 30, 2020 and December 31, 2019, other than (i) those disclosed in Note 2.s. to Notes to Consolidated Financial Statements included in our Annual Report, (ii) those acquired in acquisitions that occurred during the nine months ended September 30, 2019 is2020, as follows:
 Original
PU Awards		 PU Adjustment(1) Total
PU Awards
Non-vested at December 31, 2018967,049
 (299,948) 667,101
Granted380,856
 —
 380,856
Vested(202,141) —
 (202,141)
Forfeited/Performance or Market Conditions Not Achieved(13,898) (14,850) (28,748)
Non-vested at September 30, 20191,131,866
 (314,798) 817,068


(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.

As of September 30, 2019, we expected 100%, 50% and 100% achievement of each of the predefined revenue, return on invested capital and Adjusted EBITDA (as defineddescribed in Note 7) targets associated with4 and (iii) the awardsFine Arts reporting unit, as described in Note 2.b., all of PUs made in 2019, 2018 and 2017, respectively.which are based on Level 3 inputs.



21
17
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)

j.    Investments
f.    Income (Loss) Per Share—Basic
During 2019, we formed a joint venture entity with MakeSpace Labs, Inc. (the "MakeSpace JV"). In the second quarter of 2020, we committed to participate in a round of equity funding for the MakeSpace JV whereby we agreed tocontribute $36,000 of the $45,000 being raised in installments beginning in May 2020 through October 2021. Our equity interest in the MakeSpace JV at September 30, 2020 and DilutedDecember 31, 2019 was 37% and 34%, respectively, and the carrying value of our investment in the MakeSpace JV at September 30, 2020 and December 31, 2019 was$15,801 and $18,570, respectively.
Basic income (loss) per common share is calculated by dividing income (loss) by the weighted average number of common shares outstanding. The calculation of diluted income (loss) per share is consistent with that of basic income (loss) per share, but gives effect to all potential common shares (that is, securities such as stock options, RSUs or PUs) that were outstanding during the period, unless the effect is antidilutive.
k.    Accumulated Other Comprehensive Items, Net

The calculation of basic and diluted income (loss) per sharechanges in accumulated other comprehensive items, net for the three and nine months ended September 30, 20192020 and 20182019 are as follows:
Three Months Ended September 30, 2020Nine Months Ended September 30, 2020
 Foreign
Currency
Translation and Other
Adjustments		Change in Fair Value of Derivative InstrumentsTotalForeign
Currency
Translation and Other
Adjustments		Change in Fair Value of Derivative InstrumentsTotal
Beginning of Period$(406,444)$(21,079)$(427,523)$(252,825)$(9,756)$(262,581)
Other comprehensive income (loss):
Foreign currency translation and other adjustments44,529 0 44,529 (109,090)0 (109,090)
Change in fair value of derivative instruments0 (184)(184)0 (11,507)(11,507)
Total other comprehensive income (loss)44,529 (184)44,345 (109,090)(11,507)(120,597)
End of Period$(361,915)$(21,263)$(383,178)$(361,915)$(21,263)$(383,178)
Three Months Ended September 30, 2019Nine Months Ended September 30, 2019
Foreign
Currency
Translation and Other
Adjustments		Change in Fair Value of Derivative InstrumentsTotalForeign
Currency
Translation and Other
Adjustments		Change in Fair Value of Derivative InstrumentsTotal
Beginning of Period$(253,243)$(8,578)$(261,821)$(264,691)$(973)$(265,664)
Other comprehensive (loss) income:
Foreign currency translation and other adjustments(82,886)0 (82,886)(71,438)0 (71,438)
Change in fair value of derivative instruments0 (1,496)(1,496)0 (9,101)(9,101)
Total other comprehensive (loss) income(82,886)(1,496)(84,382)(71,438)(9,101)(80,539)
End of Period$(336,129)$(10,074)$(346,203)$(336,129)$(10,074)$(346,203)

18
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019
2018 2019
2018
Income (loss) from continuing operations$108,284
 $77,349
 $231,107
 $209,001
Less: Net income (loss) attributable to noncontrolling interests609
 (125) 1,534
 485
Income (loss) from continuing operations (utilized in numerator of Earnings Per Share calculation)$107,675
 $77,474
 $229,573
 $208,516
(Loss) income from discontinued operations, net of tax$—
 $(11,605) $104
 $(12,427)
Net income (loss) attributable to Iron Mountain Incorporated$107,675
 $65,869
 $229,677
 $196,089
        
Weighted-average shares—basic287,152,000
 286,159,000
 286,869,000
 285,801,000
Effect of dilutive potential stock options93,752
 264,451
 157,928
 250,574
Effect of dilutive potential RSUs and PUs445,081
 558,891
 528,387
 463,583
Weighted-average shares—diluted287,690,833
 286,982,342
 287,555,315
 286,515,157
        
Earnings (losses) per share—basic: 
  
  
  
Income (loss) from continuing operations$0.37
 $0.27
 $0.80
 $0.73
(Loss) income from discontinued operations, net of tax—
 (0.04) —
 (0.04)
Net income (loss) attributable to Iron Mountain Incorporated(1)$0.37
 $0.23
 $0.80
 $0.69
        
Earnings (losses) per share—diluted: 
  
  
  
Income (loss) from continuing operations$0.37
 $0.27
 $0.80
 $0.73
(Loss) income from discontinued operations, net of tax—
 (0.04) —
 (0.04)
Net income (loss) attributable to Iron Mountain Incorporated(1)$0.37
 $0.23
 $0.80
 $0.68
 

      
Antidilutive stock options, RSUs and PUs, excluded from the calculation4,782,661
 3,253,975
 4,590,645
 3,256,206


(1) Columns may not foot due to rounding.

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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)

g. Income Taxes
We provide for income taxes during interim periods basedl.    Gain on our estimateDisposal/Write-Down of the effective tax rate for the year. Our estimate of the effective tax rates for the years ending December 31, 2019Property, Plant 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 nine months ended September 30, 2019 and 2018 are as follows:
 
Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2019(1) 2018(1) 2019(1) 2018(2)
Effective Tax Rate16.8%
15.3%
15.7% 16.0%


(1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and nine months ended September 30, 2019 and for the three months ended September 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 nine months ended September 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.
h. Fair Value Measurements
Our financial assets or liabilities that are carried at fair value are required to be measured using inputs from the three levels of the fair value hierarchy. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The three levels of the fair value hierarchy are as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3—Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

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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 September 30, 2019 and December 31, 2018, respectively, are as follows:
    Fair Value Measurements at
September 30, 2019 Using
Description Total Carrying
Value at
September 30, 2019		 Quoted prices
in active
markets
(Level 1)		   Significant other
observable
inputs
(Level 2)		   Significant
unobservable
inputs
(Level 3)
Money Market Funds(1) $30,123
 $—
   $30,123
   $—
Trading Securities 9,996
 9,540
 (2) 456
 (3) —
Derivative Assets(4) 1,972
 —
   1,972
   —
Derivative Liabilities(4) 12,046
 —
   12,046
   —
    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
   —
Derivative Liabilities(4) 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 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, (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 and (iii) short-term (six months or less) foreign exchange currency forward contracts that we have entered into to hedge certain of our foreign exchange intercompany exposures. 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.
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 September 30, 2019 and December 31, 2018, other than those disclosed in Note 2.s. to Notes to Consolidated Financial Statements included in our Annual Report, those acquired in acquisitions that occurred during the nine months ended September 30, 2019 and our initial investment in Makespace LLC (as disclosed in Note 10), all of which are based on Level 3 inputs.
The fair value of our long-term debt, which was determined based on either Level 1 inputs or Level 3 inputs, is disclosed in Note 5. Long-term debt is measured at cost in our Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

24
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.    Accumulated Other Comprehensive Items,Equipment, Net
The changes in accumulated other comprehensive items,
Consolidated gain on disposal/write-down of property, plant and equipment, net, for the three and nine months ended September 30, 2019, respectively, are as follows:2020 was approximately $75,800 and $78,200, respectively. These amounts primarily consisted of gains of approximately $76,400 associated with the sale-leaseback transactions of 2 facilities during the third quarter of 2020.
 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
 Foreign
Currency
Translation
Adjustments		 Change in Fair Value of Derivative Instruments Total Foreign
Currency
Translation
Adjustments		 Change in Fair Value of Derivative Instruments Total
Beginning of Period$(253,243) $(8,578) $(261,821) $(264,691) $(973) $(265,664)
Other comprehensive (loss) income:

 

 

      
Foreign currency translation adjustment(82,886) —
 (82,886) (71,438) —
 (71,438)
Change in fair value of derivative instruments—
 (1,496) (1,496) —
 (9,101) (9,101)
Total other comprehensive (loss) income(82,886) (1,496) (84,382) (71,438) (9,101) (80,539)
End of Period$(336,129) $(10,074) $(346,203) $(336,129) $(10,074) $(346,203)

The changes in accumulated other comprehensive items, net for the three and nine months ended September 30, 2018, respectively, are as follows:
 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
 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$(209,653) $2,203
 $(207,450) $(103,989) $—
 $(103,989)
Other comprehensive (loss) income:

 

 

      
Foreign currency translation adjustment(22,790) —
 (22,790) (128,454) —
 (128,454)
Change in fair value of derivative instruments—
 1,980
 1,980
 —
 4,183
 4,183
Total other comprehensive (loss) income(22,790) 1,980
 (20,810) (128,454) 4,183
 (124,271)
End of Period$(232,443) $4,183
 $(228,260) $(232,443) $4,183
 $(228,260)



25
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)

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

Consolidated gain on disposal/write-down of property, plant and equipment, net, for the three and nine months ended September 30, 2019 was approximately $9,300 and $17,100, respectively.

During These amounts consisted of (i) a gain of approximately $36,000 associated with the second quartersale of 2019, we began exploring strategic options regarding how to maintaincertain land and support the infrastructure of select offerings within our Iron Mountain Iron Cloud (“Iron Cloud”) portfolio. As a result,buildings during the second quarter of 2019 we performedand (ii) a long-lived asset impairment analysis on the assetsgain of approximately $9,800 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. On September 30, 2019, we entered into an agreement (the “Iron Cloud Outsourcing Agreement”) with a wholesale provider of data infrastructure and data management services to outsource the operation, infrastructure management and maintenance and delivery of select offerings within our Iron Cloud portfolio. In conjunction with the entry into the Iron Cloud Outsourcing Agreement, we also sold certain IT infrastructure assets and the rights to certain hardware and software maintenance contracts used to deliver these Iron Cloud offerings. As a result of our long-lived asset impairment analysis and sale of certain IT infrastructure assets and rights to certain hardware and software maintenance contracts, we recognized an impairment charge and a loss on sale of the assets totaling approximately $800 and $24,800 during the three and nine months ended September 30, 2019, respectively.

The gain for the nine months ended September 30, 2019 consisted primarily of gains associated with (i) a sale-leaseback transaction of 5 facilities in the United States of approximately $9,800 during the third quarter of 2019, and (ii) the sale of certain land and buildings in the United Kingdom of approximately $36,000were partially offset by losses incurred during the second quarter of 2019. These gains were partially offset by losses2019 primarily associated with (i) thean impairment charge on the assets associated with the select offerings within our Iron Mountain 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.$24,800.

k.m.    Other Expense (Income) Expense,, Net
Other
Consolidated other expense (income) expense,, net for the three and nine months ended September 30, 20192020 and 20182019 consists of the following:
 Three Months Ended September 30,Nine Months Ended September 30,
Description2020201920202019
Foreign currency transaction losses (gains), net$29,635 $(18,251)$(6,293)$(19,885)
Debt extinguishment expense51,260 0 68,300 0 
Other, net(1)2,570 4,836 4,432 6,488 
Other Expense (Income), Net$83,465 $(13,415)$66,439 $(13,397)

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
Foreign currency transaction (gains) losses, net$(18,251)
$664
 $(19,885)
$3,825
Other, net4,836

(339) 6,488

(2,405)
Other (Income) Expense, Net

$(13,415)
$325
 $(13,397)
$1,420


The gain or loss(1)    Other, net for the nine months ended September 30, 2020 is primarily comprised of losses on foreign currency transactions, calculated as the difference between the historical exchange rate and the exchange rate at the applicable measurement date, include gains or losses related to (i) borrowings in certain foreign currencies under our Revolving Credit Facility (as defined and discussed more fully in Note 5), (ii) our Euro Notes (as defined in Note 5), (iii) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and betweenequity method investments, partially offset by a gain on 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 (aspreviously held 25% equity investment in OSG Records Management (Europe) Limited ("OSG"), as more fully discussed in Note 3).4.

n.    Recent Accounting Pronouncements

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

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

26
19
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)

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

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

m. Correctiono.    Change in Presentation

Subsequent to our conversion to a REIT, weWe have historically classified gains on saleour Significant Acquisition Costs (as defined in Note 2.x. to Notes to Consolidated Financial Statements included in our Annual Report) as components 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 nine months ended September 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. During the third quarter of 2018, we recognized approximately $1,300 of gains on sale of real estate, net of tax. During the fourth quarter of 2018, we recognized approximately $54,000 of gains on sale of real estate, net of tax.

n. Immaterial Restatement

In June 2019, we received a notification of assessment from tax and customs authorities in the Netherlands related to a value-added tax (“VAT”) liability of approximately 16,800 Euros primarily related to the years ending December 31, 2018 and 2017. We have established a reserve for this matter based upon our estimate of the amount of loss that is both probable and estimable, inclusive of interest and penalties. See Note 8 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 estimatefourth 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 material impact to the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019, as a result of this matter.

27
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)

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 nine months ended September 30, 2018Operations. The prior periods have 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 nine months ended September 30, 2018: (1) cash flows from operating activities, (2) cash flows from investing activities and (3) cash flows from financing activities.presentation.

The following table sets forth the effect of the immaterial restatementchange in presentation of Significant Acquisition Costs to certain line items of our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018:2019:
Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2019
Cost of sales (excluding depreciation and amortization)$(1,945)$(4,136)
Selling, general and administrative$(2,005)$(4,461)
Significant Acquisition Costs$3,950 $8,597 
  Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Selling, general and administrative $1,459
 $10,798
Total Operating Expenses $1,459
 $10,798
Operating Income (Loss) $(1,459) $(10,798)
Interest Expense, Net $97
 $262
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes $(1,556) $(11,060)
Provision (Benefit) for Income Taxes $(277) $(1,916)
Income (Loss) from Continuing Operations $(1,279) $(9,144)
Net Income (Loss) $(1,279) $(9,144)
Net Income (Loss) Attributable to Iron Mountain Incorporated $(1,279) $(9,144)
Earnings (Losses) per Share - Basic:    
Income (Loss) from Continuing Operations $(0.01) $(0.03)
Net Income (Loss) Attributable to Iron Mountain Incorporated $—
 $(0.03)
Earnings (Losses) per Share - Diluted:    
Income (Loss) from Continuing Operations $—
 $(0.03)
Net Income (Loss) Attributable to Iron Mountain Incorporated $—
 $(0.04)
The following table sets forth the effect of the immaterial restatement to certain line items of our Consolidated Balance Sheet as of December 31, 2018:
  December 31, 2018
Total Other Assets, Net $4,971
Total Assets $4,971
Accrued expenses and other current liabilities $28,097
Total Current Liabilities $28,097
(Distribution in excess of earnings) Earnings in excess of distributions $(23,126)
Total Iron Mountain Incorporated Stockholders' Equity $(23,126)

The immaterial restatement changed (Distribution in excess of earnings) Earnings in excess of distributions disclosed in our Condensed Consolidated Statements of Equity for the periods ended September 30, 2018, June 30, 2018 and December 31, 2017All Significant Acquisition Costs were incurred by $(22,852), $(21,573) and $(13,708), respectively.
Prospectively, we will process an immaterial restatement of our consolidated financial statements for the quarterly period ended 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 Annual Report on Form 10-K for the year ending December 31, 2019.

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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 entered intoare 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) and (iii) foreign exchange currency forward contracts (which are not designated as hedges).

Interest Rate Swap Agreements Designated as Cash Flow Hedges
In March 2018,
As of September 30, 2020 and December 31, 2019, we entered intohad $350,000 in notional value of interest rate swap agreements tooutstanding, which limit our exposure to changes in interest rates on a portion of our floating rate indebtedness. As of September 30, 2019 and December 31, 2018, we had $350,000 in notional value ofThese 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 raterates as specified in the interest rate swap agreements).agreements.
In July 2019, we entered into
We have 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 forward-starting interest rate 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 as 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 September 30, 20192020 and December 31, 2018,2019, we had a derivative liability of $12,046$23,219 and $973,$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 accumulatedAccumulated other comprehensive income. We have recorded unrealizeditems, net in our Condensed Consolidated Balance Sheets.

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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
3.    Derivative Instruments and Hedging Activities (Continued)
Unrealized (gains) losses of $3,468 and $11,073associated with the interest rate swap agreements for the three and nine months ended September 30, 2020 and 2019 respectively. We have recorded unrealized gains of $1,980 and $4,183 for the three and nine months ended September 30, 2018, respectively. are as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Unrealized (gains) losses associated with interest rate swap agreements$(1,185)$3,468 $14,445 $11,073 

As of September 30, 2019,2020, cumulative net losses of $12,046$23,219 are recorded within accumulatedAccumulated 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 enteredWe enter 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, representing the fair values of the cross-currency swap agreements, and any changes in fair value are recognized as a component of accumulatedAccumulated other comprehensive income.items, net. Unrealized gains are recognized as assets while unrecognizedunrealized losses are recognized as liabilities.

In September 2020, we entered into cross-currency swap agreements whereby we notionally exchanged approximately $359,200 at an interest rate of 4.5% for approximately 300,000 Euros at a weighted average interest rate of approximately 3.4%. These cross-currency swap agreements expire in February 2026. At September 30, 2019,2020, we had a derivative asset of $1,972,$4,346, which was recorded as a component of Other within Other assets, net associated with these cross-currency swap agreements.

In August 2019, we entered into cross-currency swap agreements whereby 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%. These cross-currency swap agreements expire in our Condensed Consolidated Balance Sheet,August 2023. We had a derivative liability of $2,390 and $982 at September 30, 2020 and December 31, 2019, respectively, which represents the fair valuewas recorded as a component of Other long-term liabilities associated with these cross-currency swap agreements.

Unrealized losses (gains) associated with the cross-currency swap agreements. We have recorded unrealized gains of $1,972agreements for the three and nine months ended September 30, 2019.2020 are as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Unrealized losses (gains) associated with cross-currency swap agreements$1,370 $(1,972)$(2,938)$(1,972)

As of September 30, 2020, cumulative net gains of $1,956 are recorded within Accumulated other comprehensive items, net associated with these net investment hedges.

29
21
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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 (Continued)


b.    Euro Notes Designated as a Hedge of Net Investment
In addition,
Prior to their redemption in August 2020, we have designated a portion of our previously outstanding Euro Notes (as defined in Note 5) as a hedge of net investment of certain of our Euro denominated subsidiaries. ForFrom January 1, 2020 through the date of redemption and for the nine months ended September 30, 2019, we designated, on average, 300,000 and 279,821 Euros, of our Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. For the nine months ended September 30, 2018, we designated, on average, 209,276 Eurosrespectively, 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 (losses) of $13,101 and $14,962 for the three and nine months ended September 30, 2019, respectively, and $2,139 and $6,761 for the three and nine months ended September 30, 2018, respectively,(gains) losses related to the change in fair value of such debt due to currency translation adjustments which isas a component of accumulatedAccumulated other comprehensive items, net.

Foreign exchange losses (gains) associated with this hedge of net investment for the three and nine months ended September 30, 2020 and 2019 are as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Foreign exchange losses (gains) associated with net investment hedge$16,604 $(13,101)$17,005 $(14,962)

As of September 30, 2019,2020, cumulative net gains of $29,220,$3,256, net of tax, are recorded in accumulatedAccumulated other comprehensive items, net associated with this net investment hedge.

Foreign Exchange Currency Forward Contracts Not Designated as Hedges
We have entered into forward contracts4.    Acquisitions

Prior to hedgeJanuary 9, 2020, we owned a 25% equity interest in OSG. On January 9, 2020, we acquired the remaining 75% equity interest in OSG for cash consideration of approximately $95,500 (the "OSG Acquisition"). The OSG Acquisition enabled us to extend our exposures associatedGlobal RIM 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 certain foreign currencies. We have not designated any of these forward contracts as hedges. Our policy isthe OSG Acquisition, our previously held 25% equity investment in OSG was remeasured to record the fair value at the closing date of each derivative instrument on a gross basis. As of September 30, 2019, we had 0 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. At December 31, 2018, we had a derivative asset of $93 which was recordedthe OSG Acquisition; as a componentresult, we recorded a gain of Prepaid expenses and other in our Condensed Consolidated Balance Sheet. We recorded losses for our derivative instruments not recognized as hedging instruments forapproximately $10,000 during the three and nine months ended September 30, 2019first quarter of $0 and $737, respectively. We recorded losses for our derivative instruments not recognized as hedging instruments for the three and nine months ended September 30, 2018 of $616 and $4,172, respectively. The gains and losses for our derivative instruments not recognized as derivative instruments are2020, which is included as a component of foreign currency transaction (gains) losses,Other expense (income), net within Other (income) expense, net inon our Condensed Consolidated StatementStatements of Operations. The fair value of the 25% equity investment in OSG was determined based on the purchase price of the OSG Acquisition.


On February 17, 2020, in order to enhance our existing operations in the United Arab Emirates, we acquired Glenbeigh Records Management DWC-LLC, a storage and records management company, for total cash consideration of approximately $29,100.
30
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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(4)4.    Acquisitions (Continued)

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 the Nine Months Ended September 30, 2019

During the nine months ended September 30, 2019, in order to enhance our existing operations in the United States, the United Kingdom, Switzerland, Thailand, Colombia, Germany, Hong Kong and Latvia and to expand our operations into Bulgaria, we completed the acquisition of 9 storage and records management companies and 1 art storage company for total cash consideration of approximately $49,200.

Purchase Price Allocation

A summary of the cumulative consideration paid and the preliminary allocation of the purchase price paid for all of our 20192020 acquisitions through September 30, 20192020 is as follows:
  Nine Months Ended
September 30, 2019
Cash Paid (gross of cash acquired)(1) $51,456
Purchase Price Holdbacks and Other 4,135
Total Consideration 55,591
Fair Value of Identifiable Assets Acquired:  
Cash 2,224
Accounts Receivable, Prepaid Expenses and Other Assets 3,228
Property, Plant and Equipment(2) 5,320
Customer Relationship Intangible Assets 21,584
Operating Lease Right-of-Use Assets 16,956
Accounts Payable, Accrued Expenses and Other
Liabilities
 (2,716)
Operating Lease Liabilities (16,956)
Deferred Income Taxes (1,719)
Total Fair Value of Identifiable Net Assets Acquired 27,921
Goodwill Initially Recorded(3) $27,670


Nine Months Ended
September 30, 2020
Cash Paid (gross of cash acquired)(1)$124,614 
Fair Value of Investments Applied to Acquisitions27,276 
Total Consideration151,890 
Fair Value of Identifiable Assets Acquired:
Cash6,545 
Accounts Receivable, Prepaid Expenses and Other Assets16,815 
Property, Plant and Equipment(2)43,643 
Customer Relationship Intangible Assets(3)60,846 
Operating Lease Right-of-Use Assets111,251 
Debt Assumed(11,479)
Accounts Payable, Accrued Expenses and Other Liabilities(9,435)
Operating Lease Liabilities(111,251)
Deferred Income Taxes(6,364)
(1)Total Fair Value of Identifiable Net Assets AcquiredIncluded in cash paid for acquisitions in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2019 is net cash acquired of $2,224 and contingent and other payments, net of $7,267 related to acquisitions made in previous years.
100,571 
(2)Goodwill Initially RecordedConsists 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.$51,319 


(1)Included in cash paid for acquisitions in our Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2020 is net cash acquired of $6,545 and contingent and other payments of $512 related to acquisitions completed in 2019.
(2)    Consists primarily of leasehold improvements, racking structures and warehouse equipment.
(3)    The goodwillpreliminary weighted average lives of customer relationship intangible assets 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.seven years.


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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(4) 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 September 30, 20192020 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 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.2020. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined, but no later than the one year measurement period, 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 and nine months ended September 30, 20192020 were not material to our results from operations.

23
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 September 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
September 30, 2018
 Nine Months Ended
September 30, 2018
Total Revenues$1,060,991
 $3,167,762
Income from Continuing Operations$77,349
 $218,953
Per Share Income from Continuing Operations - Basic$0.27
 $0.76
Per Share Income from Continuing Operations - Diluted$0.27
 $0.76

In addition to our acquisition of IODC, we completed certain other acquisitions during the first nine 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.



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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(5)5.    Debt

Long-term debt is as follows:
  September 30, 2019  December 31, 2018
  Debt (inclusive of discount) Unamortized Deferred Financing Costs Carrying Amount Fair
Value		  Debt (inclusive of discount) Unamortized Deferred Financing Costs Carrying Amount Fair
Value
Revolving Credit Facility(1) $354,879
 $(11,763)
$343,116
 $354,879
  $793,832

$(14,117)
$779,715
 $793,832
Term Loan A(1) 231,250
 —
 231,250
 231,250
  240,625

—

240,625
 240,625
Term Loan B(2) 688,089
 (7,806) 680,283
 688,638
  693,169
 (8,742) 684,427
 660,013
Australian Dollar Term Loan (the "AUD Term Loan")(3) 219,871
 (2,389) 217,482
 221,165
  233,955

(3,084)
230,871
 235,645
UK Bilateral Revolving Credit Facility (the "UK Bilateral Facility")(4) 172,180
 (1,845) 170,335
 172,180
  178,299
 (2,357) 175,942
 178,299
43/8% Senior Notes due 2021 (the "43/8% Notes")(5)
 500,000
 (2,866) 497,134
 503,750
  500,000

(4,155)
495,845
 488,750
6% Senior Notes due 2023 (the "6% Notes due 2023")(5) 600,000
 (4,302) 595,698
 615,000
  600,000

(5,126)
594,874
 606,000
53/8% CAD Senior Notes due 2023 (the "CAD Notes")
 188,811
 (2,173) 186,638
 194,475
  183,403

(2,506)
180,897
 186,154
53/4% Senior Subordinated Notes due 2024 (the "53/4% Notes")(5)
 1,000,000
 (6,752) 993,248
 1,010,000
  1,000,000

(7,782)
992,218
 940,000
3% Euro Senior Notes due 2025 (the "Euro Notes")(5) 327,508
 (3,622) 323,886
 334,877
  343,347

(4,098)
339,249
 321,029
37/8% GBP Senior Notes due 2025 (the "GBP Notes")
 491,943
 (5,651) 486,292
 493,173
  509,425

(6,573)
502,852
 453,811
53/8% Senior Notes due 2026 (the "53/8% Notes")
 250,000
 (2,863) 247,137
 257,500
  250,000

(3,185)
246,815
 224,375
47/8% Senior Notes due 2027 (the "47/8% Notes due 2027")(5)
 1,000,000
 (11,375) 988,625
 1,022,500
  1,000,000

(12,442)
987,558
 855,000
51/4% Senior Notes due 2028 (the "51/4% Notes")(5)
 825,000
 (10,037) 814,963
 852,844
  825,000

(10,923)
814,077
 713,625
47/8% Senior Notes due 2029 (the "47/8% Notes due 2029")(5)
 1,000,000

(14,451)
985,549
 1,015,000
  —
 —
 —
 —
Real Estate Mortgages, Financing Lease Liabilities and Other 533,549
 (444) 533,105
 533,549
  606,702

(171)
606,531
 606,702
Accounts Receivable Securitization Program(6) 271,562
 (115) 271,447
 271,562
  221,673

(218)
221,455
 221,673
Mortgage Securitization Program(7) 50,000
 (1,019) 48,981
 50,000
  50,000
 (1,128) 48,872
 50,000
Total Long-term Debt 8,704,642
 (89,473) 8,615,169
  
  8,229,430
 (86,607) 8,142,823
  
Less Current Portion (394,822) —
 (394,822)  
  (126,406)
—

(126,406)  
Long-term Debt, Net of Current Portion $8,309,820
 $(89,473) $8,220,347
  
  $8,103,024

$(86,607) $8,016,417
  
 September 30, 2020December 31, 2019
 Debt (inclusive of discount)Unamortized Deferred Financing CostsCarrying AmountFair
Value		Debt (inclusive of discount)Unamortized Deferred Financing CostsCarrying AmountFair
Value
Revolving Credit Facility(1)$172,603 $(9,482)$163,121 $172,603 $348,808 $(12,053)$336,755 $348,808 
Term Loan A(1)218,750 0 218,750 218,750 228,125 0 228,125 228,125 
Term Loan B681,315 (6,557)674,758 682,500 686,395 (7,493)678,902 686,890 
Australian Dollar Term Loan (the "AUD Term Loan")226,690 (1,731)224,959 227,602 226,924 (2,313)224,611 228,156 
UK Bilateral Revolving Credit Facility (the "UK Bilateral Facility")180,204 (1,393)178,811 180,204 184,601 (1,801)182,800 184,601 
43/8% Senior Notes due 2021 (the "43/8% Notes")(2)
0 0 0 0 500,000 (2,436)497,564 503,450 
6% Senior Notes due 2023 (the "6% Notes due 2023")(2)0 0 0 0 600,000 (4,027)595,973 613,500 
53/8% CAD Senior Notes due 2023 (the "CAD Notes")
0 0 0 0 192,058 (2,071)189,987 199,380 
53/4% Senior Subordinated Notes due 2024 (the "53/4% Notes")(2)
0 0 0 0 1,000,000 (6,409)993,591 1,010,625 
3% Euro Senior Notes due 2025 (the "Euro Notes")(2)0 0 0 0 336,468 (3,462)333,006 345,660 
37/8% GBP Senior Notes due 2025 (the "GBP Notes")
514,867 (4,942)509,925 519,027 527,432 (5,809)521,623 539,892 
53/8% Senior Notes due 2026 (the "53/8% Notes")
0 0 0 0 250,000 (2,756)247,244 261,641 
47/8% Senior Notes due 2027 (the "47/8% Notes due 2027")(2)
1,000,000 (9,954)990,046 1,012,500 1,000,000 (11,020)988,980 1,029,475 
51/4% Senior Notes due 2028 (the "51/4% Notes due 2028")(2)
825,000 (8,857)816,143 851,813 825,000 (9,742)815,258 859,598 
5% Senior Notes due 2028 (the "5% Notes")(2)500,000 (5,667)494,333 507,500 0 0 0 0 
47/8% Senior Notes due 2029 (the "47/8% Notes due 2029")(2)
1,000,000 (13,019)986,981 1,012,500 1,000,000 (14,104)985,896 1,015,640 
51/4% Senior Notes due 2030 (the "51/4 Notes due 2030")(2)
1,300,000 (14,792)1,285,208 1,352,000 0 0 0 0 
41/2% Senior Notes due 2031 (the "41/2% Notes")(2)
1,100,000 (12,970)1,087,030 1,102,750 0 0 0 0 
55/8% Senior Notes due 2032 (the "55/8% Notes")(2)
600,000 (6,873)593,127 630,000 0 0 0 0 
Real Estate Mortgages, Financing Lease Liabilities and Other468,906 (215)468,691 468,906 523,671 (406)523,265 523,671 
Accounts Receivable Securitization Program270,600 (168)270,432 270,600 272,062 (81)271,981 272,062 
Mortgage Securitization Program50,000 (873)49,127 50,000 50,000 (982)49,018 50,000 
Total Long-term Debt9,108,935 (97,493)9,011,442  8,751,544 (86,965)8,664,579 
Less Current Portion(392,586)0 (392,586) (389,013)0 (389,013) 
Long-term Debt, Net of Current Portion$8,716,349 $(97,493)$8,618,856  $8,362,531 $(86,965)$8,275,566  


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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(5)5.    Debt (Continued)

(1)Collectively, the credit agreement ("Credit Agreement"). The Credit Agreement consists of a revolving credit facility (the "Revolving Credit Facility") and a term loan (the "Term Loan A"). The Credit Agreement is scheduled to mature on June 3, 2023. Of the $354,879 of outstanding borrowings under the Revolving Credit Facility as of September 30, 2019, 221,900 was denominated in United States dollars, 72,000 was denominated in Canadian dollars and 72,000 was denominated in Euros. In addition, we also had various outstanding letters of credit totaling $16,843. The remaining amount available for borrowing under the Revolving Credit Facility as of September 30, 2019 was $1,378,278 (which amount represents the maximum availability as of such date). The average interest rate in effect under the Credit Agreement was 3.5% as of September 30, 2019. The average interest rate in effect under the Revolving Credit Facility as of September 30, 2019 was 3.3% and the interest rate in effect under Term Loan A as of September 30, 2019 was 3.8%.

(2)In connection with the 2018 First Amendment (as defined in Note 5 to Notes to Consolidated Financial Statements included in our Annual Report), Iron Mountain Information Management, LLC ("IMIM") entered into an incremental term loan activation notice (the "Activation Notice") with certain lenders pursuant to which the lenders party to the Activation Notice agreed to provide commitments to fund an incremental term loan B in the amount of $700,000 (the "Term Loan B"). On March 26, 2018, IMIM borrowed the full amount of the Term Loan B. The Term Loan B is scheduled to mature on January 2, 2026. The interest rate in effect as of September 30, 2019 was 3.8%. The amount of debt for the Term Loan B reflects an unamortized original issue discount of $1,411 and $1,581 as of September 30, 2019 and December 31, 2018, respectively.

(3)The interest rate in effect as of September 30, 2019 was 4.9%. We had 327,500 Australian dollars outstanding on the AUD Term Loan as of September 30, 2019. The amount of debt for the AUD Term Loan reflects an unamortized original issue discount of $1,294 and $1,690 as of September 30, 2019 and December 31, 2018, respectively.

(4)The interest rate in effect as of September 30, 2019 was 3.0%.

(5)Collectively, the "Parent Notes".

(6)The interest rate in effect as of September 30, 2019 was 3.1%. The Accounts Receivable Securitization Program terminates on July 30, 2020, at which point all obligations under the program become due. 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 September 30, 2019.

(7)The interest rate in effect as of September 30, 2019 was 3.5%.

(1)Collectively, the credit agreement (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 $172,603 of outstanding borrowings under the Revolving Credit Facility as of September 30, 2020, $128,000 was denominated in United States dollars, 3,200 was denominated in Canadian dollars and 36,000 was denominated in Euros. In addition, we also had various outstanding letters of credit totaling $3,202. The remaining amount available for borrowing under the Revolving Credit Facility as of September 30, 2020 was $1,574,195 (which amount represents the maximum availability as of such date). The average interest rate in effect under the Credit Agreement was 2.3% as of September 30, 2020 and the average interest rate in effect under the Revolving Credit Facility as of September 30, 2020 was 2.9%.
(2)Collectively, the "Parent Notes".

See Note 4 to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding ourthe 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 September 30, 20192020 are consistent with the levels of the fair value hierarchy used to determine the fair value of our debt as of December 31, 20182019 (which are disclosed in our Annual Report). Additionally, see Note

June 2020 Offerings

On June 22, 2020, IMI completed private offerings of (i) $500,000 in aggregate principal amount of the 5% Notes, (ii) $1,300,000 in aggregate principal amount of the 51/4% Notes due 2030 and (iii) $600,000 in aggregate principal amount of the 55/8% Notes (collectively, the "June 2020 Offerings"). The 5% Notes, the 51/4% Notes due 2030 and the 55/8% Notes were issued at 100.000% of par. The total net proceeds of approximately $2,376,000 from the June 2020 Offerings, after deducting the initial purchasers' commissions, were used to redeem all of the 43/8% Notes, the 6% Notes due 2023 and the 53/4% Notes and to Consolidated Financial Statements includedrepay a portion of the outstanding borrowings under the Revolving Credit Facility.

On June 29, 2020, we redeemed all of the $500,000 in our Annual Report for information regarding whichaggregate principal outstanding of our consolidated subsidiaries guarantee certainthe 43/8% Notes at 100.000% of ourpar and all of the $600,000 in aggregate principal outstanding of the 6% Notes due 2023 at 102.000% of par, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date. We recorded a charge of $17,040 to Other expense (income), net during the second quarter of 2020 related to the early extinguishment of this debt, instruments. There have been no material changesrepresenting the call premium associated with the early redemption of the 6% Notes due 2023, as well as a write-off of unamortized deferred financing costs associated with the early redemption of the 43/8% Notes and the 6% Notes due 2023.

On July 2, 2020, we redeemed all of the $1,000,000 in aggregate principal outstanding of the 53/4% Notes at 100.958% of par, plus accrued and unpaid interest to, our long-termbut excluding, the redemption date. We recorded a charge of $15,310 to Other expense (income), net during the third quarter of 2020 related to the early extinguishment of this debt, since December 31, 2018 other thanrepresenting the call premium and write-off of unamortized deferred financing fees.

August 2020 Offering

On August 18, 2020, IMI completed a private offering of $1,100,000 in aggregate principal amount of the 41/2% Notes. The 41/2% Notes were issued at 100.000% of par. The total net proceeds of approximately $1,089,000 from the issuance of the 471/82% Senior Notes, due 2029, as described below.

See Note 3 for information regardingafter deducting the forward-starting interest rate swap agreementsinitial purchasers' commissions, were used to redeem all of the CAD Notes, the Euro Notes, and the cross-currency swap agreements53/8% Notes and to repay a portion of the outstanding at September 30, 2019.borrowings under the Revolving Credit Facility.

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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(5)5.    Debt (Continued)

IssuanceOn August 21, 2020, we redeemed all of the 47/8% Senior Notes due 2029
In September 2019, IMI completed a private offering of $1,000,000250,000 CAD in aggregate principal amountoutstanding of the 4CAD Notes at 104.031% of par, 300,000 Euro in aggregate principal outstanding of the Euro Notes at 101.500% of par and $250,000 in aggregate principal outstanding of the 573/8% Notes due 2029. The 4at 106.628% of par, plus, in each case accrued and unpaid interest to, but excluding, the redemption date. We recorded a charge of $35,950 to Other expense (income), net during the third quarter of 2020 related to the early extinguishment of the CAD Notes, the Euro Notes and the 573/8% Notes, due 2029 were issuedrepresenting the call premiums and write off unamortized deferred financing costs associated with the early redemption of these debt instruments.

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 30, 2021, at par.which point all obligations become due. The net proceeds of approximately $987,500 from the 47/8% Notes due 2029, after deducting the initial purchasers' commissions, were used to repayfull amount outstanding borrowings under the Revolving Credit Facility.Accounts Receivable Securitization Program is classified within the current portion of long-term debt in our Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019.

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 2 separate cash pools,pooling arrangements, 1 of which we utilize to manage global liquidity requirements for our QRSsqualified REIT subsidiaries (the "QRS Cash Pool") and the other for our TRSstaxable REIT subsidiaries (the "TRS Cash Pool").

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 September 30, 20192020 and December 31, 20182019 are as follows:
September 30, 2020December 31, 2019
 Gross Cash PositionOutstanding Debit BalancesNet Cash PositionGross Cash PositionOutstanding Debit BalancesNet Cash Position
QRS Cash Pool$573,600 $(573,000)$600 $372,100 $(369,000)$3,100 
TRS Cash Pool363,800 (362,600)1,200 319,800 (301,300)18,500 
 September 30, 2019 December 31, 2018
 Gross Cash Position Outstanding Debit Balances Net Cash Position Gross Cash Position Outstanding Debit Balances Net Cash Position
QRS Cash Pool$358,200
 $(355,800) $2,400
 $300,800
 $(298,800) $2,000
TRS Cash Pool302,200
 (296,300) 5,900
 281,500
 (279,300) 2,200


The net cash position balances as of September 30, 20192020 and December 31, 20182019 are reflected as cash and cash equivalents in theour Condensed Consolidated Balance Sheets.

Letters of Credit

As of September 30, 2019,2020, we had outstanding letters of credit totaling $35,241,$34,761, of which $16,843$3,202 reduce our borrowing capacity under the Revolving Credit Facility (as described above). The letters of credit expire at various dates between December 2019October 2020 and August 2027.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 uses EBITDAR-based calculations as the primary measures of financial performance, including leverage andrequires that we satisfy a fixed charge coverage ratios.ratio, a net total lease adjusted leverage ratio and a net secured debt lease adjusted leverage ratio on a quarterly basis and our bond indentures require that, among other things, we satisfy a leverage ratio (not lease adjusted) or a fixed charge coverage ratio (not lease adjusted), as a condition to taking actions such as paying dividends and incurring indebtedness.

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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(5)5.    Debt (Continued)

OurThe Credit Agreement uses EBITDAR-based calculations and the bond indentures use EBITDA-based calculations as the primary measures of financial performance 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. We are in compliance with our leverage and fixed charge coverage ratios under the Credit Agreement, our bond indentures and other agreements governing our indebtedness as of September 30, 20192020 and December 31, 2018, as well as our leverage ratio under our indentures as of September 30, 2019 and December 31, 2018 are as follows:
 September 30, 2019 December 31, 2018 Maximum/Minimum Allowable
Net total lease adjusted leverage ratio5.8
 5.6
 Maximum allowable of 6.5
Net secured debt lease adjusted leverage ratio2.3
 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 ratio2.1
 2.2
 Minimum allowable of 1.5

(1)
The maximum allowable leverage ratio 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 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.

(6) Selected
6.    Segment Information

Our 3 reportable operating segments as of December 31, 2019 are described in Note 9 to Notes to Consolidated Financial Statements of Parent, Guarantorsincluded in our Annual Report and Non-Guarantorsare as follows:

•Global Records and Information Management ("Global RIM") Business
•Global Data Center Business
•Corporate and Other Business

The following data summarizesoperations associated with acquisitions completed during the consolidating results of IMI on the equity method of accounting as of September 30, 2019 and December 31, 2018 and for the three andfirst nine months ended September 30, 2019 and 2018 and are prepared on the same basis as the consolidated financial statements.of 2020 have been incorporated into our existing reportable operating segments.
The Parent Notes, the CAD Notes, the GBP Notes, and the 53/8% Notes are guaranteed by the subsidiaries referred to below as the Guarantors. These subsidiaries are 100% owned by IMI. The guarantees are full and unconditional, as well as joint and several.
Additionally, IMI guarantees the CAD Notes, which were issued by Iron Mountain Canada Operations ULC ("Canada Company"), the GBP Notes, 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. 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 structureAn analysis of our subsidiaries to meet the requirements of our business. In the event of such changes, we recast the prior period financialbusiness segment information within this footnote to conformand reconciliation 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 belowaccompanying Condensed Consolidated Balance Sheets and equity in the earnings (losses) of subsidiaries, net of tax in the below Condensed ConsolidatedFinancial Statements of Operations and Comprehensive Income (Loss) with respect to the relevant Parent, Guarantors, Non-Guarantors and Eliminations columns also would change.is as follows:

Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Global RIM Business
Total Revenues$921,773 $949,564 $2,755,294 $2,850,303 
Adjusted EBITDA393,883 395,181 1,169,671 1,156,596 
Global Data Center Business
Total Revenues$72,814 $64,418 $206,939 $188,245 
Adjusted EBITDA33,359 32,261 94,812 85,913 
Corporate and Other Business
Total Revenues$42,060 $48,242 $125,384 $144,446 
Adjusted EBITDA(57,195)(51,741)(188,475)(191,360)
Total Consolidated
Total Revenues$1,036,647 $1,062,224 $3,087,617 $3,182,994 
Adjusted EBITDA370,047 375,701 1,076,008 1,051,149 

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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30, 2019
 Parent Guarantors Non-
Guarantors		 Eliminations Consolidated
Assets 
  
  
  
  
Current Assets: 
  
  
  
  
Cash and cash equivalents(1)$10
 $157,771
 $162,024
 $(133,027) $186,778
Accounts receivable—
 58,400
 763,526
 —
 821,926
Intercompany receivable—
 456,222
 —
 (456,222) —
Prepaid expenses and other—
 96,737
 98,481
 (29) 195,189
Total Current Assets10
 769,130
 1,024,031
 (589,278) 1,203,893
Property, Plant and Equipment, Net122
 3,049,090
 1,507,507
 —
 4,556,719
Other Assets, Net: 
  
  
  
  
Long-term notes receivable from affiliates and intercompany receivable5,180,133
 —
 —
 (5,180,133) —
Investment in subsidiaries1,940,454
 1,051,609
 —
 (2,992,063) —
Goodwill—
 2,853,466
 1,568,529
 —
 4,421,995
Operating lease right-of-use assets—
 939,631
 825,865
 —
 1,765,496
Other1,972
 945,025
 682,067
 —
 1,629,064
Total Other Assets, Net7,122,559
 5,789,731
 3,076,461
 (8,172,196) 7,816,555
Total Assets$7,122,691
 $9,607,951
 $5,607,999
 $(8,761,474) $13,577,167
Liabilities and Equity 
  
  
  
  
Intercompany Payable$167,220
 $—
 $289,002
 $(456,222) $—
Debit Balances Under Cash Pools—
 —
 133,027
 (133,027) —
Current Portion of Long-Term Debt—
 54,028
 340,823
 (29) 394,822
Total Other Current Liabilities (includes current portion of operating lease liabilities)233,492
 685,486
 516,311
 —
 1,435,289
Long-Term Debt, Net of Current Portion5,199,103
 1,457,499
 1,563,745
 —
 8,220,347
Long-Term Operating Lease Liabilities, Net of Current Portion—
 871,377
 755,530
 —
 1,626,907
Long-Term Notes Payable to Affiliates and Intercompany Payable—
 5,180,133
 —
 (5,180,133) —
Other Long-term Liabilities12,046
 52,842
 254,966
 —
 319,854
Commitments and Contingencies (See Note 8)


 


 


 


 


Redeemable Noncontrolling Interests—
 —
 68,099
 —
 68,099
Total Iron Mountain Incorporated Stockholders' Equity           1,510,830
 1,306,586
 1,685,477
 (2,992,063) 1,510,830
Noncontrolling Interests—
 —
 1,019
 —
 1,019
Total Equity1,510,830
 1,306,586
 1,686,496
 (2,992,063) 1,511,849
Total Liabilities and Equity$7,122,691
 $9,607,951
 $5,607,999
 $(8,761,474) $13,577,167

(1)Included within Cash and Cash Equivalents at September 30, 2019 is approximately $141,300 and $0 of cash on deposit associated with our Cash Pools for the Guarantors and Non-Guarantors, respectively.



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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors 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
 $63,407
 $169,318
 $(67,372) $165,485
Accounts receivable—
 47,472
 799,417
 —
 846,889
Intercompany receivable—
 821,324
 —
 (821,324) —
Prepaid expenses and other93
 109,480
 86,196
 (29) 195,740
Total Current Assets225
 1,041,683
 1,054,931
 (888,725) 1,208,114
Property, Plant and Equipment, Net190
 3,010,767
 1,478,600
 —
 4,489,557
Other Assets, Net: 
  
  
  
  
Long-term notes receivable from affiliates and intercompany receivable4,954,686
 —
 —
 (4,954,686) —
Investment in subsidiaries1,862,048
 983,018
 —
 (2,845,066) —
Goodwill—
 2,861,381
 1,579,649
 —
 4,441,030
Other—
 982,932
 735,585
 —
 1,718,517
Total Other Assets, Net6,816,734
 4,827,331
 2,315,234
 (7,799,752) 6,159,547
Total Assets$6,817,149
 $8,879,781
 $4,848,765
 $(8,688,477) $11,857,218
Liabilities and Equity 
  
  
  
  
Intercompany Payable$462,927
 $—
 $358,397
 $(821,324) $—
Debit Balances Under Cash Pools—
 10,612
 56,760
 (67,372) —
Current Portion of Long-Term Debt—
 63,859
 62,576
 (29) 126,406
Total Other Current Liabilities268,373
 618,513
 477,483
 —
 1,364,369
Long-Term Debt, Net of Current Portion4,223,822
 1,878,079
 1,914,516
 —
 8,016,417
Long-Term Notes Payable to Affiliates and Intercompany Payable—
 4,954,686
 —
 (4,954,686) —
Other Long-term Liabilities973
 116,895
 299,163
 —
 417,031
Commitments and Contingencies (See Note 8)


 


 


 


 


Redeemable Noncontrolling Interests—
 —
 70,532
 —
 70,532
Total Iron Mountain Incorporated Stockholders' Equity           1,861,054
 1,237,137
 1,607,929
 (2,845,066) 1,861,054
Noncontrolling Interests—
 —
 1,409
 —
 1,409
Total Equity1,861,054
 1,237,137
 1,609,338
 (2,845,066) 1,862,463
Total Liabilities and Equity$6,817,149
 $8,879,781
 $4,848,765
 $(8,688,477) $11,857,218

(1)Included within Cash and Cash Equivalents at December 31, 2018 is approximately $58,900 and $12,700 of cash on deposit associated with our Cash Pools for the Guarantors and Non-Guarantors, respectively.





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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 Three Months Ended September 30, 2019
 Parent Guarantors Non-
Guarantors		 Eliminations Consolidated
Revenues: 
  
  
  
  
Storage rental$—
 $416,967
 $256,351
 $—
 $673,318
Service—
 245,584
 143,322

—
 388,906
Intercompany revenues—
 1,173
 5,631
 (6,804) —
Total Revenues—
 663,724
 405,304
 (6,804) 1,062,224
Operating Expenses: 
  
  
  
  
Cost of sales (excluding depreciation and amortization)—
 262,183
 189,134
 —
 451,317
Intercompany—
 5,631
 1,173
 (6,804) —
Selling, general and administrative161
 162,052
 76,943

—

239,156
Depreciation and amortization23
 100,023
 57,515
 —
 157,561
(Gain) Loss on disposal/write-down of property, plant and equipment, net—
 (8,922) (362) —
 (9,284)
Total Operating Expenses184
 520,967
 324,403
 (6,804) 838,750
Operating (Loss) Income(184) 142,757
 80,901
 —
 223,474
Interest Expense (Income), Net(1)52,166
 6,074
 48,437
 —
 106,677
Other (Income) Expense, Net(596) 11,577
 (24,396) —
 (13,415)
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes(51,754)
125,106
 56,860
 —
 130,212
Provision (Benefit) for Income Taxes—
 12,814
 9,114
 —
 21,928
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax(159,429) (46,345) —
 205,774
 —
Income (Loss) from Continuing Operations107,675
 158,637
 47,746
 (205,774) 108,284
Income (Loss) from Discontinued Operations, Net of Tax—
 —
 —
 —
 —
Net Income (Loss)107,675
 158,637
 47,746
 (205,774) 108,284
Less: Net Income (Loss) Attributable to Noncontrolling Interests—
 —
 609
 —
 609
Net Income (Loss) Attributable to Iron Mountain Incorporated$107,675
 $158,637
 $47,137
 $(205,774) $107,675
Net Income (Loss)$107,675
 $158,637
 $47,746
 $(205,774) $108,284
Other Comprehensive (Loss) Income:         
Foreign Currency Translation Adjustments13,101
 —
 (96,696) —
 (83,595)
Change in Fair Value of Derivative Instruments(1,496) —
 —
 —
 (1,496)
Equity in Other Comprehensive (Loss) Income of Subsidiaries(95,987) (81,135) —
 177,122
 —
Total Other Comprehensive (Loss) Income(84,382) (81,135) (96,696) 177,122
 (85,091)
Comprehensive Income (Loss)23,293
 77,502
 (48,950) (28,652) 23,193
Comprehensive (Loss) Income Attributable to Noncontrolling Interests—
 —
 (100) —
 (100)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated$23,293
 $77,502
 $(48,850) $(28,652) $23,293

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


39
Table of Contents
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)
 Three Months Ended September 30, 2018
 Parent Guarantors Non-
Guarantors		 Eliminations Consolidated
Revenues: 
  
  
  
  
Storage rental$—
 $404,397
 $252,576
 $—
 $656,973
Service—
 250,471
 153,547
 —
 404,018
Intercompany revenues—
 1,192
 4,330
 (5,522) —
Total Revenues—
 656,060
 410,453
 (5,522) 1,060,991
Operating Expenses: 
  
  
  
 

Cost of sales (excluding depreciation and amortization)—
 254,068
 193,950
 —
 448,018
Intercompany cost of sales—
 4,330
 1,192
 (5,522) —
Selling, general and administrative(427) 177,777
 82,579
 —
 259,929
Depreciation and amortization31
 100,210
 57,556
 —
 157,797
(Gain) Loss on disposal/write-down of property, plant and equipment, net—
 (1,669) 1,281
 —
 (388)
Total Operating Expenses(396) 534,716
 336,558
 (5,522) 865,356
Operating Income (Loss)396
 121,344
 73,895
 —
 195,635
Interest Expense (Income), Net(1)49,964
 3,151
 50,823
 —
 103,938
Other Expense (Income), Net439
 4,155
 (4,269) —
 325
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes(50,007) 114,038
 27,341
 —
 91,372
Provision (Benefit) for Income Taxes—
 9,012
 5,011
 —
 14,023
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax(115,876) (25,414) —
 141,290
 —
Income (Loss) from Continuing Operations65,869
 130,440
 22,330
 (141,290) 77,349
(Loss) Income from Discontinued Operations—
 (11,588) (17) —
 (11,605)
Net Income (Loss)65,869
 118,852
 22,313
 (141,290) 65,744
Less: Net (Loss) Income Attributable to Noncontrolling Interests—
 —
 (125) —
 (125)
Net Income (Loss) Attributable to Iron Mountain Incorporated$65,869
 $118,852
 $22,438
 $(141,290) $65,869
Net Income (Loss)$65,869
 $118,852
 $22,313
 $(141,290) $65,744
Other Comprehensive (Loss) Income:         
Foreign Currency Translation Adjustment2,139
 —
 (26,908) —
 (24,769)
Change in Fair Value of Derivative Instruments1,980
 —
 —
 —
 1,980
Equity in Other Comprehensive (Loss) Income of Subsidiaries(24,929) (14,443) —
 39,372
 —
Total Other Comprehensive (Loss) Income(20,810) (14,443) (26,908) 39,372
 (22,789)
Comprehensive Income (Loss)45,059
 104,409
 (4,595) (101,918) 42,955
Comprehensive (Loss) Income Attributable to Noncontrolling Interests—
 —
 (2,104) —
 (2,104)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated$45,059
 $104,409
 $(2,491) $(101,918) $45,059
_____________________________________________________________
(1)Included within Interest Expense (Income), Net are intercompany management fees and royalty fees, which are eliminated in our consolidated financial statements.

40
Table of Contents
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)
 Nine Months Ended September 30, 2019
 Parent Guarantors Non-
Guarantors		 Eliminations Consolidated
Revenues: 
  
  
  
  
Storage rental$—
 $1,235,353
 $770,227
 $—
 $2,005,580
Service—
 733,247
 444,167
 —
 1,177,414
Intercompany revenues—
 3,485
 15,094
 (18,579) —
Total Revenues—
 1,972,085
 1,229,488
 (18,579) 3,182,994
Operating Expenses: 
  
  
  
  
Cost of sales (excluding depreciation and amortization)—
 788,864
 589,099
 —
 1,377,963
Intercompany cost of sales—
 15,094
 3,485
 (18,579) —
Selling, general and administrative310
 523,844
 238,325
 —
 762,479
Depreciation and amortization68
 308,284
 176,023
 —
 484,375
Loss (Gain) on disposal/write-down of property, plant and equipment, net—
 18,436
 (35,523) —
 (17,087)
Total Operating Expenses378
 1,654,522
 971,409
 (18,579) 2,607,730
Operating (Loss) Income(378) 317,563
 258,079

—

575,264
Interest Expense (Income), Net(1)151,392
 19,128
 143,907
 —
 314,427
Other (Income) Expense, Net(55) 16,636
 (29,978) —
 (13,397)
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes(151,715) 281,799
 144,150

—

274,234
Provision (Benefit) for Income Taxes—
 15,268
 27,859
 —
 43,127
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax(381,392) (111,897) —
 493,289
 —
Income (Loss) from Continuing Operations229,677
 378,428
 116,291

(493,289)
231,107
Income (Loss) from Discontinued Operations—
 120
 (16) —
 104
Net Income (Loss)229,677
 378,548
 116,275
 (493,289) 231,211
Less: Net Income (Loss) Attributable to Noncontrolling Interests—
 —
 1,534
 —
 1,534
Net Income (Loss) Attributable to Iron Mountain Incorporated$229,677
 $378,548
 $114,741
 $(493,289) $229,677
Net Income (Loss)$229,677
 $378,548
 $116,275
 $(493,289) $231,211
Other Comprehensive (Loss) Income:         
Foreign Currency Translation Adjustments14,962
 —
 (86,157) —
 (71,195)
Change in Fair Value of Derivative Instruments(9,101) —
 —
 —
 (9,101)
Equity in Other Comprehensive (Loss) Income of Subsidiaries(86,400) (72,858) —
 159,258
 —
Total Other Comprehensive (Loss) Income(80,539) (72,858) (86,157) 159,258
 (80,296)
Comprehensive Income (Loss)149,138
 305,690
 30,118
 (334,031) 150,915
Comprehensive Income (Loss) Attributable to Noncontrolling Interests—
 —
 1,777
 —
 1,777
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated$149,138
 $305,690
 $28,341
 $(334,031) $149,138

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


41
Table of Contents
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)
 Nine Months Ended September 30, 2018
 Parent Guarantors Non-
Guarantors		 Eliminations Consolidated
Revenues: 
  
  
  
  
Storage rental$—
 $1,201,035
 $762,526
 $—
 $1,963,561
Service—
 726,915
 473,796
 —
 1,200,711
Intercompany revenues—
 3,613
 13,126
 (16,739) —
Total Revenues—
 1,931,563
 1,249,448
 (16,739) 3,164,272
Operating Expenses: 
  
  
  
  
Cost of sales (excluding depreciation and amortization)—
 753,837
 594,366
 —
 1,348,203
Intercompany cost of sales—
 13,126
 3,613
 (16,739) —
Selling, general and administrative(348) 531,507
 258,165
 —
 789,324
Depreciation and amortization96
 299,372
 175,127
 —
 474,595
(Gain) Loss on disposal/write-down of property, plant and equipment, net—
 (2,491) 427
 —
 (2,064)
Total Operating Expenses(252) 1,595,351
 1,031,698
 (16,739) 2,610,058
Operating Income (Loss)252
 336,212
 217,750
 —
 554,214
Interest Expense (Income), Net(1)150,218
 4,863
 148,755
 —
 303,836
Other Expense (Income), Net2,049
 12,323
 (12,952) —
 1,420
(Loss) Income from Continuing Operations Before Provision (Benefit) for Income Taxes(152,015) 319,026
 81,947
 —
 248,958
Provision (Benefit) for Income Taxes—
 14,810
 25,147
 —
 39,957
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax(348,104) (54,395) —
 402,499
 —
Income (Loss) from Continuing Operations196,089
 358,611
 56,800
 (402,499) 209,001
(Loss) Income from Discontinued Operations—
 (12,283) (144) —
 (12,427)
Net Income (Loss)196,089
 346,328
 56,656
 (402,499) 196,574
Less: Net Income (Loss) Attributable to Noncontrolling Interests—
 —
 485
 —
 485
Net Income (Loss) Attributable to Iron Mountain Incorporated$196,089
 $346,328
 $56,171
 $(402,499) $196,089
Net Income (Loss)$196,089
 $346,328
 $56,656
 $(402,499) $196,574
Other Comprehensive (Loss) Income:         
Foreign Currency Translation Adjustment6,761
 —
 (139,051) —
 (132,290)
Change in Fair Value of Derivative Instruments4,183
 —
 —
 —
 4,183
Equity in Other Comprehensive (Loss) Income of Subsidiaries(135,215) (105,967) —
 241,182
 —
Total Other Comprehensive (Loss) Income(124,271) (105,967) (139,051) 241,182
 (128,107)
Comprehensive Income (Loss)71,818
 240,361
 (82,395) (161,317) 68,467
Comprehensive (Loss) Income Attributable to Noncontrolling Interests—
 —
 (3,351) —
 (3,351)
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated$71,818
 $240,361
 $(79,044) $(161,317) $71,818

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


42
Table of Contents
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months Ended September 30, 2019
 Parent Guarantors Non-
Guarantors		 Eliminations Consolidated
Cash Flows from Operating Activities: 
  
  
  
  
Cash Flows from Operating Activities—Continuing Operations$(161,288) $596,529
 $212,904
 $—
 $648,145
Cash Flows from Operating Activities—Discontinued Operations—
 —
 —
 —
 —
Cash Flows from Operating Activities(161,288) 596,529
 212,904
 —
 648,145
Cash Flows from Investing Activities: 
  
  
  
  
Capital expenditures—
 (306,567) (227,047) —
 (533,614)
Cash paid for acquisitions, net of cash acquired—
 (9,508) (46,991) —
 (56,499)
Intercompany loans to subsidiaries(295,124) 6,526
 —
 288,598
 —
Acquisitions of customer relationships, customer inducements and data center lease-based intangibles—
 (86,052) (27,457) —
 (113,509)
Investments in joint ventures (see Note 10)—
 (19,222) —
 —
 (19,222)
Proceeds from sales of property and equipment and other, net—
 33,031
 49,117
 —
 82,148
Cash Flows from Investing Activities—Continuing Operations(295,124) (381,792) (252,378) 288,598
 (640,696)
Cash Flows from Investing Activities—Discontinued Operations—
 2,564
 2,497
 —
 5,061
Cash Flows from Investing Activities(295,124) (379,228) (249,881) 288,598
 (635,635)
Cash Flows from Financing Activities: 
  
  
  
  
Repayment of revolving credit facility, term loan facilities and other debt—
 (9,507,136) (3,183,555) —
 (12,690,691)
Proceeds from revolving credit facility, term loan facilities and other debt—
 9,068,245
 3,188,031
 —
 12,256,276
Net proceeds from sales of senior notes987,500
 —
 —
 —
 987,500
Debit (payments) balances under cash pools—
 (10,612) 76,267
 (65,655) —
Debt (repayment to) financing from and equity (distribution to) contribution from noncontrolling interests, net—
 —
 (1,464) —
 (1,464)
Intercompany loans from parent—
 326,566
 (37,968) (288,598) —
Parent cash dividends(528,908) —
 —
 —
 (528,908)
Net (payments) proceeds associated with employee stock-based awards(2,059) —
 —
 —
 (2,059)
Payment of debt financing and stock issuance costs              (243) —
 (526) —
 (769)
Cash Flows from Financing Activities—Continuing Operations456,290
 (122,937) 40,785
 (354,253) 19,885
Cash Flows from Financing Activities—Discontinued Operations—
 —
 —
 —
 —
Cash Flows from Financing Activities456,290
 (122,937) 40,785
 (354,253) 19,885
Effect of exchange rates on cash and cash equivalents—
 —
 (11,102) —
 (11,102)
(Decrease) Increase in cash and cash equivalents(122) 94,364
 (7,294) (65,655) 21,293
Cash and cash equivalents, including Restricted Cash, beginning of period132
 63,407
 169,318
 (67,372) 165,485
Cash and cash equivalents, including Restricted Cash,
end of period		$10
 $157,771
 $162,024

$(133,027) $186,778

43
Table of Contents
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(6) Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)
 Nine Months Ended September 30, 2018
 Parent Guarantors Non-
Guarantors		 Eliminations Consolidated
Cash Flows from Operating Activities: 
  
  
  
  
Cash Flows from Operating Activities—Continuing Operations$(208,384) $644,493
 $189,429
 $—
 $625,538
Cash Flows from Operating Activities—Discontinued Operations—
 (995) —
 —
 (995)
Cash Flows from Operating Activities(208,384) 643,498
 189,429
 —
 624,543
Cash Flows from Investing Activities: 
  
  
  
  
Capital expenditures—
 (224,594) (105,359) —
 (329,953)
Cash paid for acquisitions, net of cash acquired—
 (1,332,235) (378,776) —
 (1,711,011)
Intercompany loans to subsidiaries629,918
 (23,092) —
 (606,826) —
Acquisitions of customer relationships, customer inducements and data center lease-based intangibles—
 (47,531) (16,030) —
 (63,561)
Net proceeds from Divestments—
 1,019
 —
 —
 1,019
Proceeds from sales of property and equipment and other, net—
 283
 430
 —
 713
Cash Flows from Investing Activities—Continuing Operations629,918
 (1,626,150) (499,735) (606,826) (2,102,793)
Cash Flows from Investing Activities—Discontinued Operations—
 —
 —
 —
 —
Cash Flows from Investing Activities629,918
 (1,626,150) (499,735) (606,826) (2,102,793)
Cash Flows from Financing Activities: 
  
  
  
  
Repayment of revolving credit facility, term loan facilities and other debt—
 (5,386,024) (5,840,147) —
 (11,226,171)
Proceeds from revolving credit facility, term loan facilities and other debt—
 6,456,050
 5,980,967
 —
 12,437,017
Debit (payments) balances under cash pools—
 (832) (389) 1,221
 —
Debt (repayment to) financing from and equity (distribution to) contribution from noncontrolling interests, net—
 —
 (2,035) —
 (2,035)
Intercompany loans from parent—
 (664,591) 57,765
 606,826
 —
Parent cash dividends(505,403) —
 —
 —
 (505,403)
Net (payments) proceeds associated with employee stock-based awards(2,800) —
 —
 —
 (2,800)
Net proceeds associated with the Over-Allotment Option exercise76,192
 —
 —
 —
 76,192
Net proceeds associated with the At the Market (ATM) Program8,716
 —
 —
 —
 8,716
Payment of debt financing and stock issuance costs              (412) (12,388) (3,157) —
 (15,957)
Cash Flows from Financing Activities—Continuing Operations(423,707) 392,215
 193,004
 608,047
 769,559
Cash Flows from Financing Activities—Discontinued Operations—
 —
 —
 —
 —
Cash Flows from Financing Activities(423,707) 392,215
 193,004
 608,047
 769,559
Effect of exchange rates on cash and cash equivalents—
 —
 (19,332) —
 (19,332)
(Decrease) Increase in cash and cash equivalents(2,173) (590,437) (136,634) 1,221
 (728,023)
Cash and cash equivalents, including Restricted Cash, beginning of period2,433
 642,408
 375,584
 (94,726) 925,699
Cash and cash equivalents, including Restricted Cash,
end of period
$260
 $51,971
 $238,950
 $(93,505) $197,676


44
Table of Contents
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(7) Segment Information

Our 6 reportable operating segments as of December 31, 2018 are described in Note 9 to Notes to Consolidated Financial Statements included in our Annual Report and are as follows:
North American Records and Information Management Business
North American Data Management Business
Western European Business
Other International Business
Global Data Center Business
Corporate and Other Business

There have been no changes made to our reportable operating segments since December 31, 2018, other than the impact of the Consumer Storage Transaction (as defined in Note 10). 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. The operations associated with acquisitions completed during the first nine months of 2019 have been incorporated into our existing reportable operating segments.

An analysis of our business segment information and reconciliation to the accompanying Condensed Consolidated Financial Statements is as follows:
  North American
Records and
Information
Management
Business		 North American
Data
Management
Business		 Western European Business Other International Business Global Data Center Business 
Corporate
and Other
Business
 Total
Consolidated
For the Three Months Ended September 30, 2019              
Total Revenues $542,044
 $96,552
 $121,437
 $197,728
 $64,418
 $40,045
 $1,062,224
Storage Rental 317,820
 66,497
 78,009
 128,715
 62,001
 20,276
 673,318
Service 224,224
 30,055
 43,428
 69,013
 2,417
 19,769
 388,906
Depreciation and Amortization 58,801
 6,709
 13,257
 30,008
 34,067
 14,719
 157,561
Depreciation 45,394
 4,620
 9,137
 17,512
 20,193
 11,296
 108,152
Amortization 13,407
 2,089
 4,120
 12,496
 13,874
 3,423
 49,409
Adjusted EBITDA 246,415
 54,378
 38,639
 62,120
 32,261
 (58,112) 375,701
Expenditures for Segment Assets 64,098
 2,822
 18,125
 43,290
 58,060
 14,883
 201,278
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations) 46,376
 2,822
 16,191
 28,944
 57,267
 14,883
 166,483
Cash Paid for Acquisitions, Net of Cash Acquired —
 —
 —
 11,848
 —
 —
 11,848
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs and third-party commissions 17,722
 —
 1,934
 2,498
 793
 —
 22,947
For the Three Months Ended September 30, 2018  
  
    
    
  
Total Revenues $539,603
 $97,477
 $126,354
 $200,639
 $63,380
 $33,538
 $1,060,991
Storage Rental 306,633
 67,779
 79,492
 124,920
 60,039
 18,110
 656,973
Service 232,970
 29,698
 46,862
 75,719
 3,341
 15,428
 404,018
Depreciation and Amortization 59,869
 9,472
 14,316
 31,487
 27,965
 14,688
 157,797
Depreciation 46,756
 7,277
 9,996
 19,272
 16,431
 13,258
 112,990
Amortization 13,113
 2,195
 4,320
 12,215
 11,534
 1,430
 44,807
Adjusted EBITDA 248,600
 53,484
 40,817
 60,106
 27,299
 (67,976) 362,330
Expenditures for Segment Assets 53,665
 5,033
 2,774
 49,330
 42,585
 29,435
 182,822
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations) 31,373
 5,033
 551
 21,929
 41,896
 11,570
 112,352
Cash Paid for Acquisitions, Net of Cash Acquired —
 —
 —
 26,277
 —
 17,865
 44,142
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs 22,292
 —
 2,223
 1,124
 689
 —
 26,328

45
Table of Contents
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(7)6.    Segment Information (Continued)

  North American
Records and
Information
Management
Business		 North American
Data
Management
Business		 Western European Business Other International Business Global Data Center Business 
Corporate
and Other
Business
 Total
Consolidated
As of and for the Nine Months Ended September 30, 2019  
  
    
    
  
Total Revenues $1,608,697
 $289,714
 $377,517
 $598,507
 $188,245
 $120,314
 $3,182,994
Storage Rental 938,161
 199,819
 237,258
 387,086
 182,301
 60,955
 2,005,580
Service 670,536
 89,895
 140,259
 211,421
 5,944
 59,359
 1,177,414
Depreciation and Amortization 181,494
 27,011
 42,842
 91,367
 98,370
 43,291
 484,375
Depreciation 137,801
 20,451
 30,560
 53,563
 58,233
 35,877
 336,485
Amortization 43,693
 6,560
 12,282
 37,804
 40,137
 7,414
 147,890
Adjusted EBITDA 715,683
 157,998
 122,011
 178,993
 85,913
 (209,449) 1,051,149
Total Assets(1) 5,742,593
 860,101
 1,319,442
 2,620,709
 2,349,917
 684,405
 13,577,167
Expenditures for Segment Assets 166,908
 13,708
 72,560
 93,373
 314,242
 42,831
 703,622
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations) 103,660
 13,708
 41,031
 56,048
 279,856
 39,311
 533,614
Cash Paid for Acquisitions, Net of Cash Acquired 9,876
 —
 11,850
 31,253
 —
 3,520
 56,499
Acquisitions of Customer Relationships and Customer Inducements and Contract Fulfillment Costs and third-party commissions 53,372
 —
 19,679
 6,072
 34,386
 —
 113,509
As of and for the Nine Months Ended September 30, 2018  
  
    
    
  
Total Revenues $1,605,526
 $297,472
 $393,869
 $618,933
 $164,878
 $83,594
 $3,164,272
Storage Rental 917,347
 205,833
 245,883
 386,278
 157,479
 50,741
 1,963,561
Service 688,179
 91,639
 147,986
 232,655
 7,399
 32,853
 1,200,711
Depreciation and Amortization 183,591
 29,114
 49,372
 93,724
 72,736
 46,058
 474,595
Depreciation 144,146
 22,517
 34,575
 56,535
 40,931
 39,219
 337,923
Amortization 39,445
 6,597
 14,797
 37,189
 31,805
 6,839
 136,672
Adjusted EBITDA 719,199
 162,616
 131,377
 181,305
 72,990
 (202,027) 1,065,460
Total Assets(1) 4,961,149
 823,868
 1,104,221
 2,328,574
 2,159,955
 433,103
 11,810,870
Expenditures for Segment Assets 138,210
 15,529
 37,813
 111,777
 1,745,770
 55,426
 2,104,525
Capital Expenditures (see Liquidity and Capital Resources section of Management's Discussion & Analysis of Financial Condition and Results of Operations) 86,365
 15,529
 31,694
 60,992
 98,169
 37,204
 329,953
Cash Paid for Acquisitions, Net of Cash Acquired 1,551
 —
 —
 45,673
 1,645,922
 17,865
 1,711,011
Acquisitions of Customer Relationships, Customer Inducements and Contract Fulfillment Costs 50,294
 —
 6,119
 5,112
 1,679
 357
 63,561

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

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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(7) 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 expense (income) expense,, net (which includes foreign currency transaction (gains) losses, net)net, and debt extinguishment expense); (4) Significant Acquisition Costs; (5) Restructuring Charges (as defined in Note 10); and (iv) Significant Acquisition(6) COVID-19 Costs (as defined below). Internally, we use Adjusted EBITDA as the basis for evaluating the performance of, and allocating resources to, our operating segments.

A reconciliation of Income (Loss) from Continuing Operations to Adjusted EBITDA to income (loss) from continuing operations on a consolidated basis for the three and nine months ended September 30, 20192020 and 20182019 is as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Income (Loss) from Continuing Operations$38,562 $108,284 $96,341 $231,107 
Add/(Deduct):
Provision (Benefit) for Income Taxes13,934 21,928 33,304 43,127 
Other Expense (Income), Net83,465 (13,415)66,439 (13,397)
Interest Expense, Net104,303 106,677 313,408 314,427 
(Gain) Loss on disposal/write-down of property, plant and equipment, net(75,840)(9,284)(78,170)(17,087)
Depreciation and amortization157,252 157,561 483,686 484,375 
Significant Acquisition Costs0 3,950 0 8,597 
Restructuring Charges48,371 0 128,715 0 
COVID-19 Costs(1)0 0 9,285 0 
Intangible impairments0 0 23,000 0 
Adjusted EBITDA$370,047 $375,701 $1,076,008 $1,051,149 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
Adjusted EBITDA$375,701
 $362,330
 $1,051,149
 $1,065,460
(Add)/Deduct:       
Provision (Benefit) for Income Taxes21,928
 14,023
 43,127
 39,957
Other (Income) Expense, Net(13,415) 325
 (13,397) 1,420
Interest Expense, Net106,677
 103,938
 314,427
 303,836
(Gain) Loss on disposal/write-down of property, plant and equipment, net(9,284) (388) (17,087) (2,064)
Depreciation and amortization157,561
 157,797
 484,375
 474,595
Significant Acquisition Costs(1)3,950
 9,286
 8,597
 38,715
Income (Loss) from Continuing Operations$108,284
 $77,349
 $231,107
 $209,001


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

_______________________________________________________________
(1)Costs that are incremental and directly attributable to the COVID-19 pandemic which are not expected to recur once the pandemic ends ("COVID-19 Costs"). For the nine months ended September 30, 2020, approximately $7,600 and $1,600 of COVID-19 Costs are included within Cost of Sales and Selling, general and administrative expenses, respectively, on our Condensed Consolidated Statement of Operations. These costs include the purchase of personal protective equipment for our employees and incremental cleaning costs of our facilities, among other direct costs.



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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(7)6.    Segment Information (Continued)

Information as to our revenues by product and service lines by segment for the three and nine months ended September 30, 20192020 and 20182019 are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
 
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
2020201920202019
For the Three Months Ended September 30, 2019              
Global RIM BusinessGlobal RIM Business
Records Management(1) $452,336
 $—
 $103,683
 $169,748
 $—
 $23,837
 $749,604
Records Management(1)$712,182 $717,570 $2,118,767 $2,135,273 
Data Management(1) —
 93,016
 17,551
 18,884
 —
 16,208
 145,659
Data Management(1)121,936 129,451 367,093 391,400 
Information Destruction(1)(2) 89,708
 3,536
 203
 9,096
 —
 —
 102,543
Information Destruction(1)(2)87,655 102,543 269,434 323,630 
Data Center —
 —
 —
 —
 64,418
 —
 64,418
Data Center0 0 0 0 
Total Revenues $542,044
 $96,552
 $121,437
 $197,728
 $64,418
 $40,045
 $1,062,224
Total Revenues$921,773 $949,564 $2,755,294 $2,850,303 
For the Three Months Ended September 30, 2018              
Global Data Center BusinessGlobal Data Center Business
Records Management(1) $441,102
 $—
 $107,388
 $173,426
 $—
 $19,183
 $741,099
Records Management(1)$0 $0 $0 $0 
Data Management(1) —
 94,917
 18,914
 18,541
 —
 14,355
 146,727
Data Management(1)0 0 0 0 
Information Destruction(1)(2) 98,501
 2,560
 52
 8,672
 —
 —
 109,785
Information Destruction(1)(2)0 0 0 0 
Data Center —
 —
 —
 —
 63,380
 —
 63,380
Data Center72,814 64,418 206,939 188,245 
Total Revenues $539,603
 $97,477
 $126,354
 $200,639
 $63,380
 $33,538
 $1,060,991
Total Revenues$72,814 $64,418 $206,939 $188,245 
For the Nine Months Ended
September 30, 2019
              
Corporate and Other BusinessCorporate and Other Business
Records Management(1) $1,322,488
 $—
 $321,759
 $515,158
 $—
 $74,377
 $2,233,782
Records Management(1)$25,720 $32,034 $75,675 $98,509 
Data Management(1) —
 280,157
 54,345
 56,898
 —
 45,937
 437,337
Data Management(1)16,340 16,208 49,709 45,937 
Information Destruction(1)(2) 286,209
 9,557
 1,413
 26,451
 —
 —
 323,630
Information Destruction(1)(2)0 0 0 0 
Data Center —
 —
 —
 —
 188,245
 —
 188,245
Data Center0 0 0 0 
Total Revenues $1,608,697
 $289,714
 $377,517
 $598,507
 $188,245
 $120,314
 $3,182,994
Total Revenues$42,060 $48,242 $125,384 $144,446 
For the Nine Months Ended
September 30, 2018
              
Total ConsolidatedTotal Consolidated
Records Management(1) $1,317,505
 $—
 $335,072
 $533,950
 $—
 $41,388
 $2,227,915
Records Management(1)$737,902 $749,604 $2,194,442 $2,233,782 
Data Management(1) —
 290,279
 58,526
 58,246
 —
 42,206
 449,257
Data Management(1)138,276 145,659 416,802 437,337 
Information Destruction(1)(2) 288,021
 7,193
 271
 26,737
 —
 —
 322,222
Information Destruction(1)(2)87,655 102,543 269,434 323,630 
Data Center —
 —
 —
 —
 164,878
 —
 164,878
Data Center72,814 64,418 206,939 188,245 
Total Revenues $1,605,526
 $297,472
 $393,869
 $618,933
 $164,878
 $83,594
 $3,164,272
Total Revenues$1,036,647 $1,062,224 $3,087,617 $3,182,994 

(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.

(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)
(8)7.    Commitments and Contingencies


We are involved in litigation from time to time in the ordinary course of business. A portion of the defense and/or settlement costs associated with such litigation is covered by various commercial liability insurance policies purchased by us and, in limited cases, indemnification from third parties. Our policy is to establish reserves for loss contingencies when the losses are both probable and reasonably able to be estimated. We record legal costs associated with loss contingencies as expenses in the period in which they are incurred. There have been no material updates or changes to the matters disclosed in Note 10 to Notes to Consolidated Financial Statements included in our Annual Report. WeReport, and we continue to believe that the resolution of the matters disclosed in Note 10 to Notes to Consolidated Financial Statements included in our Annual Report will not have a material impact on our consolidated financial condition, results of operations or cash flows.

We have estimated a reasonably possible range for all loss contingencies, including those disclosed in Note 10 to Notes to Consolidated Financial Statements included in our Annual Report and the item below, and believe it is reasonably possible that we could incur aggregate losses in addition to amounts currently accrued for all matters up to an additional $17,000$5,000 over the next several years, of which certain amounts would be covered by insurance or indemnity arrangements.

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

We believe that the assessed amount will be subject to interest and potential penalties. We have established a reserve for this matter based upon our estimate of the amount of loss that is both probable and estimable. We are in the process of exploring potential recoveries (including insurance recoveries and/or claims against other third parties) against any losses we incur associated with this matter.
(9)8.    Stockholders' Equity Matters
Our board of directors has adopted a dividend policy under which we have paid, and in the future intend to pay, quarterly cash dividends on our common stock. The amount and timing of future dividends will continue to be subject to the approval of our board of directors, in its sole discretion, and to applicable legal requirements.
In fiscal year 20182019 and the first nine months of 2019,2020, our board of directors declared the following dividends:
Declaration DateDividend
Per Share		Record DateTotal
Amount		Payment Date
February 7, 2019$0.6110 March 15, 2019$175,242 April 2, 2019
May 22, 20190.6110 June 17, 2019175,389 July 2, 2019
July 26, 20190.6110 September 16, 2019175,434 October 2, 2019
October 31, 20190.6185 December 16, 2019177,687 January 2, 2020
February 13, 20200.6185 March 16, 2020178,047 April 6, 2020
May 5, 20200.6185 June 15, 2020178,212 July 2, 2020
August 5, 20200.6185 September 15, 2020178,224 October 2, 2020
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
July 26, 2019 0.6110
 September 16, 2019 175,434
 October 2, 2019

On November 4, 2020, we declared a dividend to our stockholders of record as of December 15, 2020 of $0.6185 per share, payable on January 6, 2021.

9.     Related Parties

In connection with the formation of the MakeSpace JV, we 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 Global RIM Business segment. We recognized approximately $8,400 and $22,300 of revenue for the three and nine months ended September 30, 2020, respectively, and approximately $7,300 and $15,200 of revenue for the three and nine months ended September 30, 2019, respectively, associated with the MakeSpace Agreement.

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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(9) Stockholders' Equity Matters (Continued)10.    Project Summit

At The Market (ATM) Equity Program
As described in greater detail in Note 12In October 2019, we announced our global program designed 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 $500,000better position us for future growth and achievement of our common stock throughstrategic objectives (“Project Summit”). Since Project Summit was announced, we have identified additional opportunities to streamline our business and operations, as well as accelerated the Agents (the “Attiming of certain opportunities previously identified. Such opportunities include leveraging new technology solutions to enable us to modernize our service delivery model and more efficiently utilize our fleet, labor and real estate, which has broadened the initial scope of Project Summit. The Market (ATM) Equity Program”). There were 0 sharesactivities associated with Project Summit began in the fourth quarter of common stock sold under2019 and are expected to be substantially complete by the At The Market (ATM) Equity Program duringend of 2021.

Including the expanded scope of Project Summit, we estimate that the implementation of Project Summit will result in total costs of approximately $450,000, which includes (1) operating expenditures (“Restructuring Charges”) that primarily consist of: (i) employee severance costs; (ii) internal costs associated with the development and implementation of Project Summit initiatives; (iii) professional fees, primarily related to third party consultants who are assisting with the design and execution of various initiatives as well as project management activities and (iv) system implementation and data conversion costs, and (2) capital expenditures. For the three and nine months ended September 30, 2019. As2020, Restructuring Charges primarily related to employee severance costs, internal costs associated with the development and implementation of September 30, 2019, the remaining aggregate sale price of shares of our common stock available for distribution under the At The Market (ATM) Equity Program was approximately $431,200.Project Summit initiatives and professional fees.

(10) Divestments
On March 19, 2019, we contributed our customer contracts and certain intellectual property and other assets used by us to operate our consumer storage businessRestructuring Charges included 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 12).
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 ouraccompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2019 through the closing date of the Consumer Storage Transaction andby segment for the three and nine months ended September 30, 20182020 and from the cash flows associated with this businessinception of Project Summit through September 30, 2020 are presentedas follows:
 Three Months Ended
September 30, 2020		Nine Months Ended
September 30, 2020		From the inception of Project Summit through
September 30, 2020
Global RIM Business$16,183 $37,245 $59,145 
Global Data Center Business296 986 1,292 
Corporate and Other Business31,892 90,484 116,875 
Restructuring Charges$48,371 $128,715 $177,312 

A rollforward of the accrued Restructuring Charges, which is included as a component of cash flows from continuing operationsAccrued expenses and other current liabilities in our Condensed Consolidated Statements of Cash FlowsBalance Sheet, for the nine months ended September 30, 2020 is as follows:
Balance as of December 31, 2019(1)$17,777 
Amounts accrued128,715 
Payments(97,646)
Other, including currency translation adjustments(3,604)
Balance as of September 30, 2020(2)$45,242 

(1)    Accrued Restructuring Charges at December 31, 2019 through the closing date of the Consumer Storage Transaction and for the nine months ended September 30, 2018.
As a result of the Consumer Storage Transaction, we recorded a gain on saleconsist of approximately $4,200 to Other (income) expense, net, in the first quarter$13,000 of 2019, representing the excessaccrued professional fees and approximately $4,800 of the fair value of the consideration received over the sum of (i) the carrying value of our consumer storage operations 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 Investmentaccrued employee severance costs.
(2)    Accrued Restructuring Charges at September 30, 2019 is $21,152,2020 consist of approximately $33,400 of accrued professional fees and is presented as a componentapproximately $11,800 of Other within Other assets, net in our Condensed Consolidated Balance Sheet.accrued employee severance costs.


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IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(11) Significant Acquisition Costs11.    Subsequent Events


Significant Acquisition Costs includedOn October 1, 2020, we formed a joint venture (the “Frankfurt JV Transaction”) with AGC Equity Partners (“AGC”) to design and develop a 280,000 square foot, 27 megawatt, hyperscale data center currently under development in Frankfurt, Germany (the “Frankfurt JV”). AGC acquired an 80% equity interest in the accompanying Condensed Consolidated Statements of OperationsFrankfurt JV, while we retained a 20% equity interest (the “Frankfurt JV Investment”). The total cash consideration for the three80% equity interest sold to AGC was approximately $100,000. The substantial majority of the consideration was received upon the closing of the Frankfurt JV, and nine months ended September 30, 2019 and 2018we are as follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
Cost of sales (excluding depreciation and amortization)$1,945
 $2,892
 $4,136
 $5,015
Selling, general and administrative expenses2,005
 6,394
 4,461
 33,700
Total Significant Acquisition Costs$3,950
 $9,286
 $8,597
 $38,715


Significant Acquisition Costs includedentitled to receive an additional approximately $10,000 upon the completion of development of the data center, which we expect to occur in the accompanying Condensed Consolidated Statementssecond quarter of Operations by segment for the three and nine months ended September 30, 2019 and 2018 are as follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
North American Records and Information Management Business$796
 $950
 $1,174
 $4,551
North American Data Management Business11
 83
 11
 434
Western European Business4
 1,806
 85
 5,385
Other International Business1,307
 2,001
 2,760
 3,434
Global Data Center Business70
 232
 337
 11,572
Corporate and Other Business1,762
 4,214
 4,230
 13,339
Total Significant Acquisition Costs$3,950
 $9,286
 $8,597
 $38,715


(12) Related Party Transactions
2021. In connection with the Consumer StorageFrankfurt JV Transaction, and the Makespace Investment (both as described more fully in Note 10), we also entered into a storageagreements whereby we will earn various fees, including property management and service agreement with the Makespace JV to provide certain storageconstruction and relateddevelopment fees, for services we are providing to the MakespaceFrankfurt JV.

The assets included in the Frankfurt JV (the "Makespace Agreement"). RevenuesTransaction have a carrying value of approximately $100,000 at September 30, 2020, and expenses associated withare primarily land and land development assets which are included within our Global Data Center Business segment. The assets are classified as held for sale and are included within Other, a component of Other assets, net in our Condensed Consolidated Balance Sheet at September 30, 2020.

We will account for the Makespace Agreement areFrankfurt JV Investment as an equity method investment, and the carrying value will be presented as a component of Other within Other assets, net in our North American Records and Information Management Business segment. We recognized approximately $7,300 and $15,200 of revenue, respectively, for the three and nine months ended September 30, 2019, associated with the Makespace Agreement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In Thousands, Except Share and Per Share Data)
(Unaudited)
(13) Subsequent Events


In October 2019, we announced a global program designed to better position us for future growth and achievement of our strategic objectives (“Project Summit”). Project Summit will focus 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. The activities associated with Project Summit will beginConsolidated Balance Sheet beginning in the fourth quarter of 2019 and are expected to be substantially complete by the end of 2021. We expect the total program benefits associated with Project Summit to be fully realized by the end of 2022. We estimate that the implementation of Project Summit will result in total restructuring charges (including operating and capital expenditures) of approximately $240,000. We expect to incur restructuring charges associated with Project Summit of approximately $60,000 during2020. During the fourth quarter of 2019, substantially all of which will consist of employee severance costs and professional fees that will be settled in cash during the fourth quarter of 2019 and 2020.

As a result of the realignment of our global managerial structure and changes to our internal financial reporting associated with Project Summit, during the fourth quarter of 2019, we reassessed the composition of our reportable operating segments. Subsequent to the implementation of the planned managerial structure changes associated with Project Summit,2020, we expect to have three reportable operating segments: (i) Global Records and Information Management Business (which will consistrecognize a gain of approximately $25,000 associated with the Frankfurt JV Transaction, representing the excess of the fair value of the consideration received over the carrying value of the assets. The gain remains subject to customary closing adjustments. At the closing date of the Frankfurt JV Transaction, the fair value of our existing North American Records and Information Management Business, North American Data Management Business, Western European Business and Other International Business operating segments); (ii) Global Data Center Business; and (iii) Corporate and Other Business (which includes our Adjacent Businesses operating segment). We also are in the processFrankfurt JV Investment was approximately $25,000.


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Table of reassessing the composition of our reporting units, at which level we assess goodwill for impairment.Contents

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 nine months ended September 30, 20192020 should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto for the three and nine months ended September 30, 2019,2020, 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, 201913, 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,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, (2) expected growth 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 that profits will increase in our emerging markets, (5) expectation that our growth portfolio will become a large part of our business over time, (6) statements regarding our expectation to reduce our leverage ratio, (7) ability to close pending acquisitions and (8) expected benefits, costs and actions related to, and timing of, Project Summit (as defined and discussed below)., (3) anticipated capital expenditures and possible funding sources, (4) expected total consolidated revenue declines in 2020 and (5) other forward-looking statements related to our business, results of operations and financial condition. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors.factors, and you should not rely upon them except as statements of our present intentions and of our present expectations, which may or may not occur. 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 execute on Project Summit and the potential impacts of Project Summit on our ability to retain and recruit employees and execute on our strategic growth plan;
•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;services, including as a result of the adoption of alternative technologies and shifts to storage of data through non-paper based technologies;
•our ability or inability to execute our strategic growth plan, including our ability to invest according to plan, expand internationally, complete acquisitions on satisfactory terms, integrate acquired companies efficiently and grow our business through joint ventures;
•changes in the amount of our capital expenditures;
•our ability to raise debt or equity capital and changes in the cost of our debt;
•the cost and our ability to comply with current and future laws, regulations and customer demands, including those 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 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;
•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;instruments;
•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;
our ability to execute on Project Summit and potential impacts of Project Summit on our ability to retain and recruit employees and execute on our strategy; and
•other trends in competitive or economic conditions affecting our financial condition or results of operations not presently contemplated.contemplated; and

You should not rely upon forward-looking statements except as statements•the other risks described in our periodic reports filed with the SEC, including under the caption "Risk Factors" in Part I, Item 1A of our present intentionsAnnual Report and in Part II, Item 1A 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. Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the "March 31, 2020 Quarterly Report").
Except as required by law, we undertake no obligation to release publicly the result ofupdate any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures we have madeappearing 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.report.
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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 nine months ended September 30, 20192020 within each section. Trends and changes that are consistent with the three and nine month periods are not repeated and are discussed on a year to date basis only.

COVID-19

In January 2020, the World Health Organization declared a novel strain of coronavirus ("COVID-19") a pandemic. This 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. In response, we temporarily closed certain of our offices and facilities across the world and implemented certain travel restrictions for our employees. The preventative and protective actions that governments have ordered, or we have implemented as an organization, have resulted in a period of reduced service operations and business disruption for us, our customers and other third parties with which we do business. While we have broad geographic and customer diversification with operations in approximately 50 countries, and no single customer accounting for more than 1% of our revenue during the nine months ended September 30, 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.

We have taken certain actions during the nine months ended September 30, 2020 to manage our costs and capital expenditures, 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) temporary furloughs, reduced hours or other temporary reduction measures; (iv) the deferral of certain previously planned non-essential capital investments and (v) the implementation of a temporary freeze on future acquisitions. 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 the need for these cost saving measures and additional cost saving measures as additional information regarding the COVID-19 pandemic and the related economic downturn become known. We have incurred certain costs due to the COVID-19 pandemic which are direct, incremental and not expected to recur once the pandemic ends, which include the purchase of personal protective equipment for our employees and incremental cleaning costs of our facilities, among other direct costs. We have excluded these costs in calculating our various non-GAAP measures (as described below).

Project Summit

In October 2019, we announced aour global program designed to better position us for future growth and achievement of our strategic objectives (“("Project Summit”Summit"). Since Project Summit will focus 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 also planwas announced, we have identified additional opportunities to implement systems and process changes designed to make our organization more agile and dynamic, streamline our organizationbusiness and reallocateoperations, as well as accelerated the timing of certain opportunities previously identified. Such opportunities include leveraging new technology solutions to enable us to modernize our resources to better align withservice delivery model and more efficiently utilize our strategic goals as partfleet, labor and real estate, which has broadened the initial scope of Project Summit. As a result of the program, we expect to reduce the number of vice president level and above positions by approximately 45%. The total program is expected to reduce our total managerial and administrative workforce by approximately 700 positions over the next two years.

The activities associated with Project Summit will beginbegan in the fourth quarter of 2019 and are expected to be substantially complete by the end of 2021. We expect the total program benefits associated with Project Summit to be fully realized byexiting 2021. Including the endexpanded scope of 2022. WeProject Summit described above, we estimate that Project Summit will improve annual Adjusted EBITDA (as defined below) by approximately $200.0$375.0 million by the end of 2022 as program benefits are realized. Weexiting 2021. In addition, we expect Project Summit to improve annual Adjusted EBITDA by approximately $80.0$165.0 million in 2020, of which we expect to realize approximately $50.0 million of Adjusted EBITDA improvement as a result of the actions initiated during the fourth quarter of 2019.2020. 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.
We
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Including the expanded scope of Project Summit described above, we estimate that the implementation of Project Summit will result in total restructuring charges (including operating and capital expenditures)costs of approximately $240.0 million, including approximately $60.0$450.0 million, of restructuring chargeswhich we expect to incur during the fourth quarter of 2019. We expect to substantially complete all actionsapproximately $200.0 million in 2020. These costs include (1) operating expenditures ("Restructuring Charges") that primarily consist of: (i) employee severance costs; (ii) internal costs associated with the development and implementation of Project Summit byinitiatives; (iii) professional fees, primarily related to third party consultants who are assisting with the enddesign and execution of 2021. We expect substantially allvarious initiatives as well as project management activities and (iv) system implementation and data conversion costs, and (2) capital expenditures. The following table presents (in thousands) the total costs related to Project Summit, comprised of the restructuring chargesRestructuring Charges (primarily related to employee severance costs, internal costs associated with the development and implementation of Project Summit that we will incurinitiatives and professional fees) and capital expenditures for both the three and nine months ended September 30, 2020 and from the inception of Project Summit through September 30, 2020.
 For the Three
Months Ended September 30, 2020		For the Nine
Months Ended September 30, 2020		From the inception of Project Summit through
September 30, 2020
Restructuring Charges$48,371 $128,715 $177,312 
Capital Expenditures associated with Project Summit2,567 4,672 4,672 
Total$50,938 $133,387 $181,984 

See Note 10 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for more information on the Restructuring Charges.

During the fourth quarter of 2019, substantially all of which will consist of employee severance costs and professional fees, will be settled in cash during the fourth quarter of 2019 and 2020. In addition, we expect a significant portion of the remaining restructuring charges we will incur as a result of Project Summit will be settled in cash, primarily as a result of employee severance, professional fees, program management and implementation of various technology systems and hardware.
As a result ofthe realignment of our global managerial structure and changes to our internal financial reporting associated with Project Summit, during the fourth quarter of 2019, we reassessed the composition of our reportable operating segments. Subsequent to the implementation of the planned managerial structure changes associated with Project Summit, we expect to have three reportable operating segments: (i) Global Recordssegments and Information Management Business (which will consist of our existing North American Records and Information Management Business, North American Data Management Business, Western European Business and Other International Business operating segments); (ii) Global Data Center Business; and (iii) Corporate and Other Business (which includes our Adjacent Businesses operating segment). We also are in the process of reassessing the composition of our reporting units, at which level we assess goodwill for impairment.
IODC Acquisition
On 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 millionas discussed 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 62.h. 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 the United States and Canada (the "IM Consumer Storage Assets") and approximately $20.0 million 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").
As described in Note 10 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report, the divestment of the IM Consumer Storage Assets in the Consumer Storage Transaction does not meet the criteria to be reported as a discontinued operations in our consolidated financial statements. In 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 $7.3 million and $15.2 million of revenue, respectively, for the three and nine months ended September 30, 2019 associated with the Makespace Agreement.
Report. As a result of these changes, previously reported segment information has been restated to conform to the Consumer Storage Transaction, we recorded a gain on sale of approximately $4.2 million to Other (income) expense, net,current presentation.

Change in the first quarter of 2019, representing the excess of the fair value of the consideration received over the sum of (i) carrying value of our consumer storage operations and (ii) the Cash Contribution.Presentation
b. IMFS Divestment
On September 28, 2018, we sold substantially all of the assets associated with our fulfillment services business in the United States for total consideration of approximately $3.0 million (the "IMFS Divestment"). As described in Note 13 to Notes to Consolidated Financial Statements in our Annual Report, we have concluded that the IMFS Divestment does not meet the criteria to be reported as discontinued operations in our consolidated financial statements, as our decision to divest this business does not represent a strategic shift that will have a major effect on our operations and financial results. Our fulfillment services business represented approximately $6.1 million and $20.2 million of total revenues and approximately $(0.4) million and $0.8 million of (loss) income from continuing operations for the three and nine months ended September 30, 2018, respectively.
Significant Acquisition Costs
We currently estimate total acquisition and integration expenditures associated withhave historically classified 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 September 30, 2019, we have incurred cumulative operating and capital expenditures associated with the Recall Transaction and the IODC Transaction of $398.9 million, including $323.1 million of Significant Acquisition Costs (as defined in Note 112.x. to Notes to Consolidated Financial Statements included in our Annual Report) as components of Selling, general and $75.8 millionadministrative expenses and Cost of capital expenditures. We expectsales. Beginning in the remaining amountfourth quarter of these operating and capital expenditures will be primarily related to moving costs associated with facility consolidation and system upgrade costs.
Immaterial Restatement
In June 2019, we received a notification of assessment from tax and customs authorities in the Netherlands related to a value-added tax (“VAT”) liability which relates to periods prior to January 1, 2019. We have established a reserve for this matter based upon our estimate of the amount of loss that is both probable and estimable, and have reflected this reserve through an immaterial restatement of our consolidated financial statements. As a result, certainpresent Significant Acquisition Costs as its own line itemsitem within Operating Expenses in our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018Operations. The prior periods have been restatedconformed 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 effect of the immaterial restatement on certain line items in our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018.presentation.


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 retainedAll Significant Acquisition Costs were incurred by customers for many years, technology escrow services that protect and manage source code 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. 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, 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.

The expansion of our international businesses has impacted the major cost of sales components and selling, general and administrative expenses. Our international operations are more labor intensive relative to revenue than our operations in North America and, therefore, labor costs are a higher percentage of international segment revenue. In addition, the overhead structure of our expanding international operations has generally not achieved the same level of overhead leverage as our North American segments, which may result in an increase in selling, general and administrative expenses as a percentage of consolidated revenue as our international operations become a 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 results at the 2019 average exchange rates. Constant currency growth rates are a non-GAAP measure.


The following table is a comparison of underlying average exchange rates of the foreign currencies that had the most significant impact on our United States dollar-reported revenues and expenses:
 
Percentage of United States Dollar-Reported
Revenue for the
Three Months Ended
September 30,
 
Average Exchange
Rates for the
Three Months Ended
September 30,
 
Percentage
Strengthening /
(Weakening) of
Foreign Currency
 2019 2018 2019 2018 
Australian dollar3.4% 3.6% $0.685
 $0.731
 (6.3)%
Brazilian real2.6% 2.7% $0.252
 $0.254
 (0.8)%
British pound sterling6.2% 6.4% $1.233
 $1.303
 (5.4)%
Canadian dollar5.7% 5.8% $0.757
 $0.765
 (1.0)%
Euro7.3% 7.5% $1.112
 $1.163
 (4.4)%
 Percentage of United States Dollar-Reported
Revenue for the
Nine Months Ended
September 30,		 
Average Exchange
Rates for the
Nine Months Ended
September 30,
 
Percentage
Strengthening /
(Weakening) of
Foreign Currency
 2019 2018 2019 2018 
Australian dollar3.4% 3.8% $0.699
 $0.758
 (7.8)%
Brazilian real2.6% 2.9% $0.258
 $0.280
 (7.9)%
British pound sterling6.4% 6.7% $1.273
 $1.352
 (5.8)%
Canadian dollar5.7% 6.0% $0.752
 $0.777
 (3.2)%
Euro7.4% 7.2% $1.124
 $1.195
 (5.9)%

The percentage of United States dollar-reported revenues for all other foreign currencies was 12.5% and 12.6%December 31, 2019. Significant Acquisition Costs for the three and nine months ended September 30, 2019 respectively,were approximately $4.0 million and 12.4% and 12.6% for the three and nine months ended September 30, 2018,$8.6 million, 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 expense (income) expense,, net (which includes foreign currency transaction (gains) losses, net)net, and debt extinguishment expense); and (4) Significant Acquisition Costs.Costs; (5) Restructuring Charges; and (6) COVID-19 Costs (as defined below). 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 flowflows 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. We also show Adjusted EBITDA and Adjusted EBITDA Margin for each of our reportable operating segments under “Results of Operations – Segment Analysis” below.

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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
September 30,		Nine Months Ended
September 30,
2020201920202019
Income (Loss) from Continuing Operations$38,562 $108,284 $96,341 $231,107 
Add/(Deduct):
Provision (Benefit) for Income Taxes13,934 21,928 33,304 43,127 
Other Expense (Income), Net83,465 (13,415)66,439 (13,397)
Interest Expense, Net104,303 106,677 313,408 314,427 
(Gain) Loss on disposal/write-down of property, plant and equipment, net(75,840)(9,284)(78,170)(17,087)
Depreciation and amortization157,252 157,561 483,686 484,375 
Significant Acquisition Costs— 3,950 — 8,597 
Restructuring Charges48,371 — 128,715 — 
COVID-19 Costs(1)— — 9,285 — 
Intangible impairments— — 23,000 — 
Adjusted EBITDA$370,047 $375,701 $1,076,008 $1,051,149 


(1)    Costs that are incremental and directly attributable to the COVID-19 pandemic which are not expected to recur once the pandemic ends ("COVID-19 Costs"). These costs include the purchase of personal protective equipment for our employees and incremental cleaning costs of our facilities, among other direct costs.
36
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019 2018 2019 2018
Income (Loss) from Continuing Operations$108,284
 $77,349
 $231,107
 $209,001
Add/(Deduct):  

    
Provision (Benefit) for Income Taxes21,928
 14,023
 43,127
 39,957
Other (Income) Expense, Net(13,415) 325
 (13,397) 1,420
Interest Expense, Net106,677
 103,938
 314,427
 303,836
(Gain) Loss on disposal/write-down of property, plant and equipment, net(9,284) (388) (17,087) (2,064)
Depreciation and amortization157,561
 157,797
 484,375
 474,595
Significant Acquisition Costs3,950
 9,286
 8,597
 38,715
Adjusted EBITDA$375,701
 $362,330
 $1,051,149
 $1,065,460
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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 expense (income) expense,, net (which includes foreign currency transaction (gains) losses, net)net, and debt extinguishment expense); (4) Significant Acquisition Costs; (5) Restructuring Charges; (6) COVID-19 Costs; and (5)(7) 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
September 30,		 Nine Months Ended
September 30,		Three Months Ended
September 30,		Nine Months Ended
September 30,
2019 2018 2019 20182020201920202019
Reported EPS—Fully Diluted from Continuing Operations$0.37
 $0.27
 $0.80
 $0.73
Reported EPS—Fully Diluted from Continuing Operations$0.13 $0.37 $0.33 $0.80 
Add/(Deduct):       Add/(Deduct):
Income (Loss) Attributable to Noncontrolling Interests—
 —
 0.01
 —
Income (Loss) Attributable to Noncontrolling Interests— — — 0.01 
Other (Income) Expense, Net(0.05) —
 (0.05) —
Other Expense (Income), NetOther Expense (Income), Net0.29 (0.05)0.23 (0.05)
(Gain) Loss on disposal/write-down of property, plant and equipment, net(0.03) —
 (0.06) —
(Gain) Loss on disposal/write-down of property, plant and equipment, net(0.26)(0.03)(0.27)(0.06)
Significant Acquisition Costs0.01
 0.03
 0.03
 0.14
Significant Acquisition Costs— 0.01 — 0.03 
Restructuring ChargesRestructuring Charges0.17 — 0.45 — 
COVID-19 CostsCOVID-19 Costs— — 0.03 — 
Intangible impairmentsIntangible impairments— — 0.08 — 
Tax Impact of Reconciling Items and Discrete Tax Items(1)—
 (0.02) (0.01) (0.06)Tax Impact of Reconciling Items and Discrete Tax Items(1)(0.01)— (0.05)(0.01)
Adjusted EPS—Fully Diluted from Continuing Operations(2)$0.32
 $0.28
 $0.71
 $0.80
Adjusted EPS—Fully Diluted from Continuing Operations(2)$0.31 $0.32 $0.80 $0.71 


(1)The difference between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the three and nine months ended September 30, 2019 and 2018 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 nine months ended September 30, 2019 and 2018 was 18.6% and 20.3%, respectively.
(2)Columns may not foot due to rounding.


(1)The difference between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the three and nine months ended September 30, 2020 and 2019 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 nine months ended September 30, 2020 and 2019 was 16.8% and 18.6%, 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 expense (income) expense,, net (which includes foreign currency transaction (gains) losses, net)net, and debt extinguishment expense); (4) real estate financing lease depreciation; (5) Significant Acquisition Costs; (6) Restructuring Charges; (7) COVID-19 Costs; (8) the tax impact of reconciling items and discrete tax items; (7)(9) (income) loss (income) from discontinued operations, net of tax; and (8)(10) (gain) loss (gain) on sale of discontinued operations, net of tax.
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Reconciliation of Net Income (Loss) to FFO (Nareit) and FFO (Normalized) (in thousands):
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
September 30,		Nine Months Ended
September 30,
2019 2018 2019 20182020201920202019
Net Income (Loss)$108,284
 $65,744
 $231,211
 $196,574
Net Income (Loss)$38,562 $108,284 $96,341 $231,211 
Add/(Deduct):       Add/(Deduct):
Real Estate Depreciation(1)72,939
 72,058
 220,179
 211,499
Real Estate DepreciationReal Estate Depreciation72,019 72,939 224,325 220,179 
Gains on Sale of Real Estate, Net of Tax(9,740) (1,348) (40,252) (1,348)Gains on Sale of Real Estate, Net of Tax(75,880)(9,740)(77,461)(40,252)
Data Center Lease-Based Intangible Assets Amortization(2)11,356
 12,036
 35,337
 30,437
Data Center Lease-Based Intangible Assets AmortizationData Center Lease-Based Intangible Assets Amortization10,441 11,356 32,173 35,337 
FFO (Nareit)182,839
 148,490
 446,475
 437,162
FFO (Nareit)45,142 182,839 275,378 446,475 
Add/(Deduct):       Add/(Deduct):
(Gain) Loss on disposal/write-down of property, plant and equipment (excluding real estate), net369
 960
 28,558
 (716)
Other (Income) Expense, Net(3)(13,415) 325
 (13,397) 1,420
Loss (Gain) on disposal/write-down of property, plant and equipment (excluding real estate), netLoss (Gain) on disposal/write-down of property, plant and equipment (excluding real estate), net40 369 (359)28,558 
Other Expense (Income), Net(1)Other Expense (Income), Net(1)83,465 (13,415)66,439 (13,397)
Real Estate Financing Lease Depreciation3,115
 3,374
 9,732
 10,323
Real Estate Financing Lease Depreciation3,501 3,115 10,095 9,732 
Significant Acquisition Costs3,950
 9,286
 8,597
 38,715
Significant Acquisition Costs— 3,950 — 8,597 
Tax Impact of Reconciling Items and Discrete Tax Items(4)1,283
 (6,347) (9,202) (18,165)
Loss (Income) from Discontinued Operations, Net of Tax(5)—
 11,605
 (104) 12,427
Restructuring ChargesRestructuring Charges48,371 — 128,715 — 
COVID-19 CostsCOVID-19 Costs— — 9,285 — 
Intangible impairmentsIntangible impairments— — 23,000 — 
Tax Impact of Reconciling Items and Discrete Tax Items(2)Tax Impact of Reconciling Items and Discrete Tax Items(2)(4,314)1,283 (13,959)(9,202)
(Income) Loss from Discontinued Operations, Net of Tax(3)(Income) Loss from Discontinued Operations, Net of Tax(3)— — — (104)
FFO (Normalized)$178,141
 $167,693
 $470,659
 $481,166
FFO (Normalized)$176,205 $178,141 $498,594 $470,659 


(1)Includes depreciation expense related to owned real estate assets (land improvements, buildings, building improvements, leasehold improvements and racking), excluding depreciation related to real estate financing leases.
(2)Includes amortization expense for data center in-place lease intangible assets and data center tenant relationship intangible assets as discussed in Note 2.b. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.
(3)Includes foreign currency transaction (gains) losses, net of $(18.3) million and $(19.9) million in the three and nine months ended September 30 2019, respectively, and $0.7 million and $3.8 million in the three and nine months ended September 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.
(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 $1.0 million and $(5.5) million for the three and nine months ended September 30, 2019, respectively, and $(4.0) million and $(14.6) million for the three and nine months ended September 30, 2018, respectively.
(5)Net of a de minimis tax benefit for the three and nine months ended September 30, 2019 and 2018.

(1)Includes (i) foreign currency transaction losses (gains), net of $29.6 million and $(6.3) million for the three and nine months ended September 30, 2020, respectively, and $(18.3) million and $(19.9) million for the three and nine months ended September 30, 2019, respectively and (ii) debt extinguishment expense of $51.3 million and $68.3 million for the three and nine months ended September 30, 2020, respectively.
(2)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 $(3.8) million and $(1.6) million for the three and nine months ended September 30, 2020, respectively, and $1.0 million and $(5.5) million for the three and nine months ended September 30, 2019, respectively.
(3)Net of a de minimis tax benefit for the nine months ended September 30, 2019.
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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 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
Income Taxes
FurtherGoodwill and other indefinite-lived intangible assets not subject to amortization: Our reporting units as of December 31, 2019 are described in detail regarding our critical accounting policies can be found in "Item 7. Management's Discussion and Analysis ofNote 2.h. to Notes to Consolidated Financial Condition and Results of Operations"Statements included in our Annual Report, andReport. The goodwill associated with acquisitions completed during the Consolidated Financial Statements and the Notes included therein. We have determined that no material changes concerning our critical accounting policies have occurred since December 31, 2018, other than the adoptionfirst nine months of Accounting Standards Update No. 2016-02, Leases (Topic 842), as amended ("ASU 2016-02"), as2020 (which are described in Note 2.d.4 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.Report) has been incorporated into our reporting units as they existed as of December 31, 2019.

During the first quarter of 2020, we concluded that we had a triggering event related to our Fine Arts reporting unit, requiring us to perform an interim goodwill impairment test. The primary factor contributing to our conclusion was the expected impact of the COVID-19 pandemic to this particular business and its customers and revenue sources, which caused us to believe it was more likely than not that the carrying value of our Fine Arts reporting unit exceeded its fair value. During the first quarter of 2020, we performed an interim goodwill impairment test for our Fine Arts reporting unit utilizing a discounted cash flow model, with updated assumptions on future revenues, operating expenditures and capital expenditures. We concluded that the fair value of 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. 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. During the second and third quarters of 2020, for each of our reporting units, no factors were identified that would alter our interim goodwill impairment analysis performed during the first quarter of 2020, or change the conclusions reached at that time.

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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 potentially 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.2.n. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for a description of recently issuedadopted accounting pronouncements, including those recently adopted.pronouncements.
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Results of Operations

Comparison of the three and nine months ended September 30, 20192020 to the three and nine months ended September 30, 20182019 (in thousands):
Three Months Ended
September 30,
Dollar
Change		Percentage
Change
20202019
Revenues$1,036,647$1,062,224$(25,577)(2.4)%
Operating Expenses796,383838,750(42,367)(5.1)%
Operating Income240,264223,47416,790 7.5 %
Other Expenses, Net201,702115,19086,512 75.1 %
Income (Loss) from Continuing Operations38,562108,284(69,722)(64.4)%
Income (Loss) from Discontinued Operations, Net of Tax——— — %
Net Income (Loss)38,562108,284(69,722)(64.4)%
Net Income (Loss) Attributable to Noncontrolling Interests168609(441)(72.4)%
Net Income (Loss) Attributable to Iron Mountain Incorporated$38,394$107,675$(69,281)(64.3)%
Adjusted EBITDA$370,047$375,701$(5,654)(1.5)%
Adjusted EBITDA Margin35.7 %35.4 %
Nine Months Ended
September 30,
Dollar
Change		Percentage
Change
20202019
Revenues$3,087,617$3,182,994$(95,377)(3.0)%
Operating Expenses2,578,1252,607,730(29,605)(1.1)%
Operating Income509,492575,264(65,772)(11.4)%
Other Expenses, Net413,151344,15768,994 20.0 %
Income (Loss) from Continuing Operations96,341231,107(134,766)(58.3)%
Income (Loss) from Discontinued Operations, Net of Tax—104(104)(100.0)%
Net Income (Loss)96,341231,211(134,870)(58.3)%
Net Income (Loss) Attributable to Noncontrolling Interests1,0581,534(476)(31.0)%
Net Income (Loss) Attributable to Iron Mountain Incorporated$95,283$229,677$(134,394)(58.5)%
Adjusted EBITDA$1,076,008$1,051,149$24,859 2.4 %
Adjusted EBITDA Margin34.8 %33.0 %
41
 Three Months Ended
September 30,		   
 
Dollar
Change
 
Percentage
Change
 2019 2018  
Revenues$1,062,224
 $1,060,991
 $1,233
 0.1 %
Operating Expenses838,750
 865,356
 (26,606) (3.1)%
Operating Income223,474
 195,635
 27,839
 14.2 %
Other Expenses, Net115,190
 118,286
 (3,096) (2.6)%
Income from Continuing Operations108,284
 77,349
 30,935
 40.0 %
(Loss) Income from Discontinued Operations, Net of Tax—
 (11,605) 11,605
 (100.0)%
Net Income108,284
 65,744
 42,540
 64.7 %
Net Income (Loss) Attributable to Noncontrolling Interests609
 (125) 734
 (587.2)%
Net Income Attributable to Iron Mountain Incorporated$107,675
 $65,869
 $41,806
 63.5 %
Adjusted EBITDA(1)$375,701
 $362,330
 $13,371
 3.7 %
Adjusted EBITDA Margin(1)35.4% 34.2%    

Table of Contents
 Nine Months Ended
September 30,		    
  
Dollar
Change
 
Percentage
Change
 2019 2018  
Revenues$3,182,994
 $3,164,272
 $18,722
 0.6 %
Operating Expenses2,607,730
 2,610,058
 (2,328) (0.1)%
Operating Income575,264
 554,214
 21,050
 3.8 %
Other Expenses, Net344,157
 345,213
 (1,056) (0.3)%
Income from Continuing Operations231,107
 209,001
 22,106
 10.6 %
Income (Loss) from Discontinued Operations, Net of Tax104
 (12,427) 12,531
 (100.8)%
Net Income231,211
 196,574
 34,637
 17.6 %
Net Income Attributable to Noncontrolling Interests1,534
 485
 1,049
 216.3 %
Net Income Attributable to Iron Mountain Incorporated$229,677
 $196,089
 $33,588
 17.1 %
Adjusted EBITDA(1)$1,051,149
 $1,065,460
 $(14,311) (1.3)%
Adjusted EBITDA Margin(1)33.0% 33.7%    

(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.


REVENUES
Consolidated revenues consistsconsist of the following (in thousands):
Three Months Ended
September 30,		Percentage Change
Dollar
Change		ActualConstant
Currency(1)		Organic
Growth(2)		Impact of Acquisitions
20202019
Storage Rental$696,294 $673,318 $22,976 3.4 %3.8 %2.5 %1.3 %
Service340,353 388,906 (48,553)(12.5)%(12.2)%(13.5)%1.3 %
Total Revenues$1,036,647 $1,062,224 $(25,577)(2.4)%(2.1)%(3.4)%1.3 %
 Three Months Ended
September 30,		   Percentage Change  
  
Dollar
Change
 Actual 
Constant
Currency(1)
 
Organic
Growth(2)
 2019 2018    
Storage Rental$673,318
 $656,973
 $16,345
 2.5 % 4.0 % 3.0 %
Service388,906
 404,018
 (15,112) (3.7)% (2.1)% (3.0)%
Total Revenues$1,062,224
 $1,060,991
 $1,233
 0.1 % 1.7 % 0.7 %

 Nine Months Ended
September 30,		   Percentage Change  
  Dollar
Change		 Actual Constant
Currency(1)		 Organic
Growth(2)
 2019 2018    
Storage Rental$2,005,580
 $1,963,561
 $42,019
 2.1 % 4.5% 2.5 %
Service1,177,414
 1,200,711
 (23,297) (1.9)% 0.7% (1.2)%
Total Revenues$3,182,994
 $3,164,272
 $18,722
 0.6 % 3.1% 1.1 %

Nine Months Ended
September 30,		Percentage Change
Dollar
Change		ActualConstant
Currency(1)		Organic
Growth(2)		Impact of Acquisitions
20202019
Storage Rental$2,056,797 $2,005,580 $51,217 2.6 %4.2 %2.6 %1.6 %
Service1,030,820 1,177,414 (146,594)(12.5)%(11.1)%(13.0)%1.9 %
Total Revenues$3,087,617 $3,182,994 $(95,377)(3.0)%(1.5)%(3.2)%1.7 %

(1)Constant currency growth rates are calculated by translating the 2018 results at the 2019 average exchange rates.
(2)
(1)Constant currency growth rates, which are a non-GAAP measure, are calculated by translating the 2019 results at the 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 nine months ended September 30, 2019, the increase in reported consolidated storage rental revenues was driven by the favorable impact of acquisitions/divestitures and consolidated organic storage rental revenue growth, partially offset by unfavorable fluctuations in foreign currency exchange rates. The netrate fluctuations. Our organic revenue growth rate includes the impact of acquisitions/divestitures contributed 2.0% to the reported storage rental revenue growth rates foracquisitions of customer relationships.

Total Revenues

For the nine months ended September 30, 2019 compared to2020, the prior year period, primarilydecrease in reported consolidated revenue was driven by acquisitionsdeclines in our Global Data Center Business segment. Organicreported service revenue, partially offset by reported storage rental revenue growth of 2.5% in the nine months ended September 30, 2019 compared to the prior year period was driven by organic storage rental revenue growth of 2.0% in our North American Records and Information Management Business segment due to revenue management partially offset by volume decreases, as well as organic storage rental revenue growth of 3.1% and 4.3% 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 5.1% for the nine months ended September 30, 2019 compared to the prior year period, primarily related to a $3.4 million lease modification fee that benefited organic storage rental revenue growth for the segment by 2.2%. Organic storage rental revenue growth in our North American Data Management Business segment was negative 2.1% for the nine months ended September 30, 2019 compared to the prior year period due to lower storage volume, partially offset by the impact of revenue management. Excluding the impact of acquisitions/divestitures, global records management net volumes as of September 30, 2019 increased by 0.4% over the ending volume as of September 30, 2018. Including the impact of acquisitions/divestitures, global records management net volumes as of September 30, 2019 increased by 1.0% over the ending volume at September 30, 2018, supported by net volume increases of 1.5% and 5.2% 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.growth. Foreign currency exchange rate fluctuations decreased our reported storage rentalconsolidated revenue growth rate for the nine months ended September 30, 20192020 by 2.4%,1.5% compared to the prior year period. We expect low single digit total consolidated revenue declines for the full year 2020.


Storage Rental Revenues

Primary factors influencing the change in reported consolidated storage rental revenue for the nine months ended September 30, 2020 include the following:
•organic storage rental revenue growth driven by volume growth in faster growing markets and revenue management;
•a 2.1% increase in global records management net volume due to acquisitions (excluding acquisitions, global records management net volume decreased 1.2%); and
•a decrease of $30.9 million due to foreign currency exchange rate fluctuations.
Service Revenues

InPrimary factors influencing the three and nine months ended September 30, 2019, the decreasechange in reported consolidated service revenues was driven by 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 nine months ended September 30, 2019 by 2.6%, compared to2020 include the prior year period. Infollowing:
•a decrease in service activity as a result of the nine months ended September 30, 2019, organic service revenue growth was negative 1.2% compared to the prior year period, primarily driven by continued declines in organic service revenue activity levels in our North American Data Management Business segment resulting in negative 3.4% organic service revenue growth in this segment, as the storage business in this segment becomes more archival in nature and tape volumes decline, and negative organic service revenue growth of 1.1% in our North American Records and Information Management Business segment reflecting recent declines in recycled paper prices and lower destruction activity. The net impact of acquisitions/divestitures contributed 1.9% to the reported service revenue growth rates for the nine months ended September 30, 2019, compared to the prior year period.

Total Revenues

For the reasons stated above, our reported consolidated revenues increased $1.2 million, or 0.1%, to $1,062.2 million and $18.7 million, or 0.6%, to $3,183.0 million for the three and nine months ended September 30, 2019, respectively, from $1,061.0 million and $3,164.3 million for the three and nine months ended September 30, 2018, respectively. The net impact of acquisitions/divestitures contributed 2.0% to the reported consolidated revenue growth rate for the nine months ended September 30, 2019 compared to the prior year period. Consolidated organic revenue growth was 1.1% in the nine months ended September 30, 2019 compared to the prior year period. Foreign currency exchange rate fluctuations decreased our reported consolidated revenue growth rate for the nine months ended September 30, 2019 by 2.5%, compared to the prior year period.

Organic Growth—Eight-Quarter Trend
  2017 2018 2019
  Fourth Quarter First
Quarter		 Second Quarter 
Third
Quarter
 Fourth Quarter First
Quarter		 Second Quarter Third
Quarter
Storage Rental Revenue 4.2 % 3.7% 1.9% 2.3% 1.9% 2.0% 2.4 % 3.0 %
Service Revenue (0.1)% 1.4% 7.6% 7.1% 6.1% 1.8% (2.0)% (3.0)%
Total Revenues 2.5 % 2.8% 4.1% 4.1% 3.5% 1.9% 0.7 % 0.7 %

We expect our consolidated organic storage rental revenue growth rate for 2019 to be approximately 2.5% and our consolidated organic total revenue growth rate to be approximately 1.0%. During the past eight quarters, our organic storage rental revenue growth rate has ranged between 1.9% and 4.2%. Consolidated organic storage rental revenue growth and consolidated total organic revenue growth for the second quarter of 2018 were negatively impacted by 0.8% and 0.5%, respectively, related to a $4.2 million customer termination fee in our Global Data Center Business segmentCOVID-19 pandemic in the second quarter of 2017. Consolidated organic storage rental revenue growth and, consolidated total organic revenue growth were benefited by 0.3% and 0.2%, respectively, for the second quarter of 2019 and by 0.3% and 0.2%, respectively, forto a lesser extent, the third quarter of 2019,2020, particularly in each case related to a $1.7 million customer lease modification fee in our Global Data Center Business segment. We expect similar benefits in the fourth quarter of 2019 related to this lease modification fee, which will total approximately $5.4 million for the full year 2019. Our organic storage rental revenue growth ratesregions where governments have declined over the past two fiscal years, as organic storage rental revenue growth for full year 2017 and 2018 was 3.9% and 2.4%, 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 nine months ended September 30, 2019, we experienced modest volume declines in our North American Records and Information Management Business and North American Data Management Business segments, with organic storage rental revenue growth in these segments coming primarily from revenue management and volume growth in our Western European Business and Other International Business segments. Within theseimposed restrictions on non-essential business segments, we expect these trends to continue into the next few years.operations;


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 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. The recent increases in •organic service revenue growth ratesdeclines reflecting lower service activity levels; and
•a decrease of 7.6%, 7.1%$18.0 million due to foreign currency exchange rate fluctuations.

The severity of future service level declines is uncertain and 6.1%is dependent on the duration and severity of the COVID-19 pandemic, the resulting governmental and business actions and the duration and strength of any ensuing economic recovery that may follow, specifically within the markets in the second, thirdwhich we operate and fourth quartersamong our customers.

42
Table 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% and negative 3.0% for the first, second and third quarters of 2019, respectively, reflecting declining recycled paper prices and moderation of destruction activity compared to previous quarters. We expect these trends to continue into 2020.Contents
OPERATING EXPENSES

Cost of Sales

Consolidated costCost of sales (excluding depreciation and amortization) consists of the following expenses (in thousands):
Three Months Ended
September 30,		Percentage Change% of
Consolidated
Revenues		Percentage
Change
(Favorable)/
Unfavorable
Dollar
Change		ActualConstant
Currency
2020201920202019
Labor$183,878 $200,471 $(16,593)(8.3)%(7.4)%17.7 %18.9 %(1.2)%
Facilities179,031 171,700 7,331 4.3 %4.5 %17.3 %16.2 %1.1 %
Transportation30,890 40,137 (9,247)(23.0)%(23.4)%3.0 %3.8 %(0.8)%
Product Cost of Sales and Other40,706 37,064 3,642 9.8 %10.9 %3.9 %3.5 %0.4 %
Total Cost of sales$434,505 $449,372 $(14,867)(3.3)%(2.8)%41.9 %42.3 %(0.4)%
Three Months Ended
September 30,		  Percentage Change 
% of
Consolidated
Revenues
 
Percentage
Change
(Favorable)/
Unfavorable
  Nine Months Ended
September 30,		Percentage Change% of
Consolidated
Revenues		Percentage
Change
(Favorable)/
Unfavorable
Dollar
Change
 Actual 
Constant
Currency
 Dollar
Change		ActualConstant
Currency
2019 2018 2019 2018 2020201920202019
Labor$200,471
 $199,892
 $579
 0.3 % 2.2 % 18.9% 18.8% 0.1 %Labor$552,396 $612,385 $(59,989)(9.8)%(7.8)%17.9 %19.2 %(1.3)%
Facilities171,700
 161,634
 10,066
 6.2 % 8.0 % 16.2% 15.2% 1.0 %Facilities537,181 523,369 13,812 2.6 %4.3 %17.4 %16.4 %1.0 %
Transportation40,137
 40,573
 (436) (1.1)% 0.6 % 3.8% 3.8% — %Transportation97,990 123,136 (25,146)(20.4)%(19.6)%3.2 %3.9 %(0.7)%
Product Cost of Sales and Other37,064
 43,027
 (5,963) (13.9)% (12.1)% 3.5% 4.1% (0.6)%Product Cost of Sales and Other112,904 114,937 (2,033)(1.8)%0.6 %3.7 %3.6 %0.1 %
Significant Acquisition Costs1,945
 2,892
 (947) (32.7)% (30.1)% 0.2% 0.3% (0.1)%
Total Cost of Sales$451,317
 $448,018
 $3,299
 0.7 % 2.6 % 42.5% 42.2% 0.3 %
COVID-19 CostsCOVID-19 Costs7,648 — 7,648 100.0 %100.0 %0.2 %— %0.2 %
Total Cost of salesTotal Cost of sales$1,308,119 $1,373,827 $(65,708)(4.8)%(3.0)%42.4 %43.2 %(0.8)%

 Nine Months Ended
September 30,		  Percentage Change % of
Consolidated
Revenues		 Percentage
Change
(Favorable)/
Unfavorable
     
 Dollar
Change		 Actual Constant
Currency		  
 2019 2018    2019 2018 
Labor$612,385
 $615,898
 $(3,513) (0.6)% 2.6 % 19.2% 19.5% (0.3)%
Facilities523,369
 486,196
 37,173
 7.6 % 10.5 % 16.4% 15.4% 1.0 %
Transportation123,136
 118,930
 4,206
 3.5 % 6.3 % 3.9% 3.8% 0.1 %
Product Cost of Sales and Other114,937
 122,164
 (7,227) (5.9)% (2.6)% 3.6% 3.9% (0.3)%
Significant Acquisition Costs4,136
 5,015
 (879) (17.5)% (14.1)% 0.1% 0.2% (0.1)%
Total Cost of Sales$1,377,963
 $1,348,203
 $29,760
 2.2 % 5.2 % 43.3% 42.6% 0.7 %

Labor
Labor expenses decreased to 19.2%Primary factors influencing the change in reported consolidated Cost of consolidated revenues in the nine months ended September 30, 2019 compared to 19.5% in the nine months ended September 30, 2018. The decrease in labor expenses as a percentage of consolidated revenues was primarily driven by improvements across our North American Data Management Business, Western European Business and Other International Business segments, partially attributable to ongoing cost management actions. On a constant dollar basis, labor expensessales for the nine months ended September 30, 2019 increased2020 include the following:
•a decrease in labor costs driven by $15.4 million, or 2.6%, comparedcost containment actions taken in response to lower service activity levels due to the prior year period,COVID-19 pandemic, partially offset by incremental labor costs associated with recent acquisitions;
•a decrease in transportation costs, primarily driven by acquisitionslower third-party carrier costs and fuel costs, reflecting cost containment actions taken in our Adjacent Businesses operating segment within our Corporate and Other Business segment, as well as increased labor costs relatedresponse to growth of our shredding operations within our North American Records and Information Management Business segment.lower service activity levels;

Facilities
Facilities expenses increased to 16.4% of consolidated revenues in the nine months ended September 30, 2019 compared to 15.4% in the nine months ended September 30, 2018. The 100 basis point•an increase in facilities expenses as a percentage of consolidated revenues was driven primarily by acquisitions in our Global Data Center Business segment and our Adjacent Businesses operating segment within our Corporate and Other Business segment. On a constant dollar basis, facilities expenses for the nine months ended September 30, 2019 increased by $49.6 million, or 10.5%, compared to the prior year period, driven by higher rent expense, insurance costs, utilities and building maintenance, in part driven by the acquisitions mentioned above.
Transportation
Transportation expenses increased to 3.9% of consolidated revenues in the nine months ended September 30, 2019 compared to 3.8% in the nine months ended September 30, 2018. The increase in transportation expenses as a percentage of consolidated revenues was primarily driven by increases in third party carrier expenses,rent expense, in part due to recent acquisitions in our Adjacent Businesses operating segment within our Corporateacquisitions; and Other Business segment. On
•a constant dollar basis, transportation expenses for the nine months ended September 30, 2019 increased by $7.3decrease of $25.4 million or 6.3%, compareddue to the prior year period, primarily driven by acquisitions in our Adjacent Businesses operating segment within our Corporate and Other Business segment.foreign currency exchange rate fluctuations.
Product Cost


43
Table of Sales and OtherContents
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 3.6% of consolidated revenues for the nine months ended September 30, 2019 compared to 3.9% in the nine months ended September 30, 2018. On a constant dollar basis, product cost of sales and other decreased by $3.1 million, or 2.6%, compared to the prior year period, primarily driven by lower special project costs.
Significant Acquisition Costs
Significant Acquisition Costs included in cost of sales were $4.1 million and $5.0 million in the nine months ended September 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

Consolidated Selling, general and administrative expenses consists of the following expenses (in thousands):
Three Months Ended
September 30,		Percentage Change% of
Consolidated
Revenues		Percentage
Change
(Favorable)/
Unfavorable
Dollar
Change		ActualConstant
Currency
2020201920202019
General and Administrative$131,911 $133,796 $(1,885)(1.4)%(1.0)%12.7 %12.6 %0.1 %
Sales, Marketing and Account Management55,294 58,011 (2,717)(4.7)%(4.6)%5.3 %5.5 %(0.2)%
Information Technology40,351 37,781 2,570 6.8 %6.9 %3.9 %3.6 %0.3 %
Bad Debt Expense4,539 7,563 (3,024)(40.0)%(40.5)%0.4 %0.7 %(0.3)%
Total Selling, general and administrative expenses$232,095 $237,151 $(5,056)(2.1)%(1.9)%22.4 %22.3 %0.1 %
Three Months Ended
September 30,		   Percentage Change 
% of
Consolidated
Revenues
 
Percentage
Change
(Favorable)/
Unfavorable
Nine Months Ended
September 30,		Percentage Change% of
Consolidated Revenues		Percentage
Change
(Favorable)/
Unfavorable
   
 
Dollar
Change
 Actual 
Constant
Currency
 Dollar
Change		ActualConstant
Currency
2019 2018 2019 2018 2020201920202019
General and Administrative$133,796
 $148,456
 $(14,660) (9.9)% (8.6)% 12.6% 14.0% (1.4)%General and Administrative$397,290 $428,970 $(31,680)(7.4)%(6.1)%12.9 %13.5 %(0.6)%
Sales, Marketing and Account Management58,011
 59,031
 (1,020) (1.7)% (0.3)% 5.5% 5.6% (0.1)%Sales, Marketing and Account Management167,138 186,717 (19,579)(10.5)%(9.3)%5.4 %5.9 %(0.5)%
Information Technology37,781
 39,588
 (1,807) (4.6)% (3.7)% 3.6% 3.7% (0.1)%Information Technology120,995 125,981 (4,986)(4.0)%(3.0)%3.9 %4.0 %(0.1)%
Bad Debt Expense7,563
 6,460
 1,103
 17.1 % 20.6 % 0.7% 0.6% 0.1 %Bad Debt Expense25,715 16,350 9,365 57.3 %57.4 %0.8 %0.5 %0.3 %
Significant Acquisition Costs2,005
 6,394
 (4,389) (68.6)% (68.4)% 0.2% 0.6% (0.4)%
Total Selling, General and Administrative Expenses$239,156
 $259,929
 $(20,773) (8.0)% (6.7)% 22.5% 24.5% (2.0)%
COVID-19 CostsCOVID-19 Costs1,637 — 1,637 100.0 %100.0 %0.1 %— %0.1 %
Total Selling, general and administrative expensesTotal Selling, general and administrative expenses$712,775 $758,018 $(45,243)(6.0)%(4.7)%23.1 %23.8 %(0.7)%

 Nine Months Ended
September 30,		   Percentage Change % of
Consolidated
Revenues		 Percentage
Change
(Favorable)/
Unfavorable
      
  Dollar
Change		 Actual Constant
Currency		  
 2019 2018    2019 2018 
General and Administrative$428,970
 $429,670
 $(700) (0.2)% 2.1 % 13.5% 13.6% (0.1)%
Sales, Marketing and Account Management186,717
 191,441
 (4,724) (2.5)% (0.4)% 5.9% 6.1% (0.2)%
Information Technology125,981
 116,340
 9,641
 8.3 % 9.8 % 4.0% 3.7% 0.3 %
Bad Debt Expense16,350
 18,173
 (1,823) (10.0)% (7.9)% 0.5% 0.6% (0.1)%
Significant Acquisition Costs4,461
 33,700
 (29,239) (86.8)% (86.6)% 0.1% 1.1% (1.0)%
Total Selling, General and Administrative Expenses$762,479
 $789,324
 $(26,845) (3.4)% (1.4)% 24.0% 24.9% (0.9)%
General and Administrative
General and administrative expenses decreased to 13.5% ofPrimary factors influencing the change in reported consolidated revenues in the nine months ended September 30, 2019 compared to 13.6% in the nine months ended September 30, 2018. GeneralSelling, general and administrative expenses for the ninethree months ended September 30, 2018 includes $10.82020 include the following:
•a decrease in bad debt expense, primarily driven by improved collection activity; and
•a decrease of $0.5 million of indirect expenses associated with a value-added tax matterdue to foreign currency exchange rate fluctuations.

Primary factors influencing the change in the Netherlands (the "Netherlands VAT Matter"), as described in Note 2.n. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report. On a constant dollar basis, excluding the impact of the Netherlands VAT Matter,reported consolidated Selling, general and administrative expenses for the nine months ended September 30, 2019 increased by $19.6 million, or 4.8%, compared to2020 include the prior year period. The increasefollowing:
•a decrease in general and administrative expenses, as a percentage of consolidated revenues was driven mainly by higher compensationdecreased wages and benefits expense 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 continued investment in innovation and product development,other employee related costs, as well as acquisitions in the Adjacent Businesses operating segment within our Corporatelower professional fees, reflecting benefits from Project Summit and Other Business segment. The increase in compensation expense is primarily the result of merit-based increases as well as increased headcount,ongoing cost containment measures, partially offset by a reduction in variablehigher bonus compensation expense. For the three months ended September 30, 2019, excluding the impact of the Netherlands VAT Matter, general and administrative expenses decreased by $11.1 million, or 7.6%, compared to the prior year period on a constant dollar basis, primarily driven by a reduction in variable compensation expense as well as cost management actions.accruals;

Sales, Marketing and Account Management
Sales, marketing and account management expenses decreased to 5.9% of consolidated revenues in the nine months ended September 30, 2019 compared to 6.1% in the nine months ended September 30, 2018. The•a decrease in sales, marketing and account management expenses, as a percentage of consolidated revenues was driven by a decrease indecreased compensation expense primarily due to lower commissionsand other employee related costs, reflecting benefits from Project Summit and ongoing cost containment measures;
•higher bad debt expense, as well as a decrease in marketing costs. On a constant dollar basis, sales, marketing and account management expenses for the nine months ended September 30, 2019 decreased by $0.7 million, or 0.4%, compared to the prior year period, primarily driven by lower marketing costs.increased collectability risk resulting from the COVID-19 pandemic; and
Information Technology
IT expenses increased to 4.0% of•foreign currency exchange rate fluctuations decreased reported consolidated revenues in the nine months ended September 30, 2019 compared to 3.7% in the nine months ended September 30, 2018. IT expenses as a percentage of consolidated revenues reflect an increase in professional fees and compensation expense, primarily related to information security costs and investments in innovation and product development. On a constant dollar basis, IT expenses for the nine months ended September 30, 2019 increased by $11.3 million, or 9.8%, compared to the prior year period, primarily driven by an increase in professional fees and compensation expense, primarily related to information security costs and investments in innovation and product development.
Bad Debt Expense
We maintain an allowance for doubtful accounts that is calculated based on our past loss experience, current and prior trends in our aged receivables, current economic conditions, and specific circumstances of individual receivable balances. We continue to monitor our customers' payment activity and make adjustments based on their financial condition and in light of historical and expected trends. Bad debt expense for the nine months ended September 30, 2019 decreased by $1.4 million on a constant dollar basis compared to the prior year period, primarily driven by lower bad debt expense associated with our Western European Business and Other International Business segments.
Significant Acquisition Costs
Significant Acquisition Costs included in selling,Selling, general and administrative expenses were $4.5 million and $33.7 million in the nine months ended September 30, 2019 and 2018, respectively, and primarily consistedby $9.8 million.

44
Table of advisory and professional fees, as well as severance costs.Contents
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 decreased $1.4by $1.7 million, or 0.4%0.5%, on a reported dollar basis for the nine months ended September 30, 20192020 compared to the nine months ended September 30, 2018.prior year period. 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 $11.2by $1.0 million, or 8.2%0.7%, on a reported dollar basis for the nine months ended September 30, 20192020 compared to the prior year period.

Restructuring Charges

Restructuring Charges for the nine months ended September 30, 2018.2020 were approximately $128.7 million and primarily consist of employee severance costs, internal costs associated with the development and implementation of Project Summit initiatives and professional fees.


Intangible impairments

The intangible impairment charge for the nine months ended September 30, 2020 was $23.0 million and related to the write-down of goodwill associated with our Fine Arts reporting unit in the first quarter of 2020, as discussed above.

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

Consolidated gain on disposal/write-down of property, plant and equipment, net, for the three and nine months ended September 30, 2020 was approximately $75.8 million and $78.2 million, respectively. These amounts primarily consisted of gains of approximately $76.4 million associated with the sale-leaseback transactions of two facilities during the third quarter of 2020.

Consolidated gain on disposal/write-down of property, plant and equipment, net, for the three and nine months ended September 30, 2019 was approximately $9.3 million and $17.1 million, respectively.
During These amounts consisted of (i) a gain of approximately $36.0 million associated with the second quartersale of 2019, we began exploring strategic options regarding how to maintaincertain land and support the infrastructure of select offerings within our Iron Mountain Iron Cloud (“Iron Cloud”) portfolio. As a result,buildings during the second quarter of 2019 we performedand (ii) a long-lived asset impairment analysis on the assetsgain of approximately $9.8 million 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. On September 30, 2019, we entered into an agreement (the “Iron Cloud Outsourcing Agreement”) with a wholesale provider of data infrastructure and data management services to outsource the operation, infrastructure management and maintenance and delivery of select offerings within our Iron Cloud portfolio. In conjunction with the entry into the Iron Cloud Outsourcing Agreement, we also sold certain IT infrastructure assets and the rights to certain hardware and software maintenance contracts used to deliver these Iron Cloud offerings. As a result of our long-lived asset impairment analysis and sale of certain IT infrastructure assets and rights to certain hardware and software maintenance contracts, we recognized an impairment charge and a loss on sale of the assets totaling approximately $0.8 million and $24.8 million during the three and nine months ended September 30, 2019, respectively.
The gain for the nine months ended September 30, 2019 consisted primarily of gains associated with (i) a sale-leaseback transaction of five facilities in the United States of approximately $9.8 million during the third quarter of 2019, and (ii) the sale of certain land and buildings in the United Kingdom of approximately $36.0 millionwere partially offset by losses incurred during the second quarter of 2019. These gains were partially offset by losses2019 primarily associated with (i) thean impairment charge on the assets associated with the select offerings within our Iron Mountain 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 $3.1$24.8 million.

OTHER EXPENSES, NET

Interest Expense, Net

Consolidated interest expense, net increased $10.6decreased by $1.0 million, or 3.5%, to $314.4$313.4 million in the nine months ended September 30, 20192020 from $303.8$314.4 million in the nine months ended September 30, 2018.prior year period. This increasedecrease was mainly driven by a result ofdecrease in the weighted average interest rate on our outstanding debt, partially offset by higher average debt outstanding during the nine months ended September 30, 2019.2020. See Note 5 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our indebtedness.

45
Table of Contents
Other Expense (Income) Expense,, Net

OtherConsolidated other expense (income) expense,, net consists of the following (in thousands):
 Three Months Ended
September 30,		 
Dollar
Change
 Nine Months Ended
September 30,		 
Dollar
Change
 2019 2018  2019 2018 
Foreign currency transaction (gains) losses, net$(18,251) $664
 $(18,915) $(19,885) $3,825
 $(23,710)
Other, net4,836
 (339) 5,175
 6,488
 (2,405) 8,893
Other (Income) Expense, Net$(13,415) $325
 $(13,740) $(13,397) $1,420
 $(14,817)
Three Months Ended
September 30,		Dollar
Change		Nine Months Ended
September 30,		Dollar
Change
Description2020201920202019
Foreign currency transaction losses (gains), net$29,635 $(18,251)$47,886 $(6,293)$(19,885)$13,592 
Debt extinguishment expense51,260 — 51,260 68,300 — 68,300 
Other, net2,570 4,836 (2,266)4,432 6,488 (2,056)
Other Expense (Income), Net$83,465 $(13,415)$96,880 $66,439 $(13,397)$79,836 
Foreign Currency Transaction (Gains) Lossescurrency transaction losses (gains), net

We recorded net foreign currency transaction gains of $6.3 million in the nine months ended September 30, 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 gains of $19.9 million in the nine months ended September 30, 2019, based on period-end exchange rates. These gains resulted primarily from the impact of changes in the exchange rate of the British pound sterling against the United States dollar compared to December 31, 2018 on our intercompany balances with and between certain of our subsidiaries.
We recorded net foreign currency transaction losses
Debt extinguishment expense

Debt extinguishment expense represents the call premiums and write-off of $3.8 million inunamortized deferred financing costs associated with the nine months ended September 30, 2018, based on period-end exchange rates. These losses resulted primarily from the impact of changes in the exchange rate of eachearly redemption of the Australian dollar, Brazilian real and Turkish lira against6% Notes due 2023, 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 from43/8% Notes, the impact of changes in53/4% Notes, the exchange rate of each ofCAD Notes, 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 subsidiariesEuro Notes and the Euro53/8% Notes (as defined below).


Other, net

Included in Other, net are losses on certain of our equity method investments, which are partially offset by a gain of approximately $10.0 million recorded during the first quarter of 2020 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.

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.

Our effective tax rates for the three and nine months ended September 30, 20192020 and 20182019 are as follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2019(1) 2018(1) 2019(1) 2018(2)
Effective Tax Rate16.8% 15.3% 15.7% 16.0%
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Effective Tax Rate(1)26.5 %16.8 %25.7 %15.7 %

(1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and nine months ended September 30, 2020 and 2019 were the benefit derived from the dividends paid deduction and the impact of differences in the tax rates at which our foreign earnings are subject, including foreign exchange gains and losses in different jurisdictions with different tax rates. In addition, for the three and nine months ended September 30, 2020, the costs associated with Project Summit are more heavily weighted to our United States qualified REIT subsidiaries, and, therefore, provide no tax benefit.

(1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and nine months ended September 30, 2019 and for the three months ended September 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 nine months ended September 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.

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INCOME (LOSS) FROM CONTINUING OPERATIONS AND ADJUSTED EBITDA

The following table reflects the effect of the foregoing factors on our consolidated income (loss) from continuing operationsIncome (Loss) From Continuing Operations and Adjusted EBITDA (in thousands):
Three Months Ended
September 30,		Dollar
Change		Percentage Change
20202019
Income (Loss) from Continuing Operations$38,562 $108,284 $(69,722)(64.4)%
Income (Loss) from Continuing Operations as a percentage of Consolidated Revenue3.7 %10.2 %
Adjusted EBITDA$370,047 $375,701 $(5,654)(1.5)%
Adjusted EBITDA Margin35.7 %35.4 %
Three Months Ended
September 30,		 
Dollar
Change
 Percentage ChangeNine Months Ended
September 30,		Dollar
Change		Percentage Change
2019 2018 20202019
Income (Loss) from Continuing Operations$108,284
 $77,349
 $30,935
 40.0%Income (Loss) from Continuing Operations$96,341 $231,107 $(134,766)(58.3)%
Income (Loss) from Continuing Operations as a percentage of Consolidated Revenue10.2% 7.3%    Income (Loss) from Continuing Operations as a percentage of Consolidated Revenue3.1 %7.3 %
Adjusted EBITDA$375,701
 $362,330
 $13,371
 3.7%Adjusted EBITDA$1,076,008 $1,051,149 $24,859 2.4 %
Adjusted EBITDA Margin35.4% 34.2%    Adjusted EBITDA Margin34.8 %33.0 %

 Nine Months Ended
September 30,		 Dollar
Change		 Percentage Change
 2019 2018  
Income (Loss) from Continuing Operations$231,107
 $209,001
 $22,106
 10.6 %
Income (Loss) from Continuing Operations as a percentage of Consolidated Revenue7.3% 6.6%    
Adjusted EBITDA$1,051,149
 $1,065,460
 $(14,311) (1.3)%
Adjusted EBITDA Margin33.0% 33.7%    
ConsolidatedAdjusted EBITDA Margin increased by 180 basis points for the nine months ended September 30, 2020 compared to the same prior year period, reflecting benefits from Project Summit, revenue management, favorable revenue mix and ongoing cost containment measures, partially offset by fixed cost deleverage on lower service revenue and higher bonus compensation accruals. Adjusted EBITDA for the nine months ended September 30, 2019 decreased by $14.32020 excludes $9.3 million or 1.3%,of direct and consolidatedincremental costs related to COVID-19 incurred in the second quarter.

The decrease in Adjusted EBITDA Margin decreased by 70 basis pointsfor the three months ended September 30, 2020 compared to the same prior year period.period, reflects the impact of lower service activity levels and higher bonus compensation accruals, partially offset by benefits from Project Summit. Adjusted EBITDA for the nine months ended September 30, 2018 was negatively impacted by $10.8 million of indirect tax expenses associated with the Netherlands VAT Matter. Excluding the impact of the Netherlands VAT Matter, consolidated Adjusted EBITDA decreased $25.1 million in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily as a result of increased labor costs in our secure shredding business, higher technology costs associated with information security investments and higher overhead expenses associated with the growth of our data center business, partially offset by a reduction in variable compensation expense and the impact of cost management actions. For the three months ended September 30, 2019, excluding the impact of the Netherlands VAT Matter, consolidated Adjusted EBITDA increased by $11.9 million compared to the prior year period, primarily driven by cost management actions as well as a reduction in variable compensation expense.
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
Loss from discontinued operations, net of tax was $12.4 million for the nine months ended September 30, 2018, primarily2020 includes direct and incremental costs related to the costs associated with the Recall Divestments (as defined and discussed in Note 13 to Notes to Consolidated Financial Statements in our Annual Report).COVID-19.
47
NONCONTROLLING INTERESTS
For the nine months ended September 30, 2019 and 2018, net income attributable to noncontrolling interests resulted in a decrease in net income attributable to IMI
Table of $1.5 million and $0.5 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.Contents

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
September 30,		Percentage Change
Dollar
Change		ActualConstant
Currency		Organic
Growth		Impact of Acquisitions
20202019
Storage Rental$598,949$582,844$16,105 2.8 %3.4 %1.8 %1.6 %
Service322,824366,720(43,896)(12.0)%(11.7)%(13.0)%1.3 %
Segment Revenue$921,773$949,564$(27,791)(2.9)%(2.5)%(3.9)%1.4 %
Segment Adjusted EBITDA$393,883$395,181$(1,298)
Segment Adjusted EBITDA Margin42.7 %41.6 %
Three Months Ended
September 30,		   Percentage Change  Nine Months Ended
September 30,		Percentage Change
 
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
Dollar
Change		ActualConstant
Currency		Organic
Growth		Impact of Acquisitions
2019 2018 20202019
Storage Rental$317,820
 $306,633
 $11,187
 3.6 % 3.7 % 2.8 %Storage Rental$1,773,364$1,738,192$35,172 2.0 %3.9 %2.0 %1.9 %
Service224,224
 232,970
 (8,746) (3.8)% (3.6)% (3.2)%Service981,9301,112,111(130,181)(11.7)%(10.3)%(12.3)%2.0 %
Segment Revenue$542,044
 $539,603
 $2,441
 0.5 % 0.6 % 0.2 %Segment Revenue$2,755,294$2,850,303$(95,009)(3.3)%(1.7)%(3.6)%1.9 %
Segment Adjusted EBITDA(1)$246,415
 $248,600
 $(2,185)      
Segment Adjusted EBITDA Margin(2)45.5% 46.1%        
Segment Adjusted EBITDASegment Adjusted EBITDA$1,169,671$1,156,596$13,075 
Segment Adjusted EBITDA MarginSegment Adjusted EBITDA Margin42.5 %40.6 %

 Nine Months Ended
September 30,		   Percentage Change  
  Dollar
Change		 Actual Constant
Currency		 Organic
Growth
 2019 2018    
Storage Rental$938,161
 $917,347
 $20,814
 2.3 % 2.6 % 2.0 %
Service670,536
 688,179
 (17,643) (2.6)% (2.2)% (1.1)%
Segment Revenue$1,608,697
 $1,605,526
 $3,171
 0.2 % 0.5 % 0.7 %
Segment Adjusted EBITDA(1)$715,683
 $719,199
 $(3,516)      
Segment Adjusted EBITDA Margin(2)44.5% 44.8%        


(1)See "Non-GAAP Measures—Adjusted EBITDA"Primary factors influencing the change 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 nine months ended September 30, 2019, reported revenue in our North American Records and Information Management Business segment increased 0.2%, compared to the nine months ended September 30, 2018, due to organic revenue growth, offset by the unfavorable net impact of acquisitions/dispositions (due to the IMFS Divestment) and foreign currency exchange rates. Organic revenue growth of 0.7% was primarily the result of organic storage rental revenue growth of 2.0% driven by revenue management, partially offset by volume decreases. In addition, negative organic service revenue growth of 1.1% was driven by recent declines in recycled paper prices, lower destructions and reduced retrieval/re-file and related transportation activity, partially offset by growth in secure shredding revenue and increased project activity. Adjusted EBITDA Margin decreased 30 basis points during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily driven by lower recycled paper prices, increased facility rent expense and higher professional fees, partially offset by lower compensation expense and other employee related costs. The decrease in compensation expense is primarily due to a reduction in variable compensation expense, partially offset by increased labor costs related to growth in our shredding operations.

North American Data Management Business
 Three Months Ended
September 30,		   Percentage Change  
  
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$66,497
 $67,779
 $(1,282) (1.9)% (1.8)% (1.2)%
Service30,055
 29,698
 357
 1.2 % 1.3 % (0.5)%
Segment Revenue$96,552
 $97,477
 $(925) (0.9)% (0.9)% (1.0)%
Segment Adjusted EBITDA(1)$54,378
 $53,484
 $894
      
Segment Adjusted EBITDA Margin(2)56.3% 54.9%        

 Nine Months Ended
September 30,		   Percentage Change  
  
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$199,819
 $205,833
 $(6,014) (2.9)% (2.7)% (2.1)%
Service89,895
 91,639
 (1,744) (1.9)% (1.7)% (3.4)%
Segment Revenue$289,714
 $297,472
 $(7,758) (2.6)% (2.4)% (2.5)%
Segment Adjusted EBITDA(1)$157,998
 $162,616
 $(4,618)      
Segment Adjusted EBITDA Margin(2)54.5% 54.7%        


(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 nine months ended September 30, 2019, reported revenue in our North American Data ManagementGlobal RIM Business segment decreased 2.6%, compared to the nine months ended September 30, 2018, primarily due to negative organic revenue growth. The negative organic revenue growth of 2.5% was primarily attributable to a decline in organic service revenue growth of 3.4% 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 2.1%, primarily attributable to volume decreases, partially offset by the impact of revenue management. Adjusted EBITDA Margin increased 140 basis points for the three months ended September 30, 2019 compared to the three months ended September 30. 2018, primarily driven by cost management actions. Adjusted EBITDA Margin decreased 20 basis points during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily associated with investments in new products and services, as well as lower revenue not being offset by lower fixed costs, partially offset by cost management actions.

Western European Business
 Three Months Ended
September 30,		   Percentage Change  
  
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$78,009
 $79,492
 $(1,483) (1.9)% 2.9 % 3.7 %
Service43,428
 46,862
 (3,434) (7.3)% (2.7)% (3.8)%
Segment Revenue$121,437
 $126,354
 $(4,917) (3.9)% 0.8 % 0.9 %
Segment Adjusted EBITDA(1)$38,639
 $40,817
 $(2,178)      
Segment Adjusted EBITDA Margin(2)31.8% 32.3%        

 Nine Months Ended
September 30,		   Percentage Change  
  
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$237,258
 $245,883
 $(8,625) (3.5)% 2.3% 3.1%
Service140,259
 147,986
 (7,727) (5.2)% 0.5% 0.2%
Segment Revenue$377,517
 $393,869
 $(16,352) (4.2)% 1.6% 2.0%
Segment Adjusted EBITDA(1)$122,011
 $131,377
 $(9,366)      
Segment Adjusted EBITDA Margin(2)32.3% 33.4%        


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

For the nine months ended September 30, 2019, reported revenue in our Western European Business segment decreased 4.2%, compared to the nine months ended September 30, 2018, due to unfavorable fluctuations in foreign currency exchange rates, partially offset by organic revenue growth. Organic revenue growth was 2.0%, primarily attributable to organic storage rental revenue growth of 3.1%, primarily associated with volume increases and, to a lesser extent, revenue management, as well as organic service revenue growth of 0.2%, reflecting higher destruction activity partially offset by reduced project activity and core service declines. For the nine months ended September 30, 2019, foreign currency exchange rate fluctuations decreased our reported revenues for the Western European Business segment by 5.8% 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 110 basis points during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily driven by higher facilities costs, compensation expense and professional fees. The higher facilities costs reflect increased rent and utility costs, partially offset by lower property taxes.




Other International Business
 Three Months Ended
September 30,		   Percentage Change  
  
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$128,715
 $124,920
 $3,795
 3.0 % 7.2 % 4.5 %
Service69,013
 75,719
 (6,706) (8.9)% (3.8)% (5.7)%
Segment Revenue$197,728
 $200,639
 $(2,911) (1.5)% 3.0 % 0.6 %
Segment Adjusted EBITDA(1)$62,120
 $60,106
 $2,014
      
Segment Adjusted EBITDA Margin(2)31.4% 30.0%        

 Nine Months Ended
September 30,		   Percentage Change  
  
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$387,086
 $386,278
 $808
 0.2 % 7.6 % 4.3 %
Service211,421
 232,655
 (21,234) (9.1)% (1.0)% (2.8)%
Segment Revenue$598,507
 $618,933
 $(20,426) (3.3)% 4.4 % 1.6 %
Segment Adjusted EBITDA(1)$178,993
 $181,305
 $(2,312)      
Segment Adjusted EBITDA Margin(2)29.9% 29.3%        


(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.

In the nine months ended September 30, 2019, reported revenue in our Other International Business segment decreased 3.3% compared to the nine months ended September 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 1.6%, supported by 4.3% organic storage rental revenue growth, primarily due to volume increases and, to a lesser extent, revenue management, partially offset by negative 2.8% organic service revenue growth, primarily due to a decrease in project activity. The net impact of acquisitions/divestitures contributed 2.8% to reported revenue growth for the nine months ended September 30, 2019, compared2020 include the following:
•a decline in organic service revenue mainly driven by reduced service activity levels, primarily related to the prior year period. For the nine months ended September 30, 2019,COVID-19 pandemic;
•organic storage rental revenue growth driven by revenue management;
•a decrease in revenue of $48.7 million due to foreign currency exchange rate fluctuations decreased our reported revenues for the Other International Business segment by 7.7% compared to the prior year period primarilyfluctuations;
•a 2.1% increase in global records management net volume due to the weakening of the Australian dollaracquisitions (excluding acquisitions, global records management net volume decreased 1.2%); and Brazilian real against the United States dollar.
•a 190 basis point increase in Adjusted EBITDA Margin increased 60 basis points for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to compensation expense growing at a lower rate thandriven by benefits from Project Summit, revenue management, favorable revenue mix and a decrease in transportation costs,ongoing cost containment measures, partially offset by fixed cost deleverage on lower service revenue and higher facilities costs, mainly rent expense, and building maintenance costs.bonus compensation accruals.


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Table of Contents
Global Data Center Business
Three Months Ended
September 30,		Percentage Change
Dollar
Change		ActualConstant
Currency		Organic
Growth		Impact of Acquisitions
20202019
Storage Rental$68,416$62,001$6,415 10.3 %9.5 %9.5 %— %
Service4,3982,4171,981 82.0 %79.9 %79.9 %— %
Segment Revenue$72,814$64,418$8,396 13.0 %12.1 %12.1 %— %
Segment Adjusted EBITDA$33,359$32,261$1,098 
Segment Adjusted EBITDA Margin45.8 %50.1 %
Three Months Ended
September 30,		  Percentage Change  Nine Months Ended
September 30,		Percentage Change
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
Dollar
Change		ActualConstant
Currency		Organic
Growth		Impact of Acquisitions
2019 2018 20202019
Storage Rental$62,001
 $60,039
 $1,962
 3.3 % 4.1 % 4.1 %Storage Rental$196,823$182,301$14,522 8.0 %8.0 %8.0 %— %
Service2,417
 3,341
 (924) (27.7)% (27.5)% (27.2)%Service10,1165,9444,172 70.2 %69.6 %69.6 %— %
Segment Revenue$64,418
 $63,380
 $1,038
 1.6 % 2.5 % 2.4 %Segment Revenue$206,939$188,245$18,694 9.9 %9.9 %9.9 %— %
Segment Adjusted EBITDA(1)$32,261
 $27,299
 $4,962
      
Segment Adjusted EBITDA Margin(2)50.1% 43.1%        
Segment Adjusted EBITDASegment Adjusted EBITDA$94,812$85,913$8,899 
Segment Adjusted EBITDA MarginSegment Adjusted EBITDA Margin45.8 %45.6 %

 Nine Months Ended
September 30,		  Percentage Change  
 
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$182,301
 $157,479
 $24,822
 15.8 % 16.4 % 5.1 %
Service5,944
 7,399
 (1,455) (19.7)% (19.6)% (25.3)%
Segment Revenue$188,245
 $164,878
 $23,367
 14.2 % 14.7 % 3.7 %
Segment Adjusted EBITDA(1)$85,913
 $72,990
 $12,923
      
Segment Adjusted EBITDA Margin(2)45.6% 44.3%        


(1)See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDAPrimary factors influencing the change in revenue 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 nine months ended September 30, 2019, reported revenue in our Global Data Center Business segment increased 14.2% compared to the nine months ended September 30, 2018, primarily 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 11.0% to the reported revenue growth rate in our Global Data Center Business segment for the nine months ended September 30, 2019 compared to2020 include the following:
•organic total revenue growth from leases signed in prior periods and service revenue growth partially offset by churn of 290 basis points;
•non-recurring revenue benefits in the prior year period. Organic storage rental revenue growth in our Global Data Center Business segment was 5.1% for the nine months ended September 30, 2019 compared to the prior year period, primarily related toinclude a $3.4 million lease modification fee that benefited organic storage rental revenue growth by 2.2%. For the three months ended September 30, 2019 the impact of thepreviously disclosed lease modification fee of $1.7$3.4 million, benefited organic storage rentalwhile non-recurring revenue growth by 2.9%.benefits in the current year were $1.8 million; and
•a 20 basis point increase in Adjusted EBITDA Margin increased 700 basis points for the three months ended September 30, 2019 compared to the three months ended September 30, 2018, primarily driven by the impact of the lease modification fee andongoing cost management actions. Adjusted EBITDA increased $12.9 million for the nine months ended September 30, 2019 compared to the prior year period, primarily due to the impact of acquisitions and the lease modification fee described above. Adjusted EBITDA Margin increased 130 basis points during the nine months ended September 30, 2019 compared to the prior year period primarily due to the impact of cost management actions,containment measures, partially offset by higher facilities costs, in part due to recent acquisitions, and increased overhead to support the growthheadwinds from flow through of this business.non-recurring revenue items described above.

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Table of Contents
Corporate and Other Business
Three Months Ended
September 30,		Percentage Change
Dollar
Change		ActualConstant
Currency		Organic
Growth		Impact of Acquisitions
20202019
Storage Rental$28,929$28,473$456 1.6 %1.0 %1.1 %(0.1)%
Service13,13119,769(6,638)(33.6)%(34.1)%(34.0)%(0.1)%
Segment Revenue$42,060$48,242$(6,182)(12.8)%(13.4)%(13.3)%(0.1)%
Segment Adjusted EBITDA$(57,195)$(51,741)$(5,454)
Segment Adjusted EBITDA as a percentage of Consolidated Revenue(5.5)%(4.9)%
Three Months Ended
September 30,		  Percentage Change  Nine Months Ended
September 30,		Percentage Change
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
Dollar
Change		ActualConstant
Currency		Organic
Growth		Impact of Acquisitions
2019 2018 20202019
Storage Rental$20,276
 $18,110
 $2,166
 12.0% 12.6% 5.2%Storage Rental$86,610$85,087$1,523 1.8 %1.8 %3.3 %(1.5)%
Service19,769
 15,428
 4,341
 28.1% 29.5% 15.7%Service38,77459,359(20,585)(34.7)%(34.4)%(34.9)%0.5 %
Segment Revenue$40,045
 $33,538
 $6,507
 19.4% 20.4% 10.0%Segment Revenue$125,384$144,446$(19,062)(13.2)%(13.0)%(12.5)%(0.5)%
Segment Adjusted EBITDA(1)$(58,112) $(67,976) $9,864
      
Segment Adjusted EBITDA(1) as a percentage of Consolidated Revenue(5.5)% (6.4)%        
Segment Adjusted EBITDASegment Adjusted EBITDA$(188,475)$(191,360)$2,885 
Segment Adjusted EBITDA as a percentage of Consolidated RevenueSegment Adjusted EBITDA as a percentage of Consolidated Revenue(6.1)%(6.0)%

 Nine Months Ended
September 30,		  Percentage Change  
 
Dollar
Change
 Actual 
Constant
Currency
 
Organic
Growth
 2019 2018    
Storage Rental$60,955
 $50,741
 $10,214
 20.1% 21.2% 4.9%
Service59,359
 32,853
 26,506
 80.7% 85.1% 14.5%
Segment Revenue$120,314
 $83,594
 $36,720
 43.9% 46.1% 8.6%
Segment Adjusted EBITDA(1)$(209,449) $(202,027) $(7,422)      
Segment Adjusted EBITDA(1) as a percentage of Consolidated Revenue(6.6)% (6.4)%        


(1)See "Non-GAAP Measures—Adjusted EBITDA" in this Quarterly Report for the definitions of Adjusted EBITDAPrimary factors influencing the change in revenue 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.
Adjusted EBITDA in theour Corporate and Other Business segment decreased $7.4 million in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Adjusted EBITDA for the nine months ended September 30, 2018 was negatively impacted2020 include the following:
•a decline in organic service revenue due to lower service activity levels in our Fine Arts business, primarily related to the COVID-19 pandemic; and
•an increase in Adjusted EBITDA driven by $10.8 million of indirect tax expenses associated with the Netherlands VAT Matter. Excludingbenefits from Project Summit and ongoing cost containment measures, partially offset by the impact of the Netherlands VAT Matter, Adjusted EBITDA in the Corporate and Other Business segment decreased $18.2 million in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily driven by higher compensation expense and professional fees associated with investmentslower service activity in our global operations support team that is tasked with driving operational improvements and continued investmentFine Arts business in innovation and product development, partially offset by profitability associated with recent acquisitions in our Adjacent Businesses operating segment. The increase inaddition to higher corporate bonus compensation expense is primarily the resultaccruals.
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Table of merit-based increases as well as increased headcount, partially offset by a reduction in variable compensation expense. For the three months ended September 30, 2019, excluding the impact of the Netherlands VAT Matter, Adjusted EBITDA increased by $8.4 million compared to the prior year period, primarily driven by cost management actions as well as a reduction in variable compensation expense.Contents

Liquidity and Capital Resources

Project Summit

As disclosed in Note 13 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report,above, in October 2019, we announced Project Summit. We estimate that the implementation of Project Summit will result in total restructuring charges (including operating and capital expenditures)costs of $450.0 million. During the nine months ended September 30, 2020, we incurred approximately $240.0 million, including approximately $60.0$133.4 million of restructuring charges we expectcosts related to incur during the fourth quarterProject Summit which were comprised of 2019. We expect$128.7 million of Restructuring Charges, primarily related to substantially complete all actionsemployee severance costs, internal costs associated with Project Summit by the end of 2021. We expect a significant portion of the restructuring charges we will incur as a resultdevelopment and implementation of Project Summit to be settled in cash, including substantially allinitiatives and professional fees, and $4.7 million of the restructuring charges we expect to incur during the fourth quarter of 2019.capital expenditures.

Cash Flows

The following is a summary of our cash balances and cash flows (in thousands) as of and for the nine months ended September 30,
20202019
Cash Flows from Operating Activities - Continuing Operations$627,218 $648,145 
Cash Flows from Investing Activities - Continuing Operations(360,131)(640,696)
Cash Flows from Financing Activities - Continuing Operations(307,174)19,885 
Cash and Cash Equivalents, including Restricted Cash, End of Period151,972 186,778 
 2019 2018
Cash flows from operating activities - continuing operations$648,145
 $625,538
Cash flows from investing activities - continuing operations(640,696) (2,102,793)
Cash flows from financing activities - continuing operations19,885
 769,559
Cash and cash equivalents at the end of period186,778
 197,676

a.    Cash Flows from Operating Activities

For the nine months ended September 30, 2019,2020, net cash flows provided by operating activities increaseddecreased by $22.6$20.9 million compared to the prior year period, primarily due to a decrease in net income (including non-cash charges) of $76.1 million partially offset by an increase in cash used infrom working capital of $20.9$55.2 million, primarily related to the timing of collections of accounts receivable and certain prepaid and accrued expenses and an increase in net income (including non-cash charges) of $1.7 million.expenses.

b.    Cash Flows from Investing Activities

Our significant investing activities during the nine months ended September 30, 20192020 are highlighted below:

•We paid cash for capital expenditures of $309.2 million. Additional details of our capital spending are included in the "Capital Expenditures" section below.
•We paid cash for acquisitions (net of cash acquired) of $56.5$118.6 million, primarily funded by borrowings under ourthe revolving credit facility (the "Revolving Credit Facility").
•We paid cash for capital expendituresreceived $117.0 million in proceeds from sales of $533.6 million. Our business requires capital expendituresproperty, plant and equipment, primarily related to maintain our ongoing operations, support our expected revenue growth and new products and services, and increase our profitability. Allthe sale-leaseback transactions of these expenditures are included intwo facilities during the cash flows from investing activities. Additional detailsthird quarter of 2020. We plan to monetize a small portion of our capital spending is included in the Capital Expenditures section below.total industrial real estate assets going forward.
•We acquired customer relationships and incurred both (i) customer inducements (which primarily 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 nine months ended September 30, 20192020 of $43.0$3.5 million, $7.4$8.3 million and $63.1$30.7 million, respectively.
We paid $19.2 million as part of our investment in Makespace (as discussed above).
We received proceeds of $82.1 million primarily related to the sale of three facilities in the United Kingdom and five facilities in in the United States.
c.    Cash Flows from Financing Activities

Our significant financing activities during the nine months ended September 30, 20192020 included:
•
Net proceeds of $987.5

•Net proceeds of $2,376.0 million associated with the June 2020 Offerings (as defined below).
•Net proceeds of $1,089.0 million associated with the issuance of the 41/2% Notes (as defined below).
•Payments, including call premiums, of $2,942.6 million associated with the early redemption of the 43/8% Notes, the 6% Notes due 2023, the 53/4% Notes, the CAD Notes, the Euro Notes and the 53/8% Notes.
•7/8% Senior Notes due 2029 (as defined below).
Net payments of $434.4$263.9 million primarily associated with the repayments on ourthe Revolving Credit Facility.
•Payment of dividends in the amount of $528.9$537.9 million on our common stock.


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Capital Expenditures

The following table presents our capital spend for the nine months ended September 30, 20192020 and 2018,2019, organized by the type of the spending as described in our Annual Report:Report (in thousands):
 Nine Months Ended
September 30,
Nature of Capital Spend20202019
Growth Investment Capital Expenditures:
Real Estate$45,888 $107,895 
Non-Real Estate35,538 20,813 
Data Center151,692 316,932 
Innovation1,145 14,596 
Total Growth Investment Capital Expenditures234,263 460,236 
Recurring Capital Expenditures:
Real Estate28,242 42,997 
Non-Real Estate12,183 19,255 
Data Center8,083 4,951 
Total Recurring Capital Expenditures48,508 67,203 
Total Capital Spend (on accrual basis)282,771 527,439 
Net increase (decrease) in prepaid capital expenditures2,221 361 
Net decrease (increase) in accrued capital expenditures24,170 5,814 
Total Capital Spend (on cash basis)$309,162 $533,614 

  Nine Months Ended
September 30,
  
Nature of Capital Spend (in thousands) 2019 2018
Growth Investment Capital Expenditures:  
Real Estate(1) $107,895
 $109,246
Non-Real Estate(2) 20,813
 35,942
Data Center(3) 316,932
 106,282
Innovation(1) 14,596
 9,535
Total Growth Investment Capital Expenditures 460,236
 261,005
Recurring Capital Expenditures:  
  
Real Estate(2) 42,997
 40,618
Non-Real Estate(2) 19,255
 13,675
Data Center(3) 4,951
 6,381
Total Recurring Capital Expenditures 67,203
 60,674
Total Capital Spend (on accrual basis) 527,439
 321,679
Net increase (decrease) in prepaid capital expenditures 361
 (2,762)
Net decrease (increase) in accrued capital expenditures 5,814
 11,036
Total Capital Spend (on cash basis) $533,614
 $329,953

For the year ending December 31, 2019, excludingExcluding 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 capital expenditures to be approximately $450.0 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)Growth investment capital expenditures on our data center business to be approximately $350.0 million.
Dividends

See Note 98 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for a listing of dividends that werewe declared during the first nine months of 20192020 and fiscal year 2018.2019.


On November 4, 2020, we declared a dividend to our stockholders of record as of December 15, 2020 of $0.6185 per share, payable on January 6, 2021.

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)funds) and accounts receivable. The only significant concentration of liquid investment as of September 30, 20192020 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.funds.
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Long-term debt as of September 30, 20192020 is as follows (in thousands):
 September 30, 2020
 Debt (inclusive of discount)Unamortized Deferred
Financing Costs		 Carrying Amount
Revolving Credit Facility$172,603 $(9,482)$163,121 
Term Loan A218,750 — 218,750 
Term Loan B681,315 (6,557)674,758 
Australian Dollar Term Loan226,690 (1,731)224,959 
UK Bilateral Revolving Credit Facility180,204 (1,393)178,811 
37/8% GBP Senior Notes due 2025 (the "GBP Notes")
514,867 (4,942)509,925 
47/8% Senior Notes due 2027 (the "47/8% Notes due 2027")(1)
1,000,000 (9,954)990,046 
51/4% Senior Notes due 2028 (the "51/4% Notes due 2028")(1)
825,000 (8,857)816,143 
5% Senior Notes due 2028 (the "5% Notes")(1)500,000 (5,667)494,333 
47/8% Senior Notes due 2029 (the "47/8% Notes due 2029")(1)
1,000,000 (13,019)986,981 
51/4% Senior Notes due 2030 (the "51/4 Notes due 2030")(1)
1,300,000 (14,792)1,285,208 
41/2% Senior Notes due 2031 (the "41/2 Notes")(1)
1,100,000 (12,970)1,087,030 
55/8% Senior Notes due 2032 (the "55/8% Notes")(1)
600,000 (6,873)593,127 
Real Estate Mortgages, Financing Lease Liabilities and Other468,906 (215)468,691 
Accounts Receivable Securitization Program270,600 (168)270,432 
Mortgage Securitization Program50,000 (873)49,127 
Total Long-term Debt9,108,935 (97,493)9,011,442 
Less Current Portion(392,586)— (392,586)
Long-term Debt, Net of Current Portion$8,716,349 $(97,493)$8,618,856 

  September 30, 2019
  Debt (inclusive of discount) Unamortized Deferred Financing Costs  Carrying Amount
Revolving Credit Facility $354,879
 $(11,763) $343,116
Term Loan A 231,250
 —
 231,250
Term Loan B 688,089
 (7,806) 680,283
Australian Dollar Term Loan 219,871
 (2,389) 217,482
UK Bilateral Revolving Credit Facility 172,180
 (1,845) 170,335
43/8% Senior Notes due 2021
 500,000
 (2,866) 497,134
6% Senior Notes due 2023 600,000
 (4,302) 595,698
53/8% CAD Senior Notes due 2023
 188,811
 (2,173) 186,638
53/4% Senior Subordinated Notes due 2024
 1,000,000
 (6,752) 993,248
3% Euro Senior Notes due 2025 327,508
 (3,622) 323,886
37/8% GBP Senior Notes due 2025 (the "GBP Notes")
 491,943
 (5,651) 486,292
53/8% Senior Notes due 2026
 250,000
 (2,863) 247,137
47/8% Senior Notes due 2027 (the "47/8% Notes due 2027")
 1,000,000
 (11,375) 988,625
51/4% Senior Notes due 2028 (the "51/4% Notes")
 825,000
 (10,037) 814,963
47/8% Senior Notes due 2029 (the "47/8% Notes due 2029")
 1,000,000
 (14,451) 985,549
Real Estate Mortgages, Financing Lease Liabilities and Other 533,549
 (444) 533,105
Accounts Receivable Securitization Program 271,562
 (115) 271,447
Mortgage Securitization Program 50,000
 (1,019) 48,981
Total Long-term Debt 8,704,642
 (89,473) 8,615,169
Less Current Portion (394,822) —
 (394,822)
Long-term Debt, Net of Current Portion $8,309,820
 $(89,473) $8,220,347
(1)Collectively, the "Parent Notes".
In September 2019, IMI completed a private offering of $1.0 billion in aggregate principal amount of the 47/8% Notes due 2029. The 47/8% Notes due 2029 were issued at par. The net proceeds of approximately $987.5 million from the 47/8% Notes due 2029, after deducting the initial purchasers' commissions, were used to repay outstanding borrowings under the Revolving Credit Facility.
See Note 4 to Notes to Consolidated Financial Statements included in our Annual Report and Note 5 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our long-term debt.

June 2020 Offerings

On June 22, 2020, IMI completed private offerings of (i) $500.0 million in aggregate principal amount of the 5% Notes, (ii) $1,300.0 million in aggregate principal amount of the 51/4% Notes due 2030 and (iii) $600.0 million in aggregate principal amount of the 55/8% Notes (collectively, the "June 2020 Offerings"). The 5% Notes, the 51/4% Notes due 2030 and the 55/8% Notes were issued at 100.000% of par. The total net proceeds of approximately $2,376.0 million from the June 2020 Offerings, after deducting the initial purchasers' commissions, were used to redeem all of the 43/8% Senior Notes due 2021 ("the 43/8% Notes"), the 6% Senior Notes due 2023 (the "6% Notes due 2023") and the 53/4% Senior Subordinated Notes due 2024 (the "53/4% Notes") and to repay a portion of the outstanding borrowings under the Revolving Credit Facility.

On June 29, 2020, we redeemed all of the $500.0 million in aggregate principal outstanding of the 43/8% Notes at 100.000% of par and all of the $600.0 million in aggregate principal outstanding of the 6% Notes due 2023 at 102.000% of par, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date. We recorded a charge of $17.0 million to Other expense (income), net during the second quarter of 2020 related to the early extinguishment of this debt, representing the call premium associated with the early redemption of the 6% Notes due 2023, as well as a write-off of unamortized deferred financing costs associated with the early redemption of the 43/8% Notes and the 6% Notes due 2023.

On July 2, 2020, we redeemed all of the $1,000.0 million in aggregate principal outstanding of the 53/4% Notes at 100.958% of par, plus accrued and unpaid interest to, but excluding, the redemption date. We recorded a charge of $15.3 million to Other expense (income), net during the third quarter of 2020 related to the early extinguishment of this debt, representing the call premium and write-off of unamortized deferred financing fees.
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August 2020 Offering

On August 18, 2020, IMI completed a private offering of $1,100.0 million in aggregate principal amount of the 41/2% Notes. The 41/2% Notes were issued at 100.000% of par. The total net proceeds of approximately $1,089.0 million from the issuance of the 41/2% Notes, after deducting the initial purchasers' commissions, were used to redeem all of the 53/8% CAD Senior Notes due 2023 (the "CAD Notes"), the 3% Euro Senior Notes due 2025 (the "Euro Notes") and the 53/8% Senior Notes due 2026 (the "53/8% Notes") and to repay a portion of the outstanding borrowings under the Revolving Credit Facility.
On August 21, 2020, we redeemed all of the 250.0 million CAD in aggregate principal outstanding of the CAD Notes at 104.031% of par, 300.0 million Euro in aggregate principal outstanding of the Euro Notes at 101.500% of par and $250.0 million in aggregate principal outstanding of the 53/8% Notes at 106.628% of par, plus, in each case accrued and unpaid interest to, but excluding, the redemption date. We recorded a charge of approximately $36.0 million to Other expense (income), net during the third quarter of 2020 related to the early extinguishment of the CAD Notes, the Euro Notes and the 53/8% Notes, representing the call premiums and write off unamortized deferred financing costs associated with the early redemption of these debt instruments.

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 30, 2021, at which point all obligations become due. 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 September 30, 2020.

Letters of Credit

As of September 30, 2019,2020, we had outstanding letters of credit totaling $35.2$34.8 million, of which $16.8$3.2 million reduce our borrowing capacity under the Revolving Credit Facility. The letters of credit expire at various dates between December 2019October 2020 and August 2027.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, a net total lease adjusted leverage ratio and a net secured debt lease adjusted leverage ratio on a quarterly basis and our bond indentures require that, among other things, we satisfy a leverage ratio (not lease adjusted) or a fixed charge coverage 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 includingfor 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. For example, the calculation of financial performance under the Credit Agreement and the 47/8% Notes due 2029 includes (subject to specified exceptions and caps) 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.

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Our leverage and fixed charge coverage ratios under the Credit Agreement as of September 30, 2019 and December 31, 2018, as well as our leverage ratio under our indentures as of September 30, 2019 and December 31, 20182020 are as follows:
 September 30, 2019 December 31, 2018 Maximum/Minimum Allowable
Net total lease adjusted leverage ratio5.8
 5.6
 Maximum allowable of 6.5
Net secured debt lease adjusted leverage ratio2.3
 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 ratio2.1
 2.2
 Minimum allowable of 1.5

(1)
The maximum allowableSeptember 30, 2020
Maximum/Minimum Allowable
Net total lease adjusted leverage ratio under our indentures for the 475.3 /Maximum allowable of 6.5
8Net secured debt lease adjusted leverage ratio% Notes due 2029, the 42.0 7Maximum allowable of 4.0
/Fixed charge coverage ratio82.4 % Notes due 2027, the GBP Notes and the 5Minimum allowable of 1.5
1/4% Notes is 7.0, while the maximum allowableBond 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(not lease adjusted)5.9 Maximum allowable of 7.0(1)
Bond fixed charge coverage ratio exceeding the maximum(not lease adjusted)3.3 Minimum allowable ratio under our indentures and still remain in compliance with the covenant.of 2.0(1)

(1)The maximum leverage ratio permitted under our indentures for the GBP Notes, the 47/8% Notes due 2027, the 51/4% Notes due 2028 and the 47/8% Notes due 2029 is 7.0. As of September 30, 2020, we no longer have any indentures subject to a maximum leverage ratio of 6.5. The indentures for the 5% Notes, the 51/4% Notes due 2030, the 41/2% Notes and the 55/8% Notes do not include a maximum leverage ratio covenant; the indentures for these notes instead require us to maintain a minimum fixed charge coverage ratio of 2.0. In certain instances as provided in our indentures, we have the ability to incur additional indebtedness that would result in our bond leverage ratio or bond fixed charge coverage ratio exceeding or falling below the maximum or minimum permitted ratio under our indentures and still remain in compliance with the applicable 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.

Derivative Instruments

a.    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 swapsswap 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 as specified in the interest rate swap agreements. We have designated these interest rate swap agreements as cash flow hedges.
In August 2019, we entered
b.    Cross-Currency Swap Agreements

We enter into cross-currency swap agreements to hedge the variability of exchange rate impacts between the United States dollar and the Euro. Under the termsThe cross-currency swap agreements 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.

In September 2020, we entered into cross-currency swap agreements whereby we notionally exchanged approximately $359.2 million at an interest rate of 4.5% for approximately 300.0 million Euros at a weighted average interest rate of approximately 3.4%. These cross-currency swap agreements expire in February 2026.

In August 2019, we entered into cross-currency swap agreements whereby we notionally exchanged approximately $110.0 million at an interest rate of 6.0% for approximately 99.1 million Euros at a weighted average interest rate of approximately 3.65%. TheThese 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 and exchange of the notional amounts at maturity. We have designated these cross-currency swap agreements as net investment hedges.2023.

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

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At The Market (ATM) Equity ProgramFinancing
As described in greater detail in Note 12 to Notes to Consolidated Financial Statements included in our Annual Report,
In 2017, 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 Agentsagents under the agreement (the “At The Market (ATM) Equity Program”). ThereDuring the nine months ended September 30, 2020, there were no shares of common stock sold under the At the Market (ATM) Equity Program during the nine months ended September 30, 2019. During the nine months ended September 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 September 30, 2019,2020, 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.

Acquisitions and Joint Ventures

See Note 4 and Note 11 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for information regarding our 2020 acquisitions and joint ventures.

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 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

On February 17, 2020, in order to enhance our existing operations in the United Arab Emirates, we acquired Glenbeigh Records Management DWC-LLC, a storage and records management company, for total cash consideration of approximately $29.1 million.

c.    MakeSpace Capital Contribution

During 2019, acquisitions.we formed a joint venture entity with MakeSpace Labs, Inc. (the "MakeSpace JV"). In the second quarter of 2020, we committed to participate in a round of equity funding for the MakeSpace JV whereby we agreed tocontribute $36.0 million of the $45.0 million being raised in installments beginning in May 2020 through October 2021. Our equity interest in the MakeSpace JV at September 30, 2020 and December 31, 2019 was 37% and 34%, respectively, and the carrying value of our investment in the MakeSpace JV at September 30, 2020 and December 31, 2019 was approximately $15.8 million and $18.6 million, respectively.

Includedd.     Frankfurt Joint Venture

On October 1, 2020, we formed a joint venture (the “Frankfurt JV Transaction”) with AGC Equity Partners (“AGC”) to design and develop a 280,000 square foot, 27 megawatt, hyperscale data center currently under development in Significant Acquisition CostsFrankfurt, Germany (the “Frankfurt JV”). AGC acquired an 80% equity interest in the Frankfurt JV, while we retained a 20% equity interest (the “Frankfurt JV Investment”). The total cash consideration for the 80% equity interest sold to AGC was approximately $100.0 million. The substantial majority of the consideration was received upon the closing of the Frankfurt JV, and we are certain costsentitled to receive an additional approximately $10.0 million upon the completion of development of the data center, which we expect to occur in the second quarter of 2021. In connection with the Frankfurt JV Transaction, we also entered into agreements whereby we will earn various fees, including property management and construction and development fees, for services we are providing to the Frankfurt JV.

The assets included in the Frankfurt JV Transaction have a carrying value of approximately $100.0 million at September 30, 2020, and are primarily land and land development assets which are included within our Global Data Center Business segment. The assets are classified as held for sale and are included within Other, a component of Other assets, net in our Condensed Consolidated Balance Sheet at September 30, 2020.

During the fourth quarter of 2020, we expect to recognize a gain of approximately $25.0 million associated with the RecallFrankfurt JV Transaction, andrepresenting the IODC Transaction. This amount consistsexcess of (i) Significant Acquisition Costs and (ii) capital expendituresthe fair value of the consideration received over the carrying value of the assets. The gain remains subject to integrate Recall with our existing operations. We currently estimate total acquisition and integration expenditures associated with the Recall Transaction and acquisition expenditures associated with the IODC Transaction to be approximately $405.0 million, the substantial majoritycustomary closing adjustments.

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Table of which was incurred prior to the end of 2018.Contents

The following table presents the cumulative amount of operating and capital expenditures incurred during the nine months ended September 30, 2019 and 2018, as well as the cumulative amount incurred through September 30, 2019, associated with the Recall Transaction and the IODC Transaction (in thousands):
  
Cumulative Total Through
September 30, 2019
 
Nine Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2018
Significant Acquisition Costs $323,121
 $8,597
 $38,715
Recall Capital Expenditures 75,735
 2,198
 14,226
Total $398,856
 $10,795
 $52,941
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 September 30, 20192020 (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 September 30, 20192020, 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.



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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.

Our program to simplify our global structure may not be successful.
In October 2019, we announced Project Summit, a global program designed to better position us for future growth and achievement of our strategic objectives. Project Summit will focus on simplifying our global records and information management structure and streamlining our managerial structure. As a result of the program, we expect to reduce the number of vice president level and above positions by approximately 45%. The total program is expected to reduce our total managerial and administrative workforce by approximately 700 positions over the next two years. We also plan to implement 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. We expect the total program benefits associated with Project Summit to be fully realized by the end of 2022. We have included in this Quarterly Report on Form 10-Q estimates of expected improvements to our Adjusted EBITDA and the restructuring charges (including operating and capital expenditures) we expect to incur. However, we may not be able to realize the full amount of our expected improvements to Adjusted EBITDA in a timely manner, or at all, and the restructuring charges associated Project Summit may exceed our expectations. In addition, this program may yield unintended consequences, such as attrition beyond our intended reduction in force and distraction of our employees. As a result, Project Summit could have a material adverse effect on our results of operations or financial condition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any unregistered equity securities during the three months ended September 30, 2019,2020, nor did we repurchase any shares of our common stock during the three months ended September 30, 2019.2020.

Item 6. Exhibits

(a)    Exhibits

Certain exhibits indicated below are incorporated by reference to documents we have filed with the SEC.
Exhibit No.Description
4.1
(Incorporated by reference to the Company's Current Report on Form 8-K dated September 9, 2019.August 18, 2020.)
31.1
31.2
31.2 
32.1
32.2
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 Taxonomy Extension Presentation Linkbase Document.

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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: October 31, 2019

November 5, 2020
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