4AUG201721502439
2019 Annual Financial Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________________________________________________________________
FORM 10-K
____________________________________________________________________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2019
or
For the transition period from to
Commission File Number 1-13045
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IRON MOUNTAIN INCORPORATED
(Exact name of Registrant as Specified in Its Charter)
Delaware
(State or other jurisdiction of incorporation)
One Federal Street, Boston, Massachusetts
(Address of principal executive offices)
23-2588479
(I.R.S. Employer Identification No.)
02110
(Zip Code)
617-535-4766
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $.01 par value per share
Trading Symbols(s)
IRM
Name of Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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
Non-accelerated filer
Emerging growth company
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
No
As of June 30, 2019, the aggregate market value of the Common Stock of the registrant held by non-affiliates of the registrant was
approximately $8.9 billion based on the closing price on the New York Stock Exchange on such date.
Number of shares of the registrant's Common Stock at February 7, 2020: 287,343,251
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required in Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K (the "Annual Report") is
incorporated by reference from our definitive Proxy Statement for our 2020 Annual Meeting of Stockholders (our "Proxy Statement") to be filed
with the Securities and Exchange Commission (the "SEC") within 120 days after the close of the fiscal year ended December 31, 2019.
IRON MOUNTAIN INCORPORATED
2019 FORM 10-K ANNUAL REPORT
Table of Contents
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market For Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Item 10.
Directors, Executive Officers and Corporate Governance
PART III
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
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References in this Annual Report to "the Company," "Iron Mountain," "we," "us" or "our" include Iron Mountain
Incorporated, a Delaware corporation, and its predecessor, as applicable, and its consolidated subsidiaries, unless the context
indicates otherwise.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made statements in this Annual Report that constitute "forward-looking statements" as that term is defined in the
Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements concern our
operations, economic performance, financial condition, goals, beliefs, future growth strategies, investment objectives, plans and
current expectations, such as our (1) commitment to future dividend payments, (2) expected change in volume of records stored
with us, (3) expected organic revenue growth, including 2020 consolidated organic storage rental revenue growth rate and
consolidated organic total revenue growth rate, (4) expectations that profits will increase in our growth portfolio, including our
higher-growth markets, and that our growth portfolio will become a larger part of our business over time, (5) expectations
related to our revenue management programs and continuous improvement initiatives, (6) expectations related to our leverage
ratio and capital requirements, (7) expected ability to identify and complete acquisitions and drive returns on invested capital,
(8) anticipated capital expenditures, and (9) expected benefits, costs and actions related to Project Summit (as defined and
discussed below). These forward-looking statements are subject to various known and unknown risks, uncertainties and other
factors. When we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions, we are making
forward-looking statements. Although we believe that our forward-looking statements are based on reasonable assumptions,
our expected results may not be achieved, and actual results may differ materially from our expectations. In addition, important
factors that could cause actual results to differ from expectations include, among others:
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our ability to remain qualified for taxation as a real estate investment trust for United States federal income tax
purposes ("REIT");
the adoption of alternative technologies and shifts by our customers to storage of data through non-paper based
technologies;
changes in customer preferences and demand for our storage and information management services;
our ability or inability to execute our strategic growth plan, expand internationally, complete acquisitions on
satisfactory terms, and to integrate acquired companies efficiently;
changes in the amount of our growth and maintenance capital expenditures and our ability to raise capital and
invest according to plan;
our ability to execute on Project Summit and the potential impacts of Project Summit on our ability to retain and
recruit employees and execute on our strategy;
the cost and our ability to comply with laws, regulations and customer demands relating to data security and
privacy issues, as well as fire and safety standards;
the impact of litigation or disputes that may arise in connection with incidents in which we fail to protect our
customers' information or our internal records or information technology ("IT") systems and the impact of such
incidents on our reputation and ability to compete;
changes in the price for our storage and information management services relative to the cost of providing such
storage and information management services;
changes in the political and economic environments in the countries in which our international subsidiaries operate
and changes in the global political climate;
the impact of executing on our growth strategy through joint ventures;
our ability to comply with our existing debt obligations and restrictions in our debt instruments or to obtain
additional financing to meet our working capital needs;
the impact of service interruptions or equipment damage and the cost of power on our data center operations;
changes in the cost of our debt;
the impact of alternative, more attractive investments on dividends;
the cost or potential liabilities associated with real estate necessary for our business;
the performance of business partners upon whom we depend for technical assistance or management expertise; and
other trends in competitive or economic conditions affecting our financial condition or results of operations not
presently contemplated.
Other risks may adversely impact us, as described more fully under "Item 1A. Risk Factors" of this Annual Report.
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You should not rely upon forward-looking statements except as statements of our present intentions and of our present
expectations, which may or may not occur. You should read these cautionary statements as being applicable to all forward-
looking statements wherever they appear. Except as required by law, we undertake no obligation to release publicly the result of
any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events or otherwise. Readers are also urged to carefully review and consider the various
disclosures we have made in this document, as well as our other periodic reports filed with the SEC.
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Item 1. Business.
Business Overview
PART I
We help organizations around the world protect their information, reduce storage costs, comply with regulations,
facilitate corporate disaster recovery, and better use their information and IT infrastructure for business advantages, regardless
of its format, location or life cycle stage. We do this by storing physical records and data backup media, offering information
management solutions, and providing data center space for enterprise-class colocation and hyperscale deployments. We offer
comprehensive records and information management services and data management services, along with the expertise and
experience to address complex storage and information management challenges such as rising storage rental costs, legal and
regulatory compliance, and disaster recovery requirements. We provide secure and reliable data center facilities to protect
digital information and ensure the continued operation of our customers’ IT infrastructure, with reliable and flexible
deployment options.
Founded in an underground facility near Hudson, New York in 1951, Iron Mountain Incorporated, a Delaware
corporation, has more than 225,000 customers in a variety of industries in approximately 50 countries around the world, as of
December 31, 2019. We currently serve customers across an array of market verticals - commercial, legal, financial, healthcare,
insurance, life sciences, energy, business services, entertainment and government organizations, including approximately 96%
of the Fortune 1000. As of December 31, 2019, we employed more than 25,000 people. We are listed on the New York Stock
Exchange (the "NYSE") and are a constituent of the Standard & Poor's 500 Index and the MSCI REIT index. As of
December 31, 2019, we were number 605 on the Fortune 1000.
We have been organized and have operated as a REIT beginning with our taxable year ended December 31, 2014.
Business Strategy
Overview
Our company has been a market leader in the physical ecosystem supporting information storage and retrieval, as most
businesses have relied on paper documents or computer tapes to store their valuable information. Over time, customers are
increasing their digital information, with the new information storage ecosystem being a hybrid of physical and digital
mediums. We offer a suite of "mission-critical" storage and related services to help customers with this transformation, and
utilize the strategy outlined below to grow our business.
• Pursuing Volume Opportunities in Records and Information Management Globally with a Focus on Faster-
Growing Geographies and Verticals - We are establishing and enhancing leadership positions in higher-growth
markets such as central and eastern Europe, Latin America, Asia and Africa, through both organic expansion and
acquisitions where GDP growth is faster and outsourcing information management is at an earlier stage. We are also
focused on increasing revenues in more established markets such as the United States, Canada, Western Europe,
Australia and New Zealand, primarily through targeted sales and marketing efforts to attract new customers or to gain
incremental volumes from existing customers. We believe much of the opportunity for new customers is from
existing verticals that do not already outsource some or all of their storage and information management needs to us
or another third party vendor. We expect to continue to invest in attractive acquisitions of customer relationships and
storage and information management services businesses, designed to optimize the utilization of our existing assets
and to expand our presence and better serve our customers.
• Driving Revenue Growth and Margin Expansion Through Revenue Management and Continuous
Improvement - We expect to continue to drive revenue growth and margin expansion through further deployment of
our revenue management program. Further, we expect continuous improvement initiatives will generate additional
margin expansion opportunities, primarily in our established markets. In our higher-growth markets, we expect
profits will grow with increased scale, and we will look to reinvest a portion of the cash flows generated to support
expansion in these markets.
• Continued Expansion of Data Center Business - We have made significant progress through acquisitions and
organic growth in scaling our data center business, with 14 operating data centers across 13 global markets. As of
December 31, 2019, approximately 86% of our capacity is leased, with total potential capacity of 357 megawatts in
land and buildings currently owned or operated by Iron Mountain making us among the largest global data center
operators.
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Investing in Faster-Growing Businesses - We continue to identify, acquire, incubate and scale complementary
businesses and products to support our long-term growth objectives and drive solid returns on invested capital. These
opportunities include our Entertainment Services, Fine Arts and Consumer Storage (each as defined below)
businesses and digital services.
Our strategy is underpinned by our persistent focus on customer experience, as we continue to seek innovative solutions
to help our customers navigate the journey from physical storage to a digital ecosystem.
Project Summit
In October 2019, we announced our global program designed to better position us for future growth and achievement of
our strategic objectives ("Project Summit"). Project Summit focuses on simplifying our global structure by combining our core
records and information management operations under one global leader and rebalancing our resources, streamlining
managerial structures and leveraging our global and regional customer facing resources. We are also implementing systems and
process changes designed to make our organization more agile and dynamic, streamline our organization and reallocate our
resources to better align with our strategic goals as part of Project Summit. As a result of the program, we expect to reduce the
number of positions at vice president and above by approximately 45%. The total program is expected to have reduced our total
managerial and administrative workforce by approximately 700 positions by the end of 2021.
The activities associated with Project Summit began in the fourth quarter of 2019 and are expected to be substantially
complete by the end of 2021. We estimate that Project Summit will improve annual Adjusted EBITDA (as defined in Note 9 to
Notes to Consolidated Financial Statements included in this Annual Report) by approximately $200 million as program benefits
are realized, with the total program benefits associated with Project Summit expected to be fully realized by the end of 2022.
We estimate that the implementation of Project Summit will result in total costs of approximately $240 million.
As we simplify our global structure and combine our core records and information management operations under one
global leader, we have reassessed the composition of our business segments. Our previous North American Records and
Information Management Business, North American Data Management Business, Western European Business and Other
International Business segments have been combined into one Global Records and Information Management ("Global RIM")
Business segment with certain product lines now captured in our Corporate and Other Business segment.
Business Segments
The amount of revenues derived from our business segments and other relevant data, including financial information
about geographic areas and product and service lines, for the years ended December 31, 2019, 2018 and 2017, are set forth in
Note 9 to Notes to Consolidated Financial Statements included in this Annual Report.
• Global RIM Business: Our Global RIM Business segment includes five distinct offerings.
Records Management, stores physical records, including media such as microfilm and microfiche, film, X-rays and
blueprints, and provides healthcare information services, vital records services, service and courier operations, and the
collection, handling and disposal of sensitive documents (collectively, "Records Management") for customers in
approximately 50 countries around the globe. As of December 31, 2019, Iron Mountain stored approximately 700
million cubic feet of hardcopy records.
Data Management, provides storage and rotation of backup computer media as part of corporate disaster recovery
plans, including service and courier operations (“Data Protection & Recovery”); server and computer backup services;
and related services offerings, (collectively, "Data Management").
Information Governance and Digital Solutions ("IGDS"), develops, implements and supports comprehensive storage
and information management solutions for the complete lifecycle of our customers' information, including the
management of physical records, conversion of documents to digital formats and digital storage, primarily in the
United States and Canada.
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Secure Shredding, which includes the scheduled pick-up of office records that customers accumulate in specially
designed secure containers we provide. Secure shredding, which involves the shredding of sensitive documents for
customers that, in many cases, store their records with us, is a natural extension of our hard copy records management
operations and completes the lifecycle of a record. Complementary to our shredding operations is the sale of the
resultant waste paper to third-party recyclers. Through a combination of shredding facilities and mobile shredding
units consisting of custom built trucks, we are able to offer secure shredding services to our customers throughout the
United States, Canada and South Africa.
Consumer Storage provides on-demand, valet storage for consumers (“Consumer Storage”) across 24 markets in
North America through a strategic partnership (the "MakeSpace JV") with MakeSpace Labs, Inc. (“MakeSpace”)
formed in March 2019. The MakeSpace JV is intended to utilize data analytics and machine learning to provide
effective customer acquisition and a convenient and seamless consumer experience.
• Global Data Center Business: Our Global Data Center Business segment provides enterprise-class data center
facilities to protect mission-critical assets and ensure the continued operation of our customers’ IT infrastructure, with
secure, reliable and flexible data center options. The world’s most heavily regulated organizations have trusted us with
their data centers for over 15 years, and as of December 31, 2019, five of the top 10 global cloud providers were Iron
Mountain Data Center customers.
As of December 31, 2019, our Global Data Center Business footprint spanned nine markets in the United States:
Denver, Colorado; Kansas City, Missouri; Boston, Massachusetts; Boyers, Pennsylvania; Manassas, Virginia; Edison,
New Jersey; Columbus, Ohio; and Phoenix and Scottsdale, Arizona and four international markets: Amsterdam,
London, and Singapore, with land held for development in Frankfurt.
• Corporate and Other Business: Our Corporate and Other Business segment consists primarily of Adjacent
Businesses and other corporate items.
Adjacent Businesses is comprised of (i) entertainment and media which helps industry clients store, safeguard and
deliver physical media of all types, and provides digital content repository systems that house, distribute, and archive
key media assets, throughout the United States, Canada, France, China - Hong Kong S.A.R., the Netherlands and the
United Kingdom ("Entertainment Services") and (ii) technical expertise in the handling, installation and storing of art
in the United States, Canada and Europe ("Fine Arts").
Our Corporate and Other Business segment also includes costs related to executive and staff functions, including
finance, human resources and IT, which benefit the enterprise as a whole, and stock-based employee compensation
expense associated with all stock options, restricted stock units, performance units and shares of stock issued under
our employee stock purchase plan. Additionally, our Corporate and Other Business segment includes our technology
escrow services business in the United States.
Business Attributes
Our business has the following attributes:
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Large, Diversified, Global Business - The world's most heavily regulated organizations trust us with the storage of
their records. Our mission-critical storage offerings and related services generated approximately $4.3 billion in
annual revenue in 2019. Our business has a highly diverse customer base of approximately 225,000 customers - with
no single customer accounting for more than 1% of revenue during the year ended December 31, 2019 - and operates
in approximately 50 countries globally. This presents a significant cross-sell opportunity for our data center and
digital services businesses.
• Recurring, Durable Revenue Stream - We generate a majority of our revenues from contracted storage rental fees,
via agreements that generally range from one to five years in length. Historically, in our Records Management
business, we have seen strong customer retention (of approximately 98%) and solid physical records retention; more
than 50% of physical records that entered our facilities 15 years ago, are still with us today. We have also seen strong
customer retention in our Global Data Center Business, with low annual customer churn of approximately 4%.
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• Comprehensive Information Management Solution - As an S&P 500 REIT with approximately 1,450 locations
globally and with offerings spanning physical storage, digitization services and digital storage, we are positioned to
provide a holistic offering to our customers. We are able to cater to our customers' physical and digital needs and to
help guide their digital transformation journey.
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Significant Owner and Operator of Real Estate - We operate approximately 91 million square feet of real estate
worldwide. Our owned real estate footprint spans nearly 30 million square feet and is concentrated in major
metropolitan statistical areas in North America, Western Europe and Latin America.
Limited Revenue Cyclicality - Historically, economic downturns have not significantly affected our storage rental
business. Due to the stability in our total global physical records volumes, the success of our revenue management,
and the growth of our Global Data Center Business, we believe we can continue to grow storage rental revenue over
time.
Shifting Revenue Mix - Our growth portfolio, which consists of our business in our higher-growth markets, our
Global Data Center Business, and our Adjacent Businesses, comprised 24% of our total revenue in 2019, and grew
4% year over year, on an organic basis. We expect our growth portfolio to comprise an increasingly larger percentage
of our overall business in the coming years.
In addition, our data center business has the following attributes:
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Large Data Center Platform with Significant Expansion Opportunity - With over 3.5 million gross square feet, as of
December 31, 2019, we have 120 MW of leasable capacity with an additional 237 MW under construction or held
for development.
• Differentiated Compliance and Security - We offer comprehensive compliance support and physical and cyber
security. Our multi-layered approach to security includes a combination of technical and human security measures,
and experienced senior military and public sector cyber security leaders lead our security. As of December 31, 2019,
Iron Mountain data centers meet FISMA high and PCI-DSS compliance standards and are FedRAMP compliant.
• Efficient Access and Flexibility - We have the ability to provide customers with a range of deployment options from
one cabinet to an entire building, leveraging our global portfolio of hyperscale-ready, and underground data centers.
We also provide access to numerous carriers, cloud providers and peering exchanges with migration support and IT.
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100% Green Powered Data Centers - As of December 31, 2019, Iron Mountain data centers are powered by 100%
renewable energy, with carbon credit assistance and low power usage effectiveness ("PUE"). Iron Mountain is one of
the top 25 buyers of renewable energy among the Fortune 1000 and now offers the Green Power Pass, which allows
customers to include the power they consume at any Iron Mountain data center as green power in their CDP, RE100,
GRI, or other sustainability reporting.
Significant Acquisitions
We have completed many records management acquisitions over the years to achieve scale, expand geographically and
broaden our offerings, but most of our records management acquisitions in recent years have been smaller in size given the
fragmented nature of the records management industry. With the rapid acceleration of growth in digital data and use of cloud
storage, highly regulated companies and public sector organizations are selecting third-party providers such as us to host their
data center infrastructure. We have been providing customers with data center space and solutions for more than 15 years, and
have significantly expanded our Global Data Center Business in the last few years through acquisitions, the most significant
one being that of IO Data Centers, LLC (“IODC”). On January 10, 2018, we completed the acquisition of the United States
operations of IODC, a leading data center colocation space and solutions provider based in Phoenix, Arizona, for
approximately $1.34 billion (the "IODC Transaction"). See Note 6 to Notes to Consolidated Financial Statements included in
this Annual Report.
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Competition
We compete with thousands of storage and information management services providers around the world as well as
storage and information management services managed and operated internally by organizations. We believe that competition
for records and information customers is based on price, reputation and reliability, quality and security of storage, quality of
service and scope and scale of technology. While the majority of our competitors operate in only one market or region, we
believe we provide a differentiated global offering that competes effectively in these areas.
We also compete with numerous data center developers, owners and operators, many of whom own properties similar to
ours in some of the same metropolitan areas where our facilities are located. We believe that competition for data center
customers is based on availability of power, security considerations, location, connectivity and rental rates, and we generally
believe we compete effectively in each of these areas. Additionally, we believe our strong brand, global footprint and excellent
commercial relationships enable us to compete successfully.
Employees
As of December 31, 2019, we employed more than 9,000 employees in the United States and more than 16,000
employees outside of the United States. As of December 31, 2019, approximately 550 employees in California, Georgia and
New Jersey and three provinces in Canada were represented by unions in North America and approximately 1,200 employees
were represented by unions in Latin America (in Argentina, Brazil, Chile and Mexico). All union employees are currently under
renewed labor agreements or operating under an extension agreement.
Where applicable, employees are generally eligible to participate in our benefit programs, which may include health and
welfare arrangements as well as pension programs. Certain unionized employees in California receive these types of benefits
through their unions and are not eligible to participate in our benefit programs. In addition to base compensation and other
usual benefits, a significant portion of full-time employees participate in some form of incentive-based compensation program
that provides payments based on revenues, profits or attainment of specified objectives for the unit in which they work.
Insurance
For strategic risk transfer purposes, we maintain a comprehensive insurance program with insurers that we believe to be
reputable and that have adequate capitalization in amounts that we believe to be appropriate. Property insurance is purchased
on a comprehensive basis, including flood and earthquake (including excess coverage), subject to certain policy conditions,
sublimits and deductibles. Property is insured based upon the replacement cost of real and personal property, including
leasehold improvements, business income loss and extra expense. Other types of insurance that we carry, which are also subject
to certain policy conditions, sublimits and deductibles, include medical, workers' compensation, general liability, umbrella,
automobile, professional, warehouse legal liability and directors' and officers' liability policies.
Environmental Matters
Some of our current and formerly owned or leased properties were previously used by entities other than us for industrial
or other purposes, or were affected by waste generated from nearby properties, that involved the use, storage, generation and/or
disposal of hazardous substances and wastes, including petroleum products. In some instances, this prior use involved the
operation of underground storage tanks or the presence of asbestos-containing materials. Where we are aware of environmental
conditions that require remediation, we undertake appropriate activity, in accordance with all legal requirements. Although we
have from time to time conducted limited environmental investigations and remedial activities at some of our former and
current facilities, we have not undertaken an environmental review of all of our properties, including those we have acquired.
We therefore may be potentially liable for environmental cost and may be unable to sell, rent, mortgage or use contaminated
real estate owned or leased by us. Under various federal, state and local environmental laws, we may be liable for
environmental compliance and remediation costs to address contamination, if any, located at owned and leased properties as
well as damages arising from such contamination, whether or not we know of, or were responsible for, the contamination, or
the contamination occurred while we owned or leased the property. Environmental conditions for which we might be liable
may also exist at properties that we may acquire in the future. In addition, future regulatory action and environmental laws may
impose costs for environmental compliance that do not exist today.
We transfer a portion of our risk of financial loss due to currently undetected environmental matters by purchasing an
environmental impairment liability insurance policy, which covers all owned and leased locations. Coverage is provided for
both liability and remediation costs.
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Corporate Social Responsibility
We are committed to transparent reporting on sustainability and corporate responsibility efforts in accordance with the
guidelines of the Global Reporting Initiative. Our corporate responsibility report highlights our progress against key measures
of success for our efforts in the community, our environment, and for our people. We are a member of the FTSE4 Good Index,
MSCI World ESG Index, MSCI ACWI ESG Index and MSCI USA IMI ESG Index, each of which include companies that meet
globally recognized corporate responsibility standards. A copy of our corporate responsibility report is available on the "About
Us" section of our website, www.ironmountain.com, under the heading "Corporate Social Responsibility."
Internet Website
Our Internet address is www.ironmountain.com. Under the "Investors" section on our website, we make available, free of
charge, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") as soon as reasonably practicable after such forms are filed with or furnished to the SEC. We are not including
the information contained on or available through our website as a part of, or incorporating such information by reference into,
this Annual Report. Copies of our corporate governance guidelines, code of ethics and the charters of our audit, compensation,
finance, nominating and governance, and risk and safety committees are available on the "Investors" section of our website,
www.ironmountain.com, under the heading "Corporate Governance."
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Item 1A. Risk Factors.
We face many risks. If any of the events or circumstances described below actually occur, we and our businesses,
financial condition or results of operations could suffer, and the trading price of our debt or equity securities could decline. Our
current and potential investors should consider the following risks and the information contained under the heading
"Cautionary Note Regarding Forward-Looking Statements" before deciding to invest in our securities.
Business Risks
Our customers may shift from paper and tape storage to alternative technologies that require less physical space.
We derive most of our revenues from rental fees for the storage of physical records and computer backup tapes and from
storage related services. Alternative storage technologies exist, many of which require significantly less space than traditional
physical records and tape storage, and as alternative technologies are adopted, storage volume and/or requirements for storage
related services may decline. For example, volumes in our Global RIM Business segment were relatively steady in 2019 and
we expect them to remain relatively consistent in the near term. We can provide no assurance that our customers will continue
to store most or a portion of their records as paper documents or as tapes, or that the paper documents or tapes they do store
with us will require our storage related services at the same levels as they have in the past. A significant shift by our customers
to storage of data through non-paper or non-tape-based technologies, whether now existing or developed in the future, could
adversely affect our businesses. In addition, the digitization of records may shift our revenue mix from the more predictable
storage revenue to service revenue, which is inherently more volatile.
Failure to execute our strategic growth plan may adversely impact our financial condition and results of operations.
As part of our strategic growth plan, we expect to continue to invest in our existing businesses, including records and
information management storage and services businesses in our higher-growth markets, data centers and adjacent businesses,
and in new businesses, business strategies, products, services, technologies and geographies, and we may selectively divest
certain businesses. These initiatives may involve significant risks and uncertainties, including:
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our inability to identify suitable companies to acquire or invest in;
our inability to complete acquisitions or investments on satisfactory terms;
our inability to structure investments or acquisitions in a manner that complies with our debt covenants and is
consistent with our leverage ratio goals;
increased demands on our management, operating systems, internal controls and financial and physical resources and,
if necessary, our inability to successfully expand our infrastructure;
our inability to execute on our plans to help our customers digitize their records or incorporate new technologies into
our offerings;
failure to achieve satisfactory returns on acquired companies or other investments, particularly in markets where we
do not currently operate;
incurring additional debt necessary to acquire suitable companies or make other growth investments if we are unable
to pay the purchase price or make the investment out of working capital, common stock or other equity securities;
our inability to manage the budgeting, forecasting and other process control issues presented by future growth,
particularly with respect to operations in countries outside of the United States or in new lines of business;
insufficient revenues to offset expenses and liabilities associated with new investments; and
our inability to attract, develop and retain skilled employees to lead and support our strategic growth plan.
Our data center expansion in particular requires significant capital commitments. Our data center expansion and other
new ventures are inherently risky and we can provide no assurance that such strategies and offerings will be successful in
achieving the desired returns within a reasonable timeframe, if at all, and that they will not adversely affect our business,
reputation, financial condition, and operating results.
We also face competition from other companies in our efforts to grow our data center, international and complementary
businesses, some of which possess substantial financial and other resources. As a result, we may be unable to acquire, invest in,
or may pay a premium purchase price for, data centers, technology and higher-growth markets and adjacent businesses that
support our strategic growth plan, or we may fail to manage the growth of any businesses we acquire or invest in, which could
have an adverse effect on our results of operations and financial condition.
7
As stored records and tapes become less active our service revenue growth and profitability from related services may decline.
Our Records Management and Data Management service revenue growth is being negatively impacted by declining
activity rates as stored records and tapes are becoming less active and more archival. The amount of information available to
customers digitally or in their own information systems has been steadily increasing in recent years, and we believe this trend
continues to accelerate. As a result, our customers are less likely than they have been in the past to retrieve records and rotate
tapes, thereby reducing their activity levels. At the same time, many of our costs related to records and tape related services
remain fixed. In addition, our reputation for providing secure information storage is critical to our success, and actions to
manage cost structure, such as outsourcing certain transportation, security or other functions, could negatively impact our
reputation and adversely affect our business. Ultimately, if we are unable to appropriately align our cost structure with
decreased levels of service activity, our operating results could be adversely affected.
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 focuses on simplifying our global records and information
management structure, streamlining our managerial structure and leveraging our global and regional customer facing resources.
As a result of the program, we expect to reduce the number of positions at vice president and above by approximately 45%. The
total program is expected to have reduced our total managerial and administrative workforce by approximately 700 positions by
the end of 2021. 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 Annual
Report on Form 10-K estimates of expected improvements to our Adjusted EBITDA and the costs (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 costs associated Project Summit may exceed our expectations. In
addition, this program may yield unintended consequences, such as attrition beyond our intended reduction in force, distraction
of our employees and our anticipated systems and process changes may not work as expected and may create additional risks to
our business. As a result, Project Summit could have a material adverse effect on our results of operations or financial
condition.
Our future growth depends in part upon our ability to continue to effectively manage and execute on revenue management.
Over the past several years, our organic revenue growth has been positively impacted by our ability to effectively
introduce, expand and monitor revenue management initially in our more established markets, and subsequently in our higher-
growth markets. If we are not able to continue and effectively manage pricing, our results of operations could be adversely
affected and we may not be able to execute on our strategic growth plan.
Changes in customer behavior with respect to document destruction could adversely affect our business, financial condition
and results of operations.
Over the past year, our destruction rates as a percentage of records stored have fluctuated. When destruction rates
increase, it has a positive impact on our service revenues in the year of destruction, but negatively impacts our longer term
storage revenues, adversely affecting our financial condition and results of operations.
We and our customers are subject to laws and governmental regulations relating to data privacy and cybersecurity and
our customers' demands in this area are increasing. This may cause us to incur significant expenses and non-compliance
with such regulations and demands could harm our business.
We are subject to numerous U.S. federal, state, local and foreign laws and regulations relating to data privacy and
cybersecurity. These regulations are complex, change frequently and have tended to become more stringent over time. There
are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign
governments concerning data protection that could affect us. In addition, a growing number of U.S. and foreign legislative and
regulatory bodies have adopted consumer notification and other requirements if consumer information is accessed by
unauthorized persons and additional regulations regarding the use, access, accuracy and security of such information are
possible. In the U.S., we are subject to various state laws which provide for disparate notification regimes. In addition, as a
result of the continued emphasis on information security and instances in which personal information has been compromised,
our customers are requesting that we take additional measures to enhance security, store electronic data locally, and assume
higher liability under our contracts.
8
We devote substantial resources, and may in the future have to devote significant additional resources, to facilitate
compliance with laws and regulations, our customers’ demands and to investigate, defend or remedy actual or alleged
violations or breaches. Any failure by us to comply with, or remedy any violations or breaches of, laws and regulations or
customer requirements could result in the curtailment of certain of our operations, the imposition of fines and penalties, liability
resulting from litigation, restrictions on our ability to carry on or expand our operations, significant costs and expenses and
reputational harm. For example, we have experienced incidents in which customers' information has been lost, and we have
been informed by customers that some of the incidents involved the loss of personal information, resulting in monetary costs to
those customers for which we have provided reimbursement. It is difficult to predict the impact on our business if we were
subject to allegations of having violated existing laws or regulations.
Attacks on our internal IT systems could damage our reputation, harm our business and adversely impact our results of
operations.
Our reputation for providing secure information storage to customers is critical to the success of our business. Although
we seek to prevent and detect attempts by unauthorized users to gain access to our IT systems, our IT and network
infrastructure may be vulnerable to attacks by hackers or breaches due to employee error or other disruptions. Moreover, until
we have migrated businesses we acquire on to our IT systems, we may face additional risks because of the continued use of
predecessor IT systems. We have outsourced, and expect to continue to outsource, certain support services to third parties,
which may subject our IT and other sensitive information to additional risk. A successful breach of the security of our IT
systems could lead to theft or misuse of our customers' proprietary or confidential information and result in third party claims
against us and reputational harm. If our reputation is damaged, we may become less competitive, which could negatively
impact our businesses, financial condition or results of operations.
Changing fire and safety standards may result in significant expense.
As of December 31, 2019, we operated approximately 1,450 facilities worldwide, including over 650 in the United States.
Many of these facilities were built and outfitted by third parties and added to our real estate portfolio as part of acquisitions.
Some of these facilities contain fire suppression and safety features that are different from our current specifications and current
standards for new facilities, although we believe all of our facilities were constructed, in all material respects, in compliance
with applicable laws and regulations in effect at the time of their construction or outfitting. In some instances, local authorities
may take the position that our fire suppression and safety features in a particular facility are insufficient and require additional
measures that may involve considerable expense to us. In addition, where we determine that the fire suppression and safety
features of a facility require improvement, we will develop and implement a plan to remediate the issue, although
implementation may require an extended period to complete. A significant aspect of the integration of businesses we have
acquired or may acquire is the process of making investments in the acquired facilities to conform such facilities to our
standards of operations. This process is complex and time-consuming. If additional fire safety and suppression measures
beyond our current operating plan were required at a large number of our facilities, the expense required for compliance could
negatively impact our business, financial condition or results of operations.
Changes to environmental laws and standards may increase the cost to operate some of our businesses. Furthermore, if we fail
to meet our commitment to transition to more renewable and sustainable sources of energy, it may negatively impact our ability
to attract and retain customers and investors who focus on this commitment. This could impact our results of operations and
the trading of our stock.
Changes in environmental laws in any of the jurisdictions in which we operate could increase compliance costs or impose
limitations on our operations. For example, our emergency generators at our data centers are subject to regulations and permit
requirements governing air pollutants, and the heating, ventilation and air conditioning and fire suppression systems at some of
our data centers and data management locations may include ozone-depleting substances that are subject to regulation. While
environmental regulations do not normally impose material costs upon operations at our facilities, unexpected events,
equipment malfunctions, human error and changes in law or regulations, among other factors, could result in unexpected costs,
which could be material.
Furthermore, we have made a commitment to transition to more renewable and sustainable sources of energy. If we are
not successful in this transition, it may negatively impact our ability to attract and retain customers and investors who focus on
this commitment. This could negatively impact our results of operations and the trading of our stock.
9
Failure to successfully integrate acquired businesses could negatively impact our balance sheet and results of operations.
Strategic acquisitions are an important element of our growth strategy and the success of any acquisition we make
depends in part on our ability to integrate the acquired business and realize anticipated synergies. The process of integrating
acquired businesses, particularly in new markets, may involve unforeseen difficulties and may require a disproportionate
amount of our management's attention and our financial and other resources.
For example, the success of our significant acquisitions depends, in large part, on our ability to realize the anticipated
benefits, including cost savings from combining the acquired businesses with ours. To realize these anticipated benefits, we
must be able to successfully integrate our business and the acquired businesses, and this integration is complex and time-
consuming. We may encounter challenges in the integration process including the following:
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challenges and difficulties associated with managing our larger, more complex, company;
conforming standards, controls, procedures and policies, business cultures and compensation and benefits structures
between the two businesses;
consolidating corporate and administrative infrastructures;
coordinating geographically dispersed organizations;
potential unknown liabilities and unforeseen expenses or delays associated with an acquisition; and
our ability to deliver on our strategy going forward.
Further, our acquisitions subject us to liabilities (including tax liabilities) that may exist at an acquired company, some of
which may be unknown. Although we and our advisors conduct due diligence on the operations of businesses we acquire, there
can be no guarantee that we are aware of all liabilities of an acquired company. These liabilities, and any additional risks and
uncertainties related to an acquired company not known to us or that we may deem immaterial or unlikely to occur at the time
of the acquisition, could negatively impact our future business, financial condition and results of operations.
We can give no assurance that we will ultimately be able to effectively integrate and manage the operations of any
acquired business or realize anticipated synergies. The failure to successfully integrate the cultures, operating systems,
procedures and information technologies of an acquired business could have a material adverse effect on our financial
condition and results of operations.
Our customer contracts may not always limit our liability and may sometimes contain terms that could lead to disputes
in contract interpretation.
Our customer contracts typically contain provisions limiting our liability regarding the loss or destruction of, or damage
to, records, information, or other items stored with us. Our liability for physical storage is often limited to a nominal fixed
amount per item or unit of storage (such as per cubic foot) and our liability for IGDS, data center, destruction and other services
unrelated to records, information and other items stored with us is often limited to a percentage of annual revenue under the
contract; however, some of our contracts with large customers and some of the contracts assumed in our acquisitions contain no
such limits or contain higher limits. We can provide no assurance that our limitation of liability provisions will be enforceable
in all instances or, if enforceable, that they would otherwise protect us from liability. In addition to provisions limiting our
liability, our customer contracts generally include a schedule setting forth the majority of the customer-specific terms, including
storage rental and related service pricing and service delivery terms. Our customers may dispute the interpretation of various
provisions in their contracts. In the past, we have had relatively few disputes with our customers regarding the terms of their
customer contracts, and most disputes to date have not been material, but we can provide no assurance that we will not have
material disputes in the future. Moreover, as we expand our operations in storage of fine arts and other valuable items and
respond to customer demands for higher limitation of liability as a result of regulatory changes, our exposure to contracts with
higher or no limitations of liability and disputes with customers over the interpretation of their contracts may increase.
Although we maintain a comprehensive insurance program, we can provide no assurance that we will be able to maintain
insurance policies on acceptable terms or with high enough coverage amounts to cover losses to us in connection with customer
contract disputes.
10
International operations may pose unique risks.
As of December 31, 2019, we operated in approximately 50 countries outside the United States. Our international
operations account for a significant portion of our overall operations, and as part of our growth strategy, we expect its share to
increase as we continue to acquire or invest in businesses in select foreign markets, including countries where we do not
currently operate. International operations are subject to numerous risks, including:
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the impact of foreign government regulations and United States regulations that apply to us in foreign countries where
we operate; in particular, we are subject to United States and foreign anticorruption laws, such as the Foreign Corrupt
Practices Act and the United Kingdom Bribery Act, and, although we have implemented internal controls, policies and
procedures and training to deter prohibited practices, our employees, partners, contractors or agents may violate or
circumvent such policies and the law;
the volatility of certain foreign economies in which we operate;
political uncertainties and changes in the global political climate or other global events, such as the recent trade wars
involving the U.S. or global pandemics, which may impose restrictions on, or create additional risk in relation to,
global operations;
unforeseen liabilities, particularly within acquired businesses;
costs and difficulties associated with managing international operations of varying sizes and scale;
our operations in the United Kingdom and the European Union may be adversely affected by the exit from the
European Union (“Brexit”) by the United Kingdom, and the uncertainty associated therewith;
the risk that business partners upon whom we depend for technical assistance or management and acquisition
expertise in some markets outside of the United States will not perform as expected;
difficulties attracting and retaining local management and key employees to operate our business in certain countries;
cultural differences and differences in business practices and operating standards; and
foreign currency fluctuations.
We have operations in numerous foreign countries and, as a result, are subject to foreign exchange translation risk,
which could have an adverse effect on our financial results.
We conduct business operations in numerous foreign countries through our foreign subsidiaries or affiliates, which
primarily transact in their respective local currencies. Those local currencies are translated into United States dollars at the
applicable exchange rates for inclusion in our consolidated financial statements. The results of operations of, and certain of our
debt balances (including intercompany debt balances) associated with, our international businesses are exposed to foreign
exchange rate fluctuations. Upon translation, operating results may differ materially from expectations, and significant shifts in
foreign currencies can impact our short-term results, as well as our long-term forecasts and targets. In addition, because we
intend to distribute 100% of our REIT taxable income to our stockholders, and any exchange rate fluctuations may negatively
impact our REIT taxable income, our distribution amounts may fluctuate because of exchange rate fluctuations.
11
Significant costs or disruptions at our data centers could adversely affect our business, financial condition and results of
operations.
Since 2017, we have substantially expanded our Global Data Center Business through acquisitions and organically and
we expect to continue to grow our Global Data Center Business in both ways going forward. For example, we paid an
aggregate cash purchase price of over $1.7 billion for data center businesses we acquired in 2017 and 2018 and incurred other
costs associated with the development of real estate to support this business. Our Global Data Center Business depends on
providing customers with highly reliable facilities, power infrastructure and operations solutions, and we will need to retain
and hire qualified personnel to manage our data centers. Service interruptions or significant equipment damage could result in
difficulty maintaining service level commitment obligations that we owe to certain of our customers. Service interruptions or
equipment damage may occur at one or more of our data centers because of numerous factors, including:
human error;
equipment failure;
physical, electronic and cyber security breaches;
fire, hurricane, flood, earthquake and other natural disasters;
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power loss or telecommunications failure;
• war, terrorism and any related conflicts or similar events worldwide; and
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sabotage and vandalism.
In addition, climate change may increase the likelihood that our data centers are affected by some of these factors.
While these risks could impact our overall business, they could have a more significant impact on our Global Data Center
Business, where we have service level commitment obligations to certain of our customers. As a result, service interruptions or
significant equipment damage at our data centers could result in difficulty maintaining service level commitments to these
customers and potential claims related to such failures. Because our data centers are critical to many of our customers’
businesses, service interruptions or significant equipment damage at our data centers could also result in lost profits or other
indirect or consequential damages to our customers.
Our Global Data Center Business is susceptible to regional costs of power, power shortages, planned or unplanned power
outages and limitations on the availability of adequate power resources. We rely on third parties to provide power to our data
centers. We are therefore subject to an inherent risk that such third parties may fail to deliver such power in adequate quantities
or on a consistent basis. If the power delivered to our data centers is insufficient or interrupted, we would be required to provide
power through the operation of our on-site generators, generally at a significantly higher operating cost. Additionally, global
fluctuations in the price of power can increase the cost of energy, and we may be limited in our ability to, or may not always
choose to, pass these increased costs on to our customers. We also rely on third party telecommunications carriers to provide
internet connectivity to our customers. These carriers may elect not to offer or to restrict their services within our data centers
or may elect to discontinue such services. Furthermore, carriers may face business difficulties, which could affect their ability
to provide telecommunications services or the quality of such services. If connectivity is interrupted or terminated, our financial
condition and results of operations may be adversely affected. Events such as these may also impact our reputation as a data
center provider which could adversely affect our results of operations.
Our data center expansion requires a significant amount of capital and, if we are not able to raise that capital on
advantageous terms, our ability to fund our data center expansion may be limited.
Our data center expansion requires significant capital commitments. In addition, we may be required to commit
significant operational and financial resources in connection with the organic growth of our Global Data Center Business,
generally 12 to 18 months in advance of securing customer contracts, and we may not have enough customer demand to
support these data centers when they are built. There can be no assurance we will have sufficient customer demand to support
these data centers or data centers we have acquired or that we will not be adversely affected by the risks noted above, which
could make it difficult for us to realize expected returns on our investments, if any.
12
We may expand our use of joint ventures which could expose us to risks and liabilities, some of which differ from the risks and
liabilities related to the operation of our wholly owned subsidiaries, and our joint venture partners on whom we may rely may
have economic and business interests that are inconsistent with our business interests.
As part of our growth strategy we may expand our use of joint ventures, particularly in connection with our data center
expansion. These joint ventures could result in our acquisition of non-controlling interests in, or shared responsibility for,
managing the affairs of a property or portfolio of properties, business, partnership, joint venture or other entity. As a result, in
connection with pursuing or entering into any new joint ventures, we may be subject to additional risks, including:
• we may not have the right to exercise sole decision-making authority regarding the properties, business, partnership,
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joint venture or other entity;
if our partners become bankrupt or fail to fund their share of required capital contributions, we may choose or be
required to contribute such capital;
our partners may have economic, tax or other interests or goals that are inconsistent with our interests or goals, and
that could affect our ability to negotiate satisfactory joint venture terms, to operate the property or business or
maintain our qualification for taxation as a REIT;
our partners may be subject to different laws or regulations than us, or may be structured differently than us for tax
purposes, which could create conflicts of interest and/or affect our ability to maintain our qualification for taxation as
a REIT;
our partners may take actions that are not within our control, which could require us to dispose of the joint venture
asset, transfer it to a taxable REIT subsidiary ("TRS") in order for us to maintain our qualification for taxation as a
REIT, or purchase such partner's interests or assets at an above-market price;
in connection with our joint ventures, we may agree to restrictions on our ability to expand our business in certain
geographies independently or with other partners;
disputes between us and our partners may result in litigation or arbitration that would increase our expenses and
prevent our management from focusing their time and effort on our day-to-day business; and
• we may in certain circumstances be liable for the actions of our third-party partners or guarantee all or a portion of the
joint venture's liabilities, which may require the company to pay an amount greater than its investment in the joint
venture.
Each of these factors may result in returns on these investments being less than we expect or in losses, and our financial
and operating results may be adversely affected.
Failure to comply with certain regulatory and contractual requirements under our United States Government contracts
could adversely affect our revenues, operating results and financial position and reputation.
Having the United States Government as a customer subjects us to certain regulatory and contractual requirements.
Failure to comply with these requirements could subject us to investigations, price reductions, up to treble damages, and civil
penalties. Noncompliance with certain regulatory and contractual requirements could also result in us being suspended or
barred from future United States Government contracting. We may also face private derivative securities claims because of
adverse government actions. Any of these outcomes could have a material adverse effect on our revenues, operating results,
financial position and reputation.
We may be unable to continue our international expansion.
An important part of our growth strategy involves expanding operations in international markets, including in markets
where we currently do not operate, and we expect to continue this expansion. Europe, Latin America, Asia and Australia have
historically been our primary areas of focus for international expansion of our records and information management services
business, with expansion of our records and information management services business into Africa and the Middle East and
expansion of our data center and adjacent business operations becoming more of a focus recently. We have entered into joint
ventures or have acquired all or a majority of the equity in storage and information management services and data center
businesses operating in these areas and may enter into joint ventures and/or acquire other storage and information management
services, data center or adjacent businesses in the future, including in new countries or markets where we currently do not
operate. A changing global political climate may impose restrictions on our ability to expand internationally. This growth
strategy involves risks. We may be unable to pursue this strategy in the future at the desired pace or at all.
13
We may be subject to certain costs and potential liabilities associated with the real estate required for our business.
Because our business is heavily dependent on real estate, we face special risks attributable to the real estate we own or
lease. Such risks include:
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acquisition and occupancy costs that make it difficult to meet anticipated margins and difficulty locating suitable
facilities due to a relatively small number of available buildings having the desired characteristics in some real estate
markets;
uninsured losses or damage to our storage facilities due to an inability to obtain full coverage on a cost-effective basis
for some casualties, such as fires, hurricanes and earthquakes, or any coverage for certain losses, such as losses from
riots or terrorist activities;
inability to use our real estate holdings effectively and costs associated with vacating or consolidating facilities if the
demand for physical storage were to diminish; and
liability under environmental laws for the costs of investigation and cleanup of contaminated real estate owned or
leased by us, whether or not (i) we know of, or were responsible for, the contamination, or (ii) the contamination
occurred while we owned or leased the property.
Some of our current and formerly owned or leased properties were previously used by entities other than us for industrial
or other purposes, or were affected by waste generated from nearby properties, that involved the use, storage, generation and/or
disposal of hazardous substances and wastes, including petroleum products. In some instances this prior use involved the
operation of underground storage tanks or the presence of asbestos-containing materials. Where we are aware of environmental
conditions that require remediation, we undertake appropriate activity, in accordance with all legal requirements. Although we
have from time to time conducted limited environmental investigations and remedial activities at some of our former and
current facilities, we have not undertaken an environmental review of all of our properties, including those we have acquired.
We therefore may be potentially liable for environmental costs like those discussed above and may be unable to sell, rent,
mortgage or use contaminated real estate owned or leased by us. Environmental conditions for which we might be liable may
also exist at properties that we may acquire in the future. In addition, future regulatory action and environmental laws may
impose costs for environmental compliance that do not exist today.
Unexpected events could disrupt our operations and adversely affect our reputation and results of operations.
Unexpected events, including fires or explosions at our facilities, natural disasters such as hurricanes and earthquakes,
war or terrorist activities, unplanned power outages, supply disruptions and failure of equipment or systems, could adversely
affect our reputation and results of operations. Our customers rely on us to securely store and timely retrieve their critical
information, and these events could result in customer service disruption, physical damage to one or more key operating
facilities and the information stored in those facilities, the temporary closure of one or more key operating facilities or the
temporary disruption of information systems, each of which could negatively impact our reputation and results of operations.
During the past several years we have seen an increase in severe weather events and we expect this trend to continue due to
climate change. Some of our key facilities worldwide are vulnerable to severe weather events.
Damage to our reputation could adversely affect our business, financial condition and results of operations.
Our reputation for providing highly secure information storage to customers is critical to the success of our business. Our
reputation or brand, and specifically, the trust our customers place in us, could be negatively impacted in the event of perceived
or actual failures by us to store information securely. For example, events such as fires, natural disasters, attacks on our IT
systems or security breaches involving us could negatively impact our reputation, particularly if such incidents result in adverse
publicity, governmental investigations or litigation. Damage to our reputation could make us less competitive, which could
negatively impact our business, financial condition and results of operations.
Fluctuations in commodity prices may affect our operating revenues and results of operations.
Our operating revenues and results of operations are impacted by significant changes in commodity prices. In particular,
our secure shredding operations generate revenue from the sale of shredded paper for recycling. Further, significant declines in
the cost of paper may continue to negatively impact our revenues and results of operations, and increases in other commodity
prices, including steel, may negatively impact our results of operations.
14
The performance of our businesses relies on our ability to attract, develop, and retain talented personnel, while controlling our
labor costs.
We are highly dependent on skilled and qualified personnel to operate our businesses. The failure to attract and retain
qualified employees or to effectively control our labor costs could negatively affect our competitive position and operating
results. Our ability to control labor costs and attract qualified personnel is subject to numerous external factors, including
prevailing wages, labor shortages, the impact of legislation or regulations governing wages and hours, labor relations,
immigration, healthcare and other benefits, other employment-related costs and the hiring practices of our competitors.
We face competition for customers.
We compete with multiple businesses in all geographic areas where we operate; our current or potential customers may
choose to use those competitors instead of us. In addition, if we are successful in winning customers from competitors, the
process of moving their stored records into our facilities is often costly and time consuming. We also compete, in some of our
business lines, with our current and potential customers' internal storage and information management services capabilities and
their cloud-based alternatives. These organizations may not begin or continue to use us for their future storage and information
management service needs.
We have guaranteed certain obligations of Recall to Brambles relating to Brambles' prior demerger transaction.
On December 18, 2013, Brambles Limited, an Australian corporation ("Brambles"), implemented a demerger transaction
by way of a distribution of shares of Recall Holdings Limited ("Recall") to Brambles’ shareholders (the “Demerger”). Prior to
and in connection with the Demerger, Brambles spun off certain of its United States and Canadian subsidiaries, directly or
indirectly, to Recall. Such spin-offs were intended to be tax-free or tax-deferred under United States and Canadian tax laws,
respectively, and Brambles obtained rulings from the United States Internal Revenue Service (the "IRS") (with respect to the
United States spin-off) and the Canada Revenue Agency (with respect to the Canadian spin-off), as well as opinions of its tax
advisors, to such effect. However, the tax-free status of the spin-off of such United States subsidiaries could be adversely
affected under certain circumstances if a 50% or greater interest in such United States subsidiaries were acquired as part of a
plan or series of related transactions that included such spin-off. Similarly, the tax-deferred status of the spin-off of the
Canadian subsidiaries could be adversely affected under certain circumstances if control of such subsidiaries were acquired as
part of a series of transactions or events that included such spin-off.
In connection with the Demerger, Recall agreed to indemnify Brambles and certain of its affiliates for taxes to the extent
that actions by Recall (e.g., an acquisition of Recall shares) resulted in the United States spin-off or the Canadian spin-off
described above failing to qualify as tax-free or tax-deferred for United States or Canadian tax purposes, respectively. In
addition, Recall agreed, among other things, that it would not, within two years of the 2013 spin-offs, enter into a proposed
acquisition transaction, merger or consolidation (with respect to the United States spin-off) or take any action that could
reasonably be expected to jeopardize, directly or indirectly, any of the conclusions reached in the Canadian tax ruling or
opinion, without obtaining either a supplemental tax ruling from the relevant taxing authority, the consent of Brambles or an
opinion of a tax advisor, acceptable to Brambles in its reasonable discretion, that such transaction should not result in the spin-
offs failing to be tax-free under United States federal income tax law or Canadian tax law, respectively. Recall has obtained
such tax opinions, based on, among other things, representations and warranties made by Recall and us. Such opinions do not
affect Recall’s obligation to indemnify Brambles for an adverse impact on the tax-free status of such prior spin-offs.
We have guaranteed the foregoing indemnification obligations of Recall. Consistent with the foregoing tax opinions, we
believe that our acquisition of Recall is not part of a plan or series of related transactions, or part of a series of transactions or
events, that included the United States spin-off or the Canadian spin-off, respectively. However, if the IRS or the Canadian
Revenue Agency were to prevail in asserting a contrary view, we would be liable for the resulting taxes, which could be
material.
15
Risks Related to Our Indebtedness
Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations
under our various debt instruments.
We have a significant amount of indebtedness. As of December 31, 2019, our total long-term debt was approximately $8.8
billion, stockholders equity was approximately $1.5 billion and we had cash and cash equivalents (including restricted cash) of
approximately $193.6 million. Our substantial indebtedness could have important consequences to our current and potential
investors. These risks include:
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inability to satisfy our obligations with respect to our various debt instruments;
inability to make borrowings to fund future working capital, capital expenditures and strategic opportunities, including
acquisitions, further organic development of our Global Data Center Business and expansions into adjacent
businesses, and other general corporate requirements, including possible required repurchases, redemptions or
prepayments of our various indebtedness;
limits on our distributions to stockholders; in this regard if these limits prevented us from satisfying our REIT
distribution requirements, we could fail to remain qualified for taxation as a REIT or, if these limits do not jeopardize
our qualification for taxation as a REIT but do nevertheless prevent us from distributing 100% of our REIT taxable
income, we will be subject to federal corporate income tax, and potentially a nondeductible excise tax, on the retained
amounts;
limits on future borrowings under our existing or future credit arrangements, which could affect our ability to pay our
indebtedness or to fund our other liquidity needs;
inability to generate sufficient funds to cover required interest payments;
restrictions on our ability to refinance our indebtedness on commercially reasonable terms;
limits on our flexibility in planning for, or reacting to, changes in our business and the information management
services industry; and
inability to adjust to adverse economic conditions that could place us at a disadvantage to our competitors with less
debt and who, therefore, may be able to take advantage of opportunities that our indebtedness prevents us from
pursuing.
We are subject to risks associated with debt financing, including the risk that our cash flow could be insufficient to meet
required payments on our debt. Our Credit Agreement (as defined in Note 4 to Notes to Consolidated Financial Statements
included in this Annual Report) and our indentures contain customary restrictive covenants and financial restrictions on us,
including a maximum allowable net total lease adjusted leverage ratio of 6.5 (subject to certain exceptions) under the Credit
Agreement and a maximum allowable leverage ratio of 6.5 (subject to certain exceptions) under certain of our indentures. As of
December 31, 2019, our leverage ratio under our indentures was 5.9. In addition, potential changes to, or the elimination of, the
London Interbank Offered Rate may adversely affect interest expense related to borrowings under the Credit Agreement and
interest rate swaps, which could potentially negatively impact our financial condition.
Despite our current indebtedness levels, we may still be able to incur substantially more debt. The terms of our indentures
generally do not cap the maximum amount of additional funds that may be borrowed under our Credit Agreement and possible
future credit arrangements.
Restrictive debt covenants may limit our ability to pursue our growth strategy.
Our indentures and our Credit Agreement contain covenants restricting or limiting our ability to, among other things:
incur additional indebtedness;
pay dividends or make other restricted payments;
•
•
• make asset dispositions;
create or permit liens;
•
sell, transfer or exchange assets;
•
•
guarantee certain indebtedness;
• make acquisitions and other investments; and
enter into partnerships and joint ventures.
•
These restrictions and our long-term commitment to reduce our leverage ratio may adversely affect our ability to pursue
our acquisition and other growth strategies.
16
We may not have the ability to raise the funds necessary to finance the repurchase of outstanding senior or senior
subordinated notes upon a change of control event as required by our indentures.
Upon the occurrence of a "change of control," as defined in our indentures, we will be required to offer to repurchase all
of our outstanding senior and senior subordinated notes. However, it is possible that we will not have sufficient funds at the
time of a change of control to make the required repurchase of any outstanding notes or that restrictions in our Credit
Agreement will not allow such repurchases. Certain important corporate events, however, such as leveraged recapitalizations
that would increase the level of our indebtedness, would not constitute a "change of control" under our indentures.
Iron Mountain Incorporated ("IMI") is a holding company, and, therefore, its ability to make payments on its various debt
obligations depends in large part on the operations of its subsidiaries.
IMI is a holding company; substantially all of its assets consist of the equity in its subsidiaries, and substantially all of its
operations are conducted by its direct and indirect consolidated subsidiaries. As a result, its ability to make payments on its debt
obligations will be dependent upon the receipt of sufficient funds from its subsidiaries, whose ability to distribute funds may be
limited by local capital requirements, joint venture structures and other applicable restrictions. However, our various debt
obligations are guaranteed, on a joint and several and full and unconditional basis, by IMI’s U.S. subsidiaries that represent the
substantial majority of its U.S. operations.
Risks Related to Our Taxation as a REIT
If we fail to remain qualified for taxation as a REIT, we will be subject to tax at corporate income tax rates and will not be
able to deduct distributions to stockholders when computing our taxable income.
We have elected to be taxed as a REIT since our 2014 taxable year; however, we can provide no assurance that we will
remain qualified for taxation as a REIT. If we fail to remain qualified for taxation as a REIT, we will be taxed at corporate
income tax rates unless certain relief provisions apply.
Qualification for taxation as a REIT involves the application of highly technical and complex provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), to our operations as well as various factual determinations concerning
matters and circumstances not entirely within our control. There are limited judicial or administrative interpretations of
applicable REIT provisions.
If, in any taxable year, we fail to remain qualified for taxation as a REIT and are not entitled to relief under the Code:
• we will not be allowed a deduction for distributions to stockholders in computing our taxable income;
• we will be subject to federal and state income tax on our taxable income at regular corporate income tax rates; and
• we would not be eligible to elect REIT status again until the fifth taxable year that begins after the first year for which
we failed to qualify as a REIT.
Any such corporate tax liability could be substantial and would reduce the amount of cash available for other purposes. If
we fail to remain qualified for taxation as a REIT, we may need to borrow additional funds or liquidate some investments to
pay any additional tax liability. Accordingly, funds available for investment and distributions to stockholders could be reduced.
As a REIT, failure to make required distributions would subject us to federal corporate income tax.
We expect to continue paying regular quarterly distributions; however, the amount, timing and form of our regular
quarterly distributions will be determined, and will be subject to adjustment, by our board of directors. To remain qualified for
taxation as a REIT, we are generally required to distribute at least 90% of our REIT taxable income (determined without regard
to the dividends paid deduction and excluding net capital gain) each year, or in limited circumstances, the following year, to our
stockholders. Generally, we expect to distribute all or substantially all of our REIT taxable income. If our cash available for
distribution falls short of our estimates, we may be unable to maintain distributions that approximate our REIT taxable income
and may fail to remain qualified for taxation as a REIT. In addition, our cash flows from operations may be insufficient to fund
required distributions as a result of differences in timing between the actual receipt of income and the payment of expenses and
the recognition of income and expenses for federal income tax purposes, or the effect of nondeductible expenditures, such as
capital expenditures, payments of compensation for which Section 162(m) of the Code denies a deduction, the creation of
reserves or required debt service or amortization payments.
17
To the extent that we satisfy the 90% distribution requirement but distribute less than 100% of our REIT taxable income,
we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4%
nondeductible excise tax on our undistributed taxable income if the actual amount that we distribute to our stockholders for a
calendar year is less than the minimum amount specified under the Code.
We may be required to borrow funds, sell assets or raise equity to satisfy REIT distribution requirements, to comply with
asset ownership tests or to fund capital expenditures, future growth and expansion initiatives.
In order to meet the REIT distribution requirements and maintain our qualification and taxation as a REIT, or to fund
capital expenditures, future growth and expansion initiatives, we may need to borrow funds, sell assets or raise equity, even if
our financial condition or the then-prevailing market conditions are not favorable for these borrowings, sales or offerings.
Furthermore, the REIT distribution requirements and our commitment to investors on dividend growth may result in increasing
our financing needs to fund capital expenditures, future growth and expansion initiatives, which would increase our
indebtedness. An increase in our outstanding debt could lead to a downgrade of our credit ratings, which could negatively
impact our ability to access credit markets. Further, certain of our current debt instruments limit the amount of indebtedness we
and our subsidiaries may incur. Additional financing, therefore, may be unavailable, more expensive or restricted by the terms
of our outstanding indebtedness. For a discussion of risks related to our substantial level of indebtedness, see "Risks Related to
Our Indebtedness." See also “Risks Related to our Common Stock” for certain risks related to our issuances of equity securities
or debt convertible into equity securities.
Complying with REIT requirements may limit our flexibility, cause us to forgo otherwise attractive opportunities that we would
otherwise pursue to execute our growth strategy, or otherwise reduce our income and amounts available for distribution to our
stockholders.
To remain qualified for taxation as a REIT, we must satisfy tests concerning, among other things, the sources of our
income, the nature and diversification of our assets and the amounts we distribute to our stockholders. Thus, compliance with
these tests may require us to refrain from certain activities and may hinder our ability to make certain attractive investments,
including the purchase of non-REIT qualifying operations or assets, the expansion of non-real estate activities, and investments
in the businesses to be conducted by our TRSs, and to that extent limit our opportunities and our flexibility to change our
business strategy. This may restrict our ability to enter into joint ventures or acquire minority interests of companies.
Furthermore, acquisition opportunities in domestic and international markets may be adversely affected if we need or require
the target company to comply with some REIT requirements prior to closing.
We conduct a significant portion of our business activities, including our information management services businesses
and several of our international operations, through domestic and foreign TRSs. Under the Code, no more than 25% of the
value of the assets of a REIT may be represented by securities of one or more TRSs and other nonqualifying assets. In addition,
no more than 20% of the value of the assets of a REIT may be represented by securities of one or more TRSs within the overall
25% nonqualifying assets limitation. These limitations may affect our ability to make additional investments in non-REIT
qualifying operations or assets or in international operations through TRSs.
If we fail to comply with specified asset ownership tests applicable to REITs as measured at the end of any calendar
quarter, we generally must correct such failure within 30 days after the end of the applicable calendar quarter or qualify for
statutory relief provisions to avoid losing our qualification for taxation as a REIT. As a result, we may be required to liquidate
assets or to forgo our pursuit of otherwise attractive investments. These actions may reduce our income and amounts available
for distribution to our stockholders.
18
As a REIT, we are limited in our ability to fund distribution payments using cash generated through our TRSs.
Our ability to receive distributions from our TRSs is limited by the rules with which we must comply to maintain our
qualification for taxation as a REIT. In particular, at least 75% of our gross income for each taxable year as a REIT must be
derived from real estate, which principally includes gross income from providing customers with secure storage space or
colocation or wholesale data center space. Consequently, no more than 25% of our gross income may consist of dividend
income from our TRSs and other nonqualifying types of income. Thus, our ability to receive distributions from our TRSs may
be limited, which may impact our ability to fund distributions to our stockholders using cash flows from our TRSs. Specifically,
if our TRSs become highly profitable, we might become limited in our ability to receive net income from our TRSs in an
amount required to fund distributions to our stockholders commensurate with that profitability.
In addition, a significant amount of our income and cash flows from our TRSs is generated from our international
operations. In many cases, there are local withholding taxes and currency controls that may impact our ability or willingness to
repatriate funds to the United States to help satisfy REIT distribution requirements.
Our extensive use of TRSs, including for certain of our international operations, may cause us to fail to remain qualified
for taxation as a REIT.
Our operations include an extensive use of TRSs. The net income of our TRSs is not required to be distributed to us, and
income that is not distributed to us generally is not subject to the REIT income distribution requirement. However, there may
be limitations on our ability to accumulate earnings in our TRSs and the accumulation or reinvestment of significant earnings in
our TRSs could result in adverse tax treatment. In particular, if the accumulation of cash in our TRSs causes (1) the fair market
value of our securities in our TRSs to exceed 20% of the fair market value of our assets or (2) the fair market value of our
securities in our TRSs and other nonqualifying assets to exceed 25% of the fair market value of our assets, then we will fail to
remain qualified for taxation as a REIT. Further, a substantial portion of our operations are conducted overseas, and a material
change in foreign currency rates could also affect the value of our foreign holdings in our TRSs, negatively impacting our
ability to remain qualified for taxation as a REIT.
Even if we remain qualified for taxation as a REIT, some of our business activities are subject to corporate level income
tax and foreign taxes, which will continue to reduce our cash flows, and we will have potential deferred and contingent tax
liabilities.
Even if we remain qualified for taxation as a REIT, we may be subject to some federal, state, local and foreign taxes, including
taxes on any undistributed income, and state, local or foreign income, franchise, property and transfer taxes. In addition, we could
in certain circumstances be required to pay an excise or penalty tax, which could be significant in amount, in order to utilize one
or more relief provisions under the Code to maintain our qualification for taxation as a REIT.
Our information management services businesses, several of our international operations and certain of our other
businesses are conducted through wholly owned TRSs because these activities could generate nonqualifying REIT income as
currently structured and operated. The income of our domestic TRSs will continue to be subject to federal and state corporate
income taxes. In addition, we and our subsidiaries continue to be subject to foreign income taxes in jurisdictions in which we
have business operations or a taxable presence, regardless of whether assets are held or operations are conducted through
subsidiaries disregarded for federal income tax purposes or TRSs. Any of these taxes would decrease our earnings and our
available cash.
We will also be subject to a federal corporate level income tax at the highest regular corporate income tax rate (currently
21%) on gains we recognize within a specified period from a sale of a REIT asset where our basis in the asset is determined by
reference to the basis of the asset in the hands of a C corporation (such as an asset that we hold in one of our qualified REIT
subsidiaries ("QRSs") following the liquidation or other conversion of a former TRS). This 21% tax is generally applicable to
any disposition of such an asset during the five-year period after the date we first owned the asset as a REIT asset to the extent
of the built-in-gain based on the fair market value of such asset on the date we first held the asset as a REIT asset. In addition,
any depreciation recapture income that we recognize because of accounting method changes that we make in connection with
our acquisition activities will be fully subject to this 21% tax.
19
Complying with REIT requirements may limit our ability to hedge effectively and increase the cost of our hedging and
may cause us to incur tax liabilities.
The REIT provisions of the Code limit our ability to hedge assets, liabilities, revenues and expenses. Generally, income
from hedging transactions that we enter into to manage risk of interest rate changes with respect to borrowings made or to be
made by us to acquire or carry real estate assets and income from certain currency hedging transactions related to our non-
United States operations, as well as income from qualifying counteracting hedges, do not constitute "gross income" for
purposes of the REIT gross income tests. To the extent that we enter into other types of hedging transactions, the income from
those transactions is likely to be treated as nonqualifying income for purposes of the REIT gross income tests. As a result of
these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through our TRSs.
This could increase the cost of our hedging activities because our TRSs would be subject to tax on income or gains resulting
from hedges entered into by them and may expose us to greater risks associated with changes in interest rates or exchange rates
than we would otherwise want to bear. In addition, hedging losses in any of our TRSs generally will not provide any tax
benefit, except for being carried forward for possible use against future income or gain in the TRSs.
Distributions payable by REITs generally do not qualify for preferential tax rates.
Dividends payable by United States corporations to noncorporate stockholders, such as individuals, trusts and estates, are
generally eligible for reduced United States federal income tax rates applicable to “qualified dividends.” Distributions paid by
REITs generally are not treated as “qualified dividends” under the Code, and the reduced rates applicable to such dividends do
not generally apply. However, for tax years beginning before 2026, REIT dividends paid to noncorporate stockholders are
generally taxed at an effective tax rate lower than applicable ordinary income tax rates due to the availability of a deduction
under the Code for specified forms of income from passthrough entities. More favorable rates will nevertheless continue to
apply to regular corporate “qualified” dividends, which may cause some investors to perceive that an investment in a REIT is
less attractive than an investment in a non-REIT entity that pays dividends, thereby reducing the demand and market price of
our common stock.
The ownership and transfer restrictions contained in our certificate of incorporation may not protect our qualification for
taxation as a REIT, could have unintended antitakeover effects and may prevent our stockholders from receiving a
takeover premium.
In order for us to remain qualified for taxation as a REIT, no more than 50% of the value of outstanding shares of our
capital stock may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each
taxable year. In addition, pursuant to attribution rules under the Code, we are treated as the owner of each affiliate of any
person who owns 10% or more of our outstanding shares; if such an affiliate is a customer and we are treated under these
attribution rules as owning 10% or more of the vote or value of such customer, rents from that "affiliated tenant" will not
qualify as qualifying REIT income. Subject to certain exceptions, our certificate of incorporation prohibits any stockholder
from owning, beneficially or constructively, more than (i) 9.8% in value of the outstanding shares of all classes or series of our
capital stock or (ii) 9.8% in value or number, whichever is more restrictive, of the outstanding shares of any class or series of
our capital stock. We refer to these restrictions collectively as the "ownership limits" and we included them in our certificate of
incorporation to facilitate our compliance with REIT tax rules. The constructive ownership rules under the Code are complex
and may cause the outstanding stock owned by a group of related individuals or entities to be deemed to be constructively
owned by one individual or entity. As a result, the acquisition of less than 9.8% of our outstanding common stock (or the
outstanding shares of any class or series of our capital stock) by an individual or entity could cause that individual or entity or
another individual or entity to own constructively in excess of the relevant ownership limits. Any attempt to own or transfer
shares of our common stock or of any of our other capital stock in violation of these restrictions may result in the shares being
automatically transferred to a charitable trust or may be void. Even though our certificate of incorporation contains the
ownership limits, there can be no assurance that these provisions will be effective to prevent our qualification for taxation as a
REIT from being jeopardized, including under the affiliated tenant rule. Furthermore, there can be no assurance that we will be
able to monitor and enforce the ownership limits. If the restrictions in our certificate of incorporation are not effective and as a
result we fail to satisfy the REIT tax rules described above, then absent an applicable relief provision, we will fail to remain
qualified for taxation as a REIT.
In addition, the ownership and transfer restrictions could delay, defer or prevent a transaction or a change in control that
might involve a premium price for our stock or otherwise be in the best interest of our stockholders. As a result, the overall
effect of the ownership and transfer restrictions may be to render more difficult or discourage any attempt to acquire us, even if
such acquisition may be favorable to the interests of our stockholders.
20
Legislative or other actions affecting REITs could have a negative effect on us or our stockholders.
At any time, the federal or state income tax laws governing REITs, or the administrative interpretations of those laws,
may be amended. Federal and state tax laws are constantly under review by persons involved in the legislative process, the IRS,
the United States Department of the Treasury (the "Treasury") and state taxing authorities. Changes to the tax laws, regulations
and administrative interpretations, which may have retroactive application, could adversely affect us. In addition, some of these
changes could have a more significant impact on us as compared to other REITs due to the nature of our business and our
substantial use of TRSs, particularly non-United States TRSs. We cannot predict with certainty whether, when, in what forms,
or with what effective dates, the tax laws, regulations and administrative interpretations applicable to us may be changed.
Risks Related to our Common Stock
Sales or issuances of shares of our common stock may adversely affect the market price of our common stock.
Future sales or issuances of common stock or other equity related securities may adversely affect the market price of our
common stock, including any shares of our common stock issued to finance capital expenditures, finance acquisitions or repay
debt. In October 2017, we entered into a distribution agreement (the “Distribution Agreement”) with a syndicate of 10 banks
(the “Agents”) pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our
common stock through the Agents (the “At The Market (ATM) Equity Program”). As of December 31, 2019, we have sold
1,754,539 shares of our common stock for gross proceeds of approximately $68.8 million under the At The Market (ATM)
Equity Program. See Note 12 to Notes to Consolidated Financial Statements included in this Annual Report.
Sales or issuances of equity securities or debt convertible into equity securities could negatively impact our existing
stockholders.
Future sales or issuances of equity securities or debt convertible into equity securities, the percentage of stock ownership
by our existing stockholders may be reduced. In addition, new equity securities or convertible debt securities could have rights,
preferences and privileges senior to those of our current stockholders, which could substantially decrease the value of our
securities owned by them. Depending upon the market price of our common stock at the time of any potential issuances of
equity securities, we may have to sell a significant number of shares in order to raise the capital we deem necessary to execute
our long-term strategy, and our stockholders may experience dilution in the value of their shares as a result.
Our cash distributions are not guaranteed and may fluctuate.
As a REIT, we are generally required to distribute at least 90% of our REIT taxable income to our stockholders.
Furthermore, we are committed to growing our dividends, and have stated this publicly.
Our board of directors, in its sole discretion, will determine, on a quarterly basis, the amount of cash to be distributed to
our stockholders based on a number of factors including, but not limited to, our results of operations, cash flow and capital
requirements, economic conditions, tax considerations, borrowing capacity and other factors, including debt covenant
restrictions that may impose limitations on cash payments, future acquisitions and divestitures, any stock repurchase program
and general market demand for our space and related services. Consequently, our distribution levels may fluctuate and we may
not be able to meet our public commitments with respect to dividend growth.
Item 1B. Unresolved Staff Comments.
None.
21
Item 2. Properties.
As of December 31, 2019, we conducted operations through 1,150 leased facilities and 298 owned facilities. Our
facilities are divided among our reportable operating segments as follows: Global RIM Business (1,378), Global Data Center
Business (14) and Corporate and Other Business (56). These facilities contain a total of approximately 91.4 million square feet
of space. A breakdown of owned and leased facilities by country (and by state within the United States) is listed below:
Country/State
North America
United States (Including Puerto Rico)
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts (including Corporate Headquarters)
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Canada
Leased
Owned
Total
Number
Square Feet
Number
Square Feet
Number
Square Feet
1
6
—
15
6
6
1
—
5
5
—
7
—
1
—
4
—
1
3
8
6
—
—
5
—
3
1
1
11
—
13
3
5
3
1
8
1
1
2
4
27
1
—
7
6
—
1
179
16
195
12,621
1,207,281
—
2,038,278
517,700
665,013
120,921
—
263,930
265,049
—
1,309,975
—
14,200
—
418,760
—
95,000
327,258
1,173,503
345,736
—
—
373,120
—
316,970
107,041
146,467
2,906,688
—
1,186,266
150,624
290,291
140,000
55,621
2,485,495
54,352
12,748
214,238
63,909
2,229,977
90,553
—
605,566
472,896
—
10,655
20,688,702
1,783,258
22,471,960
4
17
2
82
14
10
5
3
40
16
2
22
7
3
3
7
8
1
21
18
20
12
3
15
3
4
8
1
43
3
35
22
20
7
12
29
5
2
6
9
69
3
2
20
11
2
9
660
68
728
325,094
1,769,529
63,604
6,644,122
984,036
864,127
429,988
62,436
2,643,002
1,179,255
105,021
2,533,320
470,536
159,338
253,919
534,760
428,475
95,000
2,115,959
1,787,747
1,160,099
878,474
201,300
1,598,768
35,990
351,530
383,561
146,467
5,468,865
151,473
2,265,201
1,127,128
1,449,783
310,428
439,917
4,414,474
292,321
82,907
461,613
320,652
4,445,528
168,701
55,200
1,269,017
771,451
105,502
419,188
52,224,806
4,949,983
57,174,789
312,473
562,248
63,604
4,605,844
466,336
199,114
309,067
62,436
2,379,072
914,206
105,021
1,223,345
470,536
145,138
253,919
116,000
428,475
—
1,788,701
614,244
814,363
878,474
201,300
1,225,648
35,990
34,560
276,520
—
2,562,177
151,473
1,078,935
976,504
1,159,492
170,428
384,296
1,928,979
237,969
70,159
247,375
256,743
2,215,551
78,148
55,200
663,451
298,555
105,502
408,533
31,536,104
3,166,725
34,702,829
3
11
2
67
8
4
4
3
35
11
2
15
7
2
3
3
8
—
18
10
14
12
3
10
3
1
7
—
32
3
22
19
15
4
11
21
4
1
4
5
42
2
2
13
5
2
8
481
52
533
22
Country/State
International
Argentina
Australia
Austria
Belgium
Brazil
Bulgaria
Chile
China Mainland (including China-Taiwan and China-Macau
S.A.R.)
China - Hong Kong S.A.R.
Colombia
Croatia
Cyprus
Czech Republic
Denmark
England
Estonia
Finland
France
Germany
Greece
Hungary
India
Indonesia
Ireland
Latvia
Lithuania
Malaysia
Mexico
The Netherlands
New Zealand
Northern Ireland
Norway
Peru
Philippines
Poland
Romania
Scotland
Serbia
Singapore
Slovakia
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Turkey
United Arab Emirates
Total
Leased
Owned
Total
Number
Square Feet
Number
Square Feet
Number
Square Feet
4
48
1
4
41
3
12
37
9
21
1
2
7
3
58
1
3
32
16
4
7
89
2
6
2
2
9
10
9
6
3
5
5
11
20
7
3
2
6
4
16
10
39
6
12
4
9
6
225,334
3,188,941
3,300
202,106
2,813,952
182,911
423,507
1,077,038
841,253
709,398
36,737
51,128
157,732
161,361
2,943,169
38,861
107,952
2,109,248
724,595
291,273
350,898
3,017,245
80,988
157,153
58,710
60,543
586,687
475,341
670,006
413,959
129,083
194,321
82,256
238,250
760,901
412,214
139,722
75,217
298,848
143,922
408,288
290,726
983,659
759,793
292,792
212,285
706,321
74,605
5
2
1
1
7
—
7
1
—
—
1
2
—
—
24
—
—
12
2
—
—
—
1
3
—
—
—
8
3
—
—
—
10
—
—
—
3
—
3
—
—
—
5
—
—
2
—
—
469,748
33,845
30,000
104,391
324,655
—
258,147
20,518
—
—
36,447
43,648
—
—
1,414,823
—
—
936,486
93,226
—
—
—
37,674
158,558
—
—
—
585,885
102,199
—
—
—
433,770
—
—
—
136,378
—
345,056
—
—
—
170,707
—
—
105,487
—
—
9
50
2
5
48
3
19
38
9
21
2
4
7
3
82
1
3
44
18
4
7
89
3
9
2
2
9
18
12
6
3
5
15
11
20
7
6
2
9
4
16
10
44
6
12
6
9
6
617
1,150
28,364,529
63,067,358
103
298
5,841,648
28,313,608
720
1,448
23
695,082
3,222,786
33,300
306,497
3,138,607
182,911
681,654
1,097,556
841,253
709,398
73,184
94,776
157,732
161,361
4,357,992
38,861
107,952
3,045,734
817,821
291,273
350,898
3,017,245
118,662
315,711
58,710
60,543
586,687
1,061,226
772,205
413,959
129,083
194,321
516,026
238,250
760,901
412,214
276,100
75,217
643,904
143,922
408,288
290,726
1,154,366
759,793
292,792
317,772
706,321
74,605
34,206,177
91,380,966
The leased facilities typically have initial lease terms of five to 10 years with one or more renewal options. In addition,
some of the leases contain either a purchase option or a right of first refusal upon the sale of the property. We believe that the
space available in our facilities is adequate to meet our current needs, although future growth may require that we lease or
purchase additional real property.
Our total building utilization and total racking utilization by region as of December 31, 2019 in Records Management and
Data Management are as follows:
Region
North America
Europe(3)
Latin America
Asia
Total
Records Management(1)
Data Management(2)
Building
Utilization
Racking
Utilization
Building
Utilization
Racking
Utilization
84%
83%
87%
82%
84%
89%
91%
92%
91%
90%
80%
49%
69%
76%
73%
89%
74%
82%
82%
86%
______________________________________________________________
(1) Total building utilization and total racking utilization for Records Management includes the utilization for IGDS and
Consumer Storage.
(2) Total building utilization and total racking utilization for Data Management excludes certain data management
operations of Recall, as Recall's unit of measurement for computer media was not consistent with ours.
(3) Includes the Records Management and Data Management businesses in South Africa and United Arab Emirates.
See Note 2.m. to Notes to Consolidated Financial Statements included in this Annual Report for information regarding
our minimum annual lease commitments as a lessee.
See Schedule III—Schedule of Real Estate and Accumulated Depreciation in this Annual Report for information
regarding the cost, accumulated depreciation and encumbrances associated with our owned real estate.
_______________________________________________________________________________
The following table sets forth a summary of the lease expirations for leases in place related to our Global Data Center
Business, for which we are the lessor, as of December 31, 2019. The information set forth in the table assumes that tenants
exercise no renewal options and all early termination rights.
Year
2020
2021
2022
2023
2024
2025
2026
Thereafter
Total
Number of
Leases Expiring
610
346
232
79
30
20
2
17
1,336
Percentage of
Total Contract
Value
Annualized Rent
28.1%
23.9%
12.0%
8.7%
6.2%
6.6%
0.1%
14.4%
100.0%
Total Megawatts
Expiring
Percentage of
Total Megawatts
Expiring
Annualized Total
Contract Rent
Expiring (In
thousands)
25.3% $
18.5%
11.5%
8.7%
6.1%
7.0%
—%
22.9%
72,784
62,083
31,007
22,652
16,121
17,061
157
37,375
100.0% $
259,240
27.6
20.2
12.6
9.5
6.7
7.6
0.1
24.9
109.2
24
Item 3. Legal Proceedings.
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. In the opinion of management, no material legal proceedings are
pending to which we, or any of our properties, are subject.
Item 4. Mine Safety Disclosures.
None.
25
PART II
Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Our common stock is traded on the NYSE under the symbol "IRM". The closing price of our common stock on the
NYSE on February 7, 2020 was $31.83. As of February 7, 2020, there were 8,358 holders of record of our common stock. See
Note 12 to Notes to Consolidated Financial Statements included in this Annual Report for additional information on dividends
declared on our common stock.
At The Market (ATM) Equity Program
In October 2017, we established the At The Market (ATM) Equity Program. Sales of our common stock made pursuant to
the Distribution Agreement may be made in negotiated transactions or transactions that are deemed to be “at the market”
offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), including sales made
directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between
the applicable Agent and us. We intend to use the net proceeds from sales of our common stock pursuant to the At The Market
(ATM) Equity Program for general corporate purposes, which may include acquisitions and investments, including acquisitions
and investments in our Global Data Center Business, and repaying amounts outstanding from time to time under the Revolving
Credit Facility (as defined in Note 4 to Notes to Consolidated Financial Statements included in this Annual Report).
During the quarter and year ended December 31, 2019, there were no shares of common stock sold under the At The
Market (ATM) Equity Program. As of December 31, 2019, the remaining aggregate sale price of shares of our common stock
available for distribution under the At The Market (ATM) Equity Program was approximately $431.2 million.
Unregistered Sales of Equity Securities and Use of Proceeds
We did not sell any unregistered equity securities during the three months ended December 31, 2019, nor did we
repurchase any shares of our common stock during the three months ended December 31, 2019.
26
Item 6. Selected Financial Data.
The following selected consolidated statements of operations, balance sheets and other data have been derived from our
audited consolidated financial statements. The selected consolidated financial and operating information set forth below should
be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations"
and our Consolidated Financial Statements and the Notes thereto included elsewhere in this Annual Report.
Consolidated Statements of Operations Data:
Revenues:
Storage rental
Service
Total Revenues
Operating Expenses:
Cost of sales (excluding depreciation and
amortization)
Selling, general and administrative
Depreciation and amortization
Significant Acquisition Costs
Restructuring Charges
Intangible impairments
(Gain) Loss on disposal/write-down of property,
plant and equipment, net
Total Operating Expenses
Operating Income
Interest Expense, Net
Other Expense (Income), Net
Income from Continuing Operations Before
Provision (Benefit) for Income Taxes
Provision (Benefit) for Income Taxes
Income from Continuing Operations
Income (Loss) from Discontinued Operations, Net of
Tax
Net Income
Less: Net Income Attributable to Noncontrolling
Interests
Net Income Attributable to Iron Mountain
Incorporated
(footnotes follow)
2019(1)
2018(2)(3)(4)(5)(6)
2017(4)(5)(6)
2016(5)(6)(7)
2015(5)(6)
Year Ended December 31,
(In thousands)
$
2,681,087
$
2,622,455
$
2,377,557
$
2,142,905
$
1,837,897
1,581,497
4,262,584
1,833,315
991,664
658,201
13,293
48,597
—
(63,824)
3,481,246
781,338
419,298
33,898
328,142
59,931
268,211
104
268,315
938
1,603,306
4,225,761
1,468,021
3,845,578
1,368,548
3,511,453
1,170,079
3,007,976
1,793,954
1,006,983
639,514
50,665
—
—
1,664,825
1,555,814
1,290,025
937,180
522,376
84,901
—
3,011
868,351
452,326
131,944
—
—
797,946
345,464
47,014
—
—
(73,622)
(766)
(898)
1,941
3,417,494
3,211,527
3,007,537
2,482,390
808,267
409,648
(11,692)
410,311
42,753
367,558
(12,427)
355,131
634,051
353,645
79,429
200,977
22,962
178,015
(6,291)
171,724
503,916
310,662
44,300
148,954
45,074
103,880
3,353
107,233
525,586
263,871
98,590
163,125
37,922
125,203
—
125,203
1,198
1,611
2,409
1,962
$
267,377
$
353,933
$
170,113
$
104,824
$
123,241
27
Earnings (Losses) per Share—Basic:
Income from Continuing Operations
Total (Loss) Income from Discontinued Operations
$
$
0.93
$
— $
Net Income Attributable to Iron Mountain Incorporated $
0.93
Earnings (Losses) per Share—Diluted:
Income from Continuing Operations
Total (Loss) Income from Discontinued Operations
$
$
Net Income Attributable to Iron Mountain Incorporated $
Weighted Average Common Shares Outstanding—
Basic
Weighted Average Common Shares Outstanding—
Diluted
(footnotes follow)
Year Ended December 31,
2019(1)
2018(2)(3)(4)
2017(4)
2016(7)
2015
(In thousands, except per share data)
1.28
$
(0.04) $
$
1.24
1.28
$
(0.04) $
$
1.23
0.66
$
(0.02) $
$
0.64
0.66
$
(0.02) $
$
0.64
0.41
0.01
0.43
0.41
0.01
0.42
$
$
$
$
$
$
0.59
—
0.58
0.59
—
0.58
$
$
0.93
— $
0.93
$
286,971
285,913
265,898
246,178
210,764
287,687
286,653
266,845
247,267
212,118
Other Data:
Adjusted EBITDA(8)
Adjusted EBITDA Margin(8)
(footnotes follow)
Consolidated Balance Sheets Data:
Cash and Cash Equivalents(9)
Total Assets
2019(1)
2018(2)(3)(4)
2017(4)
2016(7)
2015
Year Ended December 31,
(In thousands)
$ 1,437,605
$ 1,424,824
$ 1,243,573
$ 1,087,288
$
920,005
33.7%
33.7%
32.3%
31.0%
30.6%
2019(1)
2018(2)(3)(4)
2017(4)
2016(7)
2015
As of December 31,
(In thousands)
$
193,555
$
165,485
$
925,699
$
236,484
$
128,381
13,816,816
11,857,218
10,975,387
9,486,800
6,350,587
Total Long-term Debt (including current portion of
Long-term Debt)
8,664,579
8,142,823
7,043,271
6,251,181
4,845,678
Redeemable Noncontrolling Interests
67,682
70,532
91,418
54,697
—
Total Equity
(footnotes follow)
1,464,227
1,862,463
2,285,134
1,936,671
528,607
_______________________________________________________________________________
(1) On January 1, 2019, we adopted Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), as amended
("ASU 2016-02"). The selected financial data above for 2019 reflects the 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
$5.8 million to stockholders' equity.
(2) On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU
2014-09"). The selected financial data above for 2018 reflects the adoption of ASU 2014-09. At January 1, 2018, we
recognized the cumulative effect of initially applying ASU 2014-09 as an adjustment to the opening balance of
(Distributions in excess of earnings) Earnings in excess of distributions, resulting in a decrease of approximately $30.2
million to stockholders' equity.
(3) The selected financial data above for 2018 includes the results of IODC from January 10, 2018.
28
(4) 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 16.8 million Euros primarily related to the years ending December
31, 2018 and 2017, as described more fully in Note 2.y. to Notes to Consolidated Financial Statements included in this
Annual Report. Based on our estimate of the amount of loss related to this matter that is both probable and estimable,
we have restated the following: (i) selling, general and administrative expenses and interest expense were increased by
approximately $11.0 million and $0.4 million, respectively, and the provision for income taxes was decreased by
approximately $2.0 million for the year ended December 31, 2018 and (ii) selling, general and administrative expenses
and interest expense were increased by approximately $16.6 million and $0.1 million, respectively, and the provision
for income taxes was decreased by approximately $3.0 million for the year ended December 31, 2017.
(5) Beginning in the fourth quarter of 2019, we present Significant Acquisition Costs (as defined in Note 2.x. to Notes to
Consolidated Financial Statements included in this Annual Report) as a separate line on our Consolidated Statements
of Operations. Previously, these costs were included within Cost of sales (excluding depreciation and amortization)
and Selling, general and administrative expense. All prior periods are now presented to conform to this presentation.
This change in presentation resulted in a decrease in Cost of sales (excluding depreciation and amortization) of
approximately $7.6 million, $20.5 million, $12.0 million and $0.0 million for the years ended December 31, 2018,
2017, 2016 and 2015, respectively, and a decrease to Selling, general and administrative expense of approximately
$43.0 million, $64.4 million, $120.0 million and $47.0 million for the years ended December 31, 2018, 2017, 2016
and 2015, respectively. See Note 2.x. to Notes to Consolidated Financial Statements included in this Annual Report for
additional information on this change in presentation.
(6) Beginning in 2019, we 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 in our Consolidated Statements of Operations. Such
amounts are presented gross of tax with any tax impact presented within Provision (benefit) for income taxes. All prior
periods are now presented to conform to this presentation. Previously, we classified gains on sale of real estate, net of
tax, as a separate line on our Consolidated Statements of Operations and excluded such amounts from our reported
operating income. We presented such amounts net of tax as these gains were presented below the Provision (benefit)
for income taxes in our Consolidated Statements of Operations. This change in presentation resulted in an increase in
(Gain) loss on disposal/write-down of property, plant and equipment, net of approximately $63.8 million, $1.6 million,
$2.3 million and $1.1 million for the years ended December 31, 2018, 2017, 2016 and 2015, respectively, and an
increase in Provision (benefit) for income taxes of approximately $8.5 million, $0.0 million, $0.1 million and $0.2
million for the years ended December 31, 2018, 2017, 2016 and 2015, respectively. See Note 2.x. to Notes to
Consolidated Financial Statements included in this Annual Report for additional information on this change in
presentation.
(7) The selected financial data above for 2016 includes the results of Recall from May 2, 2016.
(8) For 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, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations—Non-GAAP Measures" included in this Annual Report.
(9) Includes restricted cash of $4.9 million, $15.1 million and $22.2 million as of December 31, 2019, 2018 and 2017,
respectively.
29
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with "Item 6. Selected Financial Data" and the Consolidated
Financial Statements and Notes thereto and the other financial and operating information included elsewhere in this Annual
Report.
This discussion contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform
Act of 1995 and in other securities laws. See "Cautionary Note Regarding Forward-Looking Statements" on page iii of this
Annual Report and "Item 1A. Risk Factors" beginning on page 7 of this Annual Report.
Overview
Project Summit
In October 2019, we announced Project Summit. Project Summit focuses on simplifying our global structure by
combining our core records and information management operations under one global leader and rebalancing our resources,
streamlining managerial structures and leveraging our global and regional customer facing resources. We are also implementing
systems and process changes designed to make our organization more agile and dynamic, streamline our organization and
reallocate our resources to better align with our strategic goals as part of Project Summit. As a result of the program, we expect
to reduce the number of positions at vice president and above by approximately 45%. The total program is expected to have
reduced our total managerial and administrative workforce by approximately 700 positions by the end of 2021.
The activities associated with Project Summit began in the fourth quarter of 2019 and are expected to be substantially
complete by the end of 2021. We expect the total program benefits associated with Project Summit to be fully realized by the
end of 2022. We estimate that Project Summit will improve Adjusted EBITDA (as defined below) by approximately $200.0
million by the end of 2022. We expect Project Summit to improve Adjusted EBITDA by approximately $80.0 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. 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 estimate that the implementation of Project Summit will result in total costs (including operating expenditures
("Restructuring Charges") and capital expenditures) of approximately $240.0 million. During the fourth quarter of 2019, we
incurred approximately $48.6 million of costs related to Project Summit, which were comprised entirely of Restructuring
Charges primarily related to employee severance costs and professional fees.
During the fourth quarter of 2019, as a result of the realignment of our global managerial structure and changes to our
internal financial reporting associated with Project Summit, we reassessed the composition of our reportable operating
segments and reporting units. As a result of the managerial structure changes associated with Project Summit, we now have the
following reportable operating segments: (i) Global RIM Business (which consists of the former North American Records and
Information Management Business (excluding our technology escrow services business, which is now included as a component
of our Corporate and Other Business segment), North American Data Management Business, Western European Business and
Other International Business); (ii) Global Data Center Business; and (iii) Corporate and Other Business (which includes our
Adjacent Businesses and our technology escrow services business). As a result of these changes, previously reported segment
information has been restated to conform to the current presentation.
30
IODC Acquisition
On January 10, 2018, we completed the IODC Transaction and at the closing of the IODC Transaction, we paid
approximately $1,347.0 million. In February 2019, we paid approximately $31.0 million in additional purchase price associated
with the execution of customer contracts from the closing through the one-year anniversary of the IODC Transaction. See Note
6 to Notes to Consolidated Financial Statements included in this Annual Report for unaudited pro forma results of operations
for us and IODC for the years ended December 31, 2018 and 2017, as if the IODC Transaction was completed on January 1,
2017.
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 the MakeSpace JV (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 13 to Notes to Consolidated Financial Statements included in this Annual Report, the divestment of
the IM Consumer Storage Assets in the Consumer Storage Transaction does not meet the criteria to be reported as 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 Global RIM Business segment. We recognized approximately $22.5 million of
revenue for the year ended December 31, 2019 associated with the MakeSpace Agreement.
As a result of the Consumer Storage Transaction, we recorded a gain on sale of approximately $4.2 million to Other
expense (income), net, in the first quarter of 2019, representing the excess of the fair value of the consideration received over
the sum of (i) carrying value of our consumer storage operations and (ii) the Cash Contribution.
b. IMFS Divestment
On September 28, 2018, Iron Mountain Fulfillment Services, Inc. ("IMFS"), a consolidated subsidiary of IMI that
operated our fulfillment services business in the United States, sold substantially all of its assets for total consideration of
approximately $3.0 million (the "IMFS Divestment"). 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. Accordingly, the revenues and
expenses associated with this business are presented as a component of Income (loss) from continuing operations in our
Consolidated Statements of Operations for the years ended December 31, 2018 and 2017 and the cash flows associated with
this business are presented as a component of cash flows from continuing operations in our Consolidated Statements of Cash
Flows for the years ended December 31, 2018 and 2017 through the sale date. The fair value of the consideration received as a
result of the IMFS Divestment approximated the carrying value of IMFS and, therefore, during the third quarter of 2018, we
recorded an insignificant loss in connection with the IMFS Divestment to Other (income) expense, net. Our IMFS business
represented approximately $20.2 million and $22.3 million of total revenues for the years ended December 2018 and 2017,
respectively. Our IMFS business represented approximately $1.6 million and $2.1 million of total Income (loss) from
continuing operations for the years ended December 31, 2018 and 2017, respectively. Revenues for the year ended December
31, 2018 reflect the impact of the adoption of ASU 2014-09 whereas revenues for the year ended December 31, 2017 do not.
31
c. Russia and Ukraine Divestment
See Note 13 to Notes to Consolidated Financial Statements included in this Annual Report for details regarding the
divestment of our records and information management operations in Russia and Ukraine to OSG Records Management
(Europe) Limited (“OSG”).
In connection with the divestment, we became a holder of 25% of the equity interest in OSG. On January 9, 2020, we
acquired the remaining 75% equity interest in OSG. See Note 15 to Notes to Consolidated Financial Statements included in this
Annual Report for additional information on the acquisition of OSG.
Significant Acquisition Costs
Our significant acquisition costs represent operating expenditures associated with (1) our acquisition of Recall that we
completed on May 2, 2016 (the "Recall Transaction"), including: (i) advisory and professional fees to complete the Recall
Transaction; (ii) costs associated with the Divestments (as defined in Note 13 to Notes to Consolidated Financial Statements
included in this Annual Report) required in connection with receipt of regulatory approvals (including transitional services);
and (iii) costs to integrate Recall with our existing operations, including moving, severance, facility upgrade, REIT integration
and system upgrade costs, as well as certain costs associated with our shared service center initiative for our finance, human
resources and information technology functions; and (2) the advisory and professional fees to complete the IODC Transaction
(collectively, "Significant Acquisition Costs").
Total acquisition and integration expenditures associated with the Recall Transaction and the IODC Transaction were
approximately $403.8 million, the substantial majority of which was incurred prior to the end of 2018. From January 1, 2015
through December 31, 2019, we incurred cumulative operating and capital expenditures associated with the Recall Transaction
and the IODC Transaction of $327.8 million of Significant Acquisition Costs and $76.0 million of capital expenditures.
Immaterial Restatement
In June 2019, we received a notification of assessment from tax and customs authorities in the Netherlands related to a
VAT liability of approximately 16.8 million 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,
including interest and penalties, and have reflected this reserve through an immaterial restatement of our consolidated financial
statements. As a result, certain line items in our Consolidated Statements of Operations for the years ended December 31, 2018
and 2017 have been restated to reflect the immaterial restatement. See Note 2.y. to Notes to Consolidated Financial Statements
included in this Annual Report for additional information regarding the effect of the immaterial restatement on certain line
items in our Consolidated Statements of Operations for the years ended December 31, 2018 and 2017.
Adoption of ASU 2014-09, Revenue from Contracts with Customers
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09. We adopted ASU 2014-09 as of
January 1, 2018 using the modified retrospective method for all of our customer contracts, whereby the cumulative effect of
applying ASU 2014-09 is recognized at the date of initial application. See Note 2.l. to Notes to Consolidated Financial
Statements included in this Annual Report for information on the impact to opening balance of (Distributions in excess of
earnings) Earnings in excess of distributions on our Consolidated Balance Sheets.
As a result of the adoption of ASU 2014-09, Adjusted EBITDA for the year ended December 31, 2018 increased by
approximately $25.3 million, compared to the prior year period. The adoption of ASU 2014-09 did not have a material impact
on Adjusted EPS, FFO (Nareit) or FFO (Normalized) for the year ended December 31, 2018 compared to the prior year period.
The revenues for the year ended December 31, 2018 reflect a net $14.2 million, reclassification of certain components of
storage rental revenues to service revenues associated with the adoption of ASU 2014-09.
32
Changes Impacting Comparability with Prior Year
In 2019, we made the following changes which impacted the results of fiscal years 2018 and 2017 and the accompanying
management discussion and analysis that was presented in previous filings: (i) as a result of the changes associated with Project
Summit, in the fourth quarter of 2019, we created a newly formed Global RIM Business reportable operating segment, which is
comprised of the majority of our former North American Records and Information Management Business, North American
Data Management Business, Western European Business and Other International Business reportable operating segments; (ii)
in the first quarter of 2019, we began to 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, gross of tax (with any tax impact presented within
Provision (benefit) for income taxes); and (iii) in the fourth quarter of 2019, we began to present Significant Acquisition Costs
as its own line item within Operating Expenses in our Consolidated Statements of Operations, rather than as components of
Selling, general and administrative expenses and Cost of sales. As a result of these changes, we have included management
discussion and analysis of 2018 compared to 2017 for these three items under the "Segment Analysis", "Gain on Disposal/
Write-Down of Property, Plant and Equipment, Net" and "Significant Acquisition Costs" sections in this Item 7. All other
management discussion and analysis related to 2018 and 2017 has been excluded, as there have been no material changes to
what was included in previous filings. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2018 for a comparison of 2018 to 2017.
General
Our revenues consist of storage rental revenues as well as service revenues and are reflected net of sales and value-added
taxes. Storage rental revenues, which are considered a key driver of financial performance for the storage and information
management services industry, consist primarily of recurring periodic rental charges related to the storage of materials or data
(generally on a per unit basis) that are typically retained by customers for many years, technology escrow services that protect
and manage source code 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 subsequent sale of shredded paper for recycling, 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.
Trends in facility occupancy costs are impacted by the total number of facilities we occupy, the mix of properties we own
versus properties we occupy under leases, fluctuations in per square foot occupancy costs, and the levels of utilization of these
properties. Trends in total wages and benefits in dollars and as a percentage of total consolidated revenue are influenced by
changes in headcount and compensation levels, achievement of incentive compensation targets, workforce productivity and
variability in costs associated with medical insurance and workers' compensation.
The expansion of our international businesses has impacted the major cost of sales components and selling, general and
administrative expenses. Our international operations are more labor intensive relative to revenue than our operations in North
America and, therefore, labor costs are a higher percentage of international operational 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 operations, which may result in an increase in selling, general and administrative expenses as a percentage of
consolidated revenue as our international operations become a larger percentage of our consolidated results.
Our 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.
33
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 and the 2017 results at the 2018 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 Year Ended
December 31,
Average Exchange
Rates for the
Year Ended
December 31,
2019
2018
2019
2018
Percentage
Strengthening /
(Weakening) of
Foreign Currency
3.4%
2.6%
6.4%
5.7%
7.4%
3.7% $
2.9% $
6.6% $
5.9% $
7.3% $
0.695
0.254
1.277
0.754
1.120
$
$
$
$
$
0.748
0.276
1.335
0.772
1.181
(7.1)%
(8.0)%
(4.3)%
(2.3)%
(5.2)%
Percentage of
United States
Dollar-Reported Revenue
for the Year Ended
December 31,
Average Exchange
Rates for the
Year Ended
December 31,
2018
2017
2018
2017
Percentage
Strengthening /
(Weakening) of
Foreign Currency
3.7%
2.9%
6.6%
5.9%
7.3%
4.1% $
3.6% $
6.4% $
6.3% $
6.7% $
0.748
0.276
1.335
0.772
1.181
$
$
$
$
$
0.767
0.313
1.288
0.771
1.130
(2.5)%
(11.8)%
3.6 %
0.1 %
4.5 %
Australian dollar
Brazilian real
British pound sterling
Canadian dollar
Euro
Australian dollar
Brazilian real
British pound sterling
Canadian dollar
Euro
The percentage of United States dollar-reported revenues for all other foreign currencies was 12.7%, 12.6% and 12.8%
for the years ended December 31, 2019, 2018 and 2017, respectively.
34
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), net (which includes foreign currency transaction (gains) losses,
net); (4) Significant Acquisition Costs; and (5) Restructuring Charges. Adjusted EBITDA Margin is calculated by dividing
Adjusted EBITDA by total revenues. We use multiples of current or projected Adjusted EBITDA in conjunction with our
discounted cash flow models to determine our estimated overall enterprise valuation and to evaluate acquisition targets. We
believe Adjusted EBITDA and Adjusted EBITDA Margin provide our current and potential investors with relevant and useful
information regarding our ability to generate cash flows to support business investment. These measures are an integral part of
the internal reporting system we use to assess and evaluate the operating performance of our business.
Adjusted EBITDA excludes both interest expense, net and the provision (benefit) for income taxes. These expenses are
associated with our capitalization and tax structures, which we do not consider when evaluating the operating profitability of
our core operations. Finally, Adjusted EBITDA does not include depreciation and amortization expenses, in order to eliminate
the impact of capital investments, which we evaluate by comparing capital expenditures to incremental revenue generated and
as a percentage of total revenues. Adjusted EBITDA and Adjusted EBITDA Margin should be considered in addition to, but not
as a substitute for, other measures of financial performance reported in accordance with accounting principles generally
accepted in the United States of America ("GAAP"), such as operating income, income (loss) from continuing operations, net
income (loss) or cash flows from operating activities from continuing operations (as determined in accordance with GAAP).
Reconciliation of Income (Loss) from Continuing Operations to Adjusted EBITDA (in thousands):
Income (Loss) from Continuing Operations
Add/(Deduct):
Provision (Benefit) for Income Taxes
Other Expense (Income), Net
Interest Expense, Net
(Gain) Loss on disposal/write-down of property,
plant and equipment, net
Depreciation and amortization
Significant Acquisition Costs
Restructuring Charges
Intangible impairments
Adjusted EBITDA
Year Ended December 31,
2019
268,211
$
2018
367,558
$
2017
178,015
$
2016
103,880
$
2015
125,203
$
59,931
33,898
419,298
(63,824)
658,201
13,293
48,597
—
42,753
(11,692)
409,648
(73,622)
639,514
50,665
—
—
22,962
79,429
45,074
44,300
37,922
98,590
353,645
310,662
263,871
(766)
522,376
84,901
—
3,011
(898)
452,326
131,944
—
—
1,941
345,464
47,014
—
—
$ 1,437,605
$ 1,424,824
$ 1,243,573
$ 1,087,288
$
920,005
35
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), net (which includes foreign currency transaction (gains) losses, net); (4) Significant Acquisition Costs; (5)
Restructuring Charges; and (6) the tax impact of reconciling items and discrete tax items. Adjusted EPS includes income (loss)
attributable to noncontrolling interests. We do not believe these excluded items to be indicative of our ongoing operating
results, and they are not considered when we are forecasting our future results. We believe Adjusted EPS is of value to our
current and potential investors when comparing our results from past, present and future periods.
Reconciliation of Reported EPS—Fully Diluted from Continuing Operations to Adjusted EPS—Fully Diluted from Continuing
Operations:
Year Ended December 31,
2019
2018
2017
2016
2015
Reported EPS—Fully Diluted from Continuing Operations
$
0.93
$
1.28
$
0.66
$
0.41
$
0.59
Add/(Deduct):
Income (Loss) Attributable to Noncontrolling Interests
Other Expense (Income), Net
(Gain) Loss on disposal/write-down of property, plant and
equipment, net
Significant Acquisition Costs
Restructuring Charges
Intangible impairments
Tax Impact of Reconciling Items and Discrete Tax Items(1)
Adjusted EPS—Fully Diluted from Continuing Operations(2) $
—
0.12
(0.22)
0.05
0.17
—
(0.02)
1.02
$
—
(0.04)
(0.25)
0.18
—
—
(0.09)
1.07
$
0.01
0.30
(0.01)
0.32
—
0.01
(0.19)
1.10
0.01
0.18
—
0.53
—
—
0.46
0.01
0.22
—
—
(0.06)
1.07
$
—
(0.07)
1.21
$
_______________________________________________________________________________
(1) The difference between our effective tax rate and our structural tax rate (or adjusted effective tax rate) for the years
ended December 31, 2019, 2018, 2017, 2016 and 2015 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 years ended December 31, 2019, 2018, 2017,
2016 and 2015 was 18.2%, 18.2%, 19.7%, 18.5% and 16.8%, respectively.
(2) Columns may not foot due to rounding.
36
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), net (which includes foreign currency
transaction (gains) losses, net); (4) real estate financing lease depreciation; (5) Significant Acquisition Costs; (6) Restructuring
Charges; (7) the tax impact of reconciling items and discrete tax items; (8) (income) loss from discontinued operations, net of
tax; and (9) loss (gain) on sale of discontinued operations, net of tax.
Reconciliation of Net Income (Loss) to FFO (Nareit) and FFO (Normalized) (in thousands):
Net Income (Loss)
Add/(Deduct):
Real Estate Depreciation(1)
Gain on Sale of Real Estate, Net of Tax(2)
Data Center Lease-Based Intangible Assets
Amortization(3)
FFO (Nareit)
Add/(Deduct):
Loss (Gain) on disposal/write-down of property,
plant and equipment (excluding real estate), net
Other Expense (Income), Net(4)
Real Estate Financing Lease Depreciation
Significant Acquisition Costs
Restructuring Charges
Intangible impairments
Tax Impact of Reconciling Items and Discrete
Tax Items(5)
(Income) Loss from Discontinued Operations,
Net of Tax(6)
FFO (Normalized)
Year Ended December 31,
2019
$ 268,315
2018
$ 355,131
2017
$ 171,724
2016
$ 107,233
2015
$ 125,203
303,415
(99,194)
284,804
(55,328)
247,792
(1,565)
218,644
(2,180)
171,640
(850)
46,696
519,232
43,061
627,668
643
—
—
418,594
323,697
295,993
40,763
33,898
13,364
13,293
48,597
—
(9,818)
(11,692)
13,650
50,665
—
—
799
79,429
11,495
84,901
—
3,011
1,412
44,300
7,614
131,944
—
—
3,000
98,590
7,160
47,014
—
—
(10,208)
(34,131)
(49,865)
(15,019)
(14,480)
(104)
$ 658,835
12,427
6,291
$ 648,769
$ 554,655
(3,353)
$ 490,595
—
$ 437,277
_______________________________________________________________________________
(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) Tax expense associated with the gain on sale of real estate for the years ended December 31, 2019, 2018, 2017, 2016
and 2015 was $5.4 million, $8.5 million, $0.0 million, $0.1 million and $0.2 million, respectively.
(3) Includes amortization expense for Data Center In-Place Lease Intangible Assets and Data Center Tenant Relationship
Intangible Assets as defined in Note 2.i. to Notes to Consolidated Financial Statements included in this Annual Report.
(4) Includes foreign currency transaction losses (gains), net of $24.9 million, $(15.6) million, $43.2 million, $20.4
million, and $70.9 million for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively. See Note
2.u. to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding
the components of Other expense (income), net.
37
(5) Represents the tax impact of (i) the reconciling items above, which impacts our reported income (loss) from
continuing operations before provision (benefit) for income taxes but has 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 $(1.6) million, $(27.8) million, $(38.3) million, $(2.4) million, and $(14.6) million for
the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.
(6) Net of tax provision (benefit) of $0.0 million, $(0.1) million, $(1.8) million, $0.8 million, and $0.0 million for the
years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our 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
Storage rental and service revenues are recognized in the month the respective storage rental or service is provided, and
customers are generally billed on a monthly basis on contractually agreed-upon terms. Amounts related to future storage rental
or prepaid service contracts for customers where storage rental fees or services are billed in advance are accounted for as
deferred revenue and recognized ratably over the period the applicable storage rental or service is provided or performed.
Revenues from the sales of products, which are included as a component of service revenues, are recognized when products are
shipped and title has passed to the customer. Revenues from the sales of products, which represented less than 2% of
consolidated revenues for the year ended December 31, 2019, have historically not been significant. The performance
obligation is a series of distinct services (as determined for purposes of ASU 2014-09, a “series”) that have the same pattern of
transfer to the customer that is satisfied over time. For those contracts that qualify as a series, we have a right to consideration
from the customer in an amount that corresponds directly with the value of the underlying performance obligation transferred
to the customer to date. This concept is known as "right to invoice" and we are applying the "right to invoice" practical
expedient to all revenues, with the exception of storage revenues in our Global Data Center Business.
For all of our businesses, with the exception of the storage component of our Global Data Center Business, each
purchasing decision is fully in the control of the customer and, therefore, consideration beyond the current reporting period is
variable and allocated to the specific period, which is consistent with the practical expedient described above. Our Global Data
Center Business features storage rental provided to the customer at contractually specified rates over a fixed contractual period.
The storage rental revenue related to the storage component of our Global Data Center Business is recognized on a straight-line
basis over the contract term. The revenue related to the service component of our Global Data Center Business is recognized in
the period the data center access or related services are provided.
The costs associated with the initial movement of customer records into physical storage and certain commissions are
considered costs to obtain or fulfill customer contracts (“Contract Fulfillment Costs”). See Note 2.l. to Notes to Consolidated
Financial Statements included in this Annual Report for information on each of the Contract Fulfillment Costs recognized
under ASU 2014-09.
Accounting for Acquisitions
Part of our growth strategy has been to acquire businesses. The purchase price of each acquisition has been determined
after due diligence of the target business, market research, strategic planning and the forecasting of expected future results and
synergies. Estimated future results and expected synergies are subject to revisions as we integrate each acquisition and attempt
to leverage resources.
38
During the third quarter of 2017, we adopted ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the
Definition of a Business ("ASU 2017-01"). ASU 2017-01 provides guidance for evaluating whether transactions should be
accounted for as acquisitions of assets or businesses. The guidance provides a screen to determine when an integrated set of
assets and activities does not qualify to be a business. The screen requires that when substantially all of the fair value of the
gross assets acquired is concentrated in an identifiable asset or a group of similar identifiable assets, the acquisition should not
be accounted for as the acquisition of a business, but rather the acquisition of an asset. If an acquisition is determined to be a
business, goodwill is recognized as part of purchase accounting, whereas with the acquisition of an asset there is no goodwill
recognized.
Each acquisition has been accounted for using the acquisition method of accounting as defined under the applicable
accounting standards at the date of each acquisition. Accounting for acquisitions of a business has resulted in the capitalization
of the cost in excess of the estimated fair value of the net assets acquired in each of these acquisitions as goodwill. We estimate
the fair values of the assets acquired in each acquisition as of the date of acquisition and these estimates are subject to
adjustment based on the final assessments of the fair value of intangible assets (primarily customer relationship and data center
lease-based intangible assets), property, plant and equipment (primarily building, building improvements, leasehold
improvements, data center infrastructure and racking structures), operating leases, contingencies and income taxes (primarily
deferred income taxes). We complete these assessments within one year of the date of acquisition, as we acquire additional
information impacting our estimates as of the acquisition date. See Note 6 to Notes to Consolidated Financial Statements
included in this Annual Report for a description of recent acquisitions.
Determining the fair values of the net assets acquired requires management's judgment and often involves the use of
assumptions with respect to future cash inflows and outflows, discount rates and market data, among other items. As it relates
to our data center acquisitions, the fair values of the net assets acquired requires management's judgment and often involves the
use of assumptions with respect to (i) certain economic costs (as described more fully in Note 2.i. to Notes to Consolidated
Financial Statements included in this Annual Report) avoided by acquiring a data center operation with active tenants that
would have otherwise been incurred if the data center operation was purchased vacant, (ii) market rental rates and (iii)
expectations of lease renewals and extensions. Due to the inherent uncertainty of future events, actual values of net assets
acquired could be different from our estimated fair values and could have a material impact on our financial statements.
Of the net assets acquired in our acquisitions, the fair value of owned buildings, including building improvements,
customer relationship and data center lease-based intangible assets, racking structures and operating leases are generally the
most common and most significant. For significant acquisitions or acquisitions involving new markets or new products, we
generally use third parties to assist us in estimating the fair value of owned buildings, including building improvements,
customer relationship and lease-based intangible assets and market rental rates for acquired operating leases. For acquisitions
that are not significant or do not involve new markets or new products, we generally use third parties to assist us in estimating
the fair value of acquired owned buildings, including building improvements, and market rental rates for acquired operating
leases. When not using third party appraisals of the fair value of acquired net assets, the fair value of acquired customer
relationship intangible assets, above and below market in-place operating leases, and racking structures is determined
internally. The fair value of acquired racking structures is determined internally by taking current estimated replacement cost at
the date of acquisition for the quantity of racking structures acquired, discounted to take into account the quality (e.g. age,
material and type) of the racking structures. We use discounted cash flow models to determine the fair value of customer
relationship assets, which requires a significant amount of judgment by management, including estimating expected lives of the
relationships, expected future cash flows and discount rates. We determine the fair value of tangible data center assets using an
estimated replacement cost at the date of acquisition, then discounting for age, economic and functional obsolescence.
Our estimates of fair value are based upon assumptions believed to be reasonable at that time but which are inherently
uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may
occur, which may affect the accuracy of such assumptions. Total property, plant and equipment acquired in our 2019
acquisitions was approximately $5.4 million.
39
Impairment of Tangible and Intangible Assets
Assets subject to depreciation or amortization: We review long-lived assets and all finite-lived intangible assets for
impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.
Examples of events or circumstances that may be indicative of impairment include, but are not limited to:
• A significant decrease in the market price of an asset;
• A significant change in the extent or manner in which a long-lived asset is being used or in its physical condition;
• A significant adverse change in legal factors or in the business climate that could affect the value of the asset;
• An accumulation of costs significantly greater than the amount originally expected for the acquisition or construction
of an asset;
• A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection
or forecast that demonstrates continuing losses associated with the use of a long-lived asset; and
• A current expectation that, more likely than not, an asset will be sold or otherwise disposed of significantly before the
end of its previously estimated useful life.
If events indicate the carrying value of such assets may not be recoverable, recoverability of these assets is determined by
comparing the sum of the forecasted undiscounted net cash flows of the operation to which the assets relate to their carrying
amount. The operations are generally distinguished by the business segment and geographic region in which they operate. If it
is determined that we are unable to recover the carrying amount of the assets, the long-lived assets are written down, on a pro
rata basis, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the
nature of the assets.
Goodwill and other indefinite-lived intangible assets not subject to amortization: Goodwill and intangible assets with
indefinite lives are not amortized but are reviewed annually for impairment, or more frequently if impairment indicators arise.
Other than goodwill, we currently have no intangible assets that have indefinite lives and which are not amortized.
We have selected October 1 as our annual goodwill impairment review date. We have performed our annual goodwill
impairment review as of October 1, 2019, 2018 and 2017. We concluded that as of October 1, 2019 and October 1, 2018,
goodwill was not impaired. As of October 1, 2017, we determined that the fair value of the Consumer Storage reporting unit
was less than its carrying value and, therefore, we recorded a $3.0 million impairment charge, which represented a full write-off
of all goodwill associated with this reporting unit. We concluded that the goodwill associated with each of our other reporting
units was not impaired as of October 1, 2017.
Our reporting units at which level we performed our goodwill impairment analysis as of October 1, 2019 were as follows:
(1) North American Records and Information Management; (2) North American Data Management; (3) Fine Arts; (4)
Entertainment Services; (5) Western Europe; (6) Northern/Eastern Europe and Middle East and India ("NEE and MEI"); (7)
Latin America; (8) Australia, New Zealand and South Africa ("ANZ SA"); (9) Asia; and (10) Global Data Center. See Note 2.h.
to Notes to Consolidated Financial Statements included in this Annual Report for a description of our reporting units.
40
Based on our goodwill impairment analysis as of October 1, 2019, our reporting units that had estimated fair values that
exceeded their carrying values by greater than 20% represent approximately $4,023.1 million, or 89.7%, of our consolidated
goodwill balance at December 31, 2019. Our Global Data Center and Fine Arts reporting units had estimated fair values that
exceeded their carrying values by less than 20%. These reporting units represent approximately $462.1 million, or 10.3%, of
our consolidated goodwill balance at December 31, 2019. The following is a summary of the Global Data Center and Fine Arts
reporting units, including goodwill balances (in thousands), percentage by which the fair value of these reporting units
exceeded its carrying value, and certain key assumptions used by us in determining the fair value of the reporting unit as of
October 1, 2019:
Percentage by
which the fair
value of the
reporting unit
exceeded the
reporting unit
carrying value as
of October 1, 2019
5.0%
9.5%
Key assumptions in the fair value of reporting unit
measurement as of October 1, 2019
Average
annual
contribution
margin used
in discounted
cash flow
45.5%
15.3%
Average
annual capital
expenditures
as percentage
of revenue(1)
25.4%
6.2%
Discount
rate
8.0%
12.0%
Terminal
growth
rate(2)
3.0%
2.0%
Goodwill
balance at
October 1,
2019
421,032
$
37,479
Reporting Unit
Global Data Center
Fine Arts
_______________________________________________________________________________
(1) For purposes of our goodwill impairment analysis, the term "capital expenditures" includes both growth investment
and recurring capital expenditures.
(2) Terminal growth rates are applied in year 10 of our discounted cash flow analysis.
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 (the "Market Approach"). There are inherent
uncertainties and judgments involved when determining the fair value of the reporting units for purposes of our annual
goodwill impairment testing. The following includes supplemental information to the table above for those reporting units
where the estimated fair values exceeded their carrying values by less than 20% as of October 1, 2019. 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 including, but 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.
Our Global Data Center Business footprint spanned nine markets in the United States: Denver, Colorado; Kansas City,
Missouri; Boston, Massachusetts; Boyers, Pennsylvania; Manassas, Virginia; Edison, New Jersey; Columbus, Ohio; and
Phoenix and Scottsdale, Arizona and four international markets: Amsterdam, London, and Singapore, with land held for
development in Frankfurt. We provide mission-critical data centers that are designed and operated to protect and ensure the
continued operation of IT infrastructure for our customers. Data centers are highly specialized and secure assets that serve as
centralized repositories of server, storage and network equipment. They are capital intensive and designed to provide the space,
power, cooling and network connectivity necessary to efficiently operate mission-critical IT equipment. The demand for data
center infrastructure is being driven by many factors, but most importantly by significant growth in data as well as an increased
demand for outsourcing. In order to attract and retain customers, as well as sustain growth in our existing and new markets, we
must have the capability to tailor our facilities and invest capital to meet the customers’ needs. Our estimate of fair value
reflects the expected growth in each of our data center markets along with the corresponding capital investments required to
meet demand. The business is primarily comprised of acquisitions completed in 2018 and late 2017; therefore, we would expect
that the fair value of this reporting unit will closely approximate its carrying value.
Our Fine Arts business operates in a growing, but fragmented, industry marked by increasing international interest and
changes in purchasing habits by collectors and museums. We believe the increase in contemporary art as a focus for collectors
will result in increasing storage needs, while the increase in auction "turnover" (the rate at which catalogs, collections and
individual pieces are made available for auction) has heightened the need for transportation, shipping, and related services.
Taken together, we believe these factors will result in continued growth of the fine art storage industry. The fine arts storage
market continues to change and expand, and the assumptions used when determining the fair value of the Fine Arts reporting
unit reflect this growth potential and the capital needs required to respond to the expansion opportunities. The Fine Arts
reporting unit is primarily composed of businesses we acquired in 2018 and 2015; therefore, we would expect the fair value of
this reporting unit to closely approximate its carrying value.
41
Key factors that could reasonably be expected to have a negative impact on the estimated fair value of these reporting
units and potentially result in impairment charges include, but are not limited to: (i) a deterioration in general economic
conditions, (ii) significant adverse changes in regulatory factors or in the business climate, and (iii) adverse actions or
assessment by regulators, all of which could result in adverse changes to the key assumptions used in valuing the reporting
units. The inability to meet the assumptions used in the Discounted Cash Flow Model and Market Approach for each of the
reporting units, or future adverse market conditions not currently known, could lead to a fair value that is less than the carrying
value in any one of our reporting units.
As described more above, during the fourth quarter of 2019, as a result of the realignment of our global managerial
structure and changes to our internal financial reporting associated with Project Summit, we reassessed the composition of our
reportable operating segments (see Note 9 to Notes to Consolidated Financial Statements included in this Annual Report for a
description of our reportable operating segments) and reporting units. Subsequent to the implementation of the managerial
structure changes and changes to our internal financial reporting associated with Project Summit, we now have the following
reportable operating segments: (i) Global RIM Business (which consists of the former North American Records and
Information Management Business (excluding our technology escrow services business, which is now included as a component
of our Corporate and Other Business segment), North American Data Management Business, Western European Business and
Other International Business); (ii) Global Data Center Business; and (iii) Corporate and Other Business (which includes our
Adjacent Businesses and our technology escrow services business). See Note 9 for disclosure of our reportable operating
segments.
As a result of the realignment of our global managerial structure and changes to our internal financial reporting associated
with Project Summit, we note the following changes to our reporting units: (1) our former North American Records and
Information Management (excluding our technology escrow services business) and North American Data Management
reporting units are now being managed as our “North America RIM” reporting unit; (2) our former Western Europe and NEE
and MEI reporting units (excluding India) and our business in Africa (which was which was previously managed as a
component of our former ANZ SA reporting unit) is now being managed together as our “Europe RIM” reporting unit; (3) our
business in India (which was previously managed as a component of our former NEE and MEI reporting unit) is now being
managed in conjunction with our businesses in Asia as our “Asia RIM” reporting unit; (4) our former ANZ SA reporting unit
will no longer include South Africa and will be referred to as our “Australia and New Zealand RIM” (or “ANZ RIM”) reporting
unit; and (5) our technology escrow services business is now being managed separately as our “Technology Escrow Services”
reporting unit. There were no changes to our Global Data Center, Fine Arts, Entertainment Services and Latin America RIM
reporting units as a result of the realignment of our global managerial structure and changes to our internal financial reporting
associated with Project Summit.
We concluded that the goodwill associated with our newly formed (1) North America RIM, (2) Europe RIM, (3) ANZ
RIM, (4) Asia RIM and (5) Technology Escrow Services reporting units were not impaired following the changes in reporting
units described above.
At December 31, 2019, no factors were identified that would alter the conclusions of our October 1, 2019 goodwill
impairment analysis. In making this assessment, we considered a number of factors including operating results, business plans,
anticipated future cash flows, transactions and marketplace data. There are inherent uncertainties related to these factors and
our judgment in applying them to the analysis of goodwill impairment.
Reporting unit valuations have generally been determined using a combined approach based on the Discounted Cash
Flow Model and Market Approach. The Discounted Cash Flow Model incorporates significant assumptions including future
revenue growth rates, operating margins, discount rates and capital expenditures. The Market Approach requires us to make
assumptions related to Adjusted EBITDA multiples. Changes in economic and operating conditions impacting these
assumptions or changes in multiples could result in goodwill impairments in future periods. In conjunction with our annual
goodwill impairment reviews, we reconcile the sum of the valuations of all of our reporting units to our market capitalization as
of such dates.
42
Although we believe we have sufficient historical and projected information available to us to test for goodwill
impairment, it is possible that actual results could differ from the estimates used in our impairment tests. Of the key
assumptions that impact the goodwill impairment test, the expected future cash flows and discount rate are among the most
sensitive and are considered to be critical assumptions, as changes to these estimates could have an effect on the estimated fair
value of each of our reporting units. We have assessed the sensitivity of these assumptions on each of our reporting units as of
October 1, 2019. With respect to the North American Records and Information Management, North American Data
Management, Entertainment Services, Western Europe, NEE and MEI, Latin America, ANZ SA and Asia reporting units as of
October 1, 2019, we noted that, based on the estimated fair value of these reporting units determined as of October 1, 2019, (i)
a hypothetical decrease of 10% in the expected annual future cash flows of these reporting units, with all other assumptions
unchanged, would have decreased the estimated fair value of these reporting units as of October 1, 2019 by approximately
9.7% to 10.5% but would not, however, have resulted in the carrying value of any of these reporting units with goodwill
exceeding their estimated fair value; and (ii) a hypothetical increase of 100 basis points in the discount rate, with all other
assumptions unchanged, would have decreased the estimated fair value of these reporting units as of October 1, 2019 by a
range of approximately 4.4% to 8.7% but would not, however, have resulted in the carrying value of any of these reporting
units with goodwill exceeding their estimated fair value. With respect to the Global Data Center and Fine Arts reporting units,
we noted that, as of October 1, 2019, the estimated fair value of these reporting units exceeds their carrying value by less than
20%. Accordingly, any significant negative change in either the expected annual future cash flows of these reporting units or
the discount rate may result in the carrying value of these reporting units exceeding their estimated fair value.
Income Taxes
As a REIT, we are generally permitted to deduct from our federal taxable income the dividends we pay to our
stockholders. The income represented by such dividends is not subject to federal taxation at the entity level but is taxed, if at
all, at the stockholder level. The income of our domestic TRSs, which hold our domestic operations that may not be REIT-
compliant as currently operated and structured, is subject, as applicable, to federal and state corporate income tax. In addition,
we and our subsidiaries continue to be subject to foreign income taxes in other jurisdictions in which we have business
operations or a taxable presence, regardless of whether assets are held or operations are conducted through subsidiaries
disregarded for federal income tax purposes or TRSs. We will also be subject to a separate corporate income tax on any gains
recognized on the sale or disposition of any asset previously owned by a C corporation during a five-year period after the date
we first owned the asset as a REIT asset that are attributable to "built-in gains" with respect to that asset on that date. We will
also be subject to a built-in gains tax on our depreciation recapture recognized into income as a result of accounting method
changes in connection with our acquisition activities. If we fail to remain qualified for taxation as a REIT, we will be subject to
federal income tax at regular corporate income tax rates. Even if we remain qualified for taxation as a REIT, we may be subject
to some federal, state, local and foreign taxes on our income and property in addition to taxes owed with respect to our TRS
operations. In particular, while state income tax regimes often parallel the federal income tax regime for REITs, many states do
not completely follow federal rules and some do not follow them at all.
Accounting for income taxes requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the tax and financial reporting bases of assets and liabilities and for loss and
credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable
income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect
on deferred tax assets and liabilities as a result of a change in tax rates is recognized in income in the period that the change is
enacted. Valuation allowances are provided when recovery of deferred tax assets does not meet the more likely than not
standard as defined in GAAP. Valuation allowances would be reversed as a reduction to the provision for income taxes if
related deferred tax assets are deemed realizable based on changes in facts and circumstances relevant to the recoverability of
the asset.
At December 31, 2019, we have federal net operating loss carryforwards of $152.7 million available to reduce future
federal taxable income, the majority of which expire from 2024 through 2037. Of the $152.7 million, we expect to utilize $39.2
million and realize a federal tax benefit of $8.2 million. We can carry forward these net operating losses to the extent we do not
utilize them in any given available year. We have state net operating loss carryforwards, which expire from 2020 through 2039,
of which an insignificant state tax benefit is expected to be realized. We have assets for foreign net operating losses of $90.8
million, with various expiration dates (and in some cases no expiration date), subject to a valuation allowance of approximately
64%. If actual results differ unfavorably from certain of our estimates used, we may not be able to realize all or part of our net
deferred income tax assets and additional valuation allowances may be required. Although we believe our estimates are
reasonable, no assurance can be given that our estimates reflected in the tax provisions and accruals will equal our actual
results. These differences could have a material impact on our income tax provision and operating results in the period in which
such determination is made.
43
The evaluation of an uncertain tax position is a two-step process. The first step is a recognition process whereby we
determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any
related appeals or litigation processes, based on the technical merits of the position. The second step is a measurement process
whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of
benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than
50% likely of being realized upon ultimate settlement.
We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by
various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the
likelihood of additional assessments by tax authorities and provide for these matters as appropriate. As of December 31, 2019
and 2018, we had approximately $35.1 million and $35.3 million, respectively, of reserves related to uncertain tax positions.
The reversal of these reserves will be recorded as a reduction of our income tax provision if sustained. Although we believe our
tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes in our
estimates.
Following our conversion to a REIT in 2014, we concluded that it was not our intent to reinvest our current and future
undistributed earnings of our foreign subsidiaries indefinitely outside the United States. As of December 31, 2016, we
concluded that it is our intent to indefinitely reinvest our current and future undistributed earnings of certain of our unconverted
foreign TRSs outside the United States. We no longer provide incremental foreign withholding taxes on the retained book
earnings of these unconverted foreign TRSs, which was approximately $279.7 million as of December 31, 2019. As a REIT,
future repatriation of incremental undistributed earnings of our foreign subsidiaries will not be subject to federal or state
income tax, with the exception of foreign withholding taxes in limited instances; however, such future repatriations will require
distribution in accordance with REIT distribution rules, and any such distribution may then be taxable, as appropriate, at the
stockholder level. We continue, however, to provide for incremental foreign withholding taxes on net book over outside basis
differences related to the earnings of our foreign QRSs and certain other foreign TRSs (excluding unconverted foreign TRSs).
Tax Reform
On December 22, 2017, legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Legislation”)
was enacted into law in the United States. The Tax Reform Legislation amended the Code to reduce tax rates and modify
policies, credits and deductions for businesses and individuals. The following summarizes certain components of the Tax
Reform Legislation and the impact such components of the Tax Reform Legislation. One of the primary components of the Tax
Reform Legislation was a reduction in the United States corporate federal income tax rate from 35% to 21% for taxable years
beginning after December 31, 2017.
a. Deemed Repatriation Transition Tax
The Tax Reform Legislation imposed a transition tax (the “Deemed Repatriation Transition Tax”) on a mandatory deemed
repatriation of post-1986 undistributed foreign earnings and profits not previously subject to United States tax as of November
2, 2017 or December 31, 2017, whichever was greater (the “Undistributed E&P”), as of the last taxable year beginning before
January 1, 2018. The Deemed Repatriation Transition Tax varied depending on whether the Undistributed E&P was held in
liquid (as defined in the Tax Reform Legislation) or non-liquid assets. A participation deduction against the deemed repatriation
resulted in a Deemed Repatriation Transition Tax on Undistributed E&P of 15.5% if held in cash and liquid assets and 8.0% if
held in non-liquid assets. The Deemed Repatriation Transition Tax applied regardless of whether or not an entity had cash in its
foreign subsidiaries and regardless of whether the entity actually repatriated the Undistributed E&P back to the United States.
We have completed our analysis and determined that the amount of Undistributed E&P deemed repatriated under the Tax
Reform Legislation in our taxable year ending December 31, 2017 was $160.0 million. We opted to include the full amount of
Undistributed E&P in our 2017 taxable income, rather than spread it over eight years (as permitted by the Tax Reform
Legislation). After applying the participation deduction, included in our REIT taxable income for 2017 was approximately
$70.9 million related to the deemed repatriation of Undistributed E&P.
44
b. Global Intangible Low-Taxed Income
For taxable years beginning after December 31, 2017, the Tax Reform Legislation introduced new provisions intended to
prevent the erosion of the United States federal income tax base through the taxation of certain global intangible low-taxed
income (“GILTI”). The GILTI provisions created a new requirement that certain income earned by controlled foreign
corporations (“CFCs”) must be included currently in the gross income of the CFC’s United States tax resident shareholder.
Generally, GILTI is the excess of the United States shareholder’s pro rata portion of the income of its foreign subsidiaries over
the net deemed tangible income return of such subsidiaries.
The GILTI provisions also provide for certain deductions against the inclusion of GILTI in taxable income; however,
REITs are not eligible for such deductions. Therefore, 100% of our GILTI is included in our taxable income and will increase
the required minimum distribution to our stockholders. There was no GILTI included in our taxable income for the year ended
December 31, 2019 and the amount included in our REIT taxable income for the year ended December 31, 2018 was
approximately $41.9 million. We have adopted an accounting policy such that we will recognize no deferred taxes related to
basis differences resulting from GILTI.
The Internal Revenue Service issued guidance clarifying that GILTI included in a REIT's taxable income is qualifying
income for purposes of the 95% REIT gross income test that we are required to satisfy. We do not expect the GILTI provision
will impact our provision for income taxes. However, the GILTI provision may impact the amount and characterization of
dividends that we expect to pay in future taxable years.
c. Interest Deduction Limitation
The Tax Reform Legislation also limits, for certain entities, the deduction for net interest expense to the sum of business
interest income plus 30% of adjusted taxable income (the “Interest Deduction Limitation”). Adjusted taxable income is defined
in the Tax Reform Legislation similar to earnings before interest, taxes, depreciation and amortization for taxable years
beginning after December 31, 2017 and before January 1, 2022, and is defined similar to earnings before interest and taxes for
taxable years beginning after December 31, 2021.
The Interest Deduction Limitation does not apply to taxpayers that qualify, and make an election, to be treated as an
“electing real property trade or business”. As a REIT, IMI, including all of our QRSs, made an election to be treated as an
“electing real property trade or business” beginning in our taxable year ended December 31, 2018. As such, the interest
deduction limitation does not apply to IMI or our QRSs; however, IMI will be required to utilize the alternative depreciation
system for its real property. This election does not have a material impact on our consolidated financial statements. We do not
generally believe that our TRSs are eligible for treatment as “electing real property trades or businesses”.
Recent Accounting Pronouncements
See Note 2.w. to Notes to Consolidated Financial Statements included in this Annual Report for a description of recently
issued accounting pronouncements, including those recently adopted.
45
Results of Operations
Comparison of Year Ended December 31, 2019 to Year Ended December 31, 2018 and Comparison of Year Ended
December 31, 2018 to Year Ended December 31, 2017 (in thousands):
Year Ended December 31,
Revenues
Operating Expenses
Operating Income
Other Expenses, Net
Income from Continuing Operations
Income (Loss) from Discontinued Operations, Net of Tax
Net Income
Net Income Attributable to Noncontrolling Interests
$
2019
4,262,584
3,481,246
781,338
513,127
268,211
104
268,315
938
Net Income Attributable to Iron Mountain Incorporated $
267,377
2018
4,225,761
3,417,494
808,267
440,709
367,558
(12,427)
355,131
1,198
353,933
1,424,824
$
$
$
Adjusted EBITDA(1)
Adjusted EBITDA Margin(1)
Revenues
Operating Expenses
Operating Income
Other Expenses, Net
Income from Continuing Operations
(Loss) Income from Discontinued Operations, Net of Tax
Net Income
Net Income Attributable to Noncontrolling Interests
$
1,437,605
33.7%
33.7%
Year Ended December 31,
$
2018
4,225,761
3,417,494
808,267
440,709
367,558
(12,427)
355,131
1,198
$
1,424,824
2017
3,845,578
3,211,527
634,051
456,036
178,015
(6,291)
171,724
1,611
170,113
1,243,573
$
$
$
33.7%
32.3%
Dollar
Change
Percentage
Change
$
36,823
63,752
(26,929)
72,418
(99,347)
12,531
(86,816)
(260)
(86,556)
12,781
$
$
0.9 %
1.9 %
(3.3)%
16.4 %
(27.0)%
(100.8)%
(24.4)%
(21.7)%
(24.5)%
0.9 %
Dollar
Change
Percentage
Change
$
380,183
205,967
174,216
(15,327)
189,543
(6,136)
183,407
(413)
183,820
181,251
$
$
9.9 %
6.4 %
27.5 %
(3.4)%
106.5 %
97.5 %
106.8 %
(25.6)%
108.1 %
14.6 %
Net Income Attributable to Iron Mountain Incorporated $
353,933
Adjusted EBITDA(1)
Adjusted EBITDA Margin(1)
_______________________________________________________________________________
(1) See "Non-GAAP Measures—Adjusted EBITDA" in this Annual Report for the definitions of Adjusted EBITDA and
Adjusted EBITDA Margin, 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.
46
REVENUES
Storage Rental
Service
Total Revenues
Storage Rental
Service
Total Revenues
Year Ended December 31,
2019
2,681,087
1,581,497
4,262,584
$
$
2018
2,622,455
1,603,306
4,225,761
Year Ended December 31,
2018
2,622,455
1,603,306
4,225,761
$
$
2017
2,377,557
1,468,021
3,845,578
$
$
$
$
$
$
$
$
Percentage Change
Dollar
Change
Actual
Constant
Currency(1)
Organic
Growth(2)
58,632
(21,809)
36,823
2.2 %
(1.4)%
0.9 %
4.3%
0.9%
3.0%
2.5 %
(1.0)%
1.1 %
Percentage Change
Dollar
Change
244,898
135,285
380,183
Actual
Constant
Currency(1)
Organic
Growth(2)
10.3%
9.2%
9.9%
10.6%
9.7%
10.2%
2.4%
5.4%
3.6%
_______________________________________________________________________________
(1) Constant currency growth rates are calculated by translating the 2018 results at the 2019 average exchange rates and
the 2017 results at the 2018 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, foreign currency exchange rate fluctuations and
the impact of the adoption of ASU 2014-09, but including the impact of acquisitions of customer relationships.
Storage Rental Revenues
In the year ended December 31, 2019, the increase in reported consolidated storage rental revenue 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 net impact of acquisitions/divestitures contributed 1.8% to the
reported storage rental revenue growth rates for the year ended December 31, 2019 compared to the prior year period, primarily
driven by acquisitions in our Global Data Center Business segment. Organic storage rental revenue growth of 2.5% in the year
ended December 31, 2019 compared to the prior year period was driven by organic storage rental revenue growth of 2.2% in
our Global RIM Business segment, mainly driven by revenue management. Excluding the impact of acquisitions/divestitures,
our Global RIM Business segment net volumes as of December 31, 2019 were relatively steady compared to the ending volume
as of December 31, 2018. Including the impact of acquisitions/divestitures, our Global RIM Business segment net volumes as
of December 31, 2019 increased by 0.4% over the ending volume at December 31, 2018. Organic storage rental revenue
growth in our Global Data Center Business segment was 5.3% compared to the prior year period, primarily related to a $5.4
million lease modification fee that benefited organic storage rental revenue growth for the segment by 2.5%. Foreign currency
exchange rate fluctuations decreased our reported storage rental revenue growth rate for the year ended December 31, 2019 by
2.1%, compared to the prior year period.
Service Revenues
In the year ended December 31, 2019, the decrease 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 in the year ended December 31, 2019 by 2.3%, compared to the prior year period. In the year ended December 31, 2019,
organic service revenue growth was negative 1.0% compared to the prior year period, primarily driven by continued declines in
recycled paper prices, lower destructions and reduced retrieval/re-file and related transportation activity, partially offset by
growth in our secure shredding revenue and increased project activity in our Global RIM Business segment. The net impact of
acquisitions/divestitures contributed 1.9% to the reported service revenue growth rates in the year ended December 31, 2019,
compared to the prior year period.
47
Total Revenues
For the reasons stated above, our reported consolidated revenues increased $36.8 million, or 0.9%, to $4,262.6 million for
the year ended December 31, 2019 from $4,225.8 million for the year ended December 31, 2018. The net impact of
acquisitions/divestitures contributed 1.9% to the reported consolidated revenue growth rate for the year ended December 31,
2019 compared to the prior year period. Consolidated organic revenue growth was 1.1% in the year ended December 31, 2019
compared to the prior year period. Foreign currency exchange rate fluctuations decreased our reported consolidated revenues
by 2.1% in the year ended December 31, 2019 compared to the prior year period.
Organic Growth—Eight-Quarter Trend
2018
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Storage Rental Revenue
Service Revenue
Total Revenue
3.7%
1.4%
2.8%
1.9%
7.6%
4.1%
2.3%
7.1%
4.1%
1.9%
6.1%
3.5%
2.0%
1.8%
1.9%
2.4 %
(2.0)%
0.7 %
3.0 %
(3.0)%
0.7 %
2.5 %
(0.7)%
1.3 %
We expect our consolidated organic storage rental revenue growth rate for 2020 to be approximately 1.0% to 3.0% and
our consolidated organic total revenue growth rate to be flat to approximately 2.0%. During the past eight quarters, our organic
storage rental revenue growth rate has ranged between 1.9% and 3.7%. Consolidated organic storage rental revenue growth and
consolidated total organic revenue growth were benefited by (i) 0.3% and 0.2%, respectively, for the second quarter of 2019
related to a $1.7 million customer lease modification fee in our Global Data Center Business segment, (ii) 0.3% and 0.2%,
respectively, for the third quarter of 2019 related to a $1.7 million customer lease modification fee in our Global Data Center
Business segment and (iii) 0.3% and 0.2%, respectively, for the fourth quarter of 2019 related to a $2.0 million customer lease
modification fee in our Global Data Center Business segment. Our organic storage rental revenue growth rates have increased
over the past two fiscal years, as organic storage rental revenue growth for full year 2018 and 2019 was 2.4% and 2.5%,
respectively. At various points in the economic cycle, organic storage rental revenue growth may be influenced by changes in
pricing and volume. In 2018 and 2019, we experienced relatively steady net volume in our Global RIM Business segment, with
organic storage rental revenue growth coming primarily from revenue management. We expect organic storage rental revenue
growth to benefit from revenue management and volume to remain relatively consistent in the near term.
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 Global RIM Business
segment. The increases in organic service revenue growth rates of 7.6%, 7.1% and 6.1% in the second, third and fourth quarters
of 2018 reflect a strong contribution from our secure shredding business, which benefited from higher recycled paper prices,
higher destruction activity and acquisitions of customer relationships. Organic service revenue growth declined to 1.8%,
negative 2.0%, negative 3.0% and negative 0.7% for the first, second, third and fourth 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.
48
OPERATING EXPENSES
Cost of Sales
Consolidated cost of sales (excluding depreciation and amortization) consists of the following expenses (in thousands):
Year Ended December 31,
Percentage
Change
% of
Consolidated
Revenues
Labor
Facilities
Transportation
Product Cost of Sales
and Other
$
$
2019
814,459
697,330
162,905
$
2018
818,729
651,114
158,528
158,621
165,583
Total Cost of Sales
$ 1,833,315
$ 1,793,954
$
Dollar
Change
Actual
(4,270)
46,216
4,377
(6,962)
39,361
(0.5)%
7.1 %
2.8 %
(4.2)%
2.2 %
Constant
Currency
2019
2.2 % 19.1% 19.4%
2018
9.5 % 16.4% 15.4%
5.1 % 3.8%
3.8%
(1.4)% 3.7%
3.9%
4.8 % 43.0% 42.5%
Year Ended December 31,
$
$
2018
818,729
651,114
158,528
2017
786,314
581,112
142,184
$
32,415
70,002
16,344
Percentage
Change
% of
Consolidated
Revenues
Dollar
Change
Actual
Constant
Currency
2018
2017
4.1%
12.0%
11.5%
6.7%
7.8%
4.7% 19.4% 20.4%
12.5% 15.4% 15.1%
12.2% 3.8%
3.7%
8.0% 3.9%
4.0%
8.4% 42.5% 43.3%
Labor
Facilities
Transportation
Product Cost of Sales
and Other
165,583
155,215
10,368
Total Cost of Sales
$ 1,793,954
$ 1,664,825
$
129,129
Labor
Percentage
Change
(Favorable)/
Unfavorable
(0.3)%
1.0 %
— %
(0.2)%
0.5 %
Percentage
Change
(Favorable)/
Unfavorable
(1.0)%
0.3 %
0.1 %
(0.1)%
(0.8)%
Labor expenses decreased to 19.1% of consolidated revenues in the year ended December 31, 2019 compared to 19.4% in
the year ended December 31, 2018. The decrease in labor expenses as a percentage of consolidated revenues was primarily
driven by improvements in our Global RIM Business segment, partially attributable to ongoing cost management actions. On a
constant dollar basis, labor expenses for the year ended December 31, 2019 increased by $17.4 million, or 2.2%, compared to
the prior year period, primarily driven by recent acquisitions in our Adjacent Businesses operating segment within our
Corporate and Other Business segment, as well as increased labor costs related to the growth of our shredding operations
within our Global RIM Business segment.
Facilities
Facilities expenses increased to 16.4% of consolidated revenues in the year ended December 31, 2019 compared to 15.4%
in the year ended December 31, 2018. The 100 basis point increase in facilities expenses as a percentage of consolidated
revenues was primarily driven 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 year
ended December 31, 2019 increased by $60.3 million, or 9.5%, 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 remained constant at 3.8% of consolidated revenues for the year ended December 31, 2019
compared to 3.8% for the year ended December 31, 2018. This was primarily driven by increases in third party carrier
expenses, in part due to recent acquisitions in our Adjacent Businesses operating segment within our Corporate and Other
Business segment, offset by a decrease in transportation costs within our Global RIM Business segment. On a constant dollar
basis, transportation expenses for the year ended December 31, 2019 increased by $7.9 million, or 5.1%, compared to the prior
year period, primarily driven by increases in third party carrier expenses, in part due to recent acquisitions in our Adjacent
Businesses operating segment within our Corporate and Other Business segment.
49
Product Cost of Sales and Other
Product cost of sales and other, which includes cartons, media and other service, storage and supply costs and is highly
correlated to service revenue streams, particularly project revenues, were 3.7% of consolidated revenues for the year ended
December 31, 2019 compared to 3.9% in the year ended December 31, 2018. On a constant dollar basis, product cost of sales
and other decreased by $2.2 million, or 1.4%, compared to the prior year period, primarily driven by lower special project
costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consists of the following expenses (in thousands):
Year Ended December 31,
Percentage
Change
% of
Consolidated
Revenues
2019
2018
Dollar
Change
Actual
Constant
Currency
2019
2018
Percentage
Change
(Favorable)/
Unfavorable
$
563,965
$
577,451
$
(13,486)
(2.3)%
(0.5)% 13.2% 13.7%
(0.5)%
245,704
162,606
19,389
257,306
153,601
18,625
(11,602)
9,005
764
(4.5)%
(2.8)% 5.8% 6.1%
5.9 %
4.1 %
7.1 % 3.8% 3.6%
6.4 % 0.5% 0.4%
(0.3)%
0.2 %
0.1 %
$
991,664
$ 1,006,983
$
(15,319)
(1.5)%
0.2 % 23.3% 23.8%
(0.5)%
Year Ended December 31,
Percentage
Change
% of
Consolidated
Revenues
2018
2017
Dollar
Change
Actual
Constant
Currency
2018
2017
Percentage
Change
(Favorable)/
Unfavorable
$
577,451
$
537,127
$
40,324
7.5%
7.9% 13.7% 14.0%
(0.3)%
257,306
153,601
18,625
253,117
132,110
14,826
4,189
21,491
3,799
1.7%
16.3%
25.6%
1.6% 6.1% 6.6%
16.4% 3.6% 3.4%
29.4% 0.4% 0.4%
(0.5)%
0.2 %
— %
$ 1,006,983
$
937,180
$
69,803
7.4%
7.7% 23.8% 24.4%
(0.6)%
General and
Administrative
Sales, Marketing and
Account Management
Information Technology
Bad Debt Expense
Total Selling, General
and Administrative
Expenses
General and
Administrative
Sales, Marketing and
Account Management
Information Technology
Bad Debt Expense
Total Selling, General
and Administrative
Expenses
General and Administrative
General and administrative expenses decreased to 13.2% of consolidated revenues for the year ended December 31, 2019
compared to 13.7% for the year ended December 31, 2018. General and administrative expenses for the year ended December
31, 2018 includes $11.0 million of indirect expenses associated with a value-added tax matter in the Netherlands (the
"Netherlands VAT Matter"), as described in Note 2.y. to Notes to Consolidated Financial Statements included in this Annual
Report. On a constant dollar basis, excluding the impact of the Netherlands VAT Matter, general and administrative expenses
for the year ended December 31, 2019 increased by $8.5 million, or 1.5%, compared to the prior year period. The increase in
general and administrative expenses as a percentage of consolidated revenues was driven primarily by higher compensation
expense and professional fees within our Corporate and Other Business segment, primarily associated with our global
operations support team that is tasked with driving operational improvements and continued investment in innovation and
product development, as well as acquisitions in our Adjacent Businesses operating segment within our Corporate and Other
Business segment. The increase in compensation expense is primarily the result of merit-based increases as well as increased
headcount, partially offset by a reduction in variable compensation expense.
50
Sales, Marketing & Account Management
Sales, marketing and account management expenses decreased to 5.8% of consolidated revenues for the year ended
December 31, 2019 compared to 6.1% for the year ended December 31, 2018. The decrease in sales, marketing and account
management expenses as a percentage of consolidated revenues was driven by a decrease in compensation expense, primarily
due to lower commissions expense, as well as a decrease in marketing costs. On a constant dollar basis, sales, marketing and
account management expenses for the year ended December 31, 2019 decreased by $7.1 million, or 2.8%, compared to the
prior year period, primarily driven by lower marketing costs.
Information Technology
IT expenses increased to 3.8% of consolidated revenues for the year ended December 31, 2019 compared to 3.6% for the
year ended December 31, 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 year ended December 31, 2019 increased by $10.8 million, or
7.1%, 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 year ended December 31, 2019 increased by $1.2 million on a constant
dollar basis compared to the year ended December 31, 2018, primarily driven by higher bad debt expense associated with our
Global RIM Business segment.
Depreciation and Amortization
Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include
racking structures, buildings, building and leasehold improvements and computer systems hardware and software. Amortization
relates primarily to customer relationship intangible assets, contract fulfillment costs and data center lease-based intangible
assets. Both depreciation and amortization are impacted by the timing of acquisitions.
Depreciation expense increased $3.6 million, or 0.8%, on a reported dollar basis for the year ended December 31, 2019
compared to the year ended December 31, 2018. See Note 2.f. to Notes to Consolidated Financial Statements included in this
Annual Report for additional information regarding the useful lives over which our property, plant and equipment is
depreciated.
Amortization expense increased $15.1 million, or 8.1%, on a reported dollar basis for the year ended December 31, 2019
compared to the year ended December 31, 2018.
Significant Acquisition Costs
Significant Acquisition Costs for the years ended December 31, 2019, 2018 and 2017 were approximately $13.3 million,
$50.7 million and $84.9 million, respectively, and primarily consisted of employee severance costs, facility integration costs
and advisory and professional fees associated with the Recall Transaction.
Restructuring Charges
Restructuring Charges were approximately $48.6 million for the year ended December 31, 2019, and primarily consisted
of employee severance costs and professional fees associated with Project Summit.
51
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 year ended December 31, 2019
was approximately $63.8 million. The gain consisted primarily of gains associated with (i) sale and sale-leaseback transactions
involving the sales of facilities in the United States of approximately $67.8 million and (ii) the sale of certain land and
buildings in the United Kingdom of approximately $36.0 million. These gains were partially offset by losses primarily
associated with (i) the impairment charge on the assets associated with the select offerings within our Iron Cloud portfolio (as
described below) and (ii) the write-down of certain property, plant and equipment in the United States of approximately $15.7
million.
During the second quarter of 2019, we began exploring strategic options regarding how to maintain and support the
infrastructure of select offerings within our Iron Mountain Iron Cloud (“Iron Cloud”) portfolio. As a result, during the second
quarter of 2019, we performed a long-lived asset impairment analysis on the assets associated with these select offerings and
concluded that the associated carrying value of the long-lived assets (which consisted entirely of property, plant and equipment)
was not recoverable based upon the underlying cash flows associated with these select offerings. 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 $25.0 million during the year ended December 31, 2019.
Consolidated gain on disposal/write-down of property, plant and equipment, net for the year ended December 31, 2018
was $73.6 million. The gain consisted primarily of (i) the gain on sale of real estate for the sale of buildings in the United
Kingdom of approximately $63.8 million and (ii) gains associated with the involuntary conversion of assets included in a
facility that we own in Argentina which was partially destroyed in a fire in 2014, for which we received insurance proceeds in
excess of the carrying amount of such assets during the fourth quarter of 2018. See Note 10 to Notes to Consolidated Financial
Statements included in this Annual Report.
OTHER EXPENSES, NET
Interest Expense, Net
Consolidated interest expense, net increased $9.7 million to $419.3 million for the year ended December 31, 2019 from
$409.6 million for the year ended December 31, 2018. The increase in interest expense, net during the year ended
December 31, 2019 compared to the year ended December 31, 2018 was the result of higher average debt outstanding during
2019. Our weighted average interest rate was 4.8% and 4.9% at December 31, 2019 and 2018, respectively. See Note 4 to
Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding our
indebtedness.
Other Expense (Income), Net
Other expense (income), net consists of the following (in thousands):
Foreign currency transaction losses (gains), net
Other, net
Other Expense (Income), Net
Foreign Currency Transaction Losses (Gains)
Year Ended
December 31,
2019
24,852
9,046
33,898
$
$
2018
(15,567) $
3,875
(11,692) $
$
$
Dollar
Change
40,419
5,171
45,590
We recorded net foreign currency transaction losses of $24.9 million in the year ended December 31, 2019, based on
period-end exchange rates. These losses resulted primarily from the impact of changes in the exchange rate of the British pound
sterling against the United States dollar compared to December 31, 2018 on our intercompany balances with and between
certain of our subsidiaries.
52
We recorded net foreign currency transaction gains of $15.6 million in the year ended December 31, 2018, based on
period-end exchange rates. These gains resulted primarily from the impact of changes in the exchange rate of each of the
British pound sterling and Canadian dollar against the United States dollar compared to December 31, 2017 on our
intercompany balances with and between certain of our subsidiaries and the Euro Notes (as defined below). These gains were
partially offset by losses resulting primarily from the impact of changes in the exchange rate of each of the Australian dollar,
Brazilian real and the Turkish lira against the United States dollar compared to December 31, 2017 on our intercompany
balances with and between certain of our subsidiaries.
Provision (Benefit) for Income Taxes
Our effective tax rates for the years ended December 31, 2019 and 2018 were 18.3% and 10.4%, respectively. 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
QRSs and our 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.
On December 22, 2017, the Tax Reform Legislation was enacted into law in the United States. The Tax Reform
Legislation amended the Code to reduce tax rates and modify policies, credits and deductions for businesses and individuals.
The components of the Tax Reform Legislation are described in detail in Note 7 to Notes to Consolidated Financial Statements
included in our Annual Report. One of the primary components of the Tax Reform Legislation was a reduction in the United
States corporate federal income tax rate from 35.0% to 21.0% for taxable years beginning after December 31, 2017.
The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the
year ended December 31, 2019 were the benefit derived from the dividends paid deduction of $40.6 million and the impact of
differences in the tax rates at which our foreign earnings are subject to, resulting in a tax provision of $8.6 million.
The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the
year ended December 31, 2018 were the benefit derived from the dividends paid deduction of $35.2 million, the impact of
differences in the tax rates at which our foreign earnings are subject to, resulting in a tax provision of approximately $1.0
million and a discrete tax benefit of approximately $14.0 million associated with the resolution of a tax matter.
As a REIT, we are entitled to a deduction for dividends paid, resulting in a substantial reduction of federal income tax
expense. As a REIT, substantially all of our income tax expense will be incurred based on the earnings generated by our foreign
subsidiaries and our domestic TRSs.
We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by
various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the
likelihood of additional assessments by tax authorities and provide for these matters as appropriate. Although we believe our
tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes in our
estimates.
53
INCOME (LOSS) FROM CONTINUING OPERATIONS and ADJUSTED EBITDA
The following table reflects the effect of the foregoing factors on our consolidated income from continuing operations and
Adjusted EBITDA (in thousands):
Income (Loss) from Continuing Operations
$
Income (Loss) from Continuing Operations
as a percentage of Consolidated Revenue
Year Ended December 31,
2019
268,211
$
2018
367,558
Dollar
Change
$
(99,347)
Percentage
Change
(27.0)%
6.3%
8.7%
Adjusted EBITDA
Adjusted EBITDA Margin
$ 1,437,605
$ 1,424,824
$
12,781
0.9 %
33.7%
33.7%
Income (Loss) from Continuing Operations
$
Year Ended December 31,
2018
367,558
$
2017
178,015
Dollar
Change
Percentage
Change
$
189,543
106.5%
Income (Loss) from Continuing Operations
as a percentage of Consolidated Revenue
Adjusted EBITDA
8.7%
4.6%
$ 1,424,824
$ 1,243,573
$
181,251
14.6%
Adjusted EBITDA Margin
33.7%
32.3%
Consolidated Adjusted EBITDA for the year ended December 31, 2019 increased by $12.8 million, or 0.9%, and
consolidated Adjusted EBITDA Margin remained consistent with the year ended December 31, 2018. Consolidated Adjusted
EBITDA for the year ended December 31, 2018 was negatively impacted by $11.0 million of indirect tax expenses associated
with the Netherlands VAT Matter that did not repeat in 2019. Excluding the impact of the Netherlands VAT Matter, consolidated
Adjusted EBITDA increased $1.7 million for the year ended December 31, 2019 compared to the year ended December 31,
2018, primarily due to lower variable compensation expense and the impact of cost management actions, partially offset by
increased labor costs in our secure shredding business and higher technology costs associated with information security
investments.
Consolidated Adjusted EBITDA for the year ended December 31, 2018 increased by $181.3 million, or 14.6%, compared
to the year ended December 31, 2017, primarily due to acquisitions within our Global Data Center Business segment, the
adoption of ASU 2014-09 and synergies associated with our acquisition of Recall.
Segment Analysis (in thousands)
See Note 9 to Notes to Consolidated Financial Statements included in this Annual Report for a description of our
reportable operating segments.
54
Global RIM Business
Storage Rental
Service
Segment Revenue
Year Ended December 31,
2019
$ 2,320,076
2018
$ 2,301,344
1,492,357
1,541,256
$ 3,812,433
$ 3,842,600
Segment Adjusted EBITDA(1)
$ 1,563,223
$ 1,569,353
Segment Adjusted EBITDA Margin(2)
41.0%
40.8%
Storage Rental
Service
Segment Revenue
Segment Adjusted EBITDA(1)
Year Ended December 31,
2018
$ 2,301,344
2017
$ 2,261,831
1,541,256
1,444,279
$ 3,842,600
$ 1,569,353
$ 3,706,110
$ 1,470,579
Percentage Change
Dollar
Change
Actual
Constant
Currency
Organic
Growth
18,732
(48,899)
(30,167)
(6,130)
0.8 %
(3.2)%
(0.8)%
3.0 %
(1.0)%
1.4 %
2.2 %
(1.3)%
0.8 %
Percentage Change
Dollar
Change
Actual
Constant
Currency
Organic
Growth
39,513
96,977
136,490
98,774
1.7%
6.7%
3.7%
2.0%
7.1%
4.0%
2.3%
5.1%
3.4%
$
$
$
$
$
$
Segment Adjusted EBITDA Margin(2)
40.8%
39.7%
_______________________________________________________________________________
(1) See "Non-GAAP Measures—Adjusted EBITDA" in this Annual 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 year ended December 31, 2019, reported revenue in our Global RIM Business segment decreased 0.8%, compared
to the year ended December 31, 2018, due to unfavorable fluctuations in foreign currency exchange rates, partially offset by
organic revenue growth and the favorable net impact of acquisitions/dispositions. Organic revenue growth of 0.8% was
primarily the result of organic storage rental revenue growth of 2.2% driven by revenue management. In addition, negative
organic service revenue growth of 1.3% was driven by continued declines in recycled paper prices, lower destructions and
reduced retrieval/re-file and related transportation activity, partially offset by growth in our secure shredding revenue and
increased project activity. Adjusted EBITDA Margin increased 20 basis points during the year ended December 31, 2019
compared to the year ended December 31, 2018, primarily driven by lower compensation expense and other employee related
costs, partially offset by increased facility rent expense and the impact of lower recycled paper prices. 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 secure shredding operations.
For the year ended December 31, 2018, reported revenue in our Global RIM Business segment increased 3.7% compared
to the year ended December 31, 2017, due to organic revenue growth, the favorable net impact of acquisitions/divestitures and
the adoption of ASU 2014-09, partially offset by unfavorable fluctuations in foreign currency exchange rates. Organic revenue
growth of 3.4% was primarily the result of organic storage rental revenue growth of 2.3%, driven by revenue management and
organic service revenue growth of 5.1%, driven by growth in secure shredding revenue, in part due to higher recycled paper
prices and acquisitions of customer relationships, as well as increased project and destruction activity. The net impact of
acquisitions/divestitures and the adoption of ASU 2014-09 contributed 0.6% to the reported revenue growth rates in our Global
RIM Business segment for the year ended December 31, 2018, compared to the year ended December 31, 2017. Adjusted
EBITDA Margin increased 110 basis points during the year ended December 31, 2018 compared to the year ended
December 31, 2017, primarily driven by a decrease in wages and benefits as a percentage of segment revenue, partially
attributable to synergies associated with our acquisition of Recall, cost management initiatives, the capitalization of certain
commissions as a result of our adoption of ASU 2014-09 and the benefit of revenue management.
55
Global Data Center Business
Storage Rental
Service
Segment Revenue
Segment Adjusted EBITDA(1)
Segment Adjusted EBITDA Margin(2)
Storage Rental
Service
Segment Revenue
Segment Adjusted EBITDA(1)
Year Ended December 31,
2019
246,925
10,226
257,151
121,517
2018
218,675
10,308
228,983
99,574
$
$
$
47.3%
43.5%
Year Ended December 31,
2018
218,675
10,308
228,983
99,574
2017
35,839
1,855
37,694
11,275
$
$
$
Dollar
Change
28,250
(82)
28,168
21,943
Dollar
Change
182,836
8,453
191,289
88,299
$
$
$
$
$
$
$
$
$
$
$
$
Percentage Change
Actual
12.9 %
(0.8)%
12.3 %
Constant
Currency
Organic
Growth
13.4 %
(0.7)%
12.8 %
5.3 %
(4.8)%
4.8 %
Percentage Change
Actual
510.2%
455.7%
507.5%
Constant
Currency
Organic
Growth
510.2%
455.7%
507.5%
8.2%
24.5%
9.0%
Segment Adjusted EBITDA Margin(2)
43.5%
29.9%
_______________________________________________________________________________
(1) See "Non-GAAP Measures—Adjusted EBITDA" in this Annual 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 year ended December 31, 2019, reported revenue in our Global Data Center Business segment increased 12.3%
compared to the year ended December 31, 2018, primarily due to the impact of acquisitions (see Note 6 of Notes to
Consolidated Financial Statements included in this Annual Report for additional acquisition details). The impact of acquisitions
contributed 8.0% to the reported revenue growth rate in our Global Data Center Business segment for the year ended
December 31, 2019 compared to the prior year period. Organic storage rental revenue growth in our Global Data Center
Business segment was 5.3% for the year ended December 31, 2019 compared to the prior year period, primarily related to a
$5.4 million lease modification fee that benefited organic storage rental revenue growth by 2.5%. Adjusted EBITDA Margin
increased 380 basis points during the year ended December 31, 2019 compared to the year ended December 31, 2018 primarily
due to the impact of cost management actions, the lease modification fee described above and a $4.0 million contractual
settlement, partially offset by higher facilities costs, in part due to acquisitions, and increased overhead to support the growth of
this business.
56
Corporate and Other Business
Storage Rental
Service
Segment Revenue
Year Ended December 31,
2019
$ 114,086
2018
$ 102,436
78,914
51,742
$ 193,000
$ 154,178
Segment Adjusted EBITDA(1)
$ (247,135)
$ (244,103)
Segment Adjusted EBITDA(1) as a
Percentage of Consolidated Revenue
(5.8)%
(5.8)%
Storage Rental
Service
Segment Revenue
Segment Adjusted EBITDA(1)
Segment Adjusted EBITDA(1) as a
Percentage of Consolidated Revenue
Year Ended December 31,
2018
$ 102,436
51,742
$
2017
79,887
21,887
$ 154,178
$ (244,103)
$ 101,774
$ (238,281)
(5.8)%
(6.2)%
Percentage Change
Dollar
Change
Actual
Constant
Currency
Organic
Growth
$
$
$
$
$
$
11,650
27,172
38,822
(3,032)
Dollar
Change
22,549
29,855
52,404
(5,822)
11.4%
52.5%
25.2%
11.9%
55.0%
26.3%
3.2%
8.2%
4.9%
Percentage Change
Actual
28.2%
136.4%
51.5%
Constant
Currency
Organic
Growth
28.4%
143.9%
52.6%
3.7%
21.2%
7.5%
_______________________________________________________________________________
(1) See "Non-GAAP Measures—Adjusted EBITDA" in this Annual Report for the definition of Adjusted EBITDA, a
reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations and a discussion of why we believe
this non-GAAP measure provides relevant and useful information to our current and potential investors.
For the year ended December 31, 2019, reported revenue in our Corporate and Other Business segment increased 25.2%
compared to the year ended December 31, 2018, primarily due to the impact of acquisitions. The impact of acquisitions
contributed 21.4% to the reported revenue growth rate in our Corporate and Other Business segment for the year ended
December 31, 2019 compared to the prior year period. Adjusted EBITDA in our Corporate and Other Business segment
decreased $3.0 million in the year ended December 31, 2019 compared to the year ended December 31, 2018. Adjusted
EBITDA for the year ended December 31, 2018 was negatively impacted by $11.0 million of indirect tax expenses associated
with the Netherlands VAT Matter that did not repeat in 2019. Excluding the impact of the Netherlands VAT Matter, Adjusted
EBITDA in our Corporate and Other Business segment decreased $14.1 million in the year ended December 31, 2019
compared to the year ended December 31, 2018, primarily driven by higher compensation expense and professional fees
associated with investments in our global operations support team that is tasked with driving operational improvements and
continued investment in innovation and product development, partially offset by profitability associated with recent
acquisitions in our Adjacent Businesses operating segment. The increase in compensation expense is primarily the result of
merit-based increases as well as increased headcount, partially offset by a reduction in variable compensation expense.
57
Liquidity and Capital Resources
Project Summit
As disclosed above, in October 2019, we announced Project Summit. We estimate that the implementation of Project
Summit will result in total costs of approximately $240.0 million. During the fourth quarter of 2019, we incurred approximately
$48.6 million of costs related to Project Summit which were comprised entirely of Restructuring Charges, primarily related to
employee severance costs and professional fees.
Cash Flows
The following is a summary of our cash balances and cash flows (in thousands) as of and for the years ended
December 31,
Cash flows from operating activities—continuing operations
$
Cash flows from investing activities—continuing operations
Cash flows from financing activities—continuing operations
Cash and cash equivalents at the end of year
$
2019
966,655
(735,946)
(198,973)
193,555
$
2018
936,544
(2,230,128)
550,678
165,485
2017
724,259
(599,448)
540,425
925,699
a. Cash Flows from Operating Activities
For the year ended December 31, 2019, net cash flows provided by operating activities increased by $30.1 million
compared to the prior year period primarily due to a decrease in cash used in working capital of $47.6 million, primarily related
to the timing of collections of accounts receivable and certain prepaid and accrued expenses, partially offset by a decrease in
net income (including non-cash charges and realized foreign exchange losses) of $17.5 million.
b. Cash Flows from Investing Activities
Our business requires capital expenditures to maintain our ongoing operations, support our expected revenue growth and
new products and services, and increase our profitability. These expenditures are included in the cash flows from investing
activities. The nature of our capital expenditures has evolved over time along with the nature of our business. Our capital goes
to support business-line growth and our ongoing operations, but we also expend capital to support the development and
improvement of products and services and projects designed to increase our profitability. These expenditures are generally
discretionary in nature.
Our significant investing activities for the year ended December 31, 2019 are highlighted below:
• We paid cash for acquisitions (net of cash acquired) of $58.2 million, primarily funded by borrowings under our
Revolving Credit Facility.
• We paid cash for capital expenditures of $693.0 million. Our business requires capital expenditures to maintain our
ongoing operations, support our expected revenue growth and new products and services, and increase our
profitability. All of these expenditures are included in the cash flows from investing activities. Additional details of our
capital spending is included in the Capital Expenditures section below.
• We acquired customer relationships, and incurred both customer inducements (which consists of permanent
withdrawal fees following the adoption of ASU 2014-09) and Contract Fulfillment Costs (as defined in Note 2.l. to
Notes to Consolidated Financial Statements included in this Annual Report) and third-party commissions for the year
ended December 31, 2019 of $46.1 million, $9.4 million and $76.2 million, respectively.
• We paid $19.2 million as part of our investment in the MakeSpace JV (as discussed above).
• We received proceeds of $166.1 million primarily related to the sale of facilities in the United States and the United
Kingdom.
58
c. Cash Flows from Financing Activities
Our significant financing activities for the year ended December 31, 2019 included:
• Net proceeds of $987.5 million associated with the issuance of the 47/8% Senior Notes due 2029 (as defined below).
• Net payments of $475.3 million primarily associated with the repayments on our Revolving Credit Facility.
•
Payment of dividends in the amount of $704.5 million on our common stock.
Capital Expenditures
We present two categories of capital expenditures: (1) Growth Investment Capital Expenditures and (2) Recurring Capital
Expenditures with the following sub-categories: (i) Real Estate, (ii) Non-Real Estate, (iii) Data Center and (iv) Innovation (for
growth investment only).
Growth Investment Capital Expenditures:
• Real Estate: Expenditures primarily related to investments in land, buildings, building improvements, leasehold
improvements and racking structures to grow our revenues or achieve operational efficiencies.
• Non-Real Estate: Expenditures that support the growth of our business, and/or increase our profitability, such as
customer-inventory technology systems, security upgrades or system enhancements.
• Data Center: Expenditures primarily related to investments in new construction of data center facilities (including the
acquisition of land and development of facilities) or capacity expansion in existing buildings.
•
Innovation: Discretionary capital expenditures in significant new products and services in new, existing or adjacent
business opportunities.
Recurring Capital Expenditures:
• Real Estate: Expenditures primarily related to the replacement of components of real estate assets such as buildings,
building improvements, leasehold improvements and racking structures.
• Non-Real Estate: Expenditures primarily related to the replacement of customer-facing assets such as containers and
shred bins, warehouse equipment, fixtures, computer hardware, or third-party or internally-developed software assets.
• Data Center: Expenditures related to the upgrade or re-configuration of existing data center assets.
59
The following table presents our capital spend for 2019, 2018 and 2017 organized by the type of the spending as
described above.
Nature of Capital Spend (in thousands)
Growth Investment Capital Expenditures:
Real Estate
Non-Real Estate
Data Center
Innovation
Total Growth Investment Capital Expenditures
Recurring Capital Expenditures:
Real Estate
Non-Real Estate
Data Center
Total Recurring Capital Expenditures
Total Capital Spend (on accrual basis)
Net increase (decrease) in prepaid capital expenditures
Net decrease (increase) in accrued capital expenditures(1)
2019
2018
2017
$
133,093
$
138,307
$
139,822
47,221
402,741
14,705
597,760
55,444
28,882
8,589
92,915
690,675
510
1,798
52,737
162,666
15,857
369,567
73,146
23,187
9,051
105,384
474,951
(1,844)
(13,045)
460,062
$
56,297
92,265
20,583
308,967
77,660
29,721
332
107,713
416,680
1,629
(75,178)
343,131
Total Capital Spend (on cash basis)
$
692,983
$
___________________________________________________________________
(1) The amount at December 31, 2017 includes approximately $66,800 related to a financing lease associated with our
data center in Manassas, Virginia.
Excluding capital expenditures associated with potential future acquisitions, opportunistic real estate investments and
capital expenditures associated with Project Summit, we expect our recurring capital expenditures on real estate and non-real
estate, as well as non-real estate growth investment capital expenditures, to be approximately $140.0 million to $160.0 million,
our capital expenditures on our Global Data Center Business to be approximately $200.0 million and our capital expenditures
on real estate growth investment and innovation to be approximately $150.0 million to $175.0 million in the year ending
December 31, 2020.
Dividends
See Note 12 to Notes to Consolidated Financial Statements included in this Annual Report for information on dividends.
60
Financial Instruments and Debt
Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents (including
money market funds and time deposits) and accounts receivable. As per our risk management investment policy, we limit
exposure to concentration of credit risk by limiting the amount invested in any one mutual fund to a maximum of 1% of the
fund total assets or in any one financial institution to a maximum of $75.0 million. As of December 31, 2019, our cash and cash
equivalents balance, including restricted cash, was $193.6 million.
Long-term debt as of December 31, 2019 is as follows (in thousands):
December 31, 2019
Unamortized
Deferred
Financing
Costs
Carrying
Amount
Debt (inclusive
of discount)
Revolving Credit Facility
Term Loan A
Term Loan B
Australian Dollar Term Loan (the "AUD Term Loan")
UK Bilateral Revolving Credit Facility (the "UK Bilateral Facility")
43/8% Senior Notes due 2021 (the "43/8% Notes")
6% Senior Notes due 2023
53/8% CAD Senior Notes due 2023 (the "CAD Notes due 2023")
53/4% Senior Subordinated Notes due 2024
3% Euro Senior Notes due 2025 (the "Euro Notes")
37/8% GBP Senior Notes due 2025 (the "GBP Notes due 2025")
53/8% Senior Notes due 2026 (the "53/8% Notes")
47/8% Senior Notes due 2027 (the "47/8% Notes due 2027")
51/4% Senior Notes due 2028 (the "51/4% Notes")
47/8% Senior Notes due 2029 (the "47/8% Notes due 2029")
Real Estate Mortgages, Financing Lease Liabilities and Other
Accounts Receivable Securitization Program
Mortgage Securitization Program
Total Long-term Debt
Less Current Portion
Long-term Debt, Net of Current Portion
$
348,808
$
228,125
686,395
226,924
184,601
500,000
600,000
192,058
1,000,000
336,468
527,432
250,000
1,000,000
825,000
1,000,000
523,671
272,062
50,000
8,751,544
(389,013)
$ 8,362,531
$
336,755
228,125
678,902
224,611
182,800
497,564
595,973
189,987
993,591
333,006
521,623
247,244
988,980
815,258
985,896
523,265
271,981
49,018
(12,053) $
—
(7,493)
(2,313)
(1,801)
(2,436)
(4,027)
(2,071)
(6,409)
(3,462)
(5,809)
(2,756)
(11,020)
(9,742)
(14,104)
(406)
(81)
(982)
(86,965)
—
8,664,579
(389,013)
(86,965) $ 8,275,566
See Note 4 to Notes to Consolidated Financial Statements included in this Annual Report for additional information
regarding our long-term debt.
a. Credit Agreement
On August 21, 2017, we entered into a new credit agreement (the "Credit Agreement") which amended and restated our
then existing credit agreement which consisted of a revolving credit facility (the "Former Revolving Credit Facility") and a
term loan and was scheduled to terminate on July 6, 2019. The Credit Agreement consists of a revolving credit facility (the
"Revolving Credit Facility") and a term loan (the "Term Loan A"). The maximum amount permitted to be borrowed under the
Revolving Credit Facility is $1,750.0 million. The original principal amount of the Term Loan A was $250.0 million. Under the
Revolving Credit Facility, we had the option to request additional commitments of up to $500.0 million, in the form of term
loans or through increased commitments under the Revolving Credit Facility, subject to the conditions specified in the Credit
Agreement. The Credit Agreement was originally scheduled to mature on August 21, 2022, at which point all obligations were
to become due.
61
On March 22, 2018, we entered into an amendment (the “March 2018 Amendment”) to the Credit Agreement which
provided us with the option to request additional commitments of up to approximately $1,260.0 million under the Credit
Agreement in the form of term loans or through increased commitments under the Revolving Credit Facility, subject to the
conditions specified in the Credit Agreement. On June 4, 2018, we entered into another amendment (the "June 2018
Amendment") to the Credit Agreement which (i) reduced interest rate margins applicable to existing and future borrowings
under the Revolving Credit Facility and Term Loan A by 0.25% and (ii) extended the maturity date of the Credit Agreement to
June 4, 2023. The Term Loan A is to be paid in quarterly installments in an amount equal to $3.1 million per quarter, with the
remaining balance due on June 4, 2023.
On December 20, 2019, we entered into an amendment (the “December 2019 Amendment”) to the Credit Agreement. The
December 2019 Amendment amended the definition of EBITDA and certain other definitions and restrictive covenants
contained in the Credit Agreement.
The Revolving Credit Facility enables IMI and certain of its United States and foreign subsidiaries to borrow in United
States dollars and (subject to sublimits) a variety of other currencies (including Canadian dollars, British pounds sterling and
Euros, among other currencies) in an aggregate outstanding amount not to exceed $1,750.0 million.
The amount available for borrowing under the Revolving Credit Facility as of December 31, 2019, which is based on
IMI's leverage ratio, the last 12 months' earnings before interest, taxes, depreciation and amortization and rent expense
("EBITDAR"), other adjustments as defined in the Credit Agreement and current external debt, was $1,396.3 million (which
amount represents the maximum availability as of such date). Available borrowings under the Revolving Credit Facility are
subject to compliance with our indenture covenants as described more fully below.
In connection with the March 2018 Amendment, IMI's wholly owned subsidiary, 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 original principal amount of $700.0 million (the “Term Loan B”). On March 26, 2018, IMIM borrowed the
full amount of the Term Loan B, which matures on January 2, 2026. The Term Loan B was issued at 99.75% of par. The
aggregate net proceeds of approximately $689.9 million, after paying commissions to the joint lead arrangers and net of the
original discount, were used to repay outstanding borrowings under the Revolving Credit Facility. The Term Loan B holders
benefit from the same security and guarantees as other borrowings under the Credit Agreement. The Term Loan B holders also
benefit from the same affirmative and negative covenants as other borrowings under the Credit Agreement; however, the Term
Loan B holders are not generally entitled to the benefits of the financial covenants under the Credit Agreement.
As of December 31, 2019, we had $686.4 million outstanding on the Term Loan B and the interest rate in effect under the
Term Loan B was 3.6%. The amount of debt for the Term Loan B reflects an unamortized original issue discount of $1.4
million as of December 31, 2019.
b. Issuance of 47/8% Notes due 2029
In September 2019, IMI completed a private offering of $1,000.0 million 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 paying the initial purchasers' commissions, were used to repay outstanding borrowings under the
Revolving Credit Facility.
c. Australian Dollar Term Loan Amendment
On March 27, 2018, Iron Mountain Australia Group Pty Ltd. ("IM Australia"), a wholly owned subsidiary of IMI,
amended its AUD Term Loan (the "AUD Term Loan Amendment") to (i) increase the borrowings under the AUD Term Loan
from 250.0 million Australian dollars to 350.0 million Australian dollars; (ii) increase the quarterly principal payments from 6.3
million Australian dollars per year to 8.8 million Australian dollars per year; and (iii) decrease the interest rate on the AUD
Term Loan from BBSY (an Australian benchmark variable interest rate) plus 4.3% to BBSY plus 3.875%. The interest rate in
effect under the AUD Term Loan was 4.8% as of December 31, 2019. The AUD Term Loan matures in September 2022. All
indebtedness associated with the AUD Term Loan was issued at 99% of par. The net proceeds associated with the AUD Term
Loan Amendment of approximately 99.0 million Australian dollars (or approximately $75.6 million, based upon the exchange
rate between the Australian dollar and the United States dollar on March 29, 2018 (the closing date of the AUD Term Loan
Amendment)), net of the original discount, were used to repay outstanding borrowings under the Revolving Credit Facility. See
Note 4 to Notes to Consolidated Financial Statements included in this Annual Report for additional details on the AUD Term
Loan.
62
d. UK Bilateral Revolving Credit Facility
On September 24, 2018, Iron Mountain (UK) PLC ("IM UK") and Iron Mountain (UK) Data Centre Limited entered into
a 140.0 million British pounds sterling Revolving Credit Facility (the "UK Bilateral Facility") with Barclays Bank PLC. The
maximum amount permitted to be borrowed under the UK Bilateral Facility is 140.0 million British pounds sterling, and we
have the option to request additional commitments of up to 125.0 million British pounds sterling, subject to the conditions
specified in the UK Bilateral Facility. The UK Bilateral Facility was fully utilized on September 24, 2018 (the closing date of
the UK Bilateral Facility). The initial net proceeds received under the UK Bilateral Facility of 138.3 million British pounds
sterling (or approximately $180.3 million, based upon the exchange rate between the British pound sterling and the United
States dollar on September 24, 2018 (the closing date of the UK Bilateral Facility)), net of upfront fees, were used to repay
borrowings under the Revolving Credit Facility. The UK Bilateral Facility is secured by certain properties in the United
Kingdom. IMI and its direct and indirect 100% owned United States subsidiaries that represent the substantial majority of its
United States operations guarantee all the obligations under the UK Bilateral Facility. The UK Bilateral Facility is scheduled to
mature on September 23, 2022, at which point all obligations become due. The UK Bilateral Facility contains an option to
extend the maturity date for an additional year, subject to the conditions specified in the UK Bilateral Facility, including the
lender's consent. The UK Bilateral Facility bears interest at LIBOR plus 2.25%. The interest rate in effect under the UK
Bilateral Facility as of December 31, 2019 was 3.1%.
e. Accounts Receivable Securitization Program
In March 2015, we entered into a $250.0 million accounts receivable securitization program (the "Accounts Receivable
Securitization Program") involving several of our wholly owned subsidiaries and certain financial institutions. Under the
Accounts Receivable Securitization Program, certain of our subsidiaries sell substantially all of their United States accounts
receivable balances to our wholly owned special purpose entities, Iron Mountain Receivables QRS, LLC and Iron Mountain
Receivables TRS, LLC (the "Accounts Receivable Securitization Special Purpose Subsidiaries"). The Accounts Receivable
Securitization Special Purpose Subsidiaries use the accounts receivable balances to collateralize loans obtained from certain
financial institutions. The Accounts Receivable Securitization Special Purpose Subsidiaries are consolidated subsidiaries of
IMI. IMIM retains the responsibility of servicing the accounts receivable balances pledged as collateral for the Accounts
Receivable Securitization Program and IMI provides a performance guaranty. The maximum availability allowed is limited by
eligible accounts receivable, as defined under the terms of the Accounts Receivable Securitization Program.
On July 31, 2017, we amended the Accounts Receivable Securitization Program to (i) increase the maximum amount
available from $250.0 million to $275.0 million and (ii) to extend the maturity date from March 6, 2018 to July 30, 2020, at
which point all obligations become due. As the Accounts Receivable Securitization Program matures on July 30, 2020, the
amount outstanding under the Accounts Receivable Securitization Program is classified within the current portion of long-term
debt in our Consolidated Balance Sheet as of December 31, 2019. As of December 31, 2019, the maximum availability allowed
and amount outstanding under the Accounts Receivable Securitization Program was $272.1 million. The interest rate in effect
under the Accounts Receivable Securitization Program was 2.8% as of December 31, 2019. Commitment fees at a rate of 40
basis points are charged on amounts made available but not borrowed under the Accounts Receivable Securitization Program.
f. Letters of Credit
As of December 31, 2019, we had outstanding letters of credit totaling $35.3 million, of which $4.9 million reduce our
borrowing capacity under the Revolving Credit Facility (as described above). The letters of credit expire at various dates
between January 2020 and January 2033.
g. Debt Covenants
The Credit Agreement, our indentures and other agreements governing our indebtedness contain certain restrictive
financial and operating covenants, including covenants that restrict our ability to complete acquisitions, pay cash dividends,
incur indebtedness, make investments, sell assets and take certain other corporate actions. The covenants do not contain a rating
trigger. Therefore, a change in our debt rating would not trigger a default under the Credit Agreement, our indentures or other
agreements governing our indebtedness. The Credit Agreement uses EBITDAR-based calculations as the primary measures of
financial performance, including leverage and fixed charge coverage ratios.
63
Our leverage and fixed charge coverage ratios under the Credit Agreement as of December 31, 2019 and 2018, as well as
our leverage ratio under our indentures as of December 31, 2019 and 2018 are as follows:
Net total lease adjusted leverage ratio
Net secured debt lease adjusted leverage ratio
Bond leverage ratio (not lease adjusted)
Fixed charge coverage ratio
December 31, 2019
5.7
2.3
5.9
2.2
______________________________________________________________
December 31, 2018
Maximum/Minimum Allowable
5.6 Maximum allowable of 6.5
2.6 Maximum allowable of 4.0
5.8 Maximum allowable of 6.5-7.0(1)
2.2 Minimum allowable of 1.5
(1) The maximum allowable leverage ratio under our indentures for the GBP Notes due 2025, the 47/8% Notes due 2027,
the 51/4% Notes and the 47/8% Notes due 2029 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.
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
In July 2019, we entered into forward-starting interest rate swap agreements to limit our exposure to changes in interest
rates on a portion of our floating rate indebtedness once our current interest rate swaps expire in March 2022. The forward-
starting interest rate swap agreements have $350.0 million in notional value, commence in March 2022 and expire in March
2024. Under the swap agreements we will receive variable rate interest payments based upon one-month LIBOR, in exchange
for the payment of fixed interest rate payments at the rates specified in the interest rate swap agreements. We have designated
these interest rate swap agreements as cash flow hedges.
In August 2019, we entered into cross-currency swap agreements to hedge the variability of exchange rate impacts
between the United States dollar and the Euro. Under the terms of the cross-currency swap agreements we notionally
exchanged approximately $110.0 million at an interest rate of 6.0% for approximately 99.1 million Euros at a weighted average
interest rate of approximately 3.65%. 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. We have designated these cross-currency swap agreements as net investment hedges.
See Note 3 to Notes to Consolidated Financial Statements included in this Annual Report for additional information on
our derivative instruments.
Equity Financing
In October 2017, we entered into the Distribution Agreement with 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 At The Market (ATM) Equity Program.
Sales of our common stock made pursuant to the Distribution Agreement may be made in negotiated transactions or
transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales
made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed
between the applicable Agent and us. We intend to use the net proceeds from sales of our common stock pursuant to the At The
Market (ATM) Equity Program for general corporate purposes, which may include acquisitions and investments, including
acquisitions and investments in our Global Data Center Business, and repaying amounts outstanding from time to time under
the Revolving Credit Facility.
64
During the quarter and year ended December 31, 2019, there were no shares of common stock sold under the At The
Market (ATM) Equity Program. As of December 31, 2019, the remaining aggregate sale price of shares of our common stock
available for distribution under the At The Market (ATM) Equity Program was approximately $431.2 million.
See Note 12 to Notes to Consolidated Financial Statements included in this Annual Report for additional information
regarding our equity financing.
Acquisitions
a. Acquisitions
See Note 6 to Notes to Consolidated Financial Statements included in this Annual Report for information regarding our
2019 acquisitions.
On January 9, 2020, we acquired the remaining 75% equity interest in OSG for cash consideration of 6,026 million
Russian rubles (or approximately $95.1 million, based upon the exchange rate between the Russian ruble and the United States
dollar on the closing date of the OSG Acquisition) (the "OSG Acquisition"). The OSG Acquisition will enable us to extend our
Global RIM Business in Russia, Ukraine, Kazakhstan, Belarus, and Armenia. Commencing on the date of the OSG Acquisition
we will fully consolidate the results of OSG within our consolidated financial statements.
b. Significant Acquisition Costs and Capital Expenditures
Included in Significant Acquisition Costs are certain costs associated with the Recall Transaction and the IODC
Transaction. Significant Acquisition Costs associated with the Recall Transaction and the IODC Transaction and capital
expenditures to integrate Recall with our existing operations ("Recall Capital Expenditures"), were $403.8 million, the
substantial majority of which were incurred prior to the end of 2018.
The following table presents the cumulative amount of Significant Acquisition Costs and Recall Capital Expenditures
incurred for the years ended December 31, 2019, 2018 and 2017 and the cumulative amount incurred through December 31,
2019 (in thousands):
Year Ended December 31,
2019
2018
2017
Cumulative Total Through
December 31, 2019
Significant Acquisition Costs
Recall Capital Expenditures
Total
$
$
13,293
2,447
15,740
$
$
50,665
23,640
74,305
$
$
84,901
31,441
116,342
$
$
327,817
75,984
403,801
65
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2019 and the anticipated effect of these
obligations on our liquidity in future years (in thousands):
Financing Lease Obligations(1)
Long-Term Debt Obligations (excluding
Financing Lease Obligations)
Interest Payments(2)
Operating Lease Obligations(3)
Purchase, Asset Retirement and Other
Obligations(4)
Payments Due by Period
Total
511,019
$
Less than
1 Year
1–3 Years
3–5 Years
More than
5 Years
$
62,271
$
99,879
$
70,979
$
277,890
8,386,949
2,241,373
2,915,409
342,430
395,344
339,469
1,026,353
2,376,165
4,642,001
713,343
615,609
568,046
505,413
564,640
1,454,918
269,975
134,127
100,688
3,989
31,171
Total(5)(6)
$14,324,725
$ 1,273,641
$ 2,555,872
$ 3,524,592
$ 6,970,620
_______________________________________________________________________________
(1) Excluded from our financing lease obligations is the potential obligation related to an agreement we entered into in the
fourth quarter of 2019 to lease a facility in the United Kingdom that is currently under construction. The exact terms
of the lease will be determined upon the completion of building construction, which is expected to occur in late 2020.
We expect the rent due in the first year of the lease to be approximately $5.0 million, and we expect the term of the
lease to be approximately 25 years.
(2) Amounts include variable rate interest payments, which are calculated utilizing the applicable interest rates as of
December 31, 2019; see Note 4 to Notes to Consolidated Financial Statements included in this Annual Report.
(3) These amounts are net of sublease income of $34.1 million in total (including $7.7 million, $10.3 million, $8.4 million
and $7.7 million, in less than 1 year, 1-3 years, 3-5 years and more than 5 years, respectively).
(4) Purchase commitments include obligations for future construction costs associated with the expansion of our Global
Data Center Business, which represent a significant amount of the purchase commitments due in less than one year.
(5) The table above excludes $35.1 million in uncertain tax positions as we are unable to make reliable estimates of the
period of cash settlement, if any, with the respective taxing authorities.
(6) The table above excludes $67.7 million of redeemable noncontrolling interests, which represents the estimated
redemption value of the redeemable noncontrolling interests. See Note 2.v. to Notes to Consolidated Financial
Statements included in this Annual Report. This table also excludes purchase commitments associated with
acquisitions closed or expected to close in 2020.
We expect to meet our cash flow requirements for the next twelve months from cash generated from operations, cash on
hand, borrowings under the Credit Agreement and other financings (including the issuance of equity under our At The Market
(ATM) Equity Program). We expect to meet our long-term cash flow requirements using the same means described above. We
are currently operating above our long-term targeted leverage ratio and expect our leverage ratio to reduce over time through
effective capital allocation strategies and business growth.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4)(ii).
66
Net Operating Losses
At December 31, 2019, we have federal net operating loss carryforwards of $152.7 million available to reduce future
federal taxable income, the majority of which expire from 2024 through 2037. Of the $152.7 million, we expect to utilize $39.2
million and realize a federal tax benefit of $8.2 million. We can carry forward these net operating losses to the extent we do not
utilize them in any given available year. We have state net operating loss carryforwards, which expire from 2020 through 2039,
of which an insignificant state tax benefit is expected to be realized. We have assets for foreign net operating losses of $90.8
million, with various expiration dates (and in some cases no expiration date), subject to a valuation allowance of approximately
64%.
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 7A. Quantitative and Qualitative Disclosures About Market Risk.
Credit Risk
Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents (including
money market funds and time deposits) and accounts receivable. The only significant concentrations of liquid investments as of
December 31, 2019 relate to cash and cash equivalents held in money market funds with seven "Triple A" rated money market
funds. As per our risk management investment policy, we limit exposure to concentration of credit risk by limiting the amount
invested in any one mutual fund to a maximum of 1% of the fund total assets or in any one financial institution to a maximum
of $50.0 million. As of December 31, 2019, our cash and cash equivalents balance, including restricted cash, was $193.6
million.
Interest Rate Risk
Given the recurring nature of our revenues and the long-term nature of our asset base, we have the ability and the
preference to use long-term, fixed interest rate debt to finance our business at attractive rates, thereby helping to preserve our
long-term returns on invested capital. We target approximately 75% of our debt portfolio to be fixed with respect to interest
rates. Occasionally, we may use interest rate swaps as a tool to maintain our targeted level of fixed rate debt.
In March 2018, we entered into interest rate swap agreements to limit our exposure to changes in interest rates on a
portion of our floating rate indebtedness. As of December 31, 2019, we had $350.0 million in notional value of interest rate
swap agreements outstanding, which expire in March 2022. Under the interest rate swap agreements, we receive variable rate
interest payments associated with the notional amount of each interest rate swap, based upon one-month LIBOR, in exchange
for the payment of fixed interest rate payments (at the fixed interest rate specified in the interest rate swap agreements).
In July 2019, we entered into forward-starting interest rate swap agreements to limit our exposure to changes in interest
rates on a portion of our floating rate indebtedness once our current interest rate swaps expire in March 2022. The forward-
starting interest rate swap agreements have $350.0 million in notional value, commence in March 2022 and expire in March
2024. Under the swap agreements we will receive variable rate interest payments based upon one-month LIBOR, in exchange
for the payment of fixed interest rate payments at the rates specified in the interest rate swap agreements. We have designated
these interest rate swap agreements as cash flow hedges.
As of December 31, 2019, we had $1,692.5 million of variable rate debt outstanding with a weighted average variable
interest rate of approximately 3.8%, and $7,059.0 million of fixed rate debt outstanding. As of December 31, 2019,
approximately 81% of our total debt outstanding was fixed. If the weighted average variable interest rate on our variable rate
debt had increased by 1%, our net income for the year ended December 31, 2019 would have been reduced by approximately
$18.6 million.
67
See Note 3 to Notes to Consolidated Financial Statements included in this Annual Report for a discussion on our interest
rate swaps and Note 4 to Notes to Consolidated Financial Statements included in this Annual Report for a discussion of our
long-term indebtedness, including the fair values of such indebtedness as of December 31, 2019.
Currency Risk
Our international investments may be subject to risks and uncertainties related to fluctuations in currency valuation. Our
reporting currency is the United States dollar. However, our international revenues and expenses are generated in the currencies
of the countries in which we operate, primarily the British pound sterling, Euro, Canadian dollar, Brazilian real and the
Australian dollar. Declines in the value of the local currencies in which we are paid relative to the United States dollar will
cause revenues in United States dollar terms to decrease and dollar-denominated liabilities to increase in local currency.
The impact of currency fluctuations on our earnings is mitigated by the fact that most operating and other expenses are
also incurred and paid in the local currency. We also have several intercompany obligations between our foreign subsidiaries
and IMI and our United States-based subsidiaries. In addition, our foreign subsidiaries and IME also have intercompany
obligations between them. These intercompany obligations are primarily denominated in the local currency of the foreign
subsidiary.
We have adopted and implemented a number of strategies to mitigate the risks associated with fluctuations in foreign
currency exchange rates. One strategy is to finance certain of our international subsidiaries with debt that is denominated in
local currencies, thereby providing a natural hedge. In determining the amount of any such financing, we take into account
local tax considerations, among other factors. Another strategy we utilize is for IMI or IMIM, a wholly-owned subsidiary of
IMI, to borrow in foreign currencies to hedge our intercompany financing activities. In addition, on occasion, we enter into
currency swaps to temporarily or permanently hedge an overseas investment, such as a major acquisition, to lock in certain
transaction economics. We have implemented these strategies for our foreign investments in the United Kingdom, Canada,
Australia, Latin America and continental Europe. IM UK has financed a portion of its capital needs through the issuance in
British pounds sterling of the GBP Notes due 2025. Our Australian business has financed a portion of its capital needs through
direct borrowings in Australian dollars under the AUD Term Loan. Similarly, Iron Mountain Canada Operations ULC has
financed a portion of its capital needs through direct borrowings in Canadian dollars under the Credit Agreement and through
the issuance of the CAD Notes due 2023. This creates a tax efficient natural currency hedge.
During the year ended December 31, 2019, we designated a portion of the Euro Notes as a hedge of net investment of
certain of our Euro denominated subsidiaries. As a result, we recorded $6.0 million ($6.0 million net of tax) of foreign
exchange gains related to the "marking-to-market" of such debt to currency translation adjustments which is a component of
Accumulated other comprehensive items, net included in our Consolidated Balance Sheet for the year ended December 31,
2019. As of December 31, 2019, cumulative net gains of $20.3 million, net of tax are recorded in Accumulated other
comprehensive items, net associated with this net investment hedge.
In August 2019, we entered into cross-currency swap agreements to hedge the variability of exchange rate impacts
between the United States dollar and the Euro. Under the terms of the cross-currency swap agreements we notionally
exchanged approximately $110.0 million at an interest rate of 6.0% for approximately 99.1 million Euros at a weighted average
interest rate of approximately 3.65%. The cross-currency swap agreements, which expire in August 2023, are designated as a
hedge of net investment against certain of our Euro denominated subsidiaries and require an exchange of the notional amounts
at maturity. The cross-currency swaps are marked to market at each reporting period and any changes in fair value are
recognized as a component of Accumulated other comprehensive items, net. Unrealized gains are recognized as assets while
unrecognized losses are recognized as liabilities. At December 31, 2019, we had a derivative liability of $1.0 million, which
was recorded as a component of Other within Other assets, net in our Consolidated Balance Sheet, which represents the fair
value of the cross-currency swap agreements. We have recorded unrealized losses of $1.0 million for the year ended December
31, 2019.
68
As of December 31, 2019, we had no outstanding forward contracts. At the maturity of any forward contract, we may
enter into a new forward contract to hedge movements in the underlying currencies. At the time of settlement, we either pay or
receive the net settlement amount from any forward contract and recognize this amount in Other expense (income), net in the
accompanying statements of operations as a realized foreign exchange gain or loss. At the end of each month, we mark the
outstanding forward contracts to market and record an unrealized foreign exchange gain or loss for the mark-to-market
valuation. We have not designated any of the forward contracts we have entered as hedges. During the year ended
December 31, 2019, cash payments included in cash from operating activities from continuing operations related to settlements
associated with foreign currency forward contracts were $0.7 million. We recorded net losses in connection with forward
contracts of $0.7 million related to the forward contracts in Other expense (income), net as of December 31, 2019 in the
Consolidated Financial Statements included in this Annual Report. As of December 31, 2019, except as noted above, our
currency exposures to intercompany balances are not hedged.
The impact of devaluation or depreciating currency on an entity depends on the residual effect on the local economy and
the ability of an entity to raise prices and/or reduce expenses. Due to our constantly changing currency exposure and the
potential substantial volatility of currency exchange rates, we cannot predict the effect of exchange fluctuations on our
business. The effect of a change in foreign currency exchange rates on our net investment in foreign subsidiaries is reflected in
the "Accumulated Other Comprehensive Items, net" component of equity. A 10% depreciation in year-end 2019 functional
currencies, relative to the United States dollar, would result in a reduction in our equity of approximately $257.8 million.
Item 8. Financial Statements and Supplementary Data.
The information required by this item is included in Item 15(a) of this Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
69
Item 9A. 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 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 December 31, 2019 (the "Evaluation Date"), we carried out an evaluation,
under the supervision and with the participation of our management, including our chief executive officer and chief financial
officer, of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, our chief executive officer
and chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective.
Management's Report on 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. Due to their inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the
degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of our
management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness
of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management
concluded that our internal control over financial reporting was effective as of December 31, 2019.
The effectiveness of our internal control over financial reporting has been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report which is included in this Annual Report.
70
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Iron Mountain Incorporated
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Iron Mountain Incorporated and subsidiaries (the “Company”)
as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in
Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our
report dated February 13, 2020, expressed an unqualified opinion on those financial statements and included an explanatory
paragraph regarding the Company’s adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), as amended.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 13, 2020
71
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.
In the ordinary course of business, we may routinely modify, upgrade or enhance our internal controls and procedures for
financial reporting. During the last two months of the year ended December 31, 2019, we reorganized certain internal controls
as a result of Project Summit. However, there were no changes in our internal control over financial reporting (as defined in
Rule 13a-15(f) under the Securities Act of 1934) during the quarter ended December 31, 2019 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
72
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
The information required by Item 10 is incorporated by reference to our Proxy Statement.
Item 11. Executive Compensation.
The information required by Item 11 is incorporated by reference to our Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by Item 12 is incorporated by reference to our Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by Item 13 is incorporated by reference to our Proxy Statement.
Item 14. Principal Accountant Fees and Services.
The information required by Item 14 is incorporated by reference to our Proxy Statement.
Item 15. Exhibits and Financial Statement Schedules.
(a) Financial Statements filed as part of this report:
PART IV
Iron Mountain Incorporated
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets, December 31, 2019 and 2018
Consolidated Statements of Operations, Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income (Loss), Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Equity, Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Cash Flows, Years Ended December 31, 2019, 2018 and 2017
Notes to Consolidated Financial Statements
Financial Statement Schedule III—Schedule of Real Estate and Accumulated Depreciation
Page
74
76
77
78
79
80
81
160
(b) Exhibits filed as part of this report: As listed in the Exhibit Index following the Financial Statement Schedule III-
Schedule of Real Estate and Accumulated Depreciation.
73
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Iron Mountain Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Iron Mountain Incorporated and subsidiaries (the
"Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income
(loss), equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes and the
schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and
the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity
with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 13, 2020, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in
2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), as amended, using the modified
retrospective approach.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
74
Goodwill - Global Data Center Reporting Unit - Refer to Note 2.h. to the financial statements
Critical Audit Matter Description
The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its
carrying value. The Company determined the fair value of the Global Data Center reporting unit using a combined approach
based on the present value of future cash flows (the "Discounted Cash Flow Model") and market multiples (the "Market
Approach"). The determination of the fair value using the Discounted Cash Flow Model requires management to make
significant assumptions related to future revenue growth rates, operating margins, discount rates and capital expenditures. The
determination of the fair value using the Market Approach requires management to make significant assumptions related to
adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") multiples. Changes in economic
and operating conditions impacting these assumptions or changes in multiples could result in goodwill impairments in future
periods. The goodwill balance allocated to the Global Data Center reporting unit was $421 million as of October 1, 2019
(goodwill impairment testing date). The fair value of the Global Data Center reporting unit exceeded its carrying value as of the
measurement date and, therefore, no impairment was recognized.
The Global Data Center reporting unit's fair value exceeded its carrying value by less than 10%, accordingly, auditing the
assumptions used in the goodwill impairment analysis for this reporting unit involved especially subjective judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to future revenue growth rates, operating margins and capital expenditures (collectively, the
"Forecast"), Adjusted EBITDA multiples and the selection of discount rates for the Global Data Center reporting unit included
the following, among others:
• We tested the effectiveness of controls over goodwill, including those over the Forecast and the selection of the
Adjusted EBITDA multiples and discount rates.
• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical
forecasts.
• We evaluated the reasonableness of management’s Forecast by comparing it to (1) historical results, (2) internal
communications to management and the Board of Directors, and (3) forecasted information included in Company
press releases and industry reports of the Company and companies in its peer group.
• With the assistance of our fair value specialists, we evaluated the Adjusted EBITDA multiples, including testing the
underlying source information and mathematical accuracy of the calculations and comparing the multiples selected by
management to its guideline companies.
• With the assistance of our fair value specialists, we evaluated the discount rates, including testing the underlying
source information and the mathematical accuracy of the calculations, and developing a range of independent
estimates and comparing those to the discount rates selected by management.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 13, 2020
We have served as the Company's auditor since 2002.
75
IRON MOUNTAIN INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable (less allowances of $42,856 and $43,584 as of December 31, 2019 and 2018, respectively)
Prepaid expenses and other
Total Current Assets
Property, Plant and Equipment:
Property, plant and equipment
Less—Accumulated depreciation
Property, Plant and Equipment, net
Other Assets, Net:
Goodwill
Customer relationships, customer inducements and data center lease-based intangibles
Operating lease right-of-use assets (see Note 2.m.)
Other
Total Other Assets, Net
Total Assets
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt
Accounts payable
Accrued expenses and other current liabilities (includes current portion of operating lease liabilities, see Note
2.m.)
Deferred revenue
Total Current Liabilities
Long-term Debt, net of current portion
Long-term Operating Lease Liabilities, net of current portion (see Note 2.m.)
Other Long-term Liabilities
Deferred Rent (see Note 2.m.)
Deferred Income Taxes
Commitments and Contingencies (see Note 10)
Redeemable Noncontrolling Interests (see Note 2.v.)
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 287,299,645 shares
and 286,321,009 shares as of December 31, 2019 and 2018, respectively)
Additional paid-in capital
(Distributions in excess of earnings) Earnings in excess of distributions
Accumulated other comprehensive items, net
Total Iron Mountain Incorporated Stockholders' Equity
Noncontrolling Interests
Total Equity
Total Liabilities and Equity
December 31,
2019
2018
$
193,555
$
850,701
192,083
1,236,339
8,048,906
(3,425,869)
4,623,037
4,485,209
1,393,183
1,869,101
209,947
7,957,440
$
$
13,816,816
$
389,013
$
324,708
961,752
274,036
1,949,509
8,275,566
1,728,686
143,018
—
188,128
165,485
846,889
195,740
1,208,114
7,600,949
(3,111,392)
4,489,557
4,441,030
1,506,522
—
211,995
6,159,547
11,857,218
126,406
318,765
780,781
264,823
1,490,775
8,016,417
—
111,331
121,864
183,836
67,682
70,532
—
2,873
4,298,566
(2,574,896)
(262,581)
1,463,962
265
1,464,227
$
13,816,816
$
—
2,863
4,263,348
(2,139,493)
(265,664)
1,861,054
1,409
1,862,463
11,857,218
The accompanying notes are an integral part of these consolidated financial statements.
76
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Revenues:
Storage rental
Service
Total Revenues
Operating Expenses:
Cost of sales (excluding depreciation and amortization)
Selling, general and administrative
Depreciation and amortization
Significant Acquisition Costs (see Note 2.x.)
Restructuring Charges (see Note 14)
Intangible impairments
(Gain) Loss on disposal/write-down of property, plant and equipment, net
Total Operating Expenses
Operating Income (Loss)
Interest Expense, Net (includes Interest Income of $6,559, $6,553 and $7,659 in 2019,
2018 and 2017, respectively)
Other Expense (Income), Net
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income
Taxes
Provision (Benefit) for Income Taxes
Income (Loss) from Continuing Operations
Income (Loss) from Discontinued Operations, Net of Tax
Net Income (Loss)
Less: Net Income (Loss) Attributable to Noncontrolling Interests
Net Income (Loss) Attributable to Iron Mountain Incorporated
Earnings (Losses) per Share—Basic:
Income (Loss) from Continuing Operations
Total (Loss) Income from Discontinued Operations, Net of Tax
Net Income (Loss) Attributable to Iron Mountain Incorporated
Earnings (Losses) per Share—Diluted:
Income (Loss) from Continuing Operations
Total (Loss) Income from Discontinued Operations, Net of Tax
Net Income (Loss) Attributable to Iron Mountain Incorporated
Weighted Average Common Shares Outstanding—Basic
Weighted Average Common Shares Outstanding—Diluted
Year Ended December 31,
2019
2018
2017
$
2,681,087
$
2,622,455
$
1,581,497
4,262,584
1,833,315
991,664
658,201
13,293
48,597
—
(63,824)
3,481,246
781,338
419,298
33,898
328,142
59,931
268,211
104
268,315
938
267,377
0.93
$
$
— $
0.93
0.93
$
$
— $
0.93
$
1,603,306
4,225,761
1,793,954
1,006,983
639,514
50,665
—
—
(73,622)
3,417,494
808,267
409,648
(11,692)
410,311
42,753
367,558
(12,427)
355,131
1,198
353,933
1.28
$
$
(0.04) $
1.24
1.28
$
$
(0.04) $
1.23
$
$
$
$
$
$
$
$
2,377,557
1,468,021
3,845,578
1,664,825
937,180
522,376
84,901
—
3,011
(766)
3,211,527
634,051
353,645
79,429
200,977
22,962
178,015
(6,291)
171,724
1,611
170,113
0.66
(0.02)
0.64
0.66
(0.02)
0.64
286,971
287,687
285,913
286,653
265,898
266,845
The accompanying notes are an integral part of these consolidated financial statements.
77
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Net Income (Loss)
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustment
Change in Fair Value of Derivative Instruments
Total Other Comprehensive Income (Loss)
Comprehensive Income (Loss)
Comprehensive Income (Loss) Attributable to Noncontrolling Interests
Year Ended December 31,
2019
2018
2017
$
268,315
$
355,131
$
171,724
11,994
(8,783)
3,211
271,526
1,066
(164,107)
108,564
(973)
(165,080)
190,051
(2,207)
—
108,564
280,288
1,591
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated
$
270,460
$
192,258
$
278,697
The accompanying notes are an integral part of these consolidated financial statements.
78
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share data)
Iron Mountain Incorporated Stockholders' Equity
Common Stock
Total
Shares
Amounts
Earnings in
Excess of
Distributions
(Distributions in
Excess of
Earnings)
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Items, Net
Noncontrolling
Interests
Redeemable
Noncontrolling
Interests
Balance, December 31, 2016
$
1,936,671
263,682,670
$
2,636
$
3,489,795
$
(1,343,311)
$
(212,573)
$
124
$
54,697
Issuance of shares under employee stock
purchase plan and option plans and stock-
based compensation
Issuance of shares in connection with the
Equity Offering, net of underwriting
discounts and offering expenses (see Note 12)
Issuance of shares through the At The Market
(ATM) Equity Program, net of underwriting
discounts and offering expenses (see Note 12)
Issuance of shares in connection with the
Fortrust Transaction (see Note 6)
Change in value of redeemable
noncontrolling interests (see Note 2.v.)
Parent cash dividends declared
Foreign currency translation adjustment
Net income (loss)
Noncontrolling interests equity contributions
Noncontrolling interests dividends
Purchase of noncontrolling interests
Balance, December 31, 2017
Cumulative-effect adjustment for adoption of
ASU 2014-09 (see Note 2.l.)
Issuance of shares under employee stock
purchase plan and option plans and stock-
based compensation
Issuance of shares in connection with the
Over-Allotment Option, net of underwriting
discounts and offering expenses (see Note 12)
Issuance of shares through the At The Market
(ATM) Equity Program, net of underwriting
discounts and offering expenses (see Note 12)
Changes in equity related redeemable
noncontrolling interests (see Note 2.v.)
Parent cash dividends declared
Foreign currency translation adjustment
Change in fair value of derivative instruments
Net income (loss)
Noncontrolling interests dividends
Balance, December 31, 2018
43,110
1,252,823
13
43,097
515,952
14,500,000
145
515,807
58,566
1,481,053
83,014
2,193,637
(25,680)
(606,476)
108,481
171,945
—
(1,956)
1,507
—
—
—
—
—
—
—
15
22
—
—
—
—
—
—
—
58,551
82,992
(25,680)
—
—
—
—
—
—
—
—
—
—
—
(606,476)
—
170,113
—
—
—
—
—
—
—
—
—
108,584
—
—
—
—
2,285,134
283,110,183
2,831
4,164,562
(1,779,674)
(103,989)
(30,233)
—
30,020
762,340
76,192
2,175,000
8,716
273,486
(16,110)
(683,519)
(160,548)
(973)
353,784
—
—
—
—
—
—
—
—
8
22
2
—
—
—
—
—
—
—
(30,233)
30,012
76,170
8,714
(16,110)
—
—
—
—
—
—
—
—
—
(683,519)
—
—
353,933
—
—
—
—
—
—
—
(160,702)
(973)
—
—
1,862,463
286,321,009
2,863
4,263,348
(2,139,493)
(265,664)
Cumulative-effect adjustment for adoption of
ASU 2016-02 (see Note 2.m.)
5,781
—
Issuance of shares under employee stock
purchase plan and option plans and stock-
based compensation
Changes in equity related redeemable
noncontrolling interests (see Note 2.v.)
Parent cash dividends declared
Foreign currency translation adjustment
Change in fair value of derivative instruments
Net income (loss)
Noncontrolling interests dividends
Balance, December 31, 2019
36,682
978,636
(1,454)
(708,561)
11,866
(8,783)
266,233
—
—
—
—
—
—
—
—
10
—
—
—
—
—
—
—
5,781
36,672
(1,454)
—
—
—
—
—
—
—
(708,561)
—
—
267,377
—
—
—
—
—
11,866
(8,783)
—
—
$
1,464,227
287,299,645
$
2,873
$
4,298,566
$
(2,574,896)
$
(262,581)
$
The accompanying notes are an integral part of these consolidated financial statements.
79
—
—
—
—
—
—
(103)
1,832
—
(1,956)
1,507
1,404
—
—
—
—
—
—
154
—
(149)
—
1,409
—
—
—
—
—
—
(1,144)
—
265
$
—
—
—
—
25,680
—
83
(221)
13,230
(2,051)
—
91,418
—
—
—
—
(16,151)
—
(3,559)
—
1,347
(2,523)
70,532
—
—
(3,136)
—
128
—
2,082
(1,924)
67,682
IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2019
2018
2017
Cash Flows from Operating Activities:
Net income (loss)
(Income) loss from discontinued operations
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation
Amortization (includes amortization of deferred financing costs and discounts of $16,740, $15,675 and $14,962 in 2019, 2018 and
2017, respectively)
Intangible impairments
Revenue reduction associated with amortization of permanent withdrawal fees and above- and below-market leases (see Note 2.i.)
Stock-based compensation expense
(Benefit) provision for deferred income taxes
Loss on early extinguishment of debt
(Gain) loss on disposal/write-down of property, plant and equipment, net
Gain on Russia and Ukraine Divestment (see Note 13)
Foreign currency transactions and other, net
Decrease (increase) in assets
Increase (decrease) in liabilities
Cash Flows from Operating Activities-Continuing Operations
Cash Flows from Operating Activities-Discontinued Operations
Cash Flows from Operating Activities
Cash Flows from Investing Activities:
Capital expenditures
Cash paid for acquisitions, net of cash acquired (see Note 6)
Acquisition of customer relationships
Customer inducements (see Note 2.i.)
Customer fulfillment costs and third party commissions (see Note 2.l.)
Net proceeds from divestments (see Note 13)
Investments in Joint Ventures (see Note 13)
Proceeds from sales of property and equipment and other, net (including real estate) and proceeds from involuntary conversion of
property and equipment
Cash Flows from Investing Activities-Continuing Operations
Cash Flows from Investing Activities-Discontinued Operations
Cash Flows from Investing Activities
Cash Flows from Financing Activities:
Repayment of revolving credit facilities, term loan facilities and other debt
Proceeds from revolving credit facilities, term loan facilities and other debt
Early retirement of senior subordinated and senior notes
Net proceeds from sales of senior notes
Debt financing and equity contribution from noncontrolling interests
Debt repayment and equity distribution to noncontrolling interests
Parent cash dividends
Net proceeds associated with the Equity Offering, including Over-Allotment Option
Net proceeds associated with the At The Market (ATM) Program
Net proceeds (payments) associated with employee stock-based awards
Payment of debt financing and stock issuance costs and other
Cash Flows from Financing Activities-Continuing Operations
Cash Flows from Financing Activities-Discontinued Operations
Cash Flows from Financing Activities
Effect of Exchange Rates on Cash and Cash Equivalents
Increase (decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, including Restricted Cash, Beginning of Year
Cash and Cash Equivalents, including Restricted Cash, End of Year
Supplemental Information:
Cash Paid for Interest
Cash Paid for Income Taxes, Net
Non-Cash Investing and Financing Activities:
Financing Leases (see Note 2.m.)
Accrued Capital Expenditures
Accrued Purchase Price and Other Holdbacks (see Note 6)
Dividends Payable
Fair Value of Stock Issued for Fortrust Transaction (see Note 6)
$
268,315
$
(104)
456,323
218,618
—
13,703
35,654
(624)
—
(63,824)
—
29,838
5,404
3,352
966,655
—
966,655
(692,983)
(58,237)
(46,105)
(9,371)
(76,171)
—
(19,222)
166,143
(735,946)
5,061
(730,885)
355,131
$
12,427
452,740
202,449
—
16,281
31,167
(4,239)
—
(74,134)
—
(16,395)
(36,054)
(2,829)
936,544
(995)
935,549
(460,062)
(1,758,557)
(63,577)
(8,902)
(26,208)
1,019
—
86,159
(2,230,128)
8,250
(2,221,878)
(14,535,115)
14,059,818
(14,192,139)
15,351,614
—
987,500
—
(1,924)
(704,526)
—
—
1,027
(5,753)
(198,973)
—
(198,973)
(8,727)
28,070
165,485
193,555
394,984
61,691
32,742
82,345
4,135
186,021
$
$
$
$
$
$
$
—
—
—
(2,523)
(673,635)
76,192
8,716
(1,142)
(16,405)
550,678
—
550,678
(24,563)
(760,214)
925,699
165,485
388,440
64,493
83,948
84,143
35,218
181,986
$
$
$
$
$
$
$
— $
— $
$
$
$
$
$
$
$
$
171,724
6,291
406,283
131,055
3,011
11,253
30,019
(39,355)
78,368
(766)
(38,869)
50,503
(93,805)
8,547
724,259
(3,291)
720,968
(343,131)
(219,705)
(55,126)
(20,059)
—
29,236
—
9,337
(599,448)
—
(599,448)
(14,429,695)
13,917,055
(1,746,856)
2,656,948
13,230
(4,151)
(439,999)
516,462
59,129
13,095
(14,793)
540,425
—
540,425
27,270
689,215
236,484
925,699
368,468
104,498
166,843
71,098
20,093
172,102
83,014
The accompanying notes are an integral part of these consolidated financial statements.
80
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019
(In thousands, except share and per share data)
1. Nature of Business
The accompanying financial statements represent the consolidated accounts of Iron Mountain Incorporated, a Delaware
corporation (“IMI”), and its subsidiaries (“we” or “us”). We help organizations around the world protect their information,
reduce storage rental costs, comply with regulations, facilitate corporate disaster recovery, and better use their information and
information technology ("IT") infrastructure for business advantages, regardless of its format, location or life cycle stage. We
do this by storing physical records and data backup media, offering information management solutions, and providing data
center space for enterprise-class colocation and opportunistic hyperscale data center deployments. We offer comprehensive
records and information management services and data management services, along with the expertise and experience to
address complex storage and information management challenges such as rising storage rental costs, legal and regulatory
compliance, and disaster recovery requirements. We provide secure and reliable data center facilities to protect digital
information and ensure the continued operation of our customers’ IT infrastructure, with reliable and flexible deployment
options.
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 focuses on simplifying our global structure by combining our core
records and information management operations under one global leader and rebalancing our resources, streamlining
managerial structures and leveraging our global and regional customer facing resources. We are also implementing systems and
process changes designed to make our organization more agile and dynamic, streamline our organization and reallocate our
resources to better align with our strategic goals as part of Project Summit. The activities associated with Project Summit began
in the fourth quarter of 2019 and are expected to be substantially complete by the end of 2021. See Note 2.h., Note 9 and Note
14.
On January 1, 2019, we adopted Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), as amended
("ASU 2016-02"). See Note 2.m.
On January 10, 2018, we completed the acquisition of IO Data Centers, LLC ("IODC"). See Note 6.
On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU
2014-09"). See Note 2.l.
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.
2. Summary of Significant Accounting Policies
a. Principles of Consolidation
The accompanying financial statements reflect our financial position, results of operations, comprehensive income (loss),
equity and cash flows on a consolidated basis. All intercompany transactions and account balances have been eliminated.
b. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America ("GAAP") 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.
81
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
c. Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash on hand and cash invested in highly liquid short-term securities, which have
remaining maturities at the date of purchase of less than 90 days. Cash and cash equivalents are carried at cost, which
approximates fair value.
At December 31, 2019 and 2018, we had $4,865 and $15,141, respectively, of restricted cash held by certain financial
institutions related to bank guarantees.
d. Foreign Currency
Local currencies are the functional currencies for our operations outside the United States, with the exception of certain
foreign holding companies, whose functional currency is the United States dollar. In those instances where the local currency is
the functional currency, assets and liabilities are translated at period-end exchange rates, and revenues and expenses are
translated at average exchange rates for the applicable period. Resulting translation adjustments are reflected in the accumulated
other comprehensive, net component of Iron Mountain Incorporated Stockholders' Equity. See Note 2.t.
e. Derivative Instruments and Hedging Activities
Every derivative instrument is required to be recorded in the balance sheet as either an asset or a liability measured at its
fair value. Periodically, we acquire derivative instruments that are intended to hedge either cash flows or values that are subject
to foreign exchange or other market price risk and not for trading purposes. We have formally documented our hedging
relationships, including identification of the hedging instruments and the hedged items, as well as our risk management
objectives and strategies for undertaking each hedge transaction. Given the recurring nature of our revenues and the long-term
nature of our asset base, we have the ability and the preference to use long-term, fixed interest rate debt to finance our business,
thereby preserving our long-term returns on invested capital. We target approximately 75% of our debt portfolio to be fixed
with respect to interest rates. Occasionally, we may use interest rate swaps as a tool to maintain our targeted level of fixed rate
debt. In addition, we may use borrowings in foreign currencies, either obtained in the United States or by our foreign
subsidiaries, to hedge foreign currency risk associated with our international investments. Sometimes we enter into currency
swaps to temporarily hedge an overseas investment, such as a major acquisition, while we arrange permanent financing or to
hedge our exposure due to foreign currency exchange movements related to our intercompany accounts with and between our
foreign subsidiaries. As of December 31, 2019 and 2018, none of our derivative instruments contained credit-risk related
contingent features. See Note 3.
f. Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated using the straight-line method with the following useful
lives (in years):
Buildings and building improvements
5 to 40
Range
Leasehold improvements
Racking
Warehouse equipment/vehicles
Furniture and fixtures
Computer hardware and software
5 to 10 or life of the lease (whichever is shorter)
1 to 20 or life of the lease (whichever is shorter)
1 to 10
1 to 10
2 to 5
82
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Property, plant and equipment (including financing leases in the respective category), at cost, consist of the following:
Land
Buildings and building improvements
Leasehold improvements
Racking
Warehouse equipment/vehicles
Furniture and fixtures
Computer hardware and software
Construction in progress
December 31,
2019
2018
$
448,566
$
400,980
3,029,309
852,022
2,040,832
483,218
54,275
689,261
451,423
2,991,307
770,666
2,001,831
481,515
56,207
680,283
218,160
$
8,048,906
$
7,600,949
Minor maintenance costs are expensed as incurred. Major improvements which extend the life, increase the capacity or
improve the safety or the efficiency of property owned are capitalized and depreciated. Major improvements to leased buildings
are capitalized as leasehold improvements and depreciated.
We capitalize interest expense during the active construction period of major capital projects. Capitalized interest is added
to the cost of the underlying assets and is amortized over the useful lives of the assets. During the years ended December 31,
2019 and 2018, we capitalized interest of $15,980 and $3,732, respectively. The amount of capitalized interest during the year
ended December 31, 2017 was insignificant.
We develop various software applications for internal use. Computer software costs associated with internal use software
are expensed as incurred until certain capitalization criteria are met. Third party consulting costs, as well as payroll and related
costs for employees directly associated with, and devoting time to, the development of internal use computer software projects
(to the extent time is spent directly on the project) are capitalized. During the years ended December 31, 2019, 2018 and 2017,
we capitalized $34,650, $29,407 and $25,166 of costs, respectively, associated with the development of internal use computer
software projects. Capitalization begins when the design stage of the application has been completed and it is probable that the
project will be completed and used to perform the function intended. Capitalization ends when the asset is ready for its intended
use. Depreciation begins when the software is placed in service. Computer software costs that are capitalized are periodically
evaluated for impairment.
Entities are required to record the fair value of a liability for an asset retirement obligation in the period in which it is
incurred. Asset retirement obligations represent the costs to replace or remove tangible long-lived assets required by law,
regulatory rule or contractual agreement. Our asset retirement obligations are primarily the result of requirements under our
facility lease agreements which generally have "return to original condition" clauses which would require us to remove or
restore items such as shred pits, vaults, demising walls and office build-outs, among others. The significant assumptions used in
estimating our aggregate asset retirement obligations are the timing of removals, the probability of a requirement to perform,
estimated cost and associated expected inflation rates that are consistent with historical rates and credit-adjusted risk-free rates
that approximate our incremental borrowing rate. Our asset retirement obligations at December 31, 2019 and 2018 were
$30,831 and $28,256, respectively.
83
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
g. Long-Lived Assets
We review long-lived assets, including all finite-lived intangible assets, for impairment whenever events or changes in
circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined
by comparing the sum of the forecasted undiscounted net cash flows of the operation to which the assets relate to their carrying
amount. The operations are generally distinguished by the business segment and geographic region in which they operate. If it
is determined that we are unable to recover the carrying amount of the assets, the long-lived assets are written down, on a pro
rata basis, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature
of the assets. Long-lived assets, including finite-lived intangible assets, are amortized over their useful lives. Annually, or more
frequently if events or circumstances warrant, we assess whether a change in the lives over which long-lived assets, including
finite-lived intangible assets, are amortized is necessary.
Consolidated gain on disposal/write-down of property, plant and equipment, net, for the year ended December 31, 2019
was $63,824. The gain consisted primarily of gains associated with (i) sale and sale-leaseback transactions involving the sales
of facilities in the United States of approximately $67,800 and (ii) the sale of certain land and buildings in the United Kingdom
of approximately $36,000. These gains were partially offset by losses primarily associated with (i) the impairment charge on the
assets associated with the select offerings within our Iron Cloud portfolio (as defined and described below) and (ii) the write-
down of certain property, plant and equipment in the United States of approximately $15,700.
During the second quarter of 2019, we began exploring strategic options regarding how to maintain and support the
infrastructure of select offerings within our Iron Mountain Iron Cloud (“Iron Cloud”) portfolio. As a result, during the second
quarter of 2019, we performed a long-lived asset impairment analysis on the assets associated with these select offerings and
concluded that the associated carrying value of the long-lived assets (which consisted entirely of property, plant and equipment)
was not recoverable based upon the underlying cash flows associated with these select offerings. 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 $25,000 during the year ended December 31, 2019.
Consolidated gain on disposal/write-down of property, plant and equipment, net for the year ended December 31, 2018
was $73,622. The gain consisted primarily of (i) the gain on sale of real estate for the sale of buildings in the United Kingdom
of approximately $63,800 and (ii) gains associated with the involuntary conversion of assets included in a facility that we own
in Argentina which was partially destroyed in a fire in 2014, for which we received insurance proceeds in excess of the carrying
amount of such assets during the fourth quarter of 2018. See Note 10.
h. Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill and intangible assets with indefinite lives are not amortized but are reviewed annually for impairment or more
frequently if impairment indicators arise. Other than goodwill, we currently have no intangible assets that have indefinite lives
and which are not amortized.
84
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
We have selected October 1 as our annual goodwill impairment review date. We have performed our annual goodwill
impairment review as of October 1, 2019, 2018 and 2017. We concluded that as of October 1, 2019 and October 1, 2018,
goodwill was not impaired. As of October 1, 2017, we determined that the fair value of the Consumer Storage reporting unit
was less than its carrying value and, therefore, we recorded a $3,011 impairment charge, which represented a full write-off of
all goodwill associated with this reporting unit. We concluded that the goodwill associated with each of our other reporting
units was not impaired as of October 1, 2017.
Our reporting units at which level we performed our goodwill impairment analysis as of December 31, 2017 were as
follows: (1) North American Records and Information Management; (2) North American Data Management; (3) Consumer
Storage; (4) Fine Arts; (5) Western Europe; (6) Northern/Eastern Europe and Middle East, Africa and India ("NEE and MEAI");
(7) Latin America; (8) Australia and New Zealand; (9) Asia; and (10) Global Data Center.
The following is a discussion regarding (i) the reporting units at which level we tested goodwill for impairment as of
October 1, 2018, (ii) changes to the composition of our reporting units between October 1, 2018 and December 31, 2018, (iii)
the reporting units at which level we tested goodwill for impairment as of October 1, 2019 and (iv) changes to the composition
of our reporting units between October 1, 2019 and December 31, 2019 (including the amount of goodwill associated with each
reporting unit). When changes occur in the composition of one or more reporting units, the goodwill is reassigned to the
reporting units affected based upon their relative fair values.
Goodwill Impairment Analysis - 2018
a. Reporting Units as of October 1, 2018
Our reporting units at which level we performed our goodwill impairment analysis as of October 1, 2018 were as follows:
(1) North American Records and Information Management; (2) North American Data Management; (3) Consumer Storage; (4)
Fine Arts; (5) Entertainment Services; (6) Western Europe; (7) Northern/Eastern Europe and Middle East and India ("NEE and
MEI"); (8) Latin America; (9) Australia, New Zealand and South Africa ("ANZ SA"); (10) Asia; and (11) Global Data Center.
We concluded that the goodwill associated with each of our reporting units was not impaired as of October 1, 2018.
b. Changes to Composition of Reporting Units between October 1, 2018 and December 31, 2018
During the fourth quarter of 2018, as a result of changes in the management of our Information Governance and Digital
Solutions business in Sweden, we reassessed the composition of our reporting units. As part of this reassessment, we
determined that our Information Governance and Digital Solutions business in Sweden (which was previously managed along
with our other businesses within the Western Europe reporting unit) was at the time being managed in conjunction with our
businesses included in our NEE and MEI reporting unit, which already included the remainder of our business in Sweden. We
concluded that the goodwill associated with our Western Europe and NEE and MEI reporting units was not impaired following
this change in reporting units.
85
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Goodwill by Reporting Unit as of December 31, 2018
The carrying value of goodwill, net for each of our reporting units described above as of December 31, 2018 is as follows:
North American Records and Information Management(1)
North American Data Management(2)
Consumer Storage(3)
Fine Arts(3)
Entertainment Services(3)
Western Europe(4)
NEE and MEI(5)
Latin America(5)
ANZ SA(5)
Asia(5)
Global Data Center(6)
Total
$
$
Carrying Value
as of
December 31, 2018
2,251,795
493,491
—
35,526
34,233
381,806
169,780
136,099
300,204
212,140
425,956
4,441,030
_______________________________________________________________________________
(1) This reporting unit comprised our former North American Records and Information Management Business segment.
(2) This reporting unit comprised our former North American Data Management Business segment.
(3) This reporting unit was included in our Corporate and Other Business segment.
(4) This reporting unit comprised our former Western European Business segment.
(5) This reporting unit was included in our former Other International Business segment.
(6) This reporting unit comprised our Global Data Center Business segment.
Goodwill Impairment Analysis - 2019
a. Reporting Units as of October 1, 2019
Our reporting units at which level we performed our goodwill impairment analysis as of October 1, 2019 were as follows:
(1) North American Records and Information Management; (2) North American Data Management; (3) Fine Arts; (4)
Entertainment Services; (5) Western Europe; (6) NEE and MEI; (7) Latin America; (8) ANZ SA; (9) Asia; and (10) Global Data
Center. We concluded that the goodwill associated with each of our reporting units was not impaired as of such date.
86
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
b. Changes to Composition of Reporting Units between October 1, 2019 and December 31, 2019
During the fourth quarter of 2019, as a result of the realignment of our global managerial structure and changes to our
internal financial reporting associated with Project Summit, we reassessed the composition of our reportable operating
segments (see Note 9 for a description and definitions of our reporting operating segments) as well as our reporting units. As of
December 31, 2019, we have nine reporting units. We note the following changes to our reporting units: (1) our former North
American Records and Information Management (excluding our technology escrow services business) and North American
Data Management reporting units are now being managed as our “North America RIM” reporting unit; (2) our former Western
Europe and NEE and MEI reporting units (excluding India) and our business in Africa (which was previously managed as a
component of our former ANZ SA reporting unit) is now being managed together as our “Europe RIM” reporting unit; (3) our
business in India, which was previously managed as a component of our former NEE and MEI reporting unit is now being
managed in conjunction with our businesses in Asia as our “Asia RIM” reporting unit; (4) our former Australia, New Zealand
and South Africa reporting unit will no longer include South Africa and will be referred to as our “Australia and New Zealand
RIM” (or “ANZ RIM”) reporting unit; and (5) our technology escrow services business is now being managed separately as our
“Technology Escrow Services” reporting unit. There were no changes to our Global Data Center, Fine Arts, Entertainment
Services and Latin America RIM reporting units. We concluded that the goodwill associated with our North America RIM,
Europe RIM, ANZ RIM, Asia RIM and Technology Escrow Services reporting units were not impaired following this change in
reporting units.
Goodwill by Reporting Unit as of December 31, 2019
The carrying value of goodwill, net for each of our reporting units described above as of December 31, 2019 is as follows:
North America RIM(1)
Europe RIM(1)
Latin America RIM(1)
ANZ RIM(1)
Asia RIM(1)
Global Data Center(2)
Fine Arts(3)
Entertainment Services(3)
Technology Escrow Services(3)
Total
Carrying Value
as of
December 31, 2019
2,715,550
572,482
140,897
274,913
239,059
424,568
37,533
34,102
46,105
4,485,209
$
$
______________________________________________________________________
(1) This reporting unit is included in our Global RIM (as defined in Note 9) Business segment.
(2) This reporting unit comprises our Global Data Center Business segment.
(3) This reporting unit is included in our Corporate and Other Business segment.
87
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
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 (the "Market Approach"). The Discounted Cash Flow
Model incorporates significant assumptions including future revenue growth rates, operating margins, discount rates and capital
expenditures. The Market Approach requires us to make assumptions related to Adjusted EBITDA multiples. Changes in
economic and operating conditions impacting these assumptions or changes in multiples could result in goodwill impairments
in future periods. In conjunction with our annual goodwill impairment reviews, we reconcile the sum of the valuations of all of
our reporting units to our market capitalization as of such dates.
The changes in the carrying value of goodwill attributable to each reportable operating segment for the years ended
December 31, 2019 and 2018 is as follows:
Global RIM
Business
Global Data
Center Business
Corporate and
Other Business
Total
Consolidated
Goodwill balance, net of accumulated amortization, as
of December 31, 2017
$
3,964,114
$
Deductible goodwill acquired during the year
Non-deductible goodwill acquired during the year
Goodwill allocated to IMFS Divestment (see Note 13)
Fair value and other adjustments(1)
Currency effects
Goodwill balance, net of accumulated amortization, as
of December 31, 2018
Deductible goodwill acquired during the year
Non-deductible goodwill acquired during the year
Fair value and other adjustments(2)
Currency effects
3,251
34,230
(1,202)
3,860
— $
—
429,853
—
—
106,153
$
4,070,267
6,644
3,620
—
609
9,895
467,703
(1,202)
4,469
(105,043)
(3,897)
(1,162)
(110,102)
3,899,210
425,956
115,864
4,441,030
16,450
11,228
4,439
11,574
—
—
258
(1,646)
—
1,904
(417)
389
Goodwill balance, net of accumulated amortization, as
of December 31, 2019
Accumulated Goodwill Impairment Balance as of
December 31, 2018
Accumulated Goodwill Impairment Balance as of
December 31, 2019
$
$
$
3,942,901
132,409
132,409
$
$
$
424,568
$
117,740
— $
— $
3,011
3,011
$
$
$
___________________________________________________________________
16,450
13,132
4,280
10,317
4,485,209
135,420
135,420
(1) Total fair value and other adjustments primarily include net adjustments of $(2,717) primarily related to property, plant
and equipment, customer relationship intangible assets and other liabilities and $7,186 of cash paid related to certain
acquisitions completed in 2017.
(2) Total fair value and other adjustments primarily include net adjustments of $4,942 primarily related to property, plant
and equipment, customer relationship 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.
88
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
i. Finite-lived Intangible Assets and Liabilities
i. Customer Relationship Intangible Assets
Customer relationship intangible assets, which are acquired through either business combinations or acquisitions of
customer relationships, are amortized over periods ranging from 10 to 30 years (weighted average of 17 years at December 31,
2019) and are included in depreciation and amortization in the accompanying Consolidated Statements of Operations. The
value of customer relationship intangible assets is calculated based upon estimates of their fair value.
ii. Customer Inducements
Upon the adoption of ASU 2014-09, free intake costs to transport boxes to one of our facilities, which include labor and
transportation costs ("Free Move Costs"), are considered a Contract Fulfillment Cost (as defined in Note 2.l.) and, therefore, are
now deferred and amortized and included in amortization expense over three years, consistent with the transfer of the
performance obligation to the customer to which the asset relates. See Note 2.l. for information regarding the accounting for
Free Move Costs, which are now a component of Intake Costs (as defined in Note 2.l.), following the adoption of ASU
2014-09.
Payments that are made to a customer's current records management vendor in order to terminate the customer's existing
contract with that vendor, or direct payments to a customer ("Permanent Withdrawal Fees"), are amortized over periods ranging
from five to 15 years (weighted average of seven years as of December 31, 2019) and are included in storage and service
revenue in the accompanying Consolidated Statements of Operations. Our accounting for Permanent Withdrawal Fees did not
change as a result of the adoption of ASU 2014-09.
Free Move Costs (prior to the adoption of ASU 2014-09) and Permanent Withdrawal Fees are collectively referred to as
"Customer Inducements". If the customer terminates its relationship with us, the unamortized carrying value of the Customer
Inducement intangible asset is charged to expense or revenue. However, in the event of such termination, we generally collect,
and record as income, permanent removal fees that generally equal or exceed the amount of the unamortized Customer
Inducement intangible asset.
iii. Data Center Intangible Assets and Liabilities
Finite-lived intangible assets associated with our Global Data Center Business consist of the following:
Data Center In-Place Lease Intangible Assets and Data Center Tenant Relationship Intangible Assets
Data Center In-Place Lease Intangible Assets (“Data Center In-Place Leases”) and Data Center Tenant Relationship
Intangible Assets (“Data Center Tenant Relationships") are acquired through either business combinations or asset acquisitions
in our Global Data Center Business. These intangible assets reflect the value associated with acquiring a data center operation
with active tenants as of the date of acquisition. The value of Data Center In-Place Leases is determined based upon an estimate
of the economic costs (such as lost revenues, tenant improvement costs, commissions, legal expenses and other costs to acquire
new data center leases) avoided by acquiring a data center operation with active tenants that would have otherwise been
incurred if the data center operation was purchased vacant. Data Center In-Place Leases are amortized over the weighted
average remaining term of the acquired data center leases (weighted average of five years as of December 31, 2019) and are
included in depreciation and amortization in the accompanying Consolidated Statements of Operations. The value of Data
Center Tenant Relationships is determined based upon an estimate of the economic costs avoided upon lease renewal of the
acquired tenants, based upon expectations of lease renewal. Data Center Tenant Relationships are amortized over the weighted
average remaining anticipated life of the relationship with the acquired tenant (weighted average of eight years as of
December 31, 2019) and are included in depreciation and amortization in the accompanying Consolidated Statements of
Operations. Data Center In-Place Leases and Data Center Tenant Relationships are included in Customer relationships,
customer inducements and data center lease-based intangibles in the accompanying Consolidated Balance Sheets.
89
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Data Center Above-Market and Below-Market In-Place Lease Intangible Assets
Data Center Above-Market In-Place Lease Intangible Assets (“Data Center Above-Market Leases”) and Data Center
Below-Market In-Place Lease Intangible Assets (“Data Center Below-Market Leases”) are acquired through either business
combinations or asset acquisitions in our Global Data Center Business. We record Data Center Above-Market Leases and Data
Center Below-Market Leases at the net present value of the difference between (i) the contractual amounts to be paid pursuant
to each in-place lease and (ii) management’s estimate of the fair market lease rates for each corresponding in-place lease. Data
Center Above-Market Leases (weighted average of four years as of December 31, 2019) and Data Center Below-Market Leases
(weighted average of nine years as of December 31, 2019) are amortized over the remaining non-cancellable term of the
acquired in-place lease to storage revenue in the accompanying Consolidated Statements of Operations. Data Center Above-
Market Leases are included in Customer relationships, customer inducements and data center lease-based intangibles in the
accompanying Consolidated Balance Sheets. Data Center Below-Market Leases are included in Other long-term liabilities in
the accompanying Consolidated Balance Sheets.
The gross carrying amount and accumulated amortization of our finite-lived intangible assets as of December 31, 2019
and 2018, respectively, are as follows:
December 31, 2019
December 31, 2018
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
$1,751,848
52,718
$ (544,721) $1,207,127
23,321
(29,397)
$1,718,919
56,478
$ (455,705) $1,263,214
22,297
(34,181)
265,945
31,708
$2,102,219
162,735
(103,210)
(4,134)
27,574
$ (681,462) $1,420,757
271,818
30,071
$2,077,286
221,011
(50,807)
(1,089)
28,982
$ (541,782) $1,535,504
Assets:
Customer relationship intangible
assets
Customer inducements
Data center lease-based intangible
assets(1)
Third-party commissions asset(2)
Liabilities:
Data center below-market leases
$
12,750
$
(3,937) $
8,813
$
12,318
$
(1,642) $
10,676
_______________________________________________________________________________
(1) Includes Data Center In-Place Leases, Data Center Tenant Relationships and Data Center Above-Market Leases.
(2) Third-party commissions asset is included in Other, a component of Other assets, net in the accompanying
Consolidated Balance Sheets as of December 31, 2019 and 2018. See Note 6 for additional information on the third-
party commissions asset.
Other finite-lived intangible assets, including trade names, noncompetition agreements and trademarks, are capitalized
and amortized over a weighted average of four years as of December 31, 2019, and are included in depreciation and
amortization in the accompanying Consolidated Statements of Operations.
December 31, 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)
$
19,893
$ (18,405) $
1,488
$
20,310
$ (14,798) $
5,512
90
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Amortization expense associated with finite-lived intangible assets, revenue reduction associated with the amortization of
Permanent Withdrawal Fees and net revenue reduction associated with the amortization of Data Center Above-Market Leases
and Data Center Below-Market Leases for the years ended December 31, 2019, 2018 and 2017 are as follows:
Year Ended December 31,
2019
2018
2017
Amortization expense included in depreciation and amortization
associated with:
Customer relationship and customer inducement intangible assets
$
117,972
$
113,782
$
109,563
Data center in-place leases and tenant relationships
Third-party commissions asset and other finite-lived intangible assets
46,696
7,957
43,061
5,713
—
6,530
Revenue reduction associated with amortization of:
Permanent withdrawal fees
$
9,993
$
11,408
$
11,253
Data center above-market leases and data center below-market leases
3,710
4,873
—
Estimated amortization expense for existing finite-lived intangible assets (excluding deferred financing costs, as disclosed
in Note 2.j. and Contract Fulfillment Costs, as defined and disclosed in Note 2.l.) is as follows:
Estimated Amortization
Revenue Reduction
Associated with the
Amortization of
Permanent Withdrawal
Fees
Revenue Reduction
(Increase) Associated
with Amortization of
Data Center
Above-market leases and
Below-market leases
Included in Depreciation
and Amortization
$
2020
2021
2022
2023
2024
Thereafter
$
160,865
157,647
127,148
121,256
116,253
712,369
$
7,760
5,207
3,200
2,112
1,125
1,303
872
234
273
(470)
(610)
(3,112)
91
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
j. Deferred Financing Costs
Deferred financing costs are amortized over the life of the related debt. If debt is retired early, the related unamortized
deferred financing costs are written-off in the period the debt is retired to Other expense (income), net. As of December 31,
2019 and 2018, the gross carrying amount of deferred financing costs was $144,981 and $128,469, respectively, and
accumulated amortization of those costs was $58,016 and $41,862, respectively. Unamortized deferred financing costs are
included as a component of Long-term debt in our Consolidated Balance Sheets.
Estimated amortization expense for deferred financing costs, which are amortized as a component of interest expense, is
as follows:
Estimated Amortization of
Deferred Financing Costs
$
2020
2021
2022
2023
2024
Thereafter
17,132
16,002
14,888
11,618
8,424
18,901
k. Prepaid Expenses and Accrued Expenses
There are no prepaid expenses with items greater than 5% of total current assets as of December 31, 2019 and 2018.
Accrued expenses, with items greater than 5% of total current liabilities are shown separately, and consist of the
following:
Interest
Incentive compensation
Sales tax and VAT payable
Dividend
Operating lease liabilities
Other
Accrued expenses
December 31,
2019
2018
$
97,987
$
56,662
115,352
186,021
223,249
282,481
$
961,752
$
84,283
75,256
124,232
181,986
—
315,024
780,781
92
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
l. Revenues
Our revenues consist of storage rental revenues as well as service revenues and are reflected net of sales and value-added
taxes. Storage rental revenues, which are considered a key driver of financial performance for the storage and information
management services industry, consist primarily of recurring periodic rental charges related to the storage of materials or data
(generally on a per unit basis) that are typically retained by customers for many years, technology escrow services that protect
and manage source code 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 subsequent sale of shredded paper for recycling, 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.
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09. ASU 2014-09 provides guidance
for management to reassess revenue recognition as it relates to: (1) transfer of control, (2) variable consideration, (3) allocation
of transaction price based on relative standalone selling price, (4) licenses, (5) time value of money, and (6) contract costs. We
adopted ASU 2014-09 as of January 1, 2018 using the modified retrospective method for all of our customer contracts, whereby
the cumulative effect of applying ASU 2014-09 is recognized at the date of initial application. At January 1, 2018, we
recognized the cumulative effect of initially applying ASU 2014-09 as an adjustment to the opening balance of (Distributions in
excess of earnings) Earnings in excess of distributions, resulting in a decrease of approximately $30,200 to stockholders' equity.
The reduction of (Distribution in excess of earnings) Earnings in excess of distributions represents the net effect of (i) the write-
off of Free Move Costs, net (which were capitalized and amortized prior to the adoption of ASU 2014-09) based upon the net
book value of the Free Move Costs as of December 31, 2017, (ii) the recognition of certain Contract Fulfillment Costs,
specifically Intake Costs (each as defined below) and commission assets, (iii) the recognition of deferred revenue associated
with Intake Costs billed to our customers, and (iv) the deferred income tax impact of the aforementioned items. As we adopted
ASU 2014-09 on a modified retrospective basis, the prior period consolidated financial statements were not restated to reflect
the adoption of ASU 2014-09 and reflect our revenue policies in place at that time.
Storage rental and service revenues are recognized in the month the respective storage rental or service is provided, and
customers are generally billed on a monthly basis on contractually agreed-upon terms. Amounts related to future storage rental
or prepaid service contracts for customers where storage rental fees or services are billed in advance are accounted for as
deferred revenue and recognized ratably over the period the applicable storage rental or service is provided or performed.
Revenues from the sales of products, which are included as a component of service revenues, are recognized when products are
shipped and title has passed to the customer. Revenues from the sales of products, which represented less than 2% of
consolidated revenue for the year ended December 31, 2019, have historically not been significant. The performance obligation
is a series of distinct services (as determined for purposes of ASU 2014-09, a “series”) that have the same pattern of transfer to
the customer that is satisfied over time. For those contracts that qualify as a series, we have a right to consideration from the
customer in an amount that corresponds directly with the value of the underlying performance obligation transferred to the
customer to date. This concept is known as "right to invoice" and we are applying the "right to invoice" practical expedient to
all revenues, with the exception of storage revenues in our Global Data Center Business.
For all of our businesses, with the exception of the storage component of our Global Data Center Business, each
purchasing decision is fully in the control of the customer and, therefore, consideration beyond the current reporting period is
variable and allocated to the specific period, which is consistent with the practical expedient described above. Our Global Data
Center Business features storage rental provided to the customer at contractually specified rates over a fixed contractual period.
The storage rental revenue related to the storage component of our Global Data Center Business is recognized on a straight-line
basis over the contract term. The revenue related to the service component of our Global Data Center Business is recognized in
the period the related services are provided.
93
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
The costs associated with the initial movement of customer records into physical storage and certain commissions are
considered costs to obtain or fulfill customer contracts (“Contract Fulfillment Costs”). The following describes each of these
Contract Fulfillment Costs recognized under ASU 2014-09:
Intake Costs (and associated deferred revenue)
Upon the adoption of ASU 2014-09, all the costs of the initial intake of customer records into physical storage ("Intake
Costs"), regardless of whether or not the services associated with such initial moves are billed to the customer or are provided
to the customer at no charge, are deferred and amortized as a component of depreciation and amortization in our Consolidated
Statements of Operations over three years, consistent with the transfer of the performance obligation to the customer to which
the asset relates. Similarly, in instances where such Intake Costs are billed to the customer, the associated revenue will be
deferred and recognized over the same three-year period.
Commissions
Upon the adoption of ASU 2014-09, certain commission payments that are directly associated with the fulfillment of long-
term storage contracts are capitalized and amortized as a component of depreciation and amortization in our Consolidated
Statements of Operations over three years, consistent with the transfer of the performance obligation to the customer to which
the asset relates. Certain direct commission payments associated with contracts with a duration of one year or less are expensed
as incurred under the practical expedient which allows an entity to expense as incurred an incremental cost of obtaining a
contract if the amortization period of the asset that the entity otherwise would have recognized is one year or less.
The Contract Fulfillment Costs as of December 31, 2019 and 2018 are as follows:
Description
Intake Costs asset
Commissions
asset
Location in
Balance Sheet
Other (within
Other Assets,
Net)
Other (within
Other Assets,
Net)
December 31, 2019
December 31, 2018
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
$
41,224
$
(23,579) $
17,645
$
39,748
$
(24,504) $
15,244
68,008
(27,178)
40,830
58,424
(34,637)
23,787
Amortization expense associated with the Intake Costs asset and capitalized commissions asset for the years ended
December 31, 2019 and 2018 are as follows:
Description
Intake Costs asset
Year Ended December 31,
2019
2018
$
10,144
$
10,380
13,838
Capitalized commissions asset
19,109
Estimated amortization expense for Contract Fulfillment Costs is as follows:
Year
2020
2021
2022
Estimated Amortization
28,156
$
20,448
9,871
94
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Deferred revenue liabilities are reflected as follows in our Consolidated Balance Sheets:
Description
Deferred revenue - Current
Location in Balance Sheet
Deferred revenue
Deferred revenue - Long-term Other Long-term Liabilities
36,029
Data Center Lessor Considerations
December 31,
2019
2018
$
274,036
$
264,823
26,401
Our Global 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.m. 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 Global 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 2014-09, if the nonlease components are
the predominant components. We have elected to take this practical expedient. Storage rental revenue associated with our
Global Data Center Business was approximately $246,900 and $218,700 for the years ended December 31, 2019 and 2018,
respectively, which includes approximately $43,300 and $38,800 of revenue associated with power and connectivity for the
years ended December 31, 2019 and 2018, respectively. The revenue related to the service component of our Global 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
2020
2021
2022
2023
2024
Future minimum lease payments
202,130
$
135,911
98,797
80,079
68,376
m. Leases
We lease facilities for certain warehouses, data centers and office space. We also have land leases, including those on
which certain facilities are located. The majority of our leased facilities are classified as operating leases that, on average, have
initial lease terms of five to 10 years, with one or more lease renewal options to extend the lease term. Our lease renewal option
terms generally range from one to five years. The exercise of the lease renewal option 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 life of the lease and any fair market value or Consumer
Price Index rent escalations are recognized as variable lease expense in the period in which the obligation is incurred. In
addition, we lease certain vehicles and equipment. Vehicle and equipment leases typically have lease terms ranging
from one to seven years.
95
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
In February 2016, FASB issued ASU 2016-02 which requires lessees to recognize assets and liabilities on the balance
sheet for the rights and the 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, our 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 Consolidated Balance
Sheet as of December 31, 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 carry forward 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 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 our 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 in the lease (in the limited circumstances when such rate is
explicitly stated) 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 our 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, but are accounted for as operating leases under ASU 2016-02 at January 1, 2019.
96
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Operating and financing lease right-of-use assets and lease liabilities as of December 31, 2019 and January 1, 2019 (date
of adoption of ASU 2016-02) are as follows:
Description
Assets:
Location in Balance Sheet
December 31, 2019
January 1, 2019
(Date of Adoption
of ASU 2016-02)
Operating lease right-of-use assets(1)
Operating lease right-of-use assets
Financing lease right-of-use assets, net
of accumulated depreciation(2)
Property, Plant and Equipment, Net
Total
Liabilities:
Current
Operating lease liabilities
Accrued expenses and other current
liabilities
Financing lease liabilities
Current portion of long-term debt
Total current lease liabilities
Long-term
Operating lease liabilities
Financing lease liabilities
Total long-term lease liabilities
Total
Long-term Operating Lease
Liabilities, net of current portion
Long-term Debt, net of current
portion
$
$
$
1,869,101
$
1,825,721
327,215
361,078
2,196,316
$
2,186,799
223,249
$
46,582
269,831
209,911
50,437
260,348
1,728,686
1,685,771
320,600
2,049,286
350,263
2,036,034
$
2,319,117
$
2,296,382
______________________________________________________________
(1) At December 31, 2019, these assets are comprised of approximately 99% real estate related assets (which include land,
buildings and racking) and 1% non-real estate related assets (which include warehouse equipment, vehicles, furniture
and fixtures and computer hardware and software).
(2) At December 31, 2019, these assets are comprised of approximately 69% real estate related assets and 31% non-real
estate related assets.
97
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
The components of the lease expense for the year ended December 31, 2019 are as follows:
Description
Operating lease cost(1)
Financing lease cost:
Location in Statement of Operations
Cost of sales and Selling, general
and administrative
Depreciation of financing lease right-of-use
assets
Depreciation and amortization
Interest expense for financing lease
liabilities
Total financing lease cost
Interest Expense, Net
______________________________________________________________
December 31, 2019
$
$
$
459,619
59,258
21,031
80,289
(1) Of the $459,619 incurred for the year ended December 31, 2019, $447,194 is included within Cost of sales and
$12,425 is included within Selling, general and administrative expenses. Operating lease cost includes variable lease
costs of $105,922 for the year ended December 31, 2019.
We recognized total rent expense, excluding variable lease costs such as common area maintenance charges, insurance
and taxes under all of our operating leases of $365,762 and $350,403 for the years ended December 31, 2018 and 2017,
respectively.
We sublease certain real estate to third parties. We recognized sublease income of $6,637 for the year ended December 31,
2019.
Weighted average remaining lease terms and discount rates as of December 31, 2019 are as follows:
Operating leases
Financing leases
Operating leases
Financing leases
Remaining Lease Term
Discount Rate
11.0 Years
11.6 Years
7.1%
5.7%
98
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
The estimated minimum future lease payments as of December 31, 2019, are as follows:
Year
2020
2021
2022
2023
2024
Thereafter
Total minimum lease payments
Less amounts representing interest or imputed interest
Present value of lease obligations
Operating
Leases(1)
Sublease
Income
Financing
Leases(1)
$
339,469
$
319,628
295,981
267,809
237,604
1,454,918
2,915,409
(963,474)
1,951,935
$
$
(7,695) $
(5,282)
(4,996)
(4,885)
(3,543)
(7,691)
(34,092)
$
62,271
54,993
44,886
39,130
31,849
277,890
511,019
(143,837)
367,182
The estimated minimum future lease payments as of December 31, 2018 are as follows:
Year
2019
2020
2021
2022
2023
Thereafter
Total minimum lease payments
Less amounts representing interest
Present value of lease obligations
Operating
Leases(1)
Sublease
Income
Financing
Leases(1)(2)
$
323,454
$
293,276
267,379
246,128
221,808
1,287,807
$
2,639,852
$
(7,525) $
(7,200)
(7,063)
(6,694)
(6,409)
(6,279)
(41,170)
$
80,513
71,335
61,269
52,832
44,722
377,750
688,421
(241,248)
447,173
_______________________________________________________________________________
(1) Estimated minimum future lease payments exclude variable common area maintenance charges, insurance and taxes.
Differences in estimated lease payments between December 31, 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 financing lease and financing obligations associated with build to suit lease transactions at December 31,
2018.
In the fourth quarter of 2019, we entered into an agreement to lease a facility in the United Kingdom that is currently
under construction. The exact terms of the lease will be determined upon the completion of building construction, which is
expected to occur in late 2020. We expect the rent due in the first year of the lease to be approximately $5,000, and we expect
the term of the lease to be approximately 25 years.
As of December 31, 2019, we do not have any operating or financing leases with related parties that are material to our
consolidated financial statements.
99
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Other information: Supplemental cash flow information relating to our leases for the year ended December 31, 2019 is as
follows:
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows used in operating leases
Operating cash flows used in financing leases (interest)
Financing cash flows used in financing leases
Non-cash items:
Operating lease modifications and reassessments
New operating leases (including acquisitions)
New financing leases, modifications and reassessments
Year Ended
December 31, 2019
$
$
338,059
21,031
58,033
108,023
170,464
32,742
n. Stock-Based Compensation
We record stock-based compensation expense, utilizing the straight-line method, for the cost of stock options, restricted
stock units ("RSUs"), performance units ("PUs") and shares of stock issued under our employee stock purchase plan ("ESPP")
(together, "Employee Stock-Based Awards").
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 1 (the “2019
Retirement Criteria”). Accordingly, (i) grants of Employee Stock-Based Awards to an employee who has met the 2019
Retirement Criteria on or before the date of grant, or will meet the Retirement Criteria before July 1 of the year of the grant,
will be expensed between the date of grant and July 1 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 included in the accompanying Consolidated
Statements of Operations for the years ended December 31, 2019, 2018 and 2017 was $35,654 ($33,103 after tax or $0.12 per
basic and diluted share), $31,167 ($28,998 after tax or $0.10 per basic and diluted share) and $30,019 ($26,512 after tax or
$0.10 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 Consolidated
Statements of Operations.
Stock Options
Under our various stock option plans, options are generally granted with exercise prices equal to the market price of the
stock on the date of grant; however, in certain instances, options are granted at prices greater than the market price of the stock
on the date of grant. The options we issue become exercisable ratably over a period of either (i) three years from the date of
grant and have a contractual life of 10 years from the date of grant, unless the holder's employment is terminated sooner, or (ii)
five years from the date of grant and have a contractual life of 10 years from the date of grant, unless the holder's employment
is terminated sooner. Our non-employee directors are considered employees for purposes of our stock option plans and stock
option reporting.
100
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
A summary of our stock options outstanding as of December 31, 2019 by vesting terms is as follows:
Three-year vesting period (10 year contractual life)
Five-year vesting period (10 year contractual life)
December 31, 2019
Stock Options
Outstanding
% of
Stock Options
Outstanding
4,691,321
144,400
4,835,721
97.0%
3.0%
100.0%
Our equity compensation plans generally provide that, upon a vesting change in control (as defined in each plan), any
unvested options and other awards granted thereunder shall vest immediately if an employee is terminated as a result of the
change in control or terminates their own employment for good reason (as defined in each plan). On January 20, 2015, our
stockholders approved the adoption of the Iron Mountain Incorporated 2014 Stock and Cash Incentive Plan, as amended (the
"2014 Plan"). Under the 2014 Plan, the total amount of shares of common stock reserved and available for issuance pursuant to
awards granted under the 2014 Plan is 12,750,000. The 2014 Plan permits us to continue to grant awards through May 24,
2027.
A total of 48,253,839 shares of common stock have been reserved for grants of options and other rights under our various
stock incentive plans, including the 2014 Plan. The number of shares available for grant under our various stock incentive
plans, not including the ESPP, at December 31, 2019 was 4,095,067.
The weighted average fair value of stock options granted in 2019, 2018 and 2017 was $3.58, $3.50 and $4.28 per share,
respectively. These values were estimated on the date of grant using the Black-Scholes option pricing model. The weighted
average assumptions used for grants in the year ended December 31:
Weighted Average Assumptions
Expected volatility
Risk-free interest rate
Expected dividend yield
Expected life
2019
2018
2017
24.3%
2.47%
7%
25.4%
2.65%
7%
25.7%
1.96%
6%
5.0 years
5.0 years
5.0 years
Expected volatility is calculated utilizing daily historical volatility over a period that equates to the expected life of the
option. The risk-free interest rate was based on the United States Treasury interest rates whose term is consistent with the
expected life (estimated period of time outstanding) of the stock options. Expected dividend yield is considered in the option
pricing model and represents our current annualized expected per share dividends over the current trade price of our common
stock. The expected life of the stock options granted is estimated using the historical exercise behavior of employees.
101
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
A summary of stock option activity for the year ended December 31, 2019 is as follows:
Outstanding at December 31, 2018
Granted
Exercised
Forfeited
Expired
Outstanding at December 31, 2019
Options exercisable at December 31, 2019
Options expected to vest
Options
4,271,834
920,706
(303,543)
(23,984)
(29,292)
4,835,721
3,068,945
1,648,127
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
$
$
$
$
34.78
35.71
23.86
35.21
34.78
35.64
35.80
35.34
6.72
5.81
8.47
$
$
$
3,005
3,005
—
The aggregate intrinsic value of stock options exercised for the years ended December 31, 2019, 2018 and 2017 is as
follows:
Aggregate intrinsic value of stock options exercised
$
3,148
$
2,181
$
8,485
Year Ended December 31,
2019
2018
2017
Restricted Stock Units
Under our various equity compensation plans, we may also grant RSUs. Our RSUs generally have a vesting period of
three years from the date of grant. However, RSUs granted to our non-employee directors vest immediately upon grant.
All RSUs accrue dividend equivalents associated with the underlying stock as we declare dividends. Dividends will
generally be paid to holders of RSUs in cash upon the vesting date of the associated RSU and will be forfeited if the RSU does
not vest. The fair value of RSUs is the excess of the market price of our common stock at the date of grant over the purchase
price (which is typically zero).
Cash dividends accrued and paid on RSUs for the years ended December 31, 2019, 2018 and 2017, are as follows:
Cash dividends accrued on RSUs
Cash dividends paid on RSUs
Year Ended December 31,
2019
2018
2017
$
3,215
$
2,899
$
2,369
2,477
2,590
2,370
The fair value of RSUs vested during the years ended December 31, 2019, 2018 and 2017, are as follows:
Fair value of RSUs vested
Year Ended December 31,
2019
21,191
$
2018
20,454
$
2017
19,825
$
102
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
A summary of RSU activity for the year ended December 31, 2019 is as follows:
Non-vested at December 31, 2018
Granted
Vested
Forfeited
Non-vested at December 31, 2019
Performance Units
Weighted-
Average
Grant-Date
Fair Value
34.33
34.72
34.06
34.75
34.71
RSUs
1,196,566
823,508
(678,138)
(138,337)
1,203,599
$
$
Under our various equity compensation plans, we may also make awards of PUs. For the majority of outstanding PUs, the
number of PUs earned is determined based on our performance against predefined targets of revenue and return on invested
capital ("ROIC") and, with PUs granted in 2018, Adjusted EBITDA (as defined in Note 9). The number of PUs earned may
range from 0% to 200% of the initial award. The number of PUs earned is determined based on our actual performance as
compared to the targets at the end of a three-year performance period. Certain PUs that we grant will be earned based on a
market condition associated with the total return on our common stock in relation to either (i) a subset of the Standard & Poor's
500 Index (for certain PUs granted prior to 2017), or (ii) the MSCI United States REIT Index (for certain PUs granted in 2017
and thereafter), rather than the revenue, ROIC and Adjusted EBITDA targets noted above. The number of PUs earned based on
this market condition may range from 0% to 200% of the initial award.
All of our PUs will be settled in shares of our common stock and are subject to cliff vesting three years from the date of
the original PU grant. As detailed above, PUs granted on or after February 20, 2019 are subject to the 2019 Retirement Criteria.
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. PUs granted prior
to February 20, 2019 to employees who terminate their employment during the three-year performance period and on or after
attaining age 55 and completing 10 years of qualifying service are eligible for pro-rated vesting, subject to the actual
achievement against the predefined targets or a market condition as discussed above, based on the number of full years of
service completed following the grant date (but delivery of the shares remains deferred). As a result, PUs are generally
expensed over the three-year performance period.
All PUs accrue dividend equivalents associated with the underlying stock as we declare dividends. Dividends will
generally be paid to holders of PUs in cash upon the settlement date of the associated PU and will be forfeited if the PU does
not vest.
Cash dividends accrued and paid on PUs for the years ended December 31, 2019, 2018 and 2017, are as follows:
Cash dividends accrued on PUs
Cash dividends paid on PUs
Year Ended December 31,
2019
2018
2017
$
2,260
$
1,804
$
1,162
644
1,290
205
103
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
During the years ended December 31, 2019, 2018 and 2017, we issued 380,856, 353,507 and 229,692 PUs, respectively.
We forecast the likelihood of achieving the predefined revenue, ROIC and Adjusted EBITDA targets for our PUs in order to
calculate the expected PUs to be earned. We record a compensation charge based on either the forecasted PUs to be earned
(during the performance period) or the actual PUs earned (at the three-year anniversary of the grant date) over the vesting
period for each of the awards. The fair value of PUs based on our performance against revenue, ROIC and Adjusted EBITDA
targets is the excess of the market price of our common stock at the date of grant over the purchase price (which is typically
zero). For PUs earned based on a market condition, we utilize a Monte Carlo simulation to fair value these awards at the date of
grant, and such fair value is expensed over the three-year performance period. As of December 31, 2019, we expected 100%,
50% and 100% achievement of the predefined revenue, ROIC and Adjusted EBITDA targets associated with the awards of PUs
made in 2019, 2018 and 2017, respectively.
The fair value of earned PUs that vested during the years ended December 31, 2019, 2018 and 2017, is as follows:
Fair value of earned PUs that vested
$
6,503
$
3,117
$
1,242
Year Ended December 31,
2019
2018
2017
A summary of PU activity for the year ended December 31, 2019 is as follows:
Non-vested at December 31, 2018
Granted
Vested
Forfeited/Performance or Market Conditions Not Achieved
Non-vested at December 31, 2019
Original
PU Awards
967,049
380,856
(206,279)
(27,935)
1,113,691
PU
Adjustment(1)
(299,948)
—
—
(14,850)
(314,798)
Total
PU Awards
667,101
380,856
(206,279)
(42,785)
798,893
Weighted-
Average
Grant-Date
Fair Value
$
$
36.54
36.07
37.97
26.50
36.56
_______________________________________________________________________________
(1) Represents an increase or decrease in the number of original PUs awarded based on either the final performance
criteria or market condition achievement at the end of the performance period of such PUs or a change in estimated
awards based on the forecasted performance against the predefined targets.
Employee Stock Purchase Plan
We offer an ESPP in which participation is available to substantially all United States and Canadian employees who meet
certain service eligibility requirements. The ESPP provides a way for our eligible employees to become stockholders on
favorable terms. The ESPP provides for the purchase of our common stock by eligible employees through successive offering
periods. We have historically had two six-month offering periods per year, the first of which generally runs from June 1 through
November 30 and the second of which generally runs from December 1 through May 31. During each offering period,
participating employees accumulate after-tax payroll contributions, up to a maximum of 15% of their compensation, to pay the
purchase price at the end of the offering. Participating employees may withdraw from an offering before the purchase date and
obtain a refund of the amounts withheld as payroll deductions. At the end of the offering period, outstanding options under the
ESPP are exercised, and each employee's accumulated contributions are used to purchase our common stock. The price for
shares purchased under the ESPP is 95% of the fair market price at the end of the offering period, without a look-back feature.
As a result, we do not recognize compensation expense for the ESPP shares purchased. For the years ended December 31, 2019,
2018 and 2017, there were 129,505, 119,123 and 102,826 shares, respectively, purchased under the ESPP. As of December 31,
2019, we have 376,140 shares available under the ESPP.
_______________________________________________________________________________
104
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
As of December 31, 2019, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based
Awards was $39,696 and is expected to be recognized over a weighted-average period of 1.8 years.
We issue shares of our common stock for the exercises of stock options, and the vesting of RSUs, PUs and shares of our
common stock under our ESPP from unissued reserved shares.
o. Income Taxes
Accounting for income taxes requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the tax and financial reporting bases of assets and liabilities and for loss and
credit carryforwards. Valuation allowances are provided when recovery of deferred tax assets does not meet the more likely
than not standard as defined in GAAP. We have elected to recognize interest and penalties associated with uncertain tax
positions as a component of the Provision (benefit) for income taxes in the accompanying Consolidated Statements of
Operations.
105
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
p. Income (Loss) Per Share—Basic and Diluted
Basic income (loss) per common share is calculated by dividing income (loss) by the weighted average number of
common shares outstanding. The calculation of diluted income (loss) per share is consistent with that of basic income (loss) per
share but gives effect to all potential common shares (that is, securities such as stock options, RSUs, PUs, warrants or
convertible securities) that were outstanding during the period, unless the effect is antidilutive.
The calculation of basic and diluted income (loss) per share for the years ended December 31, 2019, 2018 and 2017 is as
follows:
Year Ended December 31,
2019
2018
2017
Income (loss) from continuing operations
$
268,211
$
367,558
$
Less: Net income (loss) attributable to noncontrolling interests
938
1,198
Income (loss) from continuing operations (utilized in numerator
of Earnings Per Share calculation)
Income (loss) from discontinued operations, net of tax
267,273
104
Net income (loss) attributable to Iron Mountain Incorporated
$
267,377
$
366,360
(12,427)
353,933
$
178,015
1,611
176,404
(6,291)
170,113
Weighted-average shares—basic
Effect of dilutive potential stock options
Effect of dilutive potential RSUs and PUs
Effect of Over-Allotment Option(1)
Weighted-average shares—diluted
286,971,000
285,913,000
265,898,000
145,509
570,435
—
234,558
505,030
—
431,071
509,235
6,278
287,686,944
286,652,588
266,844,584
Earnings (losses) per share—basic:
Income (loss) from continuing operations
$
(Loss) income from discontinued operations, net of tax
Net income (loss) attributable to Iron Mountain Incorporated(2) $
Earnings (losses) per share—diluted:
Income (loss) from continuing operations
$
(Loss) income from discontinued operations, net of tax
Net income (loss) attributable to Iron Mountain Incorporated(2) $
0.93
—
0.93
0.93
—
0.93
$
$
$
$
1.28
(0.04)
1.24
1.28
(0.04)
1.23
$
$
$
$
0.66
(0.02)
0.64
0.66
(0.02)
0.64
Antidilutive stock options, RSUs and PUs, excluded from the
calculation
4,475,745
3,258,078
2,326,344
___________________________________________________________________
(1) See Note 12.
(2) Columns may not foot due to rounding.
106
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
q. Allowance for Doubtful Accounts and Credit Memo Reserves
We maintain an allowance for doubtful accounts and credit memos for estimated losses resulting from the potential
inability of our customers to make required payments and potential disputes regarding billing and service issues. When
calculating the allowance, we consider our past loss experience, current and prior trends in our aged receivables and credit
memo activity, current economic conditions and specific circumstances of individual receivable balances. If the financial
condition of our customers were to significantly change, resulting in a significant improvement or impairment of their ability to
make payments, an adjustment of the allowance may be required. We write-off uncollectible balances as circumstances warrant,
generally, no later than one year past due.
Rollforward of allowance for doubtful accounts and credit memo reserves is as follows:
Year Ended December 31,
2019
2018
2017
Balance at
Beginning of
the Year
Credit Memos
Charged to
Revenue
Allowance for
Bad Debts
Charged to
Expense
Deductions and
Other(1)
Balance at
End of
the Year
$
43,584
$
51,846
$
19,389
$
46,648
44,290
36,329
38,966
18,625
14,826
(71,963) $
(58,018)
(51,434)
42,856
43,584
46,648
_______________________________________________________________________________
(1) Primarily consists of the issuance of credit memos, the write-off of accounts receivable and the impact associated with
currency translation adjustments.
r. Concentrations of Credit Risk
Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents (including
money market funds and time deposits) and accounts receivable. The only significant concentrations of liquid investments as of
December 31, 2019 and 2018, respectively, related to cash and cash equivalents. At December 31, 2019, we had money market
funds with seven "Triple A" rated money market funds and no time deposits. At December 31, 2018, we had no money market
funds and time deposits with seven global banks. As per our risk management investment policy, we limit exposure to
concentration of credit risk by limiting the amount invested in any one mutual fund to a maximum of 1% of the fund total assets
or in any one financial institution to a maximum of $75,000. As of December 31, 2019 and 2018, our cash and cash equivalents
balance, including restricted cash, was $193,555 and $165,485, respectively. At December 31, 2019, our cash and cash
equivalents included money market funds of $13,653.
107
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
s. Fair Value Measurements
Entities are permitted under GAAP to elect to measure certain financial instruments and certain other items at either fair
value or cost. We have elected the cost measurement option.
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.
The assets and liabilities carried at fair value and measured on a recurring basis as of December 31, 2019 and 2018,
respectively, are as follows:
Description
Money Market Funds(1)
Trading Securities
Derivative Liabilities(4)
Description
Time Deposits(1)
Trading Securities
Derivative Assets(4)
Derivative Liabilities(4)
Fair Value Measurements at
December 31, 2019 Using
Total Carrying
Value at
December 31,
2019
Quoted prices
in active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$
13,653
$
—
$
13,653
$
10,732
9,756
10,168 (2)
—
564 (3)
9,756
—
—
—
Fair Value Measurements at
December 31, 2018 Using
Total Carrying
Value at
December 31,
2018
Quoted prices
in active
markets
(Level 1)
$
956
$
—
$
10,753
10,248 (2)
93
973
—
—
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
956
$
505 (3)
93
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.
108
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
(3) Certain trading securities are measured based on inputs other than quoted market prices that are observable.
(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. We did not
have any material items that are measured at fair value on a non-recurring basis for the years ended December 31, 2019, 2018,
and 2017, with the exception of: (i) the reporting units as presented in our goodwill impairment analysis (as disclosed in Note
2.h.); (ii) the assets and liabilities acquired through acquisitions (as disclosed in Note 6); (iii) the Access Contingent
Consideration (as defined and disclosed in Note 13); (iv) the redemption value of certain redeemable noncontrolling interests
(as disclosed in Note 2.v.); and (v) our initial investments in the MakeSpace JV and OSG (both as defined and disclosed in Note
13), 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 4. Long-term debt is measured at cost in our Consolidated Balance Sheets as of December 31, 2019 and 2018.
109
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
t. Accumulated Other Comprehensive Items, Net
The changes in accumulated other comprehensive items, net for the years ended December 31, 2019, 2018 and 2017 are
as follows:
Balance as of December 31, 2016
Other comprehensive (loss) income:
Foreign currency translation adjustment(1)
Total other comprehensive (loss) income
Balance as of December 31, 2017
Other comprehensive (loss) income:
Foreign currency translation adjustment
Change in fair value of derivative instruments
Total other comprehensive (loss) income
Balance as of December 31, 2018
Other comprehensive (loss) income:
Foreign currency translation adjustment
Change in fair value of derivative instruments
Total other comprehensive (loss) income
Balance as of December 31, 2019
$
______________________________________________________________
Foreign Currency
Translation
Adjustment
Change in Fair Value
of Derivative
Instruments
Total
$
(212,573) $
— $
(212,573)
108,584
108,584
(103,989)
(160,702)
—
(160,702)
(264,691)
—
—
—
—
(973)
(973)
(973)
11,866
—
11,866
(252,825) $
—
(8,783)
(8,783)
(9,756) $
108,584
108,584
(103,989)
(160,702)
(973)
(161,675)
(265,664)
11,866
(8,783)
3,083
(262,581)
(1) During the year ended December 31, 2017, approximately $29,100 of cumulative translation adjustment associated
with our businesses in Russia and Ukraine was reclassified from accumulated other comprehensive items, net and was
included in the gain on sale associated with the Russia and Ukraine Divestment (see Note 13).
110
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
u. Other Expense (Income), Net
Other expense (income), net for the years ended December 31, 2019, 2018 and 2017 consists of the following:
Foreign currency transaction losses (gains), net(1)
$
Debt extinguishment expense, net
Other, net(2)
2019
24,852
$
—
9,046
Other Expense (Income), Net
$
33,898
$
_______________________________________________________________________________
2018
(15,567) $
—
3,875
(11,692) $
2017
43,248
78,368
(42,187)
79,429
Year Ended December 31,
(1) The gain or loss on foreign currency transactions, calculated as the difference between the historical exchange rate and
the exchange rate at the applicable measurement date, includes gains or losses primarily related to (i) borrowings in
certain foreign currencies under our Revolving Credit Facility and our Former Revolving Credit Facility (each as
defined in Note 4), (ii) our Euro Notes (as defined in Note 4), (iii) certain foreign currency denominated intercompany
obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered
permanently invested and (iv) amounts that are paid or received on the net settlement amount from forward contracts
(as more fully discussed in Note 3).
(2) Other, net for the year ended December 31, 2017 includes a gain of $38,869 associated with the Russia and Ukraine
Divestment (as defined in Note 13).
v. Redeemable Noncontrolling Interests
Certain unaffiliated third parties own noncontrolling interests in our consolidated subsidiaries in Chile, India and South
Africa. The underlying agreements between us and our noncontrolling interest shareholders for these subsidiaries contain
provisions under which the noncontrolling interest shareholders can require us to purchase their respective interests in such
subsidiaries at certain times and at a purchase price as stipulated in the underlying agreements (generally at fair value). These
put options make these noncontrolling interests redeemable and, therefore, these noncontrolling interests are classified as
temporary equity outside of stockholders' equity. Redeemable noncontrolling interests are reported at the higher of their
redemption value or the noncontrolling interest holders' proportionate share of the underlying subsidiaries net carrying value.
Increases or decreases in the redemption value of the noncontrolling interest are offset against Additional Paid-in Capital.
In 2018, certain of our noncontrolling interest shareholders exercised their option to put their ownership interest back to
us. Upon the exercise of the put option, this noncontrolling interest became mandatorily redeemable by us, and, therefore, is
accounted for as a liability rather than a component of redeemable noncontrolling interests. We and these noncontrolling
interest shareholders are currently in a dispute with respect to the fair value of the noncontrolling interest shares. We have
recorded our estimate of the fair value of these noncontrolling interest shares as a component of Accrued expenses on our
Consolidated Balance Sheets as of December 31, 2019 and 2018. It is possible that the value ultimately agreed upon with the
noncontrolling interest shareholders could differ from our current estimate of the fair value. Subsequent to these noncontrolling
interest shares becoming mandatorily redeemable, any increase or decrease in the fair value of such noncontrolling interest is
included as a component of Other expense (income), net on our Consolidated Statements of Operations.
111
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
w. New Accounting Pronouncements
Recently Adopted 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.m. for information regarding the impact of the adoption of ASU 2016-02 on our consolidated
financial statements.
Other As Yet Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 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 financial
assets. The standard will eliminate the probable initial recognition of estimated losses and will provide a forward-looking
expected credit loss model for accounts receivables, loans and other financial instruments. Adoption of the standard will be
applied using a modified retrospective approach through a cumulative adjustment to retained earnings as of the effective date to
align our credit loss methodology with the new standard. ASU 2016-13 is effective for us on January 1, 2020, with early
adoption permitted. Under ASU 2016-13 we will be required to use a forward-looking expected credit loss model for accounts
receivable, loans and other financial instruments. We do not expect ASU 2016-13 will have a material impact on our
consolidated financial statements.
x. Changes in Presentation
During 2019, we changed our presentation of Significant Acquisition Costs (as defined below) and corrected the
presentation of gains on sale of real estate as presented in our Consolidated Statements of Operations.
Significant Acquisition Costs
We have historically classified our significant acquisition costs which represent operating expenditures associated with (1)
the acquisition of Recall Holdings Limited ("Recall") that we completed on May 2, 2016 (the "Recall Transaction"), including:
(i) advisory and professional fees to complete the Recall Transaction; (ii) costs associated with the Divestments (as defined in
Note 13) required in connection with receipt of regulatory approvals (including transitional services); and (iii) costs to integrate
Recall with our existing operations, including moving, severance, facility upgrade, REIT integration and system upgrade costs,
as well as certain costs associated with our shared service center initiative for our finance, human resources and information
technology functions; and (2) the advisory and professional fees to complete the IODC Transaction (as defined in Note 6)
(collectively, "Significant Acquisition Costs"), as components of Selling, general and administrative expenses and Cost of sales.
Beginning in 2019, we present Significant Acquisition Costs as its own line item within Operating Expenses in our
Consolidated Statements of Operations. All prior periods have been conformed to this presentation. See Note 9 for Significant
Acquisition Costs by segment.
112
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Gains on Sale of Real Estate
Subsequent to our conversion to a REIT, we have historically classified gains on sale of real estate, net of tax, as a
separate line on our Consolidated Statements of Operations and excluded such amounts from our reported operating income.
We presented such amounts net of tax as these gains were presented below the Provision (benefit) for income taxes in our
Consolidated Statements of Operations. Beginning in 2019, we 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. Such amounts are presented
gross of tax with any tax impact presented within Provision (benefit) for income taxes in our Consolidated Statements of
Operations. All prior periods have been conformed to this presentation. See Note 2.g. for details of the (Gain) loss on disposal/
write-down of property, plant and equipment.
The following table sets forth the effect of the (i) change in presentation of Significant Acquisition Costs and (ii)
correction in presentation of gain on sale of real estate to certain line items of our Consolidated Statements of Operations for
December 31, 2018 and 2017. The effect of these items did not impact Income (Loss) from Continuing Operations or Net
Income (Loss).
Year Ended December 31,
2018
2017
Significant
Acquisition
Costs
Gain on Sale
of Real Estate
Total
Significant
Acquisition
Costs
Gain on Sale
of Real Estate
Total
Cost of sales (excluding
depreciation and amortization)
Selling, general and
administrative
Significant Acquisition Costs
(Gain) Loss on disposal/write-
down of property, plant and
equipment, net
Total Operating Expenses
Operating Income (Loss)
Income (Loss) from Continuing
Operations Before Provision
(Benefit) for Income Taxes
Provision (Benefit) for Income
Taxes
Gain on Sale of Real Estate, Net
of tax
y. Immaterial Restatement
$
$
$
$
$
$
$
$
$
(7,628) $
— $
(7,628) $
(20,493) $
— $
(20,493)
(43,037) $
50,665
$
— $
— $
(43,037) $
$
50,665
(64,408) $
$
84,901
— $
— $
(64,408)
84,901
— $
(63,804) $
— $
(63,804) $
— $
63,804
$
(63,804) $
(63,804) $
$
63,804
— $
— $
— $
(1,565) $
(1,565) $
$
1,565
(1,565)
(1,565)
1,565
— $
63,804
— $
8,476
— $
55,328
$
$
$
63,804
8,476
55,328
$
$
$
— $
1,565
$
1,565
— $
— $
—
— $
1,565
$
1,565
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, including interest and penalties. See Note 10 for additional information on this matter.
113
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
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. The following table sets forth the effect of the immaterial restatement to certain line
items of our Consolidated Statements of Operations for the years ended December 31, 2018 and 2017:
Selling, general and administrative
Total Operating Expenses
Operating Income (Loss)
Interest Expense, Net
Income (Loss) from Continuing Operations Before Provision (Benefit) for
Income Taxes
Provision (Benefit) for Income Taxes
Income (Loss) from Continuing Operations
Net Income (Loss)
Net Income (Loss) Attributable to Iron Mountain Incorporated
Earnings (Losses) per Share - Basic:
Income (Loss) from Continuing Operations
Net Income (Loss) Attributable to Iron Mountain Incorporated
Earnings (Losses) per Share - Diluted:
Income (Loss) from Continuing Operations
Net Income (Loss) Attributable to Iron Mountain Incorporated
Year Ended December 31,
2018
2017
11,045
$
11,045
$
(11,045) $
$
359
(11,404) $
(1,986) $
(9,418) $
(9,418) $
(9,418) $
(0.03) $
(0.03) $
(0.03) $
(0.03) $
16,623
16,623
(16,623)
70
(16,693)
(2,985)
(13,708)
(13,708)
(13,708)
(0.05)
(0.05)
(0.05)
(0.05)
$
$
$
$
$
$
$
$
$
$
$
$
$
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 in the amount of $(23,126) and $(13,708) as of December 31, 2018 and 2017, respectively, for the
cumulative impact of the aforementioned items.
114
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
2. Summary of Significant Accounting Policies (Continued)
Additionally, we have restated our Consolidated Balance Sheets as of December 31, 2018 and 2017, and each of our
Consolidated Statements of Operations, our Consolidated Statements of Comprehensive Income (Loss), our Consolidated
Statements of Equity and the related notes for the years ended December 31, 2018 and 2017 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 Consolidated Statements
of Cash Flows for the years ended December 31, 2018 and 2017: (1) cash flows from operating activities, (2) cash flows from
investing activities and (3) cash flows from financing activities.
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:
Total Other Assets, Net
Total Assets
Accrued expenses and other current liabilities
Total Current Liabilities
(Distribution in excess of earnings) Earnings in excess of distributions
Total Iron Mountain Incorporated Stockholders' Equity
December 31, 2018
4,971
$
$
$
$
$
$
4,971
28,097
28,097
(23,126)
(23,126)
115
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
3. Derivative Instruments and Hedging Activities (Continued)
Derivative instruments we are party to include: (i) interest rate swap agreements (which are designated as cash flow
hedges), (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, we entered into interest rate swap agreements to limit our exposure to changes in interest rates on a
portion of our floating rate indebtedness. As of December 31, 2019 and 2018, we had $350,000 in notional value of interest rate
swap agreements outstanding, which expire in March 2022. Under the interest rate swap agreements, we receive variable rate
interest payments associated with the notional amount of each interest rate swap, based upon one-month LIBOR, in exchange
for the payment of fixed interest rate payments (at the fixed interest rate specified in the interest rate swap agreements).
In July 2019, we entered into forward-starting interest rate swap agreements to limit our exposure to changes in interest
rates on a portion of our floating rate indebtedness once our current interest rate swap agreements expire in March 2022. The
forward-starting interest rate swap agreements have $350,000 in notional value, commence in March 2022 and expire in March
2024. Under the swap agreements we will receive variable rate interest payments based upon one-month LIBOR, in exchange
for the payment of fixed interest rate payments at the rates specified in the interest rate swap agreements.
We have designated these interest rate swap agreements, including the forward-starting interest rate swap agreements, as
cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. At
December 31, 2019 and 2018, we had a derivative liability of $8,774 and $973, respectively, which was recorded as a
component of Other long-term liabilities in our Consolidated Balance Sheets. We have recorded the change in fair value of the
interest rate swap agreements as a component of Accumulated other comprehensive items, net in our Consolidated Balance
Sheets. We have recorded unrealized losses of $7,801 and $973 for the years ended December 31, 2019 and 2018, respectively.
As of December 31, 2019, cumulative net losses of $8,774 are recorded within Accumulated other comprehensive items, net
associated with these cash flow hedges.
Net Investment Hedges
a. Cross-Currency Swap Agreements Designated as a Hedge of Net Investment
In August 2019, we entered into cross-currency swap agreements to hedge the variability of exchange rate impacts
between the United States dollar and the Euro. Under the terms of the cross-currency swap agreements we notionally
exchanged approximately $110,000 at an interest rate of 6.0% for approximately 99,055 Euros at a weighted average interest
rate of approximately 3.65%. The cross-currency swap agreements, which expire in August 2023, are designated as a hedge of
net investment against certain of our Euro denominated subsidiaries and require an exchange of the notional amounts at
maturity. The cross-currency swaps are marked to market at each reporting period and any changes in fair value are recognized
as a component of Accumulated other comprehensive items, net. Unrealized gains are recognized as assets while unrecognized
losses are recognized as liabilities. At December 31, 2019 we had a derivative liability of $982, which was recorded as a
component of Other long-term liabilities in our Consolidated Balance Sheets, which represents the fair value of the cross-
currency swap agreements. We have recorded unrealized losses of $982 for the year ended December 31, 2019.
116
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
3. Derivative Instruments and Hedging Activities (Continued)
b. Euro Notes Designated as a Hedge of Net Investment
In addition, we have designated a portion of our Euro Notes (as defined in Note 4) as a hedge of net investment of certain
of our Euro denominated subsidiaries. For the years ended December 31, 2019, 2018 and 2017 we designated, on average,
284,986, 224,424 and 103,682 Euros, respectively, of our Euro Notes as a hedge of net investment of certain of our Euro
denominated subsidiaries. As a result, we recorded the following foreign exchange gains (losses) related to the change in fair
value of such debt due to the currency translation adjustments, which is a component of Accumulated other comprehensive
items, net:
Foreign exchange gains (losses)
$
6,003
$
11,070
$
Year Ended December 31,
2019
2018
2017
(15,015)
As of December 31, 2019, cumulative net gains of $20,261, net of tax, are recorded in Accumulated other comprehensive
items, net associated with this net investment hedge.
Foreign Exchange Currency Forward Contracts Not Designated as Hedges
We have entered into forward contracts to hedge our exposures associated with certain foreign currencies. We have not
designated any of these forward contracts as hedges. Our policy is to record the fair value of each derivative instrument on a
gross basis. As of December 31, 2019, we had no outstanding forward contracts. As of December 31, 2018, we had outstanding
forward contracts to purchase 29,000 Euros and sell $33,374 United States dollars. At December 31, 2018, we had a derivative
asset of $93 which is recorded as a component of Prepaid expenses and other in our Consolidated Balance Sheet.
Net cash payments (receipts) included in cash from operating activities related to settlements associated with foreign
currency forward contracts for the years ended December 31, 2019, 2018 and 2017, are as follows:
Net payments (receipts)
$
737
$
5,797
$
(9,073)
Year Ended December 31,
2019
2018
2017
Losses (gains) for our derivative instruments for the years ended December 31, 2019, 2018 and 2017 are as follows:
Derivatives Not Designated as Hedging
Instruments
Location of Loss (Gain) Recognized in
Income on Derivative
2019
2018
Foreign exchange contracts
Other expense (income), net
$
737
$
4,954
$
2017
(8,292)
Amount of Loss (Gain) Recognized in
Income on Derivatives
December 31,
117
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt
Long-term debt is as follows:
December 31, 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)
$
348,808
$
(12,053) $
336,755
$
348,808
$
793,832
$
(14,117) $
779,715
$
793,832
Term Loan A(1)
Term Loan B(1)(2)
Australian Dollar Term Loan
(the "AUD Term Loan")(3)(4)
UK Bilateral Revolving Credit
Facility (the "UK Bilateral
Facility")(4)
43/8% Senior Notes due 2021
(the "43/8% Notes")(5)(6)(7)
6% Senior Notes due 2023 (the
"6% Notes due 2023")(5)(6)
53/8% CAD Senior Notes due
2023 (the "CAD Notes due
2023")(5)(7)(8)
53/4% Senior Subordinated
Notes due 2024 (the "53/4%
Notes")(5)(6)
3% Euro Senior Notes due
2025 (the "Euro Notes")(5)(6)
(7)
37/8% GBP Senior Notes due
2025 (the "GBP Notes due
2025")(5)(7)(9)
53/8% Senior Notes due 2026
(the "53/8% Notes")(5)(7)(10)
47/8% Senior Notes due 2027
(the "47/8% Notes due 2027")
(5)(6)(7)
51/4% Senior Notes due 2028
(the "51/4% Notes")(5)(6)(7)
47/8% Senior Notes due 2029
(the "47/8% Notes due 2029")
(5)(6)(7)
Real Estate Mortgages,
Financing Lease Liabilities and
Other(11)
Accounts Receivable
Securitization Program(12)
Mortgage Securitization
Program(13)
228,125
686,395
—
228,125
(7,493)
678,902
228,125
686,890
240,625
693,169
—
240,625
(8,742)
684,427
240,625
660,013
226,924
(2,313)
224,611
228,156
233,955
(3,084)
230,871
235,645
184,601
(1,801)
182,800
184,601
178,299
(2,357)
175,942
178,299
500,000
(2,436)
497,564
503,450
500,000
(4,155)
495,845
488,750
600,000
(4,027)
595,973
613,500
600,000
(5,126)
594,874
606,000
192,058
(2,071)
189,987
199,380
183,403
(2,506)
180,897
186,154
1,000,000
(6,409)
993,591
1,010,625
1,000,000
(7,782)
992,218
940,000
336,468
(3,462)
333,006
345,660
343,347
(4,098)
339,249
321,029
527,432
(5,809)
521,623
539,892
509,425
(6,573)
502,852
453,811
250,000
(2,756)
247,244
261,641
250,000
(3,185)
246,815
224,375
1,000,000
(11,020)
988,980
1,029,475
1,000,000
(12,442)
987,558
855,000
825,000
(9,742)
815,258
859,598
825,000
(10,923)
814,077
713,625
1,000,000
(14,104)
985,896
1,015,640
—
—
—
—
523,671
(406)
523,265
523,671
606,702
(171)
606,531
606,702
272,062
(81)
271,981
272,062
221,673
(218)
221,455
221,673
50,000
(982)
49,018
50,000
50,000
(1,128)
48,872
50,000
Total Long-term Debt
8,751,544
(86,965)
8,664,579
8,229,430
(86,607)
8,142,823
Less Current Portion
(389,013)
—
(389,013)
(126,406)
—
(126,406)
Long-term Debt, Net of Current
Portion
$ 8,362,531
$
(86,965) $ 8,275,566
$ 8,103,024
$
(86,607) $ 8,016,417
______________________________________________________________
118
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
(1) The capital stock or other equity interests of most of our United States subsidiaries, and up to 66% of the capital stock
or other equity interests of most of our first-tier foreign subsidiaries, are pledged to secure these debt instruments,
together with all intercompany obligations (including promissory notes) of subsidiaries owed to us or to one of our
United States subsidiary guarantors. In addition, Iron Mountain Canada Operations ULC ("Canada Company") has
pledged 66% of the capital stock of its subsidiaries, and all intercompany obligations (including promissory notes)
owed to or held by it, to secure the Canadian dollar subfacility under the Revolving Credit Facility. The fair value
(Level 3 of fair value hierarchy described at Note 2.s.) of these debt instruments approximates the carrying value (as
borrowings under these debt instruments are based on current variable market interest rates (plus a margin that is
subject to change based on our consolidated leverage ratio), as of December 31, 2019 and 2018.
(2) The amount of debt for the Term Loan B (as defined below) reflects an unamortized original issue discount of $1,355
and $1,581 as of December 31, 2019 and 2018, respectively.
(3) The amount of debt for the AUD Term Loan reflects an unamortized original issue discount of $1,232 and $1,690 as of
December 31, 2019 and 2018, respectively.
(4) The fair value (Level 3 of fair value hierarchy described at Note 2.s.) of this debt instrument approximates the carrying
value as borrowings under this debt instrument are based on a current variable market interest rate.
(5) The fair values (Level 1 of fair value hierarchy described at Note 2.s.) of these debt instruments are based on quoted
market prices for these notes on December 31, 2019 and 2018, respectively.
(6) Collectively, the "Parent Notes". IMI is the direct obligor on the Parent Notes, which are fully and unconditionally
guaranteed, on a senior or senior subordinated basis, as the case may be, by IMI's direct and indirect 100% owned
United States subsidiaries that represent the substantial majority of our United States operations (the "Guarantors").
These guarantees are joint and several obligations of the Guarantors. The remainder of our subsidiaries do not
guarantee the Parent Notes. See Note 5.
(7) The 43/8% Notes, the CAD Notes due 2023, the Euro Notes, the GBP Notes due 2025, the 53/8% Notes, the 47/8%
Notes due 2027, the 51/4% Notes and the 47/8% Notes due 2029 (collectively, the "Unregistered Notes") have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any other
jurisdiction. Unless they are registered, the Unregistered Notes may be offered only in transactions that are exempt
from registration under the Securities Act or the securities laws of any other jurisdiction.
(8) Canada Company is the direct obligor on the CAD Notes due 2023, which are fully and unconditionally guaranteed,
on a senior basis, by IMI and the Guarantors. These guarantees are joint and several obligations of IMI and the
Guarantors. See Note 5.
(9) Iron Mountain (UK) PLC ("IM UK") is the direct obligor on the GBP Notes due 2025, which are fully and
unconditionally guaranteed, on a senior basis, by IMI and the Guarantors. These guarantees are joint and several
obligations of IMI and the Guarantors. See Note 5.
(10) Iron Mountain US Holdings, Inc. ("IM US Holdings"), one of the Guarantors, is the direct obligor on the 53/8% Notes,
which are fully and unconditionally guaranteed, on a senior basis, by IMI and the other Guarantors. These guarantees
are joint and several obligations of IMI and such Guarantors. See Note 5.
(11) Includes (i) real estate mortgages of $27,036 and $18,576 as of December 31, 2019 and 2018, respectively, which bear
interest at approximately 3.9% as of December 31, 2019 and 4.1% as of December 31, 2018 and are payable in various
installments through 2024, (ii) financing lease liabilities of $367,182 and $447,173 as of December 31, 2019 and 2018,
respectively, which bear a weighted average interest rate of 5.7% at December 31, 2019 and 2018 and (iii) other notes
and other obligations, which were assumed by us as a result of certain acquisitions, of $129,453 and $140,953 as of
December 31, 2019 and 2018, respectively, and bear a weighted average interest rate of 10.8% at December 31, 2019
and 11.1% at December 31, 2018, respectively. We believe the fair value (Level 3 of fair value hierarchy described at
Note 2.s.) of this debt approximates its carrying value.
119
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
(12) The Accounts Receivable Securitization Special Purpose Subsidiaries are the obligors under this program. We believe
the fair value (Level 3 of fair value hierarchy described at Note 2.s.) of this debt approximates its carrying value.
(13) The Mortgage Securitization Special Purpose Subsidiary is the obligor under this program. We believe the fair value
(Level 3 of fair value hierarchy described at Note 2.s.) of this debt approximates its carrying value.
a. Credit Agreement
On August 21, 2017, we entered into a new credit agreement (the "Credit Agreement") which amended and restated our
then existing credit agreement which consisted of a revolving credit facility (the "Former Revolving Credit Facility") and a
term loan and was scheduled to terminate on July 6, 2019. The Credit Agreement consists of a revolving credit facility (the
"Revolving Credit Facility") and a term loan (the "Term Loan A"). The maximum amount permitted to be borrowed under the
Revolving Credit Facility is $1,750,000. The original principal amount of the Term Loan A was $250,000. Under the Revolving
Credit Facility, we had the option to request additional commitments of up to $500,000, in the form of term loans or through
increased commitments under the Revolving Credit Facility, subject to the conditions specified in the Credit Agreement. The
Credit Agreement was originally scheduled to mature on August 21, 2022, at which point all obligations were to become due.
On March 22, 2018, we entered into an amendment (the “March 2018 Amendment”) to the Credit Agreement which
provided us with the option to request additional commitments of up to approximately $1,260,000 under the Credit Agreement
in the form of term loans or through increased commitments under the Revolving Credit Facility, subject to the conditions
specified in the Credit Agreement. On June 4, 2018, we entered into another amendment (the "June 2018 Amendment") to the
Credit Agreement which (i) reduced interest rate margins applicable to existing and future borrowings under the Revolving
Credit Facility and Term Loan A by 0.25% and (ii) extended the maturity date of the Credit Agreement to June 4, 2023. The
Term Loan A is to be paid in quarterly installments in an amount equal to $3,125 per quarter, with the remaining balance due on
June 4, 2023.
On December 20, 2019, we entered into an amendment (the “December 2019 Amendment”) to the Credit Agreement. The
December 2019 Amendment amended the definition of EBITDA and certain other definitions and restrictive covenants
contained in the Credit Agreement.
The Revolving Credit Facility enables IMI and certain of its United States and foreign subsidiaries to borrow in United
States dollars and (subject to sublimits) a variety of other currencies (including Canadian dollars, British pounds sterling and
Euros, among other currencies) in an aggregate outstanding amount not to exceed $1,750,000.
IMI and the Guarantors guarantee all obligations under the Credit Agreement. The interest rate on borrowings under the
Credit Agreement varies depending on our choice of interest rate and currency options, plus an applicable margin, which varies
based on our consolidated leverage ratio. Additionally, the Credit Agreement requires the payment of a commitment fee on the
unused portion of the Revolving Credit Facility, which fee ranges from between 0.25% to 0.4% based on our consolidated
leverage ratio and fees associated with outstanding letters of credit. As of December 31, 2019, we had $348,808 and $228,125
of outstanding borrowings under the Revolving Credit Facility and the Term Loan A, respectively. Of the $348,808 of
outstanding borrowings under the Revolving Credit Facility, $257,800 was denominated in United States dollars, 44,300 was
denominated in Canadian dollars and 50,800 was denominated in Euros. In addition, we also had various outstanding letters of
credit totaling $4,853 under the Revolving Credit Facility. The remaining amount available for borrowing under the Revolving
Credit Facility as of December 31, 2019, which is based on IMI's leverage ratio, the last 12 months' earnings before interest,
taxes, depreciation and amortization and rent expense ("EBITDAR"), other adjustments as defined in the Credit Agreement and
current external debt, was $1,396,339 (which amount represents the maximum availability as of such date). Available
borrowings under the Revolving Credit Facility are subject to compliance with our indenture covenants as described more fully
in Note 4.i. The average interest rate in effect under the Credit Agreement was 3.3% as of December 31, 2019. The average
interest rate in effect under the Revolving Credit Facility was 3.2% as of December 31, 2019 and the interest rate in effect under
the Term Loan A as of December 31, 2019 was 3.5%.
120
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
In connection with the March 2018 Amendment, IMI's wholly owned subsidiary, 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 original principal amount of $700,000 (the “Term Loan B”). On March 26, 2018, IMIM borrowed the full
amount of the Term Loan B, which matures on January 2, 2026. The Term Loan B was issued at 99.75% of par. The aggregate
net proceeds of approximately $689,850, after paying commissions to the joint lead arrangers and net of the original discount,
were used to repay outstanding borrowings under the Revolving Credit Facility. The Term Loan B holders benefit from the
same security and guarantees as other borrowings under the Credit Agreement. The Term Loan B holders also benefit from the
same affirmative and negative covenants as other borrowings under the Credit Agreement; however, the Term Loan B holders
are not generally entitled to the benefits of the financial covenants under the Credit Agreement.
Principal payments on the Term Loan B are to be paid in quarterly installments of $1,750 per quarter during the period
June 30, 2018 through December 31, 2025, with the balance due on January 2, 2026. The Term Loan B may be prepaid without
penalty at any time. The Term Loan B bears interest at a rate of LIBOR plus 1.75%. The interest rate in effect under Term Loan
B as of December 31, 2019 was 3.6%.
b. Notes Issued under Indentures
As of December 31, 2019, we had 10 series of senior subordinated or senior notes issued under various indentures, seven
of which are direct obligations of the parent company, IMI; one of which (the 53/8% Notes) is a direct obligation of IM US
Holdings; one of which (the CAD Notes due 2023) is a direct obligation of Canada Company; and one of which (the GBP
Notes due 2025) is a direct obligation of IM UK. Each series of notes shown below (i) is effectively subordinated to all of our
secured indebtedness, including under the Credit Agreement, to the extent of the value of the collateral securing such
indebtedness, (ii) ranks pari passu in right of payment with each other and with debt outstanding under the Credit Agreement,
except the 53/4% Notes which are subordinated in right of payment to the Credit Agreement, the senior notes shown below and
other "Senior Debt" as defined in, and to the extent set forth in, our indenture for the 53/4% Notes, and (iii) is structurally
subordinated to all liabilities of our subsidiaries that do not guarantee such series of notes:
•
•
43/8% Notes: $500,000 principal amount of senior notes maturing on June 1, 2021 and bearing interest at a rate of
43/8% per annum, payable semi-annually in arrears on December 1 and June 1;
6% Notes due 2023: $600,000 principal amount of senior notes maturing on August 15, 2023 and bearing interest at a
rate of 6% per annum, payable semi-annually in arrears on February 15 and August 15;
• CAD Notes due 2023: 250,000 CAD principal amount of senior notes maturing on September 15, 2023 and bearing
interest at a rate of 53/8% per annum, payable semi-annually in arrears on March 15 and September 15;
•
53/4% Notes: $1,000,000 principal amount of senior subordinated notes maturing on August 15, 2024 and bearing
interest at a rate of 53/4% per annum, payable semi-annually in arrears on February 15 and August 15;
• Euro Notes: 300,000 Euro principal amount of senior notes maturing on January 15, 2025 and bearing interest at a rate
of 3% per annum, payable semi-annually in arrears on January 15 and July 15;
• GBP Notes due 2025: 400,000 British pounds sterling principal amount of senior notes maturing on November 15,
2025 and bearing interest at a rate of 37/8% per annum, payable semi-annually in arrears on May 15 and November 15;
•
•
•
53/8% Notes: $250,000 principal amount of senior notes maturing on June 1, 2026 and bearing interest at a rate of
53/8% per annum, payable semi-annually in arrears on December 1 and June 1;
47/8% Notes due 2027: $1,000,000 principal amount of senior notes maturing on September 15, 2027 and bearing
interest at a rate of 47/8% per annum, payable semi-annually in arrears on March 15 and September 15;
51/4% Notes: $825,000 principal amount of senior notes maturing on March 15, 2028 and bearing interest at a rate of
51/4% per annum, payable semi-annually in arrears on March 15 and September 15; and
121
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
•
47/8% Notes due 2029: $1,000,000 principal amount of senior notes maturing on September 15, 2029 and bearing
interest at a rate of 47/8% per annum, payable semi-annually in arrears on March 15 and September 15.
In May 2017, IMI completed a private offering of 300,000 Euros in aggregate principal amount of the Euro Notes, which
were issued at par. The net proceeds to IMI from the Euro Notes of 296,250 Euros (or $332,683, based upon the exchange rate
between the Euro and the United States dollar on May 23, 2017 (the settlement date for the Euro Notes)), after paying the initial
purchasers' commissions, were used to repay outstanding borrowings under the Former Revolving Credit Facility.
In August 2017, we redeemed all of the 200,000 Canadian dollars in aggregate principal outstanding of the 61/8% CAD
Senior Notes due 2021 (the "CAD Notes due 2021") (approximately $157,458, based upon the exchange rate between the
Canadian dollar and the United States dollar on August 15, 2017 (the redemption date for the CAD Notes due 2021)) at
103.063% of par, plus accrued and unpaid interest to, but excluding the redemption date, utilizing borrowings under the Former
Revolving Credit Facility. We recorded a charge of $6,354 to Other expense (income), net in the third quarter of 2017 related to
the early extinguishment of this debt, representing the call premium associated with the early redemption, as well as a write-off
of unamortized deferred financing costs.
In September 2017, IMI completed a private offering of $1,000,000 in aggregate principal amount of the 47/8% Notes due
2027, which were issued at par. The net proceeds of approximately $987,500 from the 47/8% Notes due 2027 after deducting
discounts to the initial purchasers, together with borrowings under the Revolving Credit Facility, were used to fund the
redemption of all of the 6% Notes due 2020. In September 2017, we redeemed all of the $1,000,000 in aggregate principal
outstanding of the 6% Notes due 2020 at 103.155% of par, plus accrued and unpaid interest to, but excluding, the redemption
date. We recorded a charge of $41,738 to Other expense (income), net in the third quarter of 2017 related to the early
extinguishment of this debt, representing the call premium associated with the early redemption, as well as a write-off of
unamortized deferred financing costs.
In November 2017, IM UK completed a private offering of 400,000 British pounds sterling in aggregate principal amount
of the GBP Notes due 2025, which were issued at 100% of par. The net proceeds to IM UK of 395,000 British pounds sterling
(or $522,077, based upon the exchange rate between the British pounds sterling and the United States dollar on November 13,
2017 (the settlement date for the GBP Notes due 2025)), after deducting discounts to the initial purchasers, were used, together
with borrowings under the Revolving Credit Facility, to fund the redemption of all the GBP Notes due 2022. In November
2017, we redeemed all of the GBP Notes due 2022 at 104.594% of par, plus accrued and unpaid interest to, but excluding, the
redemption date. We recorded a charge of $30,056 to Other expense (income), net in the fourth quarter of 2017 related to the
early extinguishment of this debt, representing the call premium associated with the early redemption, as well as a write-off of
unamortized deferred financing costs.
In December 2017, IMI completed a private offering of $825,000 in aggregate principal amount of the 51/4% Notes. The
51/4% Notes were issued at par. The net proceeds of approximately $814,688 from the 51/4% Notes after deducting discounts to
the initial purchasers, together with the net proceeds from the Equity Offering and the Over-Allotment Option (each as defined
in Note 12), were used to finance the purchase price of the IODC Transaction, which closed on January 10, 2018, and to pay
related fees and expenses. At December 31, 2017, the net proceeds from the 51/4% Notes, together with the net proceeds of the
Equity Offering, were used to temporarily repay borrowings under our Revolving Credit Facility and invest in money market
funds.
In September 2019, IMI completed a private offering of $1,000,000 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 $987,500 from the 47/8% Notes due
2029, after paying the initial purchasers' commissions, were used to repay outstanding borrowings under the Revolving Credit
Facility.
Each of the indentures for the notes provides that we may redeem the outstanding notes, in whole or in part, upon
satisfaction of certain terms and conditions. In any redemption, we are also required to pay all accrued but unpaid interest on
the outstanding notes.
122
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
—
—
—
—
—
—
—
—
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
The following table presents the various redemption dates and prices of the senior or senior subordinated notes. The
redemption dates reflect the date at or after which the notes may be redeemed at our option at a premium redemption price.
After these dates, the notes may be redeemed at 100% of face value:
Redemption
Date
43/8% Notes
June 1,
6% Notes
due 2023
August 15,
CAD Notes
due 2023
September 15,
53/4% Notes
August 15,
Euro Notes
January 15,
GBP Notes
due 2025
November 15,
53/8% Notes
June 1,
47/8% Notes
due 2027
September 15,
51/4% Notes
March 15,
47/8% Notes
due 2029
September 15,
101.094% (1)
102.000% (1)
104.031% (1)
100.958% (1)
—
—
100.000%
101.000%
102.688%
100.000%
101.500% (1)
101.938% (1)
—
—
100.000%
100.000%
101.344%
100.000%
100.750%
100.969%
102.688% (1)
—
—
—
—
—
—
100.000%
100.000%
100.000%
100.000%
100.000%
101.792%
102.438% (1)
102.625% (1)
100.000%
100.000%
100.000%
100.000%
100.000%
100.896%
101.625%
101.750%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
100.000%
100.000%
100.000%
100.000%
100.813%
100.875%
102.438% (1)
—
—
—
—
—
100.000%
100.000%
100.000%
100.000%
100.000%
101.609%
—
—
—
—
—
—
—
—
100.000%
100.000%
100.000%
100.814%
—
—
—
100.000%
100.000%
100.000%
—
—
100.000%
100.000%
—
100.000%
_______________________________________________________________________________
(1) Prior to this date, the relevant notes are redeemable, at our option, in whole or in part, at a specified redemption price
or make-whole price, as the case may be.
Each of the indentures for the notes provides that we must repurchase, at the option of the holders, the notes at 101% of
their principal amount, plus accrued and unpaid interest, upon the occurrence of a "Change of Control," which is defined in
each respective indenture. Except for required repurchases upon the occurrence of a Change of Control or in the event of certain
asset sales, each as described in the respective indenture, we are not required to make sinking fund or redemption payments
with respect to any of the notes.
c. Australian Dollar Term Loan
On March 27, 2018, Iron Mountain Australia Group Pty, Ltd. ("IM Australia"), a wholly owned subsidiary of IMI,
amended its AUD Term Loan (the "AUD Term Loan Amendment") to (i) increase the borrowings under the AUD Term Loan
from 250,000 Australian dollars to 350,000 Australian dollars; (ii) increase the quarterly principal payments from 6,250
Australian dollars per year to 8,750 Australian dollars per year; and (iii) decrease the interest rate on the AUD Term Loan from
BBSY (an Australian benchmark variable interest rate) plus 4.3% to BBSY plus 3.875%. The AUD Term Loan matures in
September 2022.
All indebtedness associated with the AUD Term Loan was issued at 99% of par. The net proceeds associated with the
AUD Term Loan Amendment of approximately 99,000 Australian dollars (or approximately $75,600, based upon the exchange
rate between the Australian dollar and the United States dollar on March 29, 2018 (the closing date of the AUD Term Loan
Amendment)), net of the original discount, were used to repay outstanding borrowings under the Revolving Credit Facility.
Principal payments on the AUD Term Loan are to be paid in quarterly installments in an amount equivalent to an
aggregate of 8,750 Australian dollars per year, with the remaining balance due September 22, 2022. The AUD Term Loan is
secured by substantially all assets of IM Australia. IMI and the Guarantors guarantee all obligations under the AUD Term Loan.
123
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
As of December 31, 2019, we had 325,313 Australian dollars ($228,156 based upon the exchange rate between the United
States dollar and the Australian dollar as of December 31, 2019) outstanding on the AUD Term Loan. As of December 31,
2018, we had 334,063 Australian dollars ($235,645 based upon the exchange rate between the United States dollar and the
Australian dollar as of December 31, 2018) outstanding on the AUD Term Loan. The interest rate in effect under the AUD Term
Loan was 4.8% and 6.0% as of December 31, 2019 and 2018, respectively.
d. UK Bilateral Revolving Credit Facility
On September 24, 2018, IM UK and Iron Mountain (UK) Data Centre Limited entered into a 140,000 British pounds
sterling Revolving Credit Facility (the "UK Bilateral Facility") with Barclays Bank PLC. The maximum amount permitted to be
borrowed under the UK Bilateral Facility is 140,000 British pounds sterling, and we have the option to request additional
commitments of up to 125,000 British pounds sterling, subject to the conditions specified in the UK Bilateral Facility. The UK
Bilateral Facility was fully utilized on September 24, 2018 (the closing date of the UK Bilateral Facility). The initial net
proceeds received under the UK Bilateral Facility of 138,250 British pounds sterling (or approximately $180,300, based upon
the exchange rate between the British pound sterling and the United States dollar on September 24, 2018), net of upfront fees,
were used to repay borrowings under the Revolving Credit Facility. The UK Bilateral Facility is secured by certain properties in
the United Kingdom. IMI and the Guarantors guarantee all obligations under the UK Bilateral Facility. The UK Bilateral
Facility is scheduled to mature on September 23, 2022, at which point all obligations become due. The UK Bilateral Facility
contains an option to extend the maturity date for an additional year, subject to the conditions specified in the UK Bilateral
Facility, including the lender's consent. The UK Bilateral Facility bears interest at a rate of LIBOR plus 2.25%. The interest rate
in effect under the UK Bilateral Facility was 3.1% as of December 31, 2019 and 2018.
e. Accounts Receivable Securitization Program
In March 2015, we entered into a $250,000 accounts receivable securitization program (the "Accounts Receivable
Securitization Program") involving several of our wholly owned subsidiaries and certain financial institutions. Under the
Accounts Receivable Securitization Program, certain of our subsidiaries sell substantially all of their United States accounts
receivable balances to our wholly owned special purpose entities, Iron Mountain Receivables QRS, LLC and Iron Mountain
Receivables TRS, LLC (the "Accounts Receivable Securitization Special Purpose Subsidiaries"). The Accounts Receivable
Securitization Special Purpose Subsidiaries use the accounts receivable balances to collateralize loans obtained from certain
financial institutions. The Accounts Receivable Securitization Special Purpose Subsidiaries are consolidated subsidiaries of
IMI. The Accounts Receivable Securitization Program is accounted for as a collateralized financing activity, rather than a sale
of assets, and therefore: (i) accounts receivable balances pledged as collateral are presented as assets and borrowings are
presented as liabilities on our Consolidated Balance Sheets, (ii) our Consolidated Statements of Operations reflect the
associated charges for bad debt expense related to pledged accounts receivable (a component of selling, general and
administrative expenses) and reductions to revenue due to billing and service related credit memos issued to customers and
related reserves, as well as interest expense associated with the collateralized borrowings and (iii) receipts from customers
related to the underlying accounts receivable are reflected as operating cash flows and borrowings and repayments under the
collateralized loans are reflected as financing cash flows within our Consolidated Statements of Cash Flows. IMIM retains the
responsibility of servicing the accounts receivable balances pledged as collateral for the Accounts Receivable Securitization
Program and IMI provides a performance guaranty. The maximum availability allowed is limited by eligible accounts
receivable, as defined under the terms of the Accounts Receivable Securitization Program.
On July 31, 2017, we amended the Accounts Receivable Securitization Program to (i) increase the maximum amount
available from $250,000 to $275,000 and (ii) to extend the maturity date from March 6, 2018 to July 30, 2020, at which point
all obligations become due. As the Accounts Receivable Securitization Program matures on July 30, 2020, the amount
outstanding under the Accounts Receivable Securitization Program is classified within the current portion of long-term debt in
our Consolidated Balance Sheet as of December 31, 2019. As of December 31, 2019 and 2018, the maximum availability
allowed and amount outstanding under the Accounts Receivable Securitization Program was $272,062 and $221,673,
respectively. The interest rate in effect under the Accounts Receivable Securitization Program was 2.8% and 3.0% as of
December 31, 2019 and 2018, respectively. Commitment fees at a rate of 40 basis points are charged on amounts made
available but not borrowed under the Accounts Receivable Securitization Program.
124
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
f. Mortgage Securitization Program
In October 2016, we entered into a $50,000 mortgage securitization program (the "Mortgage Securitization Program")
involving certain of our wholly owned subsidiaries with Goldman Sachs Mortgage Company (“Goldman Sachs”). Under the
Mortgage Securitization Program, IMIM contributed certain real estate assets to its wholly owned special purpose entity, Iron
Mountain Mortgage Finance I, LLC (the "Mortgage Securitization Special Purpose Subsidiary"). The Mortgage Securitization
Special Purpose Subsidiary then used the real estate to secure a collateralized loan obtained from Goldman Sachs. The
Mortgage Securitization Special Purpose Subsidiary is a consolidated subsidiary of IMI. The Mortgage Securitization Program
is accounted for as a collateralized financing activity, rather than a sale of assets, and therefore: (i) real estate assets pledged as
collateral remain as assets and borrowings are presented as liabilities on our Consolidated Balance Sheets, (ii) our Consolidated
Statements of Operations reflects the associated charges for depreciation expense related to the pledged real estate and interest
expense associated with the collateralized borrowings and (iii) borrowings and repayments under the collateralized loans are
reflected as financing cash flows within our Consolidated Statements of Cash Flows. The Mortgage Securitization Program is
scheduled to terminate on November 6, 2026, at which point all obligations become due. The outstanding amount under the
Mortgage Securitization Program was $50,000 at both December 31, 2019 and 2018. The interest rate in effect under the
Mortgage Securitization Program was 3.5% as of December 31, 2019 and 2018.
g. Cash Pooling
Certain of our subsidiaries participate in cash pooling arrangements (the “Cash Pools”) with Bank Mendes Gans
(“BMG”), an independently operated wholly owned subsidiary of ING Group, in order to help manage global liquidity
requirements. Under the Cash Pools, cash deposited by participating subsidiaries with BMG is pledged as security against the
debit balances of other participating subsidiaries, and legal rights of offset are provided and, therefore, amounts are presented in
our Consolidated Balance Sheets on a net basis. Each subsidiary receives interest on the cash balances held on deposit or pays
interest on its debit balances based on an applicable rate as defined in the Cash Pools.
During the first quarter of 2017, we significantly expanded our utilization of the Cash Pools and reduced our utilization of
our financing centers in Europe for purposes of meeting our global liquidity requirements. We currently utilize two separate
cash pools with BMG, one of which we utilize to manage global liquidity requirements for our qualified REIT subsidiaries (the
"QRS Cash Pool") and the other for our taxable REIT subsidiaries (the "TRS Cash Pool"). During the second quarter of 2017,
we executed overdraft facility agreements for the QRS Cash Pool and TRS Cash Pool, each in an amount not to exceed
$10,000. Each overdraft facility permits us to cover a temporary net debit position in the applicable pool.
The approximate amount of the net cash position, gross position and outstanding debit balances for the QRS Cash Pool
and TRS Cash Pool as of December 31, 2019 and 2018 were as follows:
December 31, 2019
QRS Cash Pool
TRS Cash Pool
Gross Cash
Position
$
372,100
319,800
Outstanding
Debit Balances
$
(369,000) $
(301,300)
Net Cash
Position
Gross Cash
Position
$
3,100
18,500
300,800
281,500
December 31, 2018
Outstanding
Debit Balances
$
(298,800) $
(279,300)
Net Cash
Position
2,000
2,200
The net cash position balances as of December 31, 2019 and 2018 are reflected as Cash and cash equivalents in our
Consolidated Balance Sheets.
h. Letters of Credit
As of December 31, 2019, we had outstanding letters of credit totaling $35,251, of which $4,853 reduce our borrowing
capacity under the Revolving Credit Facility (as described above). The letters of credit expire at various dates between January
2020 and January 2033.
125
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
4. Debt (Continued)
i. Debt Covenants
The Credit Agreement, our indentures and other agreements governing our indebtedness contain certain restrictive
financial and operating covenants, including covenants that restrict our ability to complete acquisitions, pay cash dividends,
incur indebtedness, make investments, sell assets and take certain other corporate actions. The covenants do not contain a rating
trigger. Therefore, a change in our debt rating would not trigger a default under the Credit Agreement, our indentures or other
agreements governing our indebtedness. The Credit Agreement uses EBITDAR-based calculations as the primary measures of
financial performance, including leverage and fixed charge coverage ratios.
Our leverage and fixed charge coverage ratios under the Credit Agreement as of December 31, 2019 and 2018, as well as
our leverage ratio under our indentures as of December 31, 2019 and 2018 are as follows:
Net total lease adjusted leverage ratio
Net secured debt lease adjusted leverage ratio
Bond leverage ratio (not lease adjusted)
Fixed charge coverage ratio
December 31, 2019
5.7
2.3
5.9
2.2
______________________________________________________________
December 31, 2018
Maximum/Minimum Allowable
5.6 Maximum allowable of 6.5
2.6 Maximum allowable of 4.0
5.8 Maximum allowable of 6.5-7.0(1)
2.2 Minimum allowable of 1.5
(1) The maximum allowable leverage ratio under our indentures for the GBP Notes due 2025, the 47/8% Notes due 2027,
the 51/4% Notes and the 47/8% Notes due 2029 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.
j. Maturities of long-term debt (gross of discounts) are as follows:
Year
2020
2021
2022
2023
2024
Thereafter
Net Discounts
Net Deferred Financing Costs
Total Long-term Debt (including current portion)
Amount
389,013
608,584
487,601
1,384,684
1,036,688
4,847,561
8,754,131
(2,587)
(86,965)
8,664,579
$
$
126
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors
The following data summarizes the consolidating results of IMI on the equity method of accounting as of December 31,
2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 and are prepared on the same basis as the
consolidated financial statements.
The Parent Notes, the CAD Notes due 2023, the GBP Notes due 2025 and the 53/8% Notes are guaranteed by the
subsidiaries referred to below as the Guarantors. These subsidiaries are 100% owned by IMI. The guarantees are full and
unconditional, as well as joint and several.
Additionally, IMI guarantees the CAD Notes due 2023, which were issued by Canada Company, the GBP Notes, which
were issued by IM UK, and the 53/8% Notes, which were issued by IM US Holdings, 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 due 2023, the GBP Notes and the 53/8% Notes are referred to below as the Non-Guarantors.
In the normal course of business we periodically change the ownership structure of our subsidiaries to meet the
requirements of our business. In the event of such changes, we recast the prior period financial information within this footnote
to conform to the current period presentation in the period such changes occur. Generally, these changes do not alter the
designation of the underlying subsidiaries as Guarantors or Non-Guarantors. However, they may change whether the underlying
subsidiary is owned by the Parent, a Guarantor or a Non-Guarantor. If such a change occurs, the amount of investment in
subsidiaries in the below Consolidated Balance Sheets and equity in the earnings (losses) of subsidiaries, net of tax in the below
Consolidated Statements of Operations and Comprehensive Income (Loss) with respect to the relevant Parent, Guarantors, Non-
Guarantors and Eliminations columns also would change.
127
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED BALANCE SHEETS
Parent
Guarantors
December 31, 2019
Non-
Guarantors
Eliminations
Consolidated
$
105
$
206,297
$
163,858
$
(176,705) $
ASSETS
Current Assets:
Cash and cash equivalents(1)
Accounts receivable
Intercompany receivable
Prepaid expenses and other
Total Current Assets
Property, Plant and Equipment, Net
Other Assets, Net:
Long-term notes receivable from affiliates and
intercompany receivable
Investment in subsidiaries
Goodwill
Operating lease right-of-use assets
Other
Total Other Assets, Net
Total Assets
LIABILITIES AND EQUITY
Intercompany Payable
Debit Balances Under Cash Pool
Current Portion of Long-term Debt
Total Other Current Liabilities (includes current portion of
operating lease liabilities)
Long-term Debt, Net of Current Portion
Long-Term Operating Lease Liabilities, Net of Current
Portion
Long-term Notes Payable to Affiliates and Intercompany
Payable
Other Long-term Liabilities
Commitments and Contingencies (see Note 10)
Redeemable Noncontrolling Interests (see Note 2.v.)
—
—
—
105
597
5,347,774
1,966,978
—
—
—
7,314,752
7,315,454
338,794
—
—
292,673
5,210,269
—
—
9,756
—
$
$
45,608
658,580
104,164
1,014,649
3,051,426
—
1,063,178
2,855,424
986,362
911,803
805,093
—
87,948
1,056,899
1,571,014
—
(658,580)
(29)
(835,314)
—
—
—
(5,347,774)
(3,030,156)
1,629,785
882,739
691,327
—
—
—
5,816,767
3,203,851
(8,377,930)
(9,213,244) $
13,816,816
(658,580) $
(176,705)
—
—
(29)
389,013
$
$
$
$
9,882,842
$
5,831,764
— $
—
51,868
704,109
1,482,571
319,786
176,705
337,174
563,714
1,582,726
915,840
812,846
5,347,774
62,525
258,865
—
(5,347,774)
—
67,682
—
—
—
—
—
193,555
850,701
—
192,083
1,236,339
4,623,037
—
—
4,485,209
1,869,101
1,603,130
7,957,440
1,560,496
8,275,566
1,728,686
—
331,146
67,682
Total Iron Mountain Incorporated Stockholders' Equity
1,463,962
1,318,155
1,712,001
(3,030,156)
1,463,962
Noncontrolling Interests
Total Equity
Total Liabilities and Equity
—
—
265
—
265
1,463,962
1,318,155
1,712,266
(3,030,156)
1,464,227
$
7,315,454
$
9,882,842
$
5,831,764
$
(9,213,244) $
13,816,816
______________________________________________________________
(1) Included within Cash and Cash Equivalents at December 31, 2019 is approximately $198,300 and $0 of cash on
deposit associated with our Cash Pools for the Guarantors and Non-Guarantors, respectively. See Note 4 for more
information on our Cash Pools.
128
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED BALANCE SHEETS (Continued)
Parent
Guarantors
December 31, 2018
Non-
Guarantors
Eliminations
Consolidated
$
132
$
63,407
$
169,318
$
(67,372) $
ASSETS
Current Assets:
Cash and cash equivalents(1)
Accounts receivable
Intercompany receivable
Prepaid expenses and other
Total Current Assets
Property, Plant and Equipment, Net
Other Assets, Net:
Long-term notes receivable from affiliates and
intercompany receivable
Investment in subsidiaries
Goodwill
Other
Total Other Assets, Net
Total Assets
LIABILITIES AND EQUITY
Intercompany Payable
Debit Balances Under Cash Pools
Current Portion of Long-term Debt
Total Other Current Liabilities
Long-term Debt, Net of Current Portion
Long-term Notes Payable to Affiliates and Intercompany
Payable
Other Long-term Liabilities
Commitments and Contingencies (see Note 10)
Redeemable Noncontrolling Interests (see Note 2.v.)
—
—
93
225
190
4,954,686
1,862,048
—
—
6,816,734
6,817,149
462,927
—
—
268,373
4,223,822
—
973
—
$
$
47,472
821,324
109,480
1,041,683
3,010,767
—
983,018
2,861,381
982,932
4,827,331
799,417
—
86,196
1,054,931
1,478,600
—
(821,324)
(29)
(888,725)
—
—
—
(4,954,686)
(2,845,066)
1,579,649
735,585
2,315,234
—
—
(7,799,752)
$
$
8,879,781
$
4,848,765
— $
358,397
$
$
(8,688,477) $
11,857,218
10,612
63,859
618,513
1,878,079
4,954,686
116,895
56,760
62,576
477,483
1,914,516
299,163
—
70,532
(821,324) $
(67,372)
(29)
—
—
—
—
—
(4,954,686)
165,485
846,889
—
195,740
1,208,114
4,489,557
—
—
4,441,030
1,718,517
6,159,547
—
—
126,406
1,364,369
8,016,417
—
417,031
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
Total Equity
Total Liabilities and Equity
—
—
1,409
—
1,409
1,861,054
1,237,137
1,609,338
(2,845,066)
1,862,463
$
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. See Note 4 for more
information on our Cash Pools.
129
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Year Ended December 31, 2019
Parent
Guarantors
Non-
Guarantors
Eliminations
Consolidated
$
— $
1,654,359
$
1,026,728
$
— $
2,681,087
Revenues:
Storage rental
Service
Intercompany revenues
Total Revenues
Operating Expenses:
Cost of sales (excluding depreciation and amortization)
Intercompany cost of sales
Selling, general and administrative
Depreciation and amortization
Significant Acquisition Costs
Restructuring Charges
(Gain) Loss on disposal/write-down of property, plant and
equipment, net
Total Operating Expenses
Operating (Loss) Income
Interest Expense (Income), Net
Other Expense (Income), Net
(Loss) Income from Continuing Operations Before Provision
(Benefit) for Income Taxes
Provision (Benefit) for Income Taxes
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax
Income (Loss) from Continuing Operations
Income (Loss) from Discontinued Operations, Net of Tax
Net Income (Loss)
—
—
—
—
—
444
91
—
—
—
535
(535)
213,149
59
(213,743)
—
(481,120)
267,377
—
267,377
Less: Net Income (Loss) Attributable to Noncontrolling
Interests
Net Income (Loss) Attributable to Iron Mountain Incorporated $
Net Income (Loss)
$
—
—
267,377
267,377
$
$
484,936
484,936
$
$
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustment
Change in Fair Value of Derivative Instruments
Equity in Other Comprehensive (Loss) Income of
Subsidiaries
Total Other Comprehensive Income (Loss)
Comprehensive Income (Loss)
Comprehensive Income (Loss) Attributable to
Noncontrolling Interests
6,003
(8,783)
5,863
3,083
—
—
5,714
5,714
270,460
490,650
—
—
978,227
4,668
603,270
20,233
2,637,254
1,650,231
—
1,581,497
(24,901)
(24,901)
—
4,262,584
1,048,514
20,233
679,964
410,524
7,055
32,218
784,801
4,668
311,256
247,586
6,238
16,379
(26,472)
(37,352)
—
1,833,315
(24,901)
—
—
—
—
—
—
991,664
658,201
13,293
48,597
(63,824)
2,172,036
465,218
18,923
19,271
427,024
6,698
(64,490)
484,816
120
484,936
1,333,576
(24,901)
3,481,246
316,655
187,226
14,568
114,861
53,233
—
61,628
(16)
61,612
938
60,674
61,612
5,991
—
—
5,991
67,603
1,066
—
—
—
—
—
545,610
(545,610)
—
781,338
419,298
33,898
328,142
59,931
—
268,211
104
(545,610)
268,315
—
$
$
(545,610) $
(545,610) $
—
—
(11,577)
(11,577)
(557,187)
938
267,377
268,315
11,994
(8,783)
—
3,211
271,526
—
1,066
Comprehensive Income (Loss) Attributable to Iron Mountain
Incorporated
$
270,460
$
490,650
$
66,537
$
(557,187) $
270,460
130
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)
Revenues:
Storage rental
Service
Intercompany revenues
Total Revenues
Operating Expenses:
Cost of sales (excluding depreciation and amortization)
Intercompany cost of sales
Selling, general and administrative
Depreciation and amortization
Significant Acquisition Costs
(Gain) Loss on disposal/write-down of property, plant and
equipment, net
Total Operating Expenses
Operating Income (Loss)
Interest Expense (Income), Net
Other Expense (Income), Net
(Loss) Income from Continuing Operations Before (Benefit)
Provision for Income Taxes
(Benefit) Provision for Income Taxes
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax
Income (Loss) from Continuing Operations
(Loss) Income from Discontinued Operations, Net of Tax
Net Income (Loss)
Less: Net Income (Loss) Attributable to Noncontrolling
Interests
Net Income (Loss) Attributable to Iron Mountain Incorporated $
$
Net Income (Loss)
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustment
Change in Fair Value of Derivative Instrument
Equity in Other Comprehensive (Loss) Income of
Subsidiaries
Total Other Comprehensive (Loss) Income
Comprehensive Income (Loss)
Comprehensive (Loss) Income Attributable to
Noncontrolling Interests
Year Ended December 31, 2018
Parent
Guarantors
Non-
Guarantors
Eliminations
Consolidated
$
— $
1,606,346
$
1,016,109
$
— $
2,622,455
—
—
—
—
—
(288)
122
—
—
(166)
166
199,955
2,328
(202,117)
—
(556,050)
353,933
—
353,933
974,213
4,759
629,093
18,439
2,585,318
1,663,641
—
1,603,306
(23,198)
(23,198)
—
4,225,761
1,009,890
18,439
679,740
404,574
35,607
784,064
4,759
327,531
234,818
15,058
(2,841)
(70,781)
—
1,793,954
(23,198)
—
—
—
—
—
1,006,983
639,514
50,665
(73,622)
1,295,449
(23,198)
3,417,494
2,145,409
439,909
6,392
17,158
416,359
(1,006)
(147,575)
564,940
(12,283)
552,657
368,192
203,301
(31,178)
196,069
43,759
—
152,310
(144)
—
—
—
—
—
703,625
(703,625)
—
152,166
(703,625)
—
—
353,933
353,933
$
$
552,657
552,657
$
$
11,070
(973)
(171,772)
(161,675)
192,258
—
—
(139,971)
(139,971)
412,686
1,198
150,968
152,166
(175,177)
—
—
(175,177)
(23,011)
—
$
$
(703,625) $
(703,625) $
—
—
311,743
311,743
(391,882)
808,267
409,648
(11,692)
410,311
42,753
—
367,558
(12,427)
355,131
1,198
353,933
355,131
(164,107)
(973)
—
(165,080)
190,051
—
—
(2,207)
—
(2,207)
Comprehensive Income (Loss) Attributable to Iron Mountain
Incorporated
$
192,258
$
412,686
$
(20,804) $
(391,882) $
192,258
131
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Continued)
Revenues:
Storage rental
Service
Intercompany revenues
Total Revenues
Operating Expenses:
Cost of sales (excluding depreciation and amortization)
Intercompany cost of sales
Selling, general and administrative
Depreciation and amortization
Significant Acquisition Costs
Intangible impairments
(Gain) Loss on disposal/write-down of property, plant and
equipment, net
Total Operating Expenses
Operating (Loss) Income
Interest Expense (Income), Net
Other Expense (Income), Net
(Loss) Income from Continuing Operations Before Provision
(Benefit) for Income Taxes
Provision (Benefit) for Income Taxes
Equity in the (Earnings) Losses of Subsidiaries, Net of Tax
Income (Loss) from Continuing Operations
(Loss) Income from Discontinued Operations, Net of Tax
Net Income (Loss)
Less: Net Income (Loss) Attributable to Noncontrolling
Interests
Net Income (Loss) Attributable to Iron Mountain Incorporated $
Net Income (Loss)
Other Comprehensive Income (Loss):
$
—
—
—
—
—
161
167
—
—
—
328
(328)
163,541
47,176
(211,045)
—
(381,158)
170,113
—
170,113
Year Ended December 31, 2017
Parent
Guarantors
Non-
Guarantors
Eliminations
Consolidated
$
— $
1,443,219
$
934,338
$
— $
2,377,557
866,318
4,577
601,703
24,613
2,314,114
1,560,654
—
1,468,021
(29,190)
(29,190)
—
3,845,578
922,008
24,613
613,350
310,962
52,621
3,011
(1,001)
1,925,564
388,550
7,606
9,178
371,766
3,988
(11,677)
379,455
(4,370)
375,085
742,817
4,577
323,669
211,247
32,280
—
235
—
1,664,825
(29,190)
—
—
—
—
—
—
937,180
522,376
84,901
3,011
(766)
1,314,825
(29,190)
3,211,527
245,829
182,498
23,075
40,256
18,974
—
21,282
(1,921)
19,361
1,611
17,750
19,361
—
—
—
—
—
392,835
(392,835)
—
(392,835)
—
$
$
(392,835) $
(392,835) $
634,051
353,645
79,429
200,977
22,962
—
178,015
(6,291)
171,724
1,611
170,113
171,724
—
—
170,113
170,113
$
$
375,085
375,085
$
$
Foreign Currency Translation Adjustment
(15,015)
—
123,579
—
108,564
Equity in Other Comprehensive Income (Loss) of
Subsidiaries
Total Other Comprehensive Income (Loss)
Comprehensive Income (Loss)
Comprehensive Income (Loss) Attributable to
Noncontrolling Interests
123,599
108,584
278,697
82,127
82,127
457,212
—
123,579
142,940
(205,726)
(205,726)
(598,561)
—
108,564
280,288
—
—
1,591
—
1,591
Comprehensive Income (Loss) Attributable to Iron Mountain
Incorporated
$
278,697
$
457,212
$
141,349
$
(598,561) $
278,697
132
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
Cash Flows from Operating Activities-Continuing Operations
$
(157,162) $
850,840
$
272,977
$
— $
966,655
Year Ended December 31, 2019
Parent
Guarantors
Non-
Guarantors
Eliminations
Consolidated
Cash Flows from Operating Activities-Discontinued Operations
—
—
(157,162)
850,840
—
272,977
(280,258)
(48,729)
—
—
—
—
—
120,260
(32,037)
—
—
50,368
(310,656)
2,497
—
—
—
—
120,260
—
—
966,655
(692,983)
(58,237)
—
(131,647)
(19,222)
—
166,143
(735,946)
5,061
(730,885)
(124,897)
(418,089)
(308,159)
120,260
—
—
(10,479,101)
(4,056,014)
10,057,145
4,002,673
987,500
—
—
—
—
—
(14,535,115)
14,059,818
987,500
(10,612)
119,945
(109,333)
—
(1,924)
(23,507)
—
—
(2,724)
38,449
—
38,449
(8,727)
(5,460)
—
(120,260)
—
—
—
(1,924)
—
(704,526)
1,027
(5,753)
(229,593)
(198,973)
—
—
(229,593)
(198,973)
—
(109,333)
(8,727)
28,070
165,485
193,555
63,407
169,318
(67,372)
$
206,297
$
163,858
$
(176,705) $
(412,725)
(9,508)
4,637
(99,610)
(19,222)
—
115,775
(420,653)
2,564
—
143,767
—
—
(1,060)
(289,861)
—
—
142,890
Cash Flows from Investing Activities-Continuing Operations
Cash Flows from Investing Activities-Discontinued Operations
(124,897)
—
Cash Flows from Operating Activities
Cash Flows from Investing Activities:
Capital expenditures
Cash paid for acquisitions, net of cash acquired
Intercompany loans to subsidiaries
Acquisitions of customer relationships, customer inducements and
data center lease-based intangibles
Investment in joint ventures
Net proceeds from Divestments
Proceeds from sales of property and equipment and other, net
(including real estate) and proceeds from involuntary conversion of
property and equipment
Cash Flows from Investing Activities
Cash Flows from Financing Activities:
Repayment of revolving credit and term loan facilities and other
debt
Proceeds from revolving credit and term loan facilities and other
debt
Net proceeds from sales of senior notes
Debit (payments) balances under cash pools
Debt (repayment to) financing from and equity (distribution to)
contribution from noncontrolling interests, net
Intercompany loans from parent
Parent cash dividends
Net proceeds (payments) associated with employee stock-based
awards
Payment of debt financing and stock issuance costs and other
Cash Flows from Financing Activities-Continuing Operations
Cash Flows from Financing Activities-Discontinued Operations
—
—
(124,897)
—
—
—
—
—
—
—
(704,526)
1,027
(1,969)
282,032
—
Effect of exchange rates on cash and cash equivalents
Increase (Decrease) in cash and cash equivalents
Cash and cash equivalents, including Restricted Cash, beginning of
year
Cash and cash equivalents, including Restricted Cash, end of year
$
—
(27)
132
105
133
Cash Flows from Financing Activities
282,032
(289,861)
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Year Ended December 31, 2018
Parent
Guarantors
Non-
Guarantors
Eliminations
Consolidated
Cash Flows from Operating Activities:
Cash Flows from Operating Activities-Continuing Operations
$
(217,819) $
880,615
$
273,748
$
— $
936,544
Cash Flows from Operating Activities-Discontinued Operations
—
(995)
—
Cash Flows from Operating Activities
(217,819)
879,620
273,748
Cash Flows from Investing Activities:
Capital expenditures
Cash paid for acquisitions, net of cash acquired
—
—
(313,510)
(1,338,888)
(146,552)
(419,669)
—
—
—
—
(995)
935,549
(460,062)
(1,758,557)
Intercompany loans to subsidiaries
805,799
90,569
—
(896,368)
—
Acquisitions of customer relationships, customer inducements and
data center lease-based intangibles
Net proceeds from Divestments
Proceeds from sales of property and equipment and other, net
(including real estate) and proceeds from involuntary conversion of
property and equipment
—
—
—
(76,388)
1,019
299
Cash Flows from Investing Activities-Continuing Operations
805,799
(1,636,899)
Cash Flows from Investing Activities-Discontinued Operations
—
8,250
(22,299)
—
85,860
(502,660)
—
—
—
—
(98,687)
1,019
86,159
(896,368)
(2,230,128)
—
8,250
805,799
(1,628,649)
(502,660)
(896,368)
(2,221,878)
Cash Flows from Investing Activities
Cash Flows from Financing Activities:
Repayment of revolving credit and term loan facilities and other
debt
Proceeds from revolving credit and term loan facilities and other
debt
Debit balances (payments) under cash pools
Debt (repayment to) financing from and equity (distribution to)
contribution from noncontrolling interests, net
Intercompany loans from parent
Parent cash dividends
Net payments associated with employee stock-based awards
Net proceeds associated with the Equity Offering, including Over-
Allotment Option
Net proceeds associated with the At The Market (ATM) Program
Payment of debt financing and stock issuance costs and other
Cash Flows from Financing Activities-Continuing Operations
Cash Flows from Financing Activities-Discontinued Operations
—
—
—
—
—
(673,635)
(1,142)
76,192
8,716
(412)
(590,281)
—
(7,355,086)
(6,837,053)
8,445,551
6,906,063
—
—
(45,621)
18,267
27,354
(14,192,139)
15,351,614
—
—
(862,425)
(2,523)
(33,943)
—
896,368
—
—
—
—
(12,391)
170,028
—
—
—
—
—
(3,602)
47,209
—
47,209
(24,563)
—
—
—
—
—
923,722
—
923,722
—
27,354
(2,523)
—
(673,635)
(1,142)
76,192
8,716
(16,405)
550,678
—
550,678
(24,563)
(760,214)
925,699
165,485
Cash Flows from Financing Activities
Effect of exchange rates on cash and cash equivalents
(590,281)
170,028
—
—
(Decrease) Increase in cash and cash equivalents
(2,301)
(579,001)
(206,266)
Cash and cash equivalents, including Restricted Cash, beginning of
year
2,433
642,408
375,584
(94,726)
Cash and cash equivalents, including Restricted Cash, end of year
$
132
$
63,407
$
169,318
$
(67,372) $
134
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
5. Selected Consolidated Financial Statements of Parent, Guarantors and Non-Guarantors (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Year Ended December 31, 2017
Parent
Guarantors
Non-
Guarantors
Eliminations
Consolidated
Cash Flows from Operating Activities:
Cash Flows from Operating Activities-Continuing Operations $
(203,403) $
737,532
$
190,130
$
— $
724,259
Cash Flows from Operating Activities-Discontinued
Operations
Cash Flows from Operating Activities
Cash Flows from Investing Activities:
Capital expenditures
Cash paid for acquisitions, net of cash acquired
Intercompany loans to subsidiaries
Investment in subsidiaries
Acquisitions of customer relationships and customer inducements
Net proceeds from Divestments
Proceeds from sales of property and equipment and other, net
(including real estate) and proceeds from involuntary conversion
of property and equipment
—
(203,403)
—
—
(990,635)
(16,170)
—
—
—
Cash Flows from Investing Activities-Continuing Operations
(1,006,805)
Cash Flows from Investing Activities-Discontinued Operations
—
(1,345)
736,187
(237,004)
(96,946)
(344,919)
—
(63,759)
—
12,963
(729,665)
—
(1,946)
188,184
(106,127)
(122,759)
—
—
(11,426)
29,236
(3,626)
(214,702)
—
—
—
—
—
1,335,554
16,170
—
—
—
1,351,724
—
(3,291)
720,968
(343,131)
(219,705)
—
—
(75,185)
29,236
9,337
(599,448)
—
(1,006,805)
(729,665)
(214,702)
1,351,724
(599,448)
Cash Flows from Investing Activities
Cash Flows from Financing Activities:
Repayment of revolving credit and term loan facilities and other
debt
Proceeds from revolving credit and term loan facilities and other
debt
Early retirement of senior subordinated and senior notes
Net proceeds from sales of senior notes
Debit balances (payments) under cash pools
Debt (repayment to) financing from and equity (distribution to)
contribution from noncontrolling interests, net
Intercompany loans from parent
Equity contribution from parent
Parent cash dividends
Net proceeds associated with employee stock-based awards
Net proceeds associated with the Equity Offering, including
Over-Allotment Option
Net proceeds associated with the At The Market (ATM) Program
Payment of debt financing and stock issuance costs
(1,031,554)
2,134,870
—
—
—
—
(439,999)
13,095
516,462
59,129
(3,848)
Cash Flows from Financing Activities-Continuing Operations
1,210,236
Cash Flows from Financing Activities-Discontinued Operations
Cash Flows from Financing Activities
Effect of exchange rates on cash and cash equivalents
Increase (Decrease) in cash and cash equivalents
—
1,210,236
—
28
(262,579)
(8,077,553)
(6,089,563)
224,660
7,650,436
—
—
—
—
(14,429,695)
13,917,055
(1,746,856)
2,656,948
—
—
56,233
—
992,708
—
—
—
—
—
(9,391)
612,433
—
612,433
—
618,955
6,041,959
(715,302)
522,078
38,493
9,079
342,846
16,170
—
—
—
—
(1,554)
164,206
—
164,206
27,270
164,958
(94,726)
—
(1,335,554)
(16,170)
—
—
—
—
—
(1,446,450)
—
(1,446,450)
—
(94,726)
—
9,079
—
—
(439,999)
13,095
516,462
59,129
(14,793)
540,425
—
540,425
27,270
689,215
236,484
925,699
Cash and cash equivalents, including Restricted Cash, beginning of
year
2,405
23,453
210,626
—
Cash and cash equivalents, including Restricted Cash, end of year
$
2,433
$
642,408
$
375,584
$
(94,726) $
135
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
6. Acquisitions
We account for acquisitions using the acquisition method of accounting, and, accordingly, the assets and liabilities
acquired are recorded at their estimated fair values and the results of operations for each acquisition have been included in our
consolidated results from their respective acquisition dates.
a. Acquisitions Completed During the Year Ended December 31, 2019
During the year ended December 31, 2019, in order to enhance our existing operations in the United States, Colombia,
Germany, Hong Kong, Latvia, Slovakia, Switzerland, Thailand and the United Kingdom and to expand our operations into
Bulgaria, we completed the acquisition of 10 storage and records management companies and one art storage company for total
cash consideration of approximately $51,000. The individual purchase prices of these acquisitions ranged from approximately
$700 to $12,500.
b. Acquisitions Completed During the Year Ended December 31, 2018
Acquisition of IO Data Centers
On January 10, 2018, we completed the acquisition of the United States operations of IODC, a leading data center
colocation space and solutions provider based in Phoenix, Arizona, including the land and buildings associated with four data
centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio (the “IODC 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 Consolidated Balance Sheets at December 31, 2019
and 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.
Total Revenues
Income from Continuing Operations
Per Share Income from Continuing Operations - Basic
Per Share Income from Continuing Operations - Diluted
(Unaudited)
Year Ended December 31,
2018
4,229,251
377,510
1.32
1.31
$
$
$
$
2017
3,983,016
110,677
0.39
0.39
$
$
$
$
In addition to our IODC Transaction, we completed certain other acquisitions in 2019, 2018 and 2017. The Pro Forma
Financial Information does not reflect these acquisitions due to the insignificant impact of these acquisitions on our
consolidated results of operations.
136
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
6. Acquisitions (Continued)
Other Noteworthy Acquisitions
On May 25, 2018, in order to further expand our data center operations in Europe, we acquired EvoSwitch Netherlands
B.V. and EvoSwitch Global Services B.V. (collectively, "EvoSwitch"), a data center colocation space and solutions provider
with a data center in Amsterdam (the "EvoSwitch Transaction"), for (i) cash consideration of 189,000 Euros (or approximately
$222,000, based upon the exchange rate between the Euro and the United States dollar on the closing date of the EvoSwitch
Transaction) and (ii) $25,000 of additional consideration in the form of future services we will provide to the seller, which is
included in purchase price holdbacks and other in the allocation of the purchase price paid table below.
On March 8, 2018, in order to expand our data center operations into Europe and Asia, we acquired the operations of two
data centers in London and Singapore from Credit Suisse International and Credit Suisse AG (together, "Credit Suisse") for a
total of (i) 34,600 British pounds sterling and (ii) 81,000 Singapore dollars (or collectively, approximately $111,400, based
upon the exchange rates between the United States dollar and the British pound sterling and Singapore dollar on the closing
date of the Credit Suisse transaction) (the “Credit Suisse Transaction”). As part of the Credit Suisse Transaction, Credit Suisse
entered into a long-term lease with us to maintain existing data center operations.
In addition to the transactions noted above, during 2018, in order to enhance our existing operations in the United States,
Brazil, China, India, Ireland, Philippines, South Korea and the United Kingdom and to expand our operations into Croatia, we
completed the acquisition of 11 storage and records management companies and three art storage companies for total
consideration of approximately $98,100. The individual purchase prices of these acquisitions ranged from approximately
$1,000 to $34,100.
c. Acquisitions Completed During the Year Ended December 31, 2017
In December 2017, we acquired the storage and information management assets and operations of Santa Fe in China (the
“Santa Fe China Transaction”) for approximately $16,800. The purchase price for the Santa Fe China Transaction was not paid
until January 2018 and, therefore, we accrued for the purchase price of the Santa Fe China Transaction in our Consolidated
Balance Sheet as of December 31, 2017.
In September 2017, in order to expand our existing entertainment storage and services operations in the United States and
to expand our entertainment storage and services operations into Canada, the United Kingdom, France, the Netherlands and
Hong Kong, we completed the acquisition of Bonded Services of America, Inc. and Bonded Services Acquisition, Ltd.
(together, "Bonded") (the "Bonded Transaction"), providers of media asset storage and management services for global
entertainment and media companies, for approximately 62,000 British pounds sterling (or approximately $83,000, based upon
the exchange rate between the British pound sterling and the United States dollar on the closing date of the Bonded
Transaction).
In September 2017, in order to expand our data center operations in the United States, we acquired Mag Datacenters
LLC, which operated Fortrust, a private data center business with operations in Denver, Colorado (the “Fortrust Transaction”).
At the closing of the Fortrust Transaction, we paid approximately $54,500 in cash (the "Fortrust Cash Consideration") and
issued 2,193,637 shares of our common stock (the "Fortrust Stock Consideration"). The shares of our common stock issued to
the former owners of Fortrust in connection with the Fortrust Transaction contain certain restrictions that impact the
marketability of such shares for a period of six months following the closing date of the Fortrust Transaction (the “Lack of
Marketability Restriction”). The 2,193,637 shares issued as part of the Fortrust Stock Consideration were valued at
approximately $37.84 per share, which reflects a discount related to the Lack of Marketability Restriction, resulting in a total
purchase price (including the Fortrust Cash Consideration and the Fortrust Stock Consideration) of approximately $137,500.
In addition to the transactions noted above, during 2017, in order to enhance our existing operations in the United States,
India, Greece, Peru and South Africa and to expand our operations into Cyprus, Macau, South Korea and the United Arab
Emirates, we completed the acquisition of 12 records and information management companies and one art storage company for
total consideration of approximately $98,200. The individual purchase prices of these acquisitions ranged from approximately
$100 to $28,500.
137
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
6. Acquisitions (Continued)
d. Purchase Price Allocation
A summary of the cumulative consideration paid and the allocation of the purchase price paid for all of our acquisitions in
each respective year is as follows:
Cash Paid (gross of cash acquired)(1)
$
53,230
2019
Total
2018
Other Fiscal
Year 2018
Acquisitions
432,078
$
IODC
Transaction
$ 1,347,046
2017
Total
$ 1,779,124
$
Total
234,314
Purchase Price Holdbacks and Other(2)
Fair Value of Common Stock Issued
Fair Value of Noncontrolling Interests
4,135
—
—
—
—
—
35,218
35,218
—
—
—
—
20,093
83,014
1,507
Total Consideration
57,365
1,347,046
467,296
1,814,342
338,928
Fair Value of Identifiable Assets Acquired:
Cash
2,260
34,307
10,227
44,534
14,746
Accounts Receivable, Prepaid Expenses and Other
Assets
Property, Plant and Equipment(3)
Customer Relationship Intangible Assets(4)
Operating Lease Right-of-Use Assets
Data Center In-Place Leases(5)
Data Center Tenant Relationships(6)
Data Center Above-Market Leases(7)
Other Intangible Assets
Debt Assumed
3,102
5,396
22,071
16,956
—
—
—
—
—
7,070
863,027
—
—
104,340
77,362
16,439
—
—
Accounts Payable, Accrued Expenses and Other
Liabilities
Operating Lease Liabilities
Deferred Income Taxes
Data Center Below-Market Leases(7)
Total Fair Value of Identifiable Net Assets Acquired
(3,233)
(16,956)
(1,813)
—
27,783
(36,230)
—
—
(11,421)
1,054,894
17,662
225,848
44,622
—
36,130
18,410
2,381
—
(12,312)
(17,206)
—
(43,218)
(694)
281,850
24,732
1,088,875
44,622
—
140,470
95,772
18,820
—
(12,312)
(53,436)
—
(43,218)
(12,115)
1,336,744
24,379
150,878
116,028
—
6,300
—
—
14,487
(5,287)
(24,869)
—
(18,122)
—
278,540
Goodwill Initially Recorded(8)
$
29,582
$
292,152
$
185,446
$
477,598
$
60,388
_______________________________________________________________________________
(1) Included in cash paid for acquisitions in our Consolidated Statement of Cash Flows for the year ended December 31,
2019 is net cash acquired of $2,260 and contingent and other payments, net of $7,267 related to acquisitions made in
years prior to 2019. Included in cash paid for acquisitions in our Consolidated Statement of Cash Flows for the year
ended December 31, 2018 is net cash acquired of $44,534 and contingent and other payments, net of $23,967 related
to acquisitions made in years prior to 2018. Included in cash paid for acquisitions in our Consolidated Statement of
Cash Flows for the year ended December 31, 2017 is net cash acquired of $14,746 and contingent and other payments,
net of $137 related to acquisitions made in years prior to 2017.
(2) Purchase price holdbacks and other includes $18,824 purchase price accrued for the EvoSwitch Transaction in 2018
and $16,771 purchase price accrued for the Santa Fe China Transaction in 2017.
(3) Consists primarily of buildings, building improvements, leasehold improvements, data center infrastructure, racking
structures, warehouse equipment and computer hardware and software.
138
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
6. Acquisitions (Continued)
(4) The weighted average lives of customer relationship intangible assets associated with acquisitions in 2019, 2018 and
2017 was 16 years, 10 years and 12 years, respectively.
(5) The weighted average lives of data center in-place leases associated with acquisitions in 2018 was six years.
(6) The weighted average lives of data center tenant relationships associated with acquisitions in 2018 was nine years.
(7) The weighted average lives of data center above-market leases associated with acquisitions in 2018 was three years
and the weighted average lives of data center below-market leases associated with acquisitions in 2018 was seven
years.
(8) The goodwill associated with acquisitions, including IODC, 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.
Allocations of the purchase price for acquisitions made in 2019, 2018 and 2017 were based on estimates of the fair value
of the net assets acquired and are subject to adjustment upon the finalization of the purchase price allocations. The accounting
for business combinations requires estimates and judgments regarding expectations for future cash flows of the acquired
business, and the allocations of those cash flows to identifiable tangible and intangible assets, in determining the assets acquired
and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including
contingent consideration, are based on management's best estimates and assumptions, as well as other information compiled by
management, including valuations that utilize customary valuation procedures and techniques. The estimates and assumptions
underlying the initial valuations are subject to the collection of information necessary to complete the valuations within the
measurement periods, which are up to one year from the respective acquisition dates. The preliminary purchase price
allocations that are not finalized as of December 31, 2019 primarily relate to the final assessment of the fair values of intangible
assets (primarily customer relationship intangible assets), property, plant and equipment (primarily racking structures) and
income taxes (primarily deferred income taxes) 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. Any adjustments to our estimates of purchase price allocation will be made in the
periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the
adjustments had been completed as of the acquisition dates. Adjustments recorded during the fourth quarter of 2019 were not
material to our results from operations.
139
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
7. Income Taxes
We have been organized and have operated as a REIT effective beginning with our taxable year that ended on December
31, 2014. As a REIT, we are generally permitted to deduct from our federal taxable income the dividends we pay to our
stockholders. The income represented by such dividends is not subject to federal taxation at the entity level but is taxed, if at all,
at the stockholder level. The income of our domestic taxable REIT subsidiaries ("TRSs"), which hold our domestic operations
that may not be REIT-compliant as currently operated and structured, is subject, as applicable, to federal and state corporate
income tax. In addition, we and our subsidiaries continue to be subject to foreign income taxes in other jurisdictions in which
we have business operations or a taxable presence, regardless of whether assets are held or operations are conducted through
subsidiaries disregarded for federal income tax purposes or TRSs. We will also be subject to a separate corporate income tax on
any gains recognized on the sale or disposition of any asset previously owned by a C corporation during a five-year period after
the date we first owned the asset as a REIT asset that are attributable to "built-in gains" with respect to that asset on that date.
We will also be subject to a built-in gains tax on our depreciation recapture recognized into income as a result of accounting
method changes in connection with our acquisition activities. If we fail to remain qualified for taxation as a REIT, we will be
subject to federal income tax at regular corporate income tax rates. Even if we remain qualified for taxation as a REIT, we may
be subject to some federal, state, local and foreign taxes on our income and property in addition to taxes owed with respect to
our TRS operations. In particular, while state income tax regimes often parallel the federal income tax regime for REITs, many
states do not completely follow federal rules and some do not follow them at all.
On December 22, 2017, legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Legislation”)
was enacted into law in the United States. The Tax Reform Legislation amended the Internal Revenue Code of 1986, as
amended (the “Code”), to reduce tax rates and modify policies, credits and deductions for businesses and individuals. The
following summarizes certain components of the Tax Reform Legislation and the impact such components of the Tax Reform
Legislation. One of the primary components of the Tax Reform Legislation was a reduction in the United States corporate
federal income tax rate from 35% to 21% for taxable years beginning after December 31, 2017.
a. Deemed Repatriation Transition Tax
The Tax Reform Legislation imposed a transition tax (the “Deemed Repatriation Transition Tax”) on a mandatory deemed
repatriation of post-1986 undistributed foreign earnings and profits not previously subject to United States tax as of November
2, 2017 or December 31, 2017, whichever was greater (the “Undistributed E&P”) as of the last taxable year beginning before
January 1, 2018. The Deemed Repatriation Transition Tax varied depending on whether the Undistributed E&P was held in
liquid (as defined in the Tax Reform Legislation) or non-liquid assets. A participation deduction against the deemed repatriation
resulted in a Deemed Repatriation Transition Tax on Undistributed E&P of 15.5% if held in cash and liquid assets and 8.0% if
held in non-liquid assets. The Deemed Repatriation Transition Tax applied regardless of whether or not an entity had cash in its
foreign subsidiaries and regardless of whether the entity actually repatriated the Undistributed E&P back to the United States.
We have completed our analysis and determined that the amount of Undistributed E&P deemed repatriated under the Tax
Reform Legislation in our taxable year ending December 31, 2017 was $160,000. We opted to include the full amount of
Undistributed E&P in our 2017 taxable income, rather than spread it over eight years (as permitted by the Tax Reform
Legislation). After applying the participation deduction, included in our REIT taxable income for 2017 was approximately
$70,900 related to the deemed repatriation of Undistributed E&P.
b. Global Intangible Low-Taxed Income
For taxable years beginning after December 31, 2017, the Tax Reform Legislation introduced new provisions intended to
prevent the erosion of the United States federal income tax base through the taxation of certain global intangible low-taxed
income (“GILTI”). The GILTI provisions created a new requirement that certain income earned by controlled foreign
corporations (“CFCs”) must be included currently in the gross income of the CFC’s United States tax resident shareholder.
Generally, GILTI is the excess of the United States shareholder’s pro rata portion of the income of its foreign subsidiaries over
the net deemed tangible income return of such subsidiaries.
140
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
7. Income Taxes (Continued)
The GILTI provisions also provide for certain deductions against the inclusion of GILTI in taxable income; however,
REITs are not eligible for such deductions. Therefore, 100% of our GILTI is included in our taxable income and will increase
the required minimum distribution to our stockholders. There was no GILTI included in our taxable income for the year ended
December 31, 2019 and the amount included in our REIT taxable income for the year ended December 31, 2018 was $41,944.
We have adopted an accounting policy such that we will recognize no deferred taxes related to basis differences resulting from
GILTI.
c. Interest Deduction Limitation
The Tax Reform Legislation also limits, for certain entities, the deduction for net interest expense to the sum of business
interest income plus 30% of adjusted taxable income (the “Interest Deduction Limitation”). Adjusted taxable income is defined
in the Tax Reform Legislation similar to earnings before interest, taxes, depreciation and amortization for taxable years
beginning after December 31, 2017 and before January 1, 2022, and is defined similar to earnings before interest and taxes for
taxable years beginning after December 31, 2021.
The Interest Deduction Limitation does not apply to taxpayers that qualify, and make an election, to be treated as an
“electing real property trade or business”. As a REIT, IMI, including all of our qualified REIT subsidiaries ("QRSs"), made an
election to be treated as an "electing real property trade or business" beginning in our taxable year ended December 31, 2018.
As such, the interest deduction limitation does not apply to IMI or our QRSs; however, IMI will be required to utilize the
alternative depreciation system for its real property. This election does not have a material impact on our consolidated financial
statements. We do not generally believe our TRSs are eligible for treatment as "electing real property trades or businesses".
The significant components of our deferred tax assets and deferred tax liabilities are presented below:
December 31,
2019
2018
Deferred Tax Assets:
Accrued liabilities and other adjustments(1)
$
53,197
$
Net operating loss carryforwards
Federal benefit of unrecognized tax benefits
Valuation allowance
Deferred Tax Liabilities:
Other assets, principally due to differences in amortization
Plant and equipment, principally due to differences in depreciation
Other
Net deferred tax liability
99,240
3,039
(60,003)
95,473
(177,645)
(67,515)
(21,903)
(267,063)
(171,590) $
$
59,477
92,952
2,925
(55,666)
99,688
(166,469)
(74,147)
(26,260)
(266,876)
(167,188)
______________________________________________________________________________
(1) Amounts as of December 31, 2018 has been restated to reflect the impact of the Netherlands VAT liability (as
discussed in Note 2.y.) which resulted in an increase in accrued liabilities and other adjustments of $4,971.
141
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
7. Income Taxes (Continued)
The deferred tax assets and deferred tax liabilities are presented below:
Noncurrent deferred tax assets (Included in Other, a component of
Other assets, net)
$
Deferred income taxes
December 31,
2019
2018
16,538
(188,128)
$
16,648
(183,836)
At December 31, 2019, we have federal net operating loss carryforwards of $152,743 available to reduce future federal
taxable income, the majority of which expire from 2024 through 2037. Of the $152,743, we expect to utilize $39,156 and
realize a federal tax benefit of $8,223. We can carry forward these net operating losses to the extent we do not utilize them in
any given available year. We have state net operating loss carryforwards, which expire from 2020 through 2039, of which an
insignificant state tax benefit is expected to be realized. We have assets for foreign net operating losses of $90,811, with various
expiration dates (and in some cases no expiration date), subject to a valuation allowance of approximately 64%.
Rollforward of the valuation allowance is as follows:
Year Ended December 31,
2019
2018
2017
Balance at
Beginning of
the Year
Charged
(Credited) to
Expense
Other Increases/
(Decreases)(1)
Balance at
End of
the Year
$
$
55,666
61,756
71,359
$
6,211
3,568
(4,317)
(1,874) $
(9,658)
(5,286)
60,003
55,666
61,756
_______________________________________________________________________________
(1) Other increases and decreases in valuation allowances are primarily related to changes in foreign currency exchange
rates and disposal of certain foreign subsidiaries.
The components of income (loss) from continuing operations before provision (benefit) for income taxes are:
United States
Canada
Other Foreign
Year Ended December 31,
2019
2018
2017
$
$
203,225
$
203,078
$
48,326
76,591
53,779
153,454
328,142
$
410,311
$
162,763
50,019
(11,805)
200,977
142
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
7. Income Taxes (Continued)
The provision (benefit) for income taxes consists of the following components:
Year Ended December 31,
2019
2018
Federal—current
Federal—deferred
State—current
State—deferred
Foreign—current
Foreign—deferred
$
7,262
$
(3,356)
3,943
(1,126)
49,350
3,858
Provision (Benefit) for Income Taxes
$
59,931
$
703
(4,162)
918
627
45,371
(704)
42,753
$
$
2017
16,345
(12,655)
3,440
(1,276)
42,532
(25,424)
22,962
A reconciliation of total income tax expense and the amount computed by applying the current federal statutory tax rate of
21.0% to income from continuing operations before provision (benefit) for income taxes for the years ended December 31,
2019 and 2018 and the former federal statutory tax rate of 35.0% to income from continuing operations before provision
(benefit) for income taxes for the year ended December 31, 2017 is as follows:
Computed "expected" tax provision
Changes in income taxes resulting from:
Tax adjustment relating to REIT
State taxes (net of federal tax benefit)
Increase (decrease) in valuation allowance (net operating losses)
Foreign repatriation
U.S. Federal Rate Reduction
Reserve (reversal) accrual and audit settlements (net of federal tax benefit)
Foreign tax rate differential
Disallowed foreign interest, Subpart F income, and other foreign taxes
Other, net
Provision (Benefit) for Income Taxes
$
Year Ended December 31,
2019
68,910
$
2018
86,165
$
2017
70,342
$
(40,577)
2,115
6,211
—
—
514
8,562
14,241
(45)
59,931
$
(35,165)
1,599
3,568
—
—
(13,985)
1,031
903
(1,363)
42,753
$
(78,873)
2,692
(4,317)
29,476
(4,685)
(9,103)
(9,639)
29,325
(2,256)
22,962
Our effective tax rates for the years ended December 31, 2019, 2018 and 2017 were 18.3%, 10.4% and 11.4%,
respectively. 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 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.
The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the
year ended December 31, 2019 were the benefit derived from the dividends paid deduction of $40,577 and the impact of
differences in the tax rates at which our foreign earnings are subject to, resulting in a tax provision of $8,562.
The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the
year ended December 31, 2018 were the benefit derived from the dividends paid deduction of $35,165, the impact of
differences in the tax rates at which our foreign earnings are subject to, resulting in a tax provision of $1,031 and a discrete tax
benefit of approximately $14,000 associated with the resolution of a tax matter (which was included as a component of Accrued
expenses in our Consolidated Balance Sheet as of December 31, 2017).
143
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
7. Income Taxes (Continued)
The primary reconciling items between the former federal statutory tax rate of 35.0% and our overall effective tax rate for
the year ended December 31, 2017 were the benefit derived from the dividends paid deduction of $78,873, the impact of
differences in the tax rates at which our foreign earnings are subject to, resulting in a tax benefit of $9,639, and a release of
valuation allowances on certain of our foreign net operating losses of $4,317 as a result of the merger of certain of our foreign
subsidiaries, partially offset by the impact of the Tax Reform Legislation of $24,791 (reflecting the impact of the Deemed
Repatriation Transition Tax, partially offset by the impact of the U.S. Federal Tax Rate Reduction).
As a REIT, we are entitled to a deduction for dividends paid, resulting in a substantial reduction of federal income tax
expense. As a REIT, substantially all of our income tax expense will be incurred based on the earnings generated by our foreign
subsidiaries and our domestic TRSs.
Following our conversion to a REIT in 2014, we concluded that it was not our intent to reinvest our current and future
undistributed earnings of our foreign subsidiaries indefinitely outside the United States. As of December 31, 2016, we
concluded that it is our intent to indefinitely reinvest our current and future undistributed earnings of certain of our unconverted
foreign TRSs outside the United States. We no longer provide incremental foreign withholding taxes on the retained book
earnings of these unconverted foreign TRSs, which was approximately $279,700 as of December 31, 2019. As a REIT, future
repatriation of incremental undistributed earnings of our foreign subsidiaries will not be subject to federal or state income tax,
with the exception of foreign withholding taxes in limited instances; however, such future repatriations will require distribution
in accordance with REIT distribution rules, and any such distribution may then be taxable, as appropriate, at the stockholder
level. We continue, however, to provide for incremental foreign withholding taxes on net book over outside basis differences
related to the earnings of our foreign QRSs and certain other foreign TRSs (excluding unconverted foreign TRSs).
The evaluation of an uncertain tax position is a two-step process. The first step is a recognition process whereby we
determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any
related appeals or litigation processes, based on the technical merits of the position. The second step is a measurement process
whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of
benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than
50% likely of being realized upon ultimate settlement.
We have elected to recognize interest and penalties associated with uncertain tax positions as a component of the
provision (benefit) for income taxes in the accompanying Consolidated Statements of Operations. We recorded an increase of
$1,780, $1,961 and $289 for gross interest and penalties for the years ended December 31, 2019, 2018 and 2017, respectively.
We had $9,282 and $7,557 accrued for the payment of interest and penalties as of December 31, 2019 and 2018, respectively.
A summary of tax years that remain subject to examination by major tax jurisdictions is as follows:
Tax Years
See Below
2015 to present
2012 to present
Tax Jurisdiction
United States—Federal and State
United Kingdom
Canada
The normal statute of limitations for United States federal tax purposes is three years from the date the tax return is filed;
however, the statute of limitations may remain open for periods longer than three years in instances where a federal tax
examination is in progress. The 2018, 2017 and 2016 tax years remain subject to examination for United States federal tax
purposes as well as net operating loss carryforwards utilized in these years. We utilized net operating losses from 2002 through
2003 and 2010 through 2015 in our federal income tax returns for these tax years. The normal statute of limitations for state
purposes is between three to five years. However, certain of our state statute of limitations remain open for periods longer than
this when audits are in progress.
144
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
7. Income Taxes (Continued)
We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by
various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the
likelihood of additional assessments by tax authorities and provide for these matters as appropriate. As of December 31, 2019,
we had $35,068 of reserves related to uncertain tax positions, of which $31,992 and $3,076 is included in other long-term
liabilities and deferred income taxes, respectively, in the accompanying Consolidated Balance Sheet. As of December 31, 2018,
we had $35,320 of reserves related to uncertain tax positions, of which $32,144 and $3,176 is included in other long-term
liabilities and deferred income taxes, respectively, in the accompanying Consolidated Balance Sheet. Although we believe our
tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes in our
estimates.
A rollforward of unrecognized tax benefits is as follows:
Gross tax contingencies—December 31, 2016
$
Gross additions based on tax positions related to the current year
Gross additions for tax positions of prior years
Gross reductions for tax positions of prior years(1)
Lapses of statutes
Settlements
Gross tax contingencies—December 31, 2017
Gross additions based on tax positions related to the current year
Gross additions for tax positions of prior years
Gross reductions for tax positions of prior years
Lapses of statutes
Settlements
Gross tax contingencies—December 31, 2018
Gross additions based on tax positions related to the current year
Gross additions for tax positions of prior years
Gross reductions for tax positions of prior years
Lapses of statutes
Settlements
Gross tax contingencies—December 31, 2019
$
59,466
4,067
3,368
(2,789)
(2,629)
(22,950)
38,533
3,147
981
(2,865)
(4,462)
(14)
35,320
2,914
1,271
(299)
(4,034)
(104)
35,068
_______________________________________________________________________________
(1) This amount includes gross additions related to the Recall Transaction.
The reversal of these reserves of $35,068 ($32,311 net of federal tax benefit) as of December 31, 2019 will be recorded as
a reduction of our income tax provision, if sustained. We believe that it is reasonably possible that an amount up to
approximately $7,400 ($4,587 net of federal tax benefit) of our unrecognized tax positions may be recognized by the end of
2020 as a result of a lapse of statute of limitations or upon closing and settling significant audits in various worldwide
jurisdictions.
145
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
8. Quarterly Results of Operations (Unaudited)
Quarter Ended
2019
Total revenues
Operating income (loss)
Income (loss) from continuing operations
Total (loss) income from discontinued operations
Net income (loss)
Net income (loss) attributable to Iron Mountain
Incorporated
Earnings (losses) per Share-Basic:
Income (loss) per share from continuing operations
Total (loss) income per share from discontinued operations
Net income (loss) per share attributable to Iron Mountain
Incorporated
Earnings (losses) per Share-Diluted:
Income (loss) per share from continuing operations
Total (loss) income per share from discontinued operations
Net income (loss) per share attributable to Iron Mountain
Incorporated
2018
Total revenues
Operating income (loss)
Income (loss) from continuing operations(2)
Total (loss) income from discontinued operations
Net income (loss)
Net income (loss) attributable to Iron Mountain
Incorporated
Earnings (losses) per Share-Basic:
Income (loss) per share from continuing operations
Total (loss) income per share from discontinued operations
Net income (loss) per share attributable to Iron Mountain
Incorporated
Earnings (losses) per Share-Diluted:
Income (loss) per share from continuing operations
Total (loss) income per share from discontinued operations
Net income (loss) per share attributable to Iron Mountain
Incorporated
March 31
June 30
September 30
December 31
$ 1,053,863
$ 1,066,907
$ 1,062,224
$ 1,079,590
158,675
30,476
(24)
30,452
193,115
92,347
128
92,475
223,474
108,284
—
108,284
206,074
37,104
—
37,104
29,561
92,441
107,675
37,700 (1)
0.10
—
0.10
0.10
—
0.10
0.32
—
0.32
0.32
—
0.32
0.37
—
0.37
0.37
—
0.37
0.13
—
0.13
0.13
—
0.13
$ 1,042,458
$ 1,060,823
$ 1,060,991
$ 1,061,489
157,119
201,460
195,635
39,389
(462)
38,927
92,263
(360)
91,903
77,349
(11,605)
65,744
254,053
158,557
—
158,557
38,459
91,761
65,869
157,844 (3)
0.14
—
0.13
0.14
—
0.13
0.32
—
0.32
0.32
—
0.32
0.27
(0.04)
0.23
0.27
(0.04)
0.23
0.55
—
0.55
0.55
—
0.55
_______________________________________________________________________________
146
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
8. Quarterly Results of Operations (Unaudited) (Continued)
(1) The change in net income (loss) attributable to Iron Mountain Incorporated in the fourth quarter of 2019 compared to
the third quarter of 2019 is primarily attributable to (i) an increase of approximately $63,000 in losses on foreign
currency transactions in the fourth quarter of 2019 compared to the third quarter of 2019, (ii) Restructuring Charges of
$48,600, which began in the fourth quarter of 2019 (as described in Note 14), partially offset by (iii) an increase in net
gains on disposal/write-down of property, plant and equipment of $37,500 recorded during the fourth quarter of 2019
compared to the third quarter of 2019 and (iv) a decrease of approximately $5,100 in the provision for income taxes
recorded in the fourth quarter of 2019 compared to the third quarter of 2019.
(2) Income (loss) from continuing operations reflects the immaterial restatement described in Note 2.y., which reduced
Income (loss) from continuing operations for the three month periods ended March 31, 2018, June 30, 2018,
September 30, 2018 and December 31, 2018 by $6,225, $1,640, $1,279 and $274, respectively.
(3) The change in net income (loss) attributable to Iron Mountain Incorporated in the fourth quarter of 2018 compared to
the third quarter of 2018 is primarily attributable to (i) gains of approximately $62,500 recorded during the fourth
quarter of 2018 associated with the sale of land and buildings in the United Kingdom (see Note 2.g.), (ii) a gain on
disposal/write-down of property, plant and equipment (excluding real estate) recorded during the fourth quarter of
2018 of approximately $8,800 related to the receipt of insurance proceeds related to the involuntary conversion of
certain assets in a facility we own in Argentina (see Note 2.g.), (iii) a decrease in the provision for income taxes
recorded in the fourth quarter of 2018 compared to the third quarter of 2018 of approximately $11,200, (iv) an increase
in gains on foreign currency transactions in the fourth quarter of 2018 compared to the third quarter of 2018 of
approximately $20,000 and (v) a charge of $11,100 recorded during the third quarter of 2018 relating to the resolution
of the post-closing adjustments to the Access Contingent Consideration (as defined and discussed in Note 13) that did
not recur during the fourth quarter of 2018.
147
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
9. Segment Information
During the fourth quarter of 2019, as a result of the realignment of our global managerial structure and changes to our
internal financial reporting associated with Project Summit, we reassessed the composition of our reportable operating
segments and reporting units. As a result of the managerial structure changes associated with Project Summit, we now have the
following reportable operating segments: (i) Global Records and Information Management ("Global RIM") Business (which
consists of the former North American Records and Information Management Business (excluding our technology escrow
services business, which is now included as a component of our Corporate and Other Business segment), North American Data
Management Business, Western European Business and Other International Business); (ii) Global Data Center Business; and
(iii) Corporate and Other Business (which includes our Adjacent Businesses and our technology escrow services business). As a
result of these changes, previously reported segment information has been restated to conform to the current presentation.
As of December 31, 2019, our three reportable operating segments are described as follows:
• Global RIM Business—provides (i) storage of physical records, including media such as microfilm and microfiche,
film, X-rays and blueprints, including healthcare information services, vital records services, service and courier
operations, and the collection, handling and disposal of sensitive documents for customers in approximately 50
countries ("Records Management"), (ii) storage and rotation of backup computer media as part of corporate disaster
recovery plans, including service and courier operations (“Data Protection & Recovery”); server and computer backup
services; and related services offerings, (collectively, "Data Management"), (iii) Information Governance and Digital
Solutions, which develops, implements and supports comprehensive storage and information management solutions
for the complete lifecycle of our customers' information, including the management of physical records, document
conversion and digital storage in the United States and Canada, (iv) the shredding of sensitive documents for
customers that, in many cases, store their records with us ("Secure Shredding") and the subsequent sale of shredded
paper for recycling, and (v) on-demand, valet storage for consumers across 24 markets in North America through the
MakeSpace JV (as defined in Note 13).
• Global Data Center Business—provides enterprise-class data center facilities to protect mission-critical assets and
ensure the continued operation of our customers’ IT infrastructure, with secure and reliable data center options. As of
December 31, 2019, our Global Data Center Business footprint spanned nine markets in the United States: Denver,
Colorado; Kansas City, Missouri; Boston, Massachusetts; Boyers, Pennsylvania; Manassas, Virginia; Edison, New
Jersey; Columbus, Ohio; and Phoenix and Scottsdale, Arizona and four international markets: Amsterdam, London,
and Singapore, with land held for development in Frankfurt.
• Corporate and Other Business—consists primarily of Adjacent Businesses and other corporate items. Our Adjacent
Businesses is comprised of (i) helping entertainment and media industry clients store, safeguard and deliver physical
media of all types, and provides digital content repository systems that house, distribute, and archive key media assets,
throughout the United States, Canada, France, China - Hong Kong S.A.R., the Netherlands and the United Kingdom
("Entertainment Services") and (ii) technical expertise in the handling, installation and storing of art in the United
States, Canada and Europe ("Fine Arts"). Additionally, our Corporate and Other Business segment includes costs
related to executive and staff functions, including finance, human resources and IT, which benefit the enterprise as a
whole, and stock-based employee compensation expense associated with all stock options, restricted stock units,
performance units and shares of stock issued under our employee stock purchase plan. Additionally, our Corporate and
Other Business segment includes our technology escrow services business in the United States.
148
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
9. Segment Information (Continued)
An analysis of our business segment information and reconciliation to the accompanying Consolidated Financial
Statements is as follows:
As of and for the Year Ended December 31, 2019
Total Revenues
Storage Rental
Service
Depreciation and Amortization
Depreciation
Amortization
Adjusted EBITDA
Total Assets(1)
Expenditures for Segment Assets
Capital Expenditures
Cash Paid for Acquisitions, Net of Cash Acquired
Acquisitions of Customer Relationships, Customer Inducements,
Contract Fulfillment Costs and third-party commissions
As of and for the Year Ended December 31, 2018
Total Revenues
Storage Rental
Service
Depreciation and Amortization
Depreciation
Amortization
Adjusted EBITDA
Total Assets(1)
Expenditures for Segment Assets
Capital Expenditures
Cash Paid for Acquisitions, Net of Cash Acquired
Acquisitions of Customer Relationships, Customer Inducements
and Contract Fulfillment Costs
As of and for the Year Ended December 31, 2017
Total Revenues
Storage Rental
Service
Depreciation and Amortization
Depreciation
Amortization
Adjusted EBITDA
Total Assets(1)
Expenditures for Segment Assets
Capital Expenditures
Cash Paid for Acquisitions, Net of Cash Acquired(2)
Acquisitions of Customer Relationships and Customer Inducements
Global RIM
Business
Global Data
Center Business
Corporate and
Other Business
Total
Consolidated
$
3,812,433
$
257,151
$
193,000
$
2,320,076
1,492,357
454,652
330,534
124,118
1,563,223
10,753,218
398,690
248,232
54,717
246,925
10,226
133,927
78,939
54,988
121,517
2,535,848
427,935
392,029
—
114,086
78,914
69,622
46,850
22,772
(247,135)
527,750
56,242
52,722
3,520
4,262,584
2,681,087
1,581,497
658,201
456,323
201,878
1,437,605
13,816,816
882,867
692,983
58,237
95,741
35,906
—
131,647
$
3,842,600
$
228,983
$
154,178
$
2,301,344
1,541,256
472,155
341,384
130,771
1,569,353
9,135,198
443,634
254,308
93,217
218,675
10,308
105,680
58,707
46,973
99,574
2,217,505
1,794,386
152,739
1,639,427
102,436
51,742
61,679
52,649
9,030
(244,103)
504,515
79,286
53,015
25,913
4,225,761
2,622,455
1,603,306
639,514
452,740
186,774
1,424,824
11,857,218
2,317,306
460,062
1,758,557
96,109
2,220
358
98,687
$
3,706,110
$
37,694
$
101,774
$
2,261,831
1,444,279
458,634
351,915
106,719
1,470,579
9,151,755
424,628
262,474
86,969
75,185
35,839
1,855
10,224
8,617
1,607
11,275
382,198
86,543
32,015
54,528
—
79,887
21,887
53,518
45,751
7,767
(238,281)
1,441,434
126,850
48,642
78,208
—
3,845,578
2,377,557
1,468,021
522,376
406,283
116,093
1,243,573
10,975,387
638,021
343,131
219,705
75,185
_______________________________________________________________________________
(1) Excludes all intercompany receivables or payables and investment in subsidiary balances. Total Assets as of December
31, 2019 reflects the adoption of ASU 2016-02. Total Assets for the Corporate and Other Business segment have been
restated to reflect the impact of the Netherlands VAT liability (as discussed in Note 2.y.) which resulted in an increase
in total assets for this segment of $4,971 and $2,985, at December 31, 2018 and 2017, respectively.
149
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
9. Segment Information (Continued)
The accounting policies of the reportable segments are the same as those described in Note 2. 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: (1) (gain) loss on disposal/write-down of property, plant and equipment (including real estate); (2)
intangible impairments; (3) other expense (income), net (which includes foreign currency transaction (gains) losses, net); (4)
Significant Acquisition Costs; and (5) Restructuring Charges. Internally, we use Adjusted EBITDA as the basis for evaluating
the performance of, and allocated resources to, our operating segments.
A reconciliation of Adjusted EBITDA to income (loss) from continuing operations on a consolidated basis is as follows:
Adjusted EBITDA
(Add)/Deduct:
Year Ended December 31,
2019
$ 1,437,605
2018
$ 1,424,824
2017
$ 1,243,573
Provision (Benefit) for Income Taxes
Other Expense (Income), Net
Interest Expense, Net
(Gain) Loss on disposal/write-down of property,
plant and equipment, net
Depreciation and amortization
Significant Acquisition Costs
Restructuring Charges
Intangible impairments
59,931
33,898
419,298
(63,824)
658,201
13,293
48,597
—
42,753
(11,692)
409,648
(73,622)
639,514
50,665
—
—
22,962
79,429
353,645
(766)
522,376
84,901
—
3,011
Income (Loss) from Continuing Operations
$
268,211
$
367,558
$
178,015
Information as to our operations in different geographical areas is as follows:
Revenues:
United States
United Kingdom
Canada
Australia
Remaining Countries
Total Revenues
Long-lived Assets:
United States
United Kingdom
Canada
Australia
Remaining Countries
Total Long-lived Assets
Year Ended December 31,
2019
2018
2017
$ 2,632,586
274,931
$ 2,579,847
280,993
$ 2,310,296
246,373
243,033
143,511
249,505
155,367
243,625
157,333
968,523
$ 4,262,584
960,049
$ 4,225,761
887,951
$ 3,845,578
$ 7,862,262
$ 6,902,232
$ 5,476,551
755,859
556,591
530,755
547,768
453,398
442,755
529,233
500,396
470,432
2,875,010
2,302,951
2,048,460
$ 12,580,477
$ 10,649,104
$ 9,025,072
150
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
9. Segment Information (Continued)
Information as to our revenues by product and service lines by segment are as follows:
For the Year Ended December 31, 2019
Records Management(1)
Data Management(1)
Information Destruction(1)(2)
Data Center
Total Revenues
For the Year Ended December 31, 2018
Records Management(1)
Data Management(1)
Information Destruction(1)(2)
Data Center
Total Revenues
For the Year Ended December 31, 2017
Records Management(1)
Data Management(1)
Information Destruction(1)(2)
Data Center
Total Revenues
Global RIM
Business
Global Data
Center Business
Corporate and
Other Business
Total
Consolidated
$
2,866,192
$
— $
128,954
$
2,995,146
520,082
426,159
—
—
—
257,151
64,046
—
—
$
$
$
$
$
$
$
$
3,812,433
2,871,253
539,035
432,312
—
3,842,600
2,778,024
542,148
385,938
—
$
$
$
$
257,151
$
193,000
— $
—
—
228,983
96,669
57,509
—
—
228,983
$
154,178
— $
—
—
37,694
69,667
32,103
4
—
584,128
426,159
257,151
4,262,584
2,967,922
596,544
432,312
228,983
4,225,761
2,847,691
574,251
385,942
37,694
$
3,706,110
$
37,694
$
101,774
$
3,845,578
_______________________________________________________________________________
(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 the destruction services offering, which does not have a storage rental
component.
(2) Includes Secure Shredding services.
Significant Acquisition Costs included in the accompanying Consolidated Statements of Operations by segment are as
follows:
Year Ended December 31,
Global RIM Business
Global Data Center Business
Corporate and Other Business
2019
$
8,223
$
337
4,733
2018
20,590
11,423
18,652
Total Significant Acquisition Costs
$
13,293
$
50,665
$
151
2017
47,722
$
—
37,179
84,901
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
10. Commitments and Contingencies
a. Purchase Commitments
We have certain contractual obligations related to purchase commitments which require minimum payments as follows:
Year
2020
2021
2022
2023
2024
Thereafter
Purchase
Commitments(1)
134,127
68,208
32,480
2,004
1,985
340
239,144
$
$
______________________________________________________________________
(1) Purchase commitments (i) include obligations for future construction costs associated with the expansion of our Global
Data Center Business, which represent a significant amount of the purchase commitments due in 2020 and (ii) exclude
our operating and financing lease obligations (see Note 2.m.).
b. Self-Insured Liabilities
We are self-insured up to certain limits for costs associated with workers' compensation claims, vehicle accidents,
property and general business liabilities, and benefits paid under employee healthcare and short-term disability programs. At
December 31, 2019 and 2018 there were $43,127 and $41,328, respectively, of self-insurance accruals reflected in Accrued
expenses on our Consolidated Balance Sheets. The measurement of these costs requires the consideration of historical cost
experience and judgments about the present and expected levels of cost per claim. We account for these costs primarily through
actuarial methods, which develop estimates of the undiscounted liability for claims incurred, including those claims incurred
but not reported. These methods provide estimates of future claim costs based on claims incurred as of the balance sheet date.
c. Litigation—General
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 estimable. We record legal costs associated with loss contingencies as expenses in the
period in which they are incurred. The matters described below represent our significant loss contingencies. We have evaluated
each matter and, if both probable and estimable, accrued an amount that represents our estimate of any probable loss associated
with such matter. In addition, we have estimated a reasonably possible range for all loss contingencies including those
described below. We believe it is reasonably possible that we could incur aggregate losses in addition to amounts currently
accrued for all matters up to an additional $6,000 over the next several years, of which certain amounts would be covered by
insurance or indemnity arrangements.
152
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
10. Commitments and Contingencies (Continued)
d. Netherlands VAT Liability
In June 2019, we received a notification of assessment from tax and customs authorities in the Netherlands related to VAT
liability of approximately 16,800 Euros primarily related to the years ending December 31, 2018 and 2017. The notification of
assessment is related to our customs clearing and logistics business in the Netherlands, which we acquired through the
acquisition of 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 on behalf of which the goods are being imported. 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.
e. Italy Fire
On November 4, 2011, we experienced a fire at a facility we leased in Aprilia, Italy. The facility primarily stored archival
and inactive business records for local area businesses. Despite quick response by local fire authorities, damage to the building
was extensive, and the building and its contents were a total loss. We have been sued by six customers. Four of those lawsuits
have been settled and two remain pending, including a claim asserted by Azienda per i Transporti Autoferrotranviari del
Comune di Roma, S.p.A, seeking 42,600 Euros for the loss of its current and historical archives. We have also received
correspondence from other affected customers, including certain customers demanding payment under various theories of
liability. Although our warehouse legal liability insurer has reserved its rights to contest coverage related to certain types of
potential claims, we believe we carry adequate insurance. We deny any liability with respect to the fire and we have referred
these claims to our warehouse legal liability insurer for an appropriate response. We do not expect that this event will have a
material impact on our consolidated financial condition, results of operations or cash flows. We sold our Italian operations on
April 27, 2012, and we indemnified the buyers related to certain obligations and contingencies associated with this fire. As a
result of the sale of the Italian operations, any future statement of operations and cash flow impacts related to the fire will be
reflected as discontinued operations.
f. Argentina Fire
On February 5, 2014, we experienced a fire at a facility we own in Buenos Aires, Argentina. As a result of the quick
response by local fire authorities, the fire was contained before the entire facility was destroyed and all employees were safely
evacuated; however, a number of first responders lost their lives, or in some cases, were severely injured. The cause of the fire
is currently being investigated. We believe we carry adequate insurance and do not expect that this event will have a material
impact to our consolidated financial condition, results of operations or cash flows. Revenues from our operations at this facility
represent less than 0.5% of our consolidated revenues. In December 2018, we received insurance proceeds of approximately
$13,700 related to the involuntary conversion of assets included in the facility and, as a result, we recorded a gain on disposal/
write-down of property, plant and equipment, net of $8,814 during the fourth quarter of 2018.
153
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
10. Commitments and Contingencies (Continued)
g. Brooklyn Fire (Recall)
On January 31, 2015, a former Recall leased facility located in Brooklyn, New York was completely destroyed by a
fire. Approximately 900,000 cartons of customer records were lost impacting approximately 1,200 customers. No one was
injured as a result of the fire. We believe we carry adequate insurance to cover any losses resulting from the fire. There is one
pending customer-related lawsuit stemming from the fire, which is being defended by our warehouse legal liability insurer. We
have also received correspondence from other customers, under various theories of liability. We deny any liability with respect
to the fire and we have referred these claims to our insurer for an appropriate response. We do not expect that this event will
have a material impact on our consolidated financial condition, results of operations or cash flows.
_______________________________________________________________________________
Our policy related to business interruption insurance recoveries is to record gains within Other expense (income), net in
our Consolidated Statements of Operations and proceeds received within cash flows from operating activities in our
Consolidated Statements of Cash Flows. Such amounts are recorded in the period the cash is received. Our policy with respect
to involuntary conversion of property, plant and equipment is to record any gain or loss within (Gain) loss on disposal/write-
down of property, plant and equipment, net within operating income in our Consolidated Statements of Operations and proceeds
received within cash flows from investing activities within our Consolidated Statements of Cash Flows. Losses are recorded
when incurred and gains are recorded in the period when the cash received exceeds the carrying value of the related property,
plant and equipment.
11. Related Party Transactions
In March 2019, in connection with the Consumer Storage Transaction and the MakeSpace Investment (both as defined
and described more fully in Note 13), we entered into a storage and service agreement with the MakeSpace JV (as defined in
Note 13) 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 $22,500 of revenue during the year ended December 31, 2019, associated with the MakeSpace
Agreement.
During the years ended December 31, 2019, 2018 and 2017, the Company had no other related party transactions.
154
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
12. 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 2017, 2018 and 2019, our board of directors declared the following dividends:
Declaration Date
February 15, 2017
May 24, 2017
July 27, 2017
October 24, 2017
February 14, 2018
May 24, 2018
July 24, 2018
October 25, 2018
February 7, 2019
May 22, 2019
July 26, 2019
October 31, 2019
Dividend
Per Share
$
0.5500
0.5500
0.5500
0.5875
0.5875
0.5875
0.5875
0.6110
0.6110
0.6110
0.6110
0.6185
Record Date
Total
Amount
Payment Date
March 15, 2017
$
145,235
June 15, 2017
September 15, 2017
December 15, 2017
March 15, 2018
June 15, 2018
September 17, 2018
December 17, 2018
March 15, 2019
June 17, 2019
September 16, 2019
December 16, 2019
145,417
146,772
166,319
167,969
168,078
168,148
174,935
175,242
175,389
175,434
177,687
April 3, 2017
July 3, 2017
October 2, 2017
January 2, 2018
April 2, 2018
July 2, 2018
October 2, 2018
January 3, 2019
April 2, 2019
July 2, 2019
October 2, 2019
January 2, 2020
During the years ended December 31, 2019, 2018, and 2017, we declared distributions to our stockholders of $703,752,
$679,130 and $603,743, respectively. These distributions represent approximately $2.45 per share, $2.38 per share and $2.27
per share for the years ended December 31, 2019, 2018, and 2017, respectively, based on the weighted average number of
common shares outstanding during each respective year.
For federal income tax purposes, distributions to our stockholders are generally treated as nonqualified ordinary dividends
(potentially eligible for the lower effective tax rates available for "qualified REIT dividends"), qualified ordinary dividends or
return of capital. The United States Internal Revenue Service requires historical C corporation earnings and profits to be
distributed prior to any REIT distributions, which may affect the character of each distribution to our stockholders, including
whether and to what extent each distribution is characterized as a qualified or nonqualified ordinary dividend. In addition,
certain of our distributions qualify as capital gain distributions. For the years ended December 31, 2019, 2018, and 2017, the
dividends we paid on our common shares were classified as follows:
Nonqualified ordinary dividends
Qualified ordinary dividends
Capital gains
Return of capital
Year Ended December 31,
2019
2018
2017
54.8%
4.5%
14.7%
26.0%
83.0%
4.8%
5.8%
6.4%
82.1%
17.9%
—%
—%
100.0%
100.0%
100.0%
155
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
12. Stockholders' Equity Matters (Continued)
Dividends paid during the years ended December 31, 2019, 2018, and 2017 which were classified as qualified ordinary
dividends for federal income tax purposes primarily related to the distribution of historical C corporation earnings and profits
related to certain acquisitions completed during the years ended December 31, 2019, 2018, and 2017. In 2019, the percentage of
our dividend that was classified as a capital gain was 14.7% and primarily related to the sale of land and buildings in the United
States and United Kingdom. In 2018, the percentage of our dividend that was classified as a capital gain was 5.8% and
primarily relates to the sale of land and buildings in the United Kingdom. In 2017, none of our dividends were characterized as
a return of capital primarily due to the impact of the Deemed Repatriation Transition Tax. See Note 7 for further disclosure
regarding the impact of the Deemed Repatriation Transition Tax.
At The Market (ATM) Equity Program
In October 2017, we entered into a distribution agreement (the “Distribution Agreement”) with a syndicate of 10 banks
(the “Agents”) pursuant to which we may sell, from time to time, up to an aggregate sales price of $500,000 of our common
stock through the Agents (the “At The Market (ATM) Equity Program”). Sales of our common stock made pursuant to the
Distribution Agreement may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings
as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a
market maker other than on an exchange, or as otherwise agreed between the applicable Agent and us. We intend to use the net
proceeds from sales of our common stock pursuant to the At The Market (ATM) Equity Program for general corporate
purposes, which may include acquisitions and investments, including acquisitions and investments in our Global Data Center
Business, and repaying amounts outstanding from time to time under the Revolving Credit Facility.
During the quarter and year ended December 31, 2019, there were no shares of common stock sold under the At The
Market (ATM) Equity Program. During the year ended December 31, 2018, under the At The Market (ATM) Equity Program,
we sold an aggregate of 273,486 shares of common stock for gross proceeds of approximately $8,800, generating net proceeds
of $8,716, after deducting commissions of $90. During the year ended December 31, 2017, under the At The Market (ATM)
Equity Program, we sold an aggregate of 1,481,053 shares of common stock for gross proceeds of approximately $60,000,
generating net proceeds of $59,100 after deducting commissions of $900.
As of December 31, 2019, the remaining aggregate sale price of shares of our common stock available for distribution
under the At The Market (ATM) Equity Program was approximately $431,200.
Equity Offering
On December 12, 2017, we entered into an underwriting agreement (the "Underwriting Agreement") with a syndicate of
16 banks (the “Underwriters”) related to the public offering by us of 14,500,000 shares (the “Firm Shares”) of our common
stock (the “Equity Offering”). The offering price to the public for the Equity Offering was $37.00 per share, and we agreed to
pay the Underwriters an underwriting commission of $1.38195 per share. The net proceeds to us from the Equity Offering, after
deducting underwriters' commissions, was $516,462.
Pursuant to the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase from us up to an
additional 2,175,000 shares of common stock (the “Option Shares”) at the public offering price, less the underwriting
commission and less an amount per share equal to any dividends or distributions declared by us and payable on the Firm Shares
but not payable on the Option Shares (the “Over-Allotment Option"). On January 10, 2018, the Underwriters exercised the
Over-Allotment Option in its entirety. The net proceeds to us from the exercise of the Over-Allotment Option, after deducting
underwriters' commissions and the per share value of the dividend we declared on our common stock on October 24, 2017 (for
which the record date was December 15, 2017) which was paid on January 2, 2018, was approximately $76,200. The net
proceeds of the Equity Offering and the Over-Allotment Option, together with the net proceeds from the issuance of the 51/4%
Notes, were used to finance the purchase price of the IODC Transaction, and to pay related fees and expenses. At December 31,
2017, the net proceeds of the Equity Offering, together with the net proceeds from the 51/4% Notes, were used to temporarily
repay borrowings under our Revolving Credit Facility and invest in money market funds.
156
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
13. 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
$20,000 in cash (gross of certain transaction expenses) (the "Cash Contribution") to a joint venture entity, MakeSpace LLC (the
"MakeSpace JV"), established by us and MakeSpace Labs, Inc. ("MakeSpace"), a consumer storage services provider (the
"Consumer Storage Transaction"). Upon the closing of the Consumer Storage Transaction on March 19, 2019, the MakeSpace
JV owned (i) the IM Consumer Storage Assets, (ii) the Cash Contribution and (iii) the customer contracts, intellectual property
and certain other assets used by MakeSpace to operate its consumer storage business in the United States. As part of the
Consumer Storage Transaction, we received an equity interest of approximately 34% in the MakeSpace JV (the "MakeSpace
Investment"). In connection with the Consumer Storage Transaction and the MakeSpace Investment, we also entered into a
storage and service agreement with the MakeSpace JV to provide certain storage and related services to the MakeSpace JV (see
Note 11).
We have concluded that the divestment of the IM Consumer Storage Assets in the Consumer Storage Transaction does not
meet the criteria to be reported as 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. Accordingly,
the revenues and expenses associated with this business are presented as a component of Income (loss) from continuing
operations in our Consolidated Statements of Operations for the year ended December 31, 2019 through the closing date of the
Consumer Storage Transaction and for the years ended December 31, 2018 and 2017 and the cash flows associated with this
business are presented as a component of cash flows from continuing operations in our Consolidated Statements of Cash Flows
for the year ended December 31, 2019 through the closing date of the Consumer Storage Transaction and for the years ended
December 31, 2018 and 2017.
As a result of the Consumer Storage Transaction, we recorded a gain on sale of approximately $4,200 to Other expense
(income), net, in the first quarter of 2019, representing the excess 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 Investment at December 31, 2019 is
$18,570, and is presented as a component of Other within Other assets, net in our Consolidated Balance Sheet.
b. IMFS Divestment
On September 28, 2018, Iron Mountain Fulfillment Services, Inc. ("IMFS"), a consolidated subsidiary of IMI that
operated our fulfillment services business in the United States, sold substantially all of its assets for total consideration of
approximately $3,000 (the "IMFS Divestment"). 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. Accordingly, the revenues and
expenses associated with this business are presented as a component of Income (loss) from continuing operations in our
Consolidated Statements of Operations for the years ended December 31, 2018 and 2017 and the cash flows associated with
this business are presented as a component of cash flows from continuing operations in our Consolidated Statements of Cash
Flows for the years ended December 31, 2018 and 2017 through the sale date. The fair value of the consideration received as a
result of the IMFS Divestment approximated the carrying value of IMFS and, therefore, during the third quarter of 2018, we
recorded an insignificant loss in connection with the IMFS Divestment to Other (income) expense, net.
c. Russia and Ukraine Divestment
On May 30, 2017, IM EES sold its records and information management operations in Russia and Ukraine to OSG
Records Management (Europe) Limited ("OSG") in a stock transaction (the “Russia and Ukraine Divestment”). As
consideration for the Russia and Ukraine Divestment, IM EES received a 25% equity interest in OSG (the “OSG Investment”).
157
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
13. Divestments (Continued)
We have concluded that the Russia and Ukraine Divestment does not meet the criteria to be reported as discontinued
operations in our consolidated financial statements, as our decision to divest these businesses does not represent a strategic shift
that will have a major effect on our operations and financial results. Accordingly, the revenues and expenses associated with
these businesses are presented as a component of Income (loss) from continuing operations in our Consolidated Statement of
Operations for the year ended December 31, 2017 through the sale date and the cash flows associated with these businesses are
presented as a component of cash flows from continuing operations in our Consolidated Statement of Cash Flows for the year
ended December 31, 2017 through the sale date.
As a result of the Russia and Ukraine Divestment, we recorded a gain on sale of $38,869 to Other expense (income), net,
in the second quarter of 2017, representing the excess of the fair value of the consideration received over the carrying value of
our businesses in Russia and Ukraine. As of the closing date of the Russia and Ukraine Divestment, the fair value of the OSG
Investment was approximately $18,000. We account for the OSG Investment as an equity method investment. As of the closing
date of the Russia and Ukraine Divestment, the carrying value of our businesses in Russia and Ukraine was a credit balance of
$20,869, which consisted of (i) a credit balance of approximately $29,100 of cumulative translation adjustment associated with
our businesses in Russia and Ukraine that was reclassified from accumulated other comprehensive items, net, (ii) the carrying
value of the net assets of our businesses in Russia and Ukraine, excluding goodwill, of $4,716 and (iii) $3,515 of goodwill
associated with our former Northern and Eastern Europe reporting unit (of which our businesses in Russia and Ukraine were a
component of prior to the Russia and Ukraine Divestment), which was allocated, on a relative fair value basis, to our businesses
in Russia and Ukraine. The carrying value of the OSG Investment at December 31, 2019 and 2018 is $17,012 and $17,514,
respectively, and is presented as a component of Other within Other assets, net in our Consolidated Balance Sheets.
On January 9, 2020 we acquired the remaining 75% equity interest in OSG. See Note 15.
d. Recall Divestments
In connection with the acquisition of Recall, we sought regulatory approval of the Recall Transaction from the United
States Department of Justice (the "DOJ"), the Australian Competition and Consumer Commission (the "ACCC"), the Canada
Competition Bureau (the "CCB") and the United Kingdom Competition and Markets Authority (the "CMA"), and as part of the
regulatory approval process, we agreed to make certain divestments in the United States, Australia, Canada and the United
Kingdom (the "Divestments"), which include the Recall Divestments (as defined below).
We have concluded that the following divestments (collectively, the “Recall Divestments”) meet the criteria to be reported
as discontinued operations in our Consolidated Statements of Operations and Consolidated Statements of Cash Flows for the
years ended December 31, 2019, 2018 and 2017 as the Recall Divestments met the criteria to be reported as assets and
liabilities held for sale at, or within a short period of time following, the closing of the Recall Transaction:
• The assets and liabilities, including all associated tangible and intangible assets and employees, related to Recall's
records and information management facilities in 13 United States cities were sold to Access CIG, LLC (“Access
CIG”) on May 4, 2016 (the “Access Sale”);
• The assets and liabilities, including associated tangible and intangible assets and employees, related to Recall’s record
and information management facilities in two areas of Scotland were sold to Oasis Group on December 9, 2016; and
• The assets and liabilities, including all associated tangible and intangible assets and employees, related to certain of
Recall’s records and information management facilities in two cities in the United States, and in three cities in Canada,
were sold to Arkive Information Management LLC and Arkive Information Management Ltd. on December 29, 2016.
158
IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2019
(In thousands, except share and per share data)
13. Divestments (Continued)
The table below summarizes certain results of operations of the Recall Divestments included in discontinued operations
for the years ended December 31, 2019, 2018 and 2017:
Description
Total Revenues
Year Ended December 31,
2019
2018(1)
2017
$
— $
— $
—
Income (Loss) from Discontinued Operations Before
Provision (Benefit) for Income Taxes
(Benefit) Provision for Income Taxes
104
—
Income (Loss) from Discontinued Operations, Net of Tax
$
104
$
(12,574)
(147)
(12,427) $
(8,118)
(1,827)
(6,291)
______________________________________________________________________________
(1) As indicated above, on May 4, 2016, we completed the Access Sale. As part of the total consideration for the Access
Sale we were entitled to receive up to $25,000 of additional cash proceeds (the "Access Contingent Consideration").
During 2018, we settled the Access Contingent Consideration with Access CIG, as well as indemnification claims
Access CIG previously raised in connection with the Access Sale. Changes to the realizable value of the Access
Contingent Consideration were recorded to our Consolidated Statement of Operations as a component of discontinued
operations. The loss from discontinued operations during the year ended December 31, 2018 primarily relates to losses
incurred due to the resolution of the post-closing adjustments to the Access Contingent Consideration in connection
with our agreement with Access CIG.
14. Restructuring Charges
We estimate total costs associated with Project Summit to be approximately $240,000 which includes operating
expenditures ("Restructuring Charges") and capital expenditures. During the fourth quarter of 2019, we incurred approximately
$48,600 of Restructuring Charges primarily related to employee severance costs and professional fees. Our accrued liabilities
for the Restructuring Charges in our Consolidated Balance Sheet at December 31, 2019 is not material.
Restructuring Charges included in the accompanying Consolidated Statement of Operations by segment for the year
ended December 31, 2019 is as follows:
Global RIM Business
Global Data Center Business
Corporate and Other Business
Year Ended
December 31, 2019
21,900
$
306
26,391
48,597
Restructuring Charges
$
15. Subsequent Events
On January 9, 2020 we acquired the remaining 75% equity interest in OSG for cash consideration of 6,026,020 Russian
rubles (or approximately $95,100, based upon the exchange rate between the Russian ruble and the United States dollar on the
closing date of the OSG Acquisition) (the "OSG Acquisition"). The OSG Acquisition will enable us to extend our Global RIM
Business in Russia, Ukraine, Kazakhstan, Belarus, and Armenia. Commencing on the date of the OSG Acquisition, we will
fully consolidate the results of OSG within our consolidated financial statements.
159
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
Schedule III - Schedule of Real Estate and Accumulated Depreciation ("Schedule III") reflects the cost and associated
accumulated depreciation for the real estate facilities that are owned. The gross cost included in Schedule III includes the cost
for land, land improvements, buildings, building improvements and racking. Schedule III does not reflect the 1,150 leased
facilities in our real estate portfolio. In addition, Schedule III does not include any value for financing leases for property that is
classified as land, buildings and building improvements in our consolidated financial statements.
The following table presents a reconciliation of the gross amount of real estate assets, as presented in Schedule III below,
to the sum of the historical book value of land, buildings and building improvements, racking and construction in progress as
disclosed in Note 2.f. to Notes to Consolidated Financial Statements as of December 31, 2019:
Gross Amount of Real Estate Assets, As Reported on Schedule III
$ 3,856,515
Add Reconciling Items:
Book value of racking included in leased facilities(1)
Book value of financing leases(2)
Book value of construction in progress(3)
Book value of other(4)
Total Reconciling Items
1,321,159
439,166
280,108
73,182
2,113,615
Gross Amount of Real Estate Assets, As Disclosed in Note 2.f.
$ 5,970,130
_______________________________________________________________________________
(1) Represents the gross book value of racking installed in our 1,150 leased facilities, which is included in historical book
value of racking in Note 2.f., but excluded from Schedule III.
(2) Represents the gross book value of buildings and building improvements that are subject to financing leases, which are
included in the historical book value of building and building improvements in Note 2.f., but excluded from Schedule
III.
(3) Represents the gross book value of non-real estate assets that are included in the historical book value of construction
in progress assets in Note 2.f., but excluded from Schedule III, as such assets are not considered real estate associated
with owned buildings. The historical book value of real estate assets associated with owned buildings that were related
to construction in progress as of December 31, 2019 is included in Schedule III.
(4) Represents the gross book value of owned land that is either (i) associated with buildings that are subject to financing
leases or (ii) under development, which are included in the historical book value of either land or construction in
progress, respectively, in Note 2.f., but excluded from Schedule III.
160
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
The following table presents a reconciliation of the accumulated depreciation of real estate assets, as presented in
Schedule III below, to the total accumulated depreciation for all property, plant and equipment presented on our Consolidated
Balance Sheet as of December 31, 2019:
Accumulated Depreciation of Real Estate Assets, As Reported on Schedule III
$ 1,072,013
Add Reconciling Items:
Accumulated Depreciation - non-real estate assets(1)
Accumulated Depreciation - racking in leased facilities(2)
Accumulated Depreciation - financing leases(3)
Total Reconciling Items
1,412,193
817,069
124,594
2,353,856
Accumulated Depreciation, As Reported on Consolidated Balance Sheet
$ 3,425,869
_______________________________________________________________________________
(1) Represents the accumulated depreciation of non-real estate assets that is included in the total accumulated depreciation
of property, plant and equipment on our Consolidated Balance Sheet, but excluded from Schedule III as the assets to
which this accumulated depreciation relates are not considered real estate assets associated with owned buildings.
(2) Represents the accumulated depreciation of racking as of December 31, 2019 installed in our 1,150 leased facilities,
which is included in total accumulated depreciation of property, plant and equipment on our Consolidated Balance
Sheet, but excluded from Schedule III, as disclosed in Footnote 1 to Schedule III.
(3) Represents the accumulated depreciation of buildings and building improvements as of December 31, 2019 that are
subject to financing leases, which is included in the total accumulated depreciation of property, plant and equipment
on our Consolidated Balance Sheet, but excluded from Schedule III, as disclosed in Footnote 1 to Schedule III.
161
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
(A)
(B)
(C)
(D)
(E)
(F)
DECEMBER 31, 2019
(Dollars in thousands)
Facilities(1)
Encumbrances
Initial cost
to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
Life on which
depreciation in
latest income
statement is
computed
$
— $
1,322
$
953
$
2,275
$
Region/Country/State/Campus
Address
North America
United States (Including Puerto
Rico)
140 Oxmoor Ct, Birmingham,
Alabama
1420 North Fiesta Blvd, Gilbert,
Arizona
4802 East Van Buren, Phoenix,
Arizona
615 North 48th Street, Phoenix,
Arizona
2955 S. 18th Place, Phoenix,
Arizona
4449 South 36th St, Phoenix,
Arizona
8521 E. Princess Drive,
Scottsdale, Arizona
13379 Jurupa Ave, Fontana,
California
600 Burning Tree Rd, Fullerton,
California
21063 Forbes St., Hayward,
California
5086 4th St, Irwindale, California
6933 Preston Ave, Livermore,
California
1006 North Mansfield, Los
Angeles, California
1025 North Highland Ave, Los
Angeles, California
1350 West Grand Ave, Oakland,
California
1760 North Saint Thomas Circle,
Orange, California
8700 Mercury Lane, Pico Rivera,
California
8661 Kerns St, San Diego,
California
1915 South Grand Ave, Santa
Ana, California
2680 Sequoia Dr, South Gate,
California
336 Oyster Point Blvd, South
San Francisco, California
25250 South Schulte Rd, Tracy,
California
3576 N. Moline, Aurora,
Colorado
North Stone Ave, Colorado
Springs, Colorado
4300 Brighton Boulevard,
Denver, Colorado
11333 E 53rd Ave, Denver,
Colorado
5151 E. 46th Ave, Denver,
Colorado
20 Eastern Park Rd, East
Hartford, Connecticut
Bennett Rd, Suffield,
Connecticut
Kennedy Road, Windsor,
Connecticut
293 Ella Grasso Rd, Windsor
Locks, Connecticut
150-200 Todds Ln, Wilmington,
Delaware
13280 Vantage Way,
Jacksonville, Florida
12855 Starkey Rd, Largo, Florida
7801 Riviera Blvd, Miramar,
Florida
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
2
2
1
1
1
1
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,107
1,937
257
28,395
5,227
5,002
8,139
9,930
2,969
2,666
3,589
10,535
109
13,914
14,882
1,842
9,584
7,352
1,954
4,177
2001
2001
2019
2018
2007
2012
2018
2002
2002
2019
2002
2002
2014
1988
1997
2002
2012
2002
2001
2002
Up to 40 years
Up to 40 years
Up to 40 years
(5) Up to 40 years
Up to 40 years
Up to 40 years
(5) Up to 40 years
Up to 40 years
Up to 40 years
(7) Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
2,168
2019
(7) Up to 40 years
2,080
1,810
1,771
9,503
9,330
1,528
6,125
1,373
2001
2001
2001
2017
2001
2014
2002
2000
2001
2002
2002
2001
2001
2017
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
1,637
15,599
423,107
12,178
7,305
87,865
10,472
4,762
13,407
6,800
14,585
749
10,168
15,172
4,576
27,957
10,512
3,420
6,329
15,100
3,049
1,583
761
116,336
7,403
6,312
7,417
1,768
2,737
141,274
15,322
11,461
1,045
1,302
8,714
1,897
351
2,523
13,927
—
26,191
6,224
495
213
6,821
1,261
2,251
18
1,774
4,390
2,718
19,117
10,215
709
1,891
933
4,374
156,873
438,429
23,639
8,350
89,167
19,186
6,659
13,758
9,323
28,512
749
36,359
21,396
5,071
28,170
17,333
4,681
8,580
15,118
4,823
5,973
3,479
135,453
17,618
7,021
9,308
2,701
10,447
31,140
41,587
20,432
4,021
7,226
1,853
3,293
8,250
2,019
1,044
567
2,966
221
6,040
8,270
2,420
6,259
8,471
2,846
5,036
938
3,187
808
162
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
(A)
(B)
(C)
(D)
(E)
(F)
DECEMBER 31, 2019
(Dollars in thousands)
Region/Country/State/Campus
Address
United States (Including Puerto
Rico) (continued)
10002 Satellite Blvd, Orlando,
Florida
3501 Electronics Way, West Palm
Beach, Florida
1890 MacArthur Blvd, Atlanta
Georgia
3881 Old Gordon Rd, Atlanta,
Georgia
5319 Tulane Drive SW, Atlanta,
Georgia
6111 Live Oak Parkway,
Norcross, Georgia
3150 Nifda Dr, Smyrna, Georgia
1301 S. Rockwell St, Chicago,
Illinois
2211 W. Pershing Rd, Chicago,
Illinois
2425 South Halsted St, Chicago,
Illinois
2604 West 13th St, Chicago,
Illinois
2255 Pratt Blvd, Elk Grove,
Illinois
4175 Chandler Dr Opus No.
Corp, Hanover Park, Illinois
2600 Beverly Drive, Lincoln,
Illinois
6090 NE 14th Street, Des
Moines, Iowa
South 7th St, Louisville,
Kentucky
26 Parkway Drive (fka 133
Pleasant), Scarborough, Maine
8928 McGaw Ct, Columbia,
Maryland
10641 Iron Bridge Rd, Jessup,
Maryland
8275 Patuxent Range Rd, Jessup,
Maryland
96 High St, Billerica,
Massachusetts
120 Hampden St, Boston,
Massachusetts
32 George St, Boston,
Massachusetts
3435 Sharps Lot Rd, Dighton,
Massachusetts
77 Constitution Boulevard,
Franklin, Massachusetts
216 Canal St, Lawrence,
Massachusetts
Bearfoot Road, Northboro,
Massachusetts
38300 Plymouth Road, Livonia,
Michigan
6601 Sterling Dr South, Sterling
Heights, Michigan
1985 Bart Ave, Warren, Michigan
Wahl Court, Warren, Michigan
31155 Wixom Rd, Wixom,
Michigan
3140 Ryder Trail South, Earth
City, Missouri
Missouri Bottom Road,
Hazelwood, Missouri
Leavenworth St/18th St, Omaha,
Nebraska
4105 North Lamb Blvd, Las
Vegas, Nevada
17 Hydro Plant Rd, Milton, New
Hampshire
Facilities(1)
Encumbrances
Initial cost
to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
Life on which
depreciation in
latest income
statement is
computed
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
4
1
1
1
1
1
1
1
1
1
1
2
1
1
1
2
1
1
4
3
1
1
$
— $
1,927
$
295
$
2,222
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,201
1,786
1,185
2,808
3,542
463
7,947
4,264
7,470
404
1,989
22,048
1,378
622
709
8,337
2,198
3,782
10,105
3,221
164
1,820
1,911
5,413
1,298
55,923
10,285
1,294
1,802
3,426
4,000
3,072
28,282
2,924
3,430
6,179
13,678
17,879
2,528
1,511
6,748
5,190
1,233
27,604
18,243
9,128
3,222
5,881
24,509
2,301
1,126
14,136
8,724
8,614
5,119
17,808
7,147
1,094
7,211
2,699
5,631
2,387
68,429
11,528
2,444
2,332
6,061
5,381
6,470
33,251
22,660
12,387
10,530
742
326
3,940
1,648
770
19,657
13,979
1,658
2,818
3,892
2,461
923
504
13,427
387
6,416
1,337
7,703
3,926
930
5,391
788
218
1,089
12,506
1,243
1,150
530
2,635
1,381
3,398
4,969
19,736
8,957
4,351
163
886
6,968
1,123
863
3,146
390
731
15,927
8,435
4,310
2,799
1,516
9,552
254
408
5,302
3,151
3,591
2,618
10,037
3,661
542
5,431
2,085
713
1,270
2001
2001
2002
2001
2002
2017
1990
1999
2001
2006
2001
2000
2014
2015
2003
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Various
Up to 40 years
2015
1999
2000
2001
1998
2002
1991
1999
2014
2001
(7) Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
40,067
Various
Up to 40 years
3,937
1,240
1,113
3,705
2,687
2,351
7,708
7,533
5,850
6,523
2015
2002
2000
Various
2001
2004
(7) Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Various
(7) Up to 40 years
Various
Up to 40 years
2002
2001
Up to 40 years
Up to 40 years
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
(A)
(B)
(C)
(D)
(E)
(F)
Region/Country/State/Campus
Address
United States (Including Puerto
Rico) (continued)
Kimberly Rd, East Brunsick,
New Jersey
3003 Woodbridge Avenue,
Edison, New Jersey
811 Route 33, Freehold, New
Jersey
51-69 & 77-81 Court St, Newark,
New Jersey
560 Irvine Turner Blvd, Newark,
New Jersey
231 Johnson Ave, Newark, New
Jersey
650 Howard Avenue, Somerset,
New Jersey
100 Bailey Ave, Buffalo, New
York
64 Leone Ln, Chester, New York
1368 County Rd 8, Farmington,
New York
County Rd 10, Linlithgo, New
York
77 Seaview Blvd, N. Hempstead
New York
37 Hurds Corner Road, Pawling,
New York
Ulster Ave/Route 9W, Port Ewen,
New York
Binnewater Rd, Rosendale, New
York
220 Wavel St, Syracuse, New
York
2235 Cessna Drive, Burlington,
North Carolina
14500 Weston Pkwy, Cary, North
Carolina
826 Church Street, Morrisville,
North Carolina
1275 East 40th, Cleveland, Ohio
7208 Euclid Avenue, Cleveland,
Ohio
4260 Tuller Ridge Rd, Dublin,
Ohio
3366 South Tech Boulevard,
Miamisburg, Ohio
302 South Byrne Rd, Toledo,
Ohio
Partnership Drive, Oklahoma
City, Oklahoma
7530 N. Leadbetter Road,
Portland, Oregon
Branchton Rd, Boyers,
Pennsylvania
800 Carpenters Crossings,
Folcroft, Pennsylvania
36 Great Valley Pkwy, Malvern,
Pennsylvania
2300 Newlins Mill Road, Palmer
Township, Pennsylvania
Henderson Dr/Elmwood Ave,
Sharon Hill, Pennsylvania
Las Flores Industrial Park, Rio
Grande, Puerto Rico
24 Snake Hill Road, Chepachet,
Rhode Island
1061 Carolina Pines Road,
Columbia, South Carolina
2301 Prosperity Way, Florence,
South Carolina
Mitchell Street, Knoxville,
Tennessee
6005 Dana Way, Nashville,
Tennessee
Facilities(1)
Encumbrances
Initial cost
to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
Life on which
depreciation in
latest income
statement is
computed
3
1
3
1
1
1
1
1
1
1
2
1
1
3
2
1
1
1
1
1
1
1
1
1
3
1
3
1
1
1
2
1
1
1
1
2
2
$
— $
22,105
$
5,924
$
28,029
$
14,303
Various
Up to 40 years
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
310,404
38,697
11,734
9,522
8,945
3,585
1,324
5,086
2,611
102
5,719
4,323
23,137
5,142
2,929
1,602
1,880
7,087
3,129
3,336
1,030
29,092
602
11,437
5,187
21,166
2,457
2,397
18,365
24,153
4,185
2,659
11,776
2,846
718
1,827
36,772
55,396
9,774
709
1,855
11,808
11,086
1,132
4,788
2,959
1,442
1,285
11,277
11,664
2,712
328
2,224
266
599
3,268
1,881
507
1,081
313
1,874
347,176
19,038
2018
(5) Up to 40 years
94,093
21,508
10,231
10,800
15,393
12,410
6,218
7,399
3,061
7,161
5,608
34,414
16,806
5,641
1,930
4,104
7,353
3,728
6,604
2,911
29,599
1,683
11,750
7,061
52,431
Various
Up to 40 years
1,478
858
905
6,027
6,584
3,482
4,609
1,646
2,721
2,271
22,318
7,062
2,924
222
1,909
1,335
2,041
3,185
1,483
2,013
752
3,286
4,170
2015
2015
2015
2006
1998
2000
1998
2001
2006
2005
2001
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Various
Up to 40 years
1997
2015
1999
2017
1999
2001
1999
2018
2001
2015
2002
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
(5) Up to 40 years
Up to 40 years
(7) Up to 40 years
Up to 40 years
232,609
253,775
61,886
Various
Up to 40 years
3,410
9,473
27,392
24,258
7,632
4,861
14,116
4,104
5,275
4,742
2,069
4,420
1,412
2000
1999
2017
Up to 40 years
Up to 40 years
Up to 40 years
12,362
Various
Up to 40 years
4,416
2,928
3,223
1,217
2,022
1,921
2001
2001
2016
2016
Up to 40 years
Up to 40 years
(7) Up to 40 years
(7) Up to 40 years
Various
Up to 40 years
2000
Up to 40 years
953
7,076
9,027
105
3,447
2,202
2,340
1,258
4,557
2,915
164
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
(A)
(B)
(C)
(D)
(E)
(F)
Region/Country/State/Campus
Address
United States (Including Puerto
Rico) (continued)
11406 Metric Blvd, Austin, Texas
6600 Metropolis Drive, Austin,
Texas
Capital Parkway, Carrollton,
Texas
1800 Columbian Club Dr,
Carrolton, Texas
1905 John Connally Dr,
Carrolton, Texas
13425 Branchview Ln, Dallas,
Texas
Cockrell Ave, Dallas, Texas
1819 S. Lamar St, Dallas, Texas
2000 Robotics Place Suite B,
Fort Worth, Texas
1202 Ave R, Grand Prairie, Texas
15333 Hempstead Hwy,
Houston, Texas
2600 Center Street, Houston,
Texas
3502 Bissonnet St, Houston,
Texas
5249 Glenmont Ave, Houston,
Texas
5707 Chimney Rock, Houston,
Texas
5757 Royalton Dr, Houston,
Texas
6203 Bingle Rd, Houston, Texas
7800 Westpark, Houston, Texas
9601 West Tidwell, Houston,
Texas
15300 FM 1825, Pflugerville,
Texas
930 Avenue B, San Antonio,
Texas
931 North Broadway, San
Antonio, Texas
1665 S. 5350 West, Salt Lake
City, Utah
11052 Lakeridge Pkwy, Ashland,
Virginia
2301 International Parkway,
Fredericksburg, Virginia
4555 Progress Road, Norfolk,
Virginia
3725 Thirlane Rd. N.W.,
Roanoke, Virginia
7700-7730 Southern Dr,
Springfield, Virginia
8001 Research Way, Springfield,
Virginia
22445 Randolph Dr, Sterling,
Virginia
307 South 140th St, Burien,
Washington
8908 W. Hallett Rd, Cheney,
Washington
6600 Hardeson Rd, Everett,
Washington
19826 Russell Rd, South, Kent,
Washington
1201 N. 96th St, Seattle,
Washington
4330 South Grove Road,
Spokane, Washington
12021 West Bluemound Road,
Wauwatosa, Wisconsin
Facilities(1)
Encumbrances
Initial cost
to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
Life on which
depreciation in
latest income
statement is
computed
1
1
3
1
1
1
1
1
1
1
3
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
$
— $
5,489
$
2,211
$
7,700
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,519
8,299
19,673
2,174
3,518
1,277
3,215
5,328
8,354
6,327
2,840
7,687
3,467
1,032
1,795
3,188
6,323
1,680
3,811
393
3,526
6,239
1,709
20,980
6,527
2,577
14,167
5,230
7,598
2,078
510
5,399
14,793
4,496
3,906
1,307
454
246
1,179
791
3,680
1,596
1,083
2,065
2,173
37,648
2,172
692
2,401
1,189
994
11,476
1,276
2,305
7,952
245
1,144
4,270
1,924
30
1,088
172
2,651
2,790
3,724
2,367
4,259
3,404
9,752
2,112
850
2,124
4,973
8,545
20,852
2,965
7,198
2,873
4,298
7,393
10,527
43,975
5,012
8,379
5,868
2,221
2,789
14,664
7,599
3,985
11,763
638
4,670
10,509
3,633
21,010
7,615
2,749
16,818
8,020
11,322
4,445
4,769
8,803
24,545
6,608
4,756
3,431
4,090
1,358
2,661
9,438
1,387
4,193
1,979
2,578
2,951
5,947
13,034
2,575
5,840
2,753
1,089
1,300
8,672
1,832
1,302
5,042
259
2,857
5,236
1,842
5,777
3,297
1,119
9,475
3,384
6,018
2,323
2,066
3,543
10,705
3,556
472
1,445
2002
2011
2015
2013
2000
2001
2000
2000
2002
2003
2004
2000
2002
2000
2002
2000
2001
2015
2001
2001
1998
1999
2002
1999
2015
2011
2015
2002
2002
2005
1999
1999
2002
2002
2001
2015
1999
Up to 40 years
Up to 40 years
(7) Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
(7) Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
(7) Up to 40 years
Up to 40 years
(7) Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
179
—
1,908,077
1,070,345
2,978,422
791,249
165
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
(A)
(B)
(C)
(D)
(E)
(F)
Region/Country/State/Campus
Address
Canada
Facilities(1)
Encumbrances
Initial cost
to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
Life on which
depreciation in
latest income
statement is
computed
One Command Court, Bedford
195 Summerlea Road, Brampton
10 Tilbury Court, Brampton
8825 Northbrook Court, Burnaby
8088 Glenwood Drive, Burnaby
5811 26th Street S.E., Calgary
3905-101 Street, Edmonton
68 Grant Timmins Drive,
Kingston
3005 Boul. Jean-Baptiste
Deschamps, Lachine
1655 Fleetwood, Laval
4005 Richelieu, Montreal
1209 Algoma Rd, Ottawa
1650 Comstock Rd, Ottawa
235 Edson Street, Saskatoon
640 Coronation Drive,
Scarborough
610 Sprucewood Ave, Windsor
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
16
195
$
— $
3,847
$
4,482
$
8,329
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,403
5,007
8,091
4,326
14,658
2,020
3,639
2,751
8,196
1,800
1,059
7,478
829
1,853
1,243
6,479
17,257
2,062
7,114
8,509
640
660
138
18,161
2,531
6,899
(70)
1,676
1,208
667
11,882
22,264
10,153
11,440
23,167
2,660
4,299
2,889
26,357
4,331
7,958
7,408
2,505
3,061
1,910
72,200
78,413
150,613
1,980,277
1,148,758
3,129,035
2000
2000
2000
2001
2005
2000
2000
2016
2000
2000
2000
2000
2017
2008
2000
2007
4,126
5,357
7,916
4,648
4,658
11,114
1,578
330
1,382
12,687
1,699
4,019
2,647
855
1,279
676
64,971
856,220
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
166
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
(A)
(B)
(C)
(D)
(E)
(F)
Region/Country/State/Campus
Address
Facilities(1)
Encumbrances
Initial cost to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
Life on which
depreciation in
latest income
statement is
computed
Europe
Gewerbeparkstr. 3, Vienna,
Austria
Woluwelaan 147, Diegem,
Belgium
Croatia
Kratitirion 9 Kokkinotrimithia
Industrial District, Nicosia,
Cyprus
Karyatidon 1, Agios Sylas
Industrial Area (3rd), Limassol,
Cyprus
65 Egerton Road, Birmingham,
England
Corby 278, Long Croft Road,
Corby, England
Otterham Quay Lane,
Gillingham, England
Pennine Way, Hemel Hempstead,
England
Kemble Industrial Park, Kemble,
England
Gayton Road, Kings Lynn,
England
Cody Road, London, England
17 Broadgate, Oldham, England
Harpway Lane, Sopley, England
Unit 1A Broadmoor Road,
Swindom, England
Jeumont-Schneider, Champagne
Sur Seine, France
Bat I-VII Rue de Osiers,
Coignieres, France
26 Rue de I Industrie,
Fergersheim, France
Bat A, B, C1, C2, C3 Rue
Imperiale, Gue de Longroi,
France
Le Petit Courtin Site de Dois,
Gueslin, Mingieres, France
ZI des Sables, Morangis, France
45 Rue de Savoie, Manissieux,
Saint Priest, France
Gutenbergstrabe 55, Hamburg,
Germany
Brommer Weg 1, Wipshausen,
Germany
Warehouse and Offices 4
Springhill, Cork, Ireland
17 Crag Terrace, Dublin, Ireland
Damastown Industrial Park,
Dublin, Ireland
Portsmuiden 46, Amsterdam, The
Netherlands
Schepenbergweg 1, Amsterdam,
The Netherlands
Vareseweg 130, Rotterdam, The
Netherlands
Howemoss Drive, Aberdeen,
Scotland
Traquair Road, Innerleithen,
Scotland
1
1
1
1
1
1
1
9
1
2
3
3
1
1
1
3
4
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
$
— $
6,542
$
8,051
$
14,593
$
8,850
1,980
6,363
1,889
8,530
21,230
10,848
16,960
12,267
4,948
29,123
4,381
2,126
3,114
4,179
20,571
1,242
4,090
13,869
27,543
5,361
4,764
4,791
11,574
3,560
23,017
3,676
601
2,379
12,526
2,283
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
582
—
—
—
—
—
—
—
—
—
—
—
2,541
1,408
6,309
572
3,136
3,227
1,935
6,980
20,486
7,418
10,847
5,277
3,119
20,307
4,039
681
2,636
1,750
21,318
1,322
3,390
14,141
12,407
5,546
4,022
3,220
9,040
2,818
16,034
1,852
1,258
1,357
6,970
113
(46)
1,550
744
3,430
6,113
6,990
1,829
8,816
342
1,445
478
2,429
(747)
(80)
700
(272)
15,136
(185)
742
1,571
2,534
742
6,983
1,824
(657)
1,022
5,556
2,170
167
3,514
4,218
2010
2003
Up to 40 years
Up to 40 years
33
2018
Up to 40 years
434
2017
Up to 40 years
158
4,888
537
5,269
7,002
8,524
2,872
11,398
2,342
1,384
1,190
2,214
2017
2003
2018
2003
2004
2004
2003
Various
2008
2004
2006
2003
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
3,904
2016
(4) Up to 40 years
235
2016
(4) Up to 40 years
846
2016
(4) Up to 40 years
1,838
18,712
2016
2004
(4) Up to 40 years
Up to 40 years
779
966
3,272
4,604
1,333
7,689
2,255
2016
(4) Up to 40 years
2016
(4) Up to 40 years
2006
2014
2001
2012
2015
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
(7) Up to 40 years
300
2015
(7) Up to 40 years
1,691
2015
(7) Up to 40 years
4,912
Various
Up to 40 years
1,101
2004
Up to 40 years
Region/Country/State/Campus
Address
Europe (Continued)
Nettlehill Road, Houston Industrial
Estate, Livingston, Scotland
Av Madrid s/n Poligono Industrial
Matillas, Alcala de Henares, Spain
Calle Bronce, 37, Chiloeches, Spain
Ctra M.118 , Km.3 Parcela 3,
Madrid, Spain
Abanto Ciervava, Spain
Latin America
Amancio Alcorta 2396, Buenos
Aires, Argentina
Azara 1245, Buenos Aires,
Argentina
Saraza 6135, Buenos Aires,
Argentina
Spegazzini, Ezeiza Buenos Aires,
Argentina
Av Ernest de Moraes 815, Bairro
Fim do Campo, Jarinu Brazil
Rua Peri 80, Jundiai, Brazil
Francisco de Souza e Melo, Rio de
Janerio, Brazil
Hortolandia, Sao Paulo, Brazil
El Taqueral 99, Santiago, Chile
Panamericana Norte 18900,
Santiago, Chile
Avenida Prolongacion del Colli
1104, Guadalajara, Mexico
Privada Las Flores No. 25 (G3),
Guadalajara, Mexico
Tula KM Parque de Las,
Huehuetoca, Mexico
Carretera Pesqueria Km2.5(M3),
Monterrey, Mexico
Lote 2, Manzana A, (T2& T3),
Toluca, Mexico
Prolongacion de la Calle 7 (T4),
Toluca, Mexico
Panamericana Sur, KM 57.5, Lima,
Peru
Av. Elmer Faucett 3462, Lima, Peru
Calle Los Claveles-Seccion 3,
Lima, Peru
1
1
1
1
2
57
2
1
1
1
1
2
3
1
2
5
1
1
2
2
1
1
7
2
1
37
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
(A)
(B)
(C)
(D)
(E)
(F)
Facilities(1)
Encumbrances
Initial cost to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
$
— $
11,517
$
25,433
$
36,950
$
17,916
—
—
—
—
186
11,011
3,981
1,053
317
1,845
5,719
(75)
503
12,856
9,700
978
264
3,088
6,460
446
582
231,658
122,557
354,215
138,588
2001
2014
2010
2001
Various
Life on which
depreciation in
latest income
statement is
computed
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,232
—
1,232
655
166
144
12,773
12,562
8,894
1,868
24,078
2,629
4,001
374
905
19,937
3,537
2,204
7,544
1,549
4,112
8,179
1,188
(162)
98
(9,554)
(2,267)
(1,760)
10,436
1,279
32,773
18,831
1,292
1,278
(771)
3,691
4,790
15,171
893
5,314
32,720
116,111
115,240
1,843
4
242
3,219
10,295
7,134
12,304
25,357
35,402
22,832
1,666
2,183
19,166
7,228
6,994
22,715
2,442
9,426
40,899
231,351
535
Various
Up to 40 years
1998
1995
2012
2016
2016
Up to 40 years
Up to 40 years
Up to 40 years
(4) Up to 40 years
(4) Up to 40 years
Various
Up to 40 years
2014
2006
2004
2002
2004
2016
2004
2002
2007
Various
Various
2010
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
(4) Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
Up to 40 years
—
52
582
1,524
1,141
3,341
3,569
11,212
7,261
1,016
998
2,864
2,636
5,167
7,341
1,203
4,656
9,227
64,325
168
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
(A)
(B)
(C)
(D)
(E)
(F)
Region/Country/State/Campus
Address
Facilities(1)
Encumbrances
Initial cost to
Company(1)
Cost
capitalized
subsequent to
acquisition
(1)(2)
Gross amount
carried at close
of current
period
(1)(8)
Accumulated
depreciation at
close of current
period(1)(8)
Date of
construction or
acquired(3)
Asia
Warehouse No 4, Shanghai, China
Jalan Karanggan Muda Raya No
59, Bogor Indonesia
1 Serangoon North Avenue 6,
Singapore
2 Yung Ho Road, Singapore
26 Chin Bee Drive, Singapore
IC1 69 Moo 2, Soi Wat Namdaeng,
Bangkok, Thailand
Australia
8 Whitestone Drive, Austins Ferry,
Australia
6 Norwich Street, South
Launceston, Australia
1
1
1
1
1
2
7
1
1
2
$
— $
1,530
$
671
$
2,201
$
—
—
—
—
—
—
—
—
—
7,897
58,637
10,395
15,699
13,226
107,384
681
1,090
1,771
(316)
21,633
871
1,315
6,136
30,310
2,532
(83)
2,449
7,581
80,270
11,266
17,014
19,362
373
2,195
5,058
836
1,262
2,659
137,694
12,383
3,213
1,007
4,220
404
93
497
2013
2017
2018
2016
2016
2016
2012
2015
Life on which
depreciation in
latest income
statement is
computed
Up to 40 years
Up to 40 years
(7) Up to 40 years
(4) Up to 40 years
(4) Up to 40 years
(4) Up to 40 years
Up to 40 years
Up to 40 years
Total
298
$
1,814
$
2,437,201
$
1,419,314
$
3,856,515
$
1,072,013
____________________________________
(1) The above information only includes the real estate facilities that are owned. The gross cost includes the cost for land,
land improvements, buildings, building improvements and racking. The listing does not reflect the 1,150 leased
facilities in our real estate portfolio. In addition, the above information does not include any value for financing leases
for property that is classified as land, buildings and building improvements in our consolidated financial statements.
(2) Amount includes cumulative impact of foreign currency translation fluctuations.
(3) Date of construction or acquired represents the date we constructed the facility, acquired the facility through purchase
or acquisition.
(4) Property was acquired in connection with the Recall Transaction.
(5) Property was acquired in connection with the IODC Transaction.
(6) Property was acquired in connection with the Credit Suisse Transaction.
(7) This date represents the date the categorization of the property was changed from a leased facility to an owned facility.
169
SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
IRON MOUNTAIN INCORPORATED
DECEMBER 31, 2019
(Dollars in thousands)
(8) The following tables present the changes in gross carrying amount of real estate owned and accumulated depreciation
for the years ended December 31, 2019 and 2018:
Gross Carrying Amount of Real Estate
Gross amount at beginning of period
Additions during period:
Discretionary capital projects
Acquisitions(1)
Other adjustments(2)
Foreign currency translation fluctuations
Deductions during period:
Year Ended December 31,
2019
$ 3,700,307
2018
$ 2,707,925
278,508
—
25,077
5,978
309,563
155,901
918,091
—
(58,798)
1,015,194
Cost of real estate sold, disposed or written-down
Gross amount at end of period
(153,355)
$ 3,856,515
(22,812)
$ 3,700,307
_______________________________________________________________________________
(1) Includes acquisition of sites through business combinations and purchase accounting adjustments.
(2) Includes costs associated with real estate we acquired which primarily includes building improvements and
racking, which were previously subject to leases.
Accumulated Depreciation
Gross amount of accumulated depreciation at beginning of period
Additions during period:
Depreciation
Other adjustments(1)
Foreign currency translation fluctuations
Deductions during period:
Year Ended December 31,
2019
$ 1,011,050
$
2018
909,092
122,366
1,314
3,514
127,194
125,280
—
(16,016)
109,264
Amount of accumulated depreciation for real estate assets sold,
disposed or written-down
Gross amount of end of period
(66,231)
$ 1,072,013
(7,306)
$ 1,011,050
_______________________________________________________________________________
(1) Includes accumulated depreciation associated with building improvements and racking, which were
previously subject to leases.
The aggregate cost of our real estate assets for federal tax purposes at December 31, 2019 was approximately $3,812,000.
170
Item 16. Form 10-K Summary.
Not applicable.
171
Certain exhibits indicated below are incorporated by reference to documents we have filed with the SEC. Each exhibit
marked by a pound sign (#) is a management contract or compensatory plan.
INDEX TO EXHIBITS
Exhibit
3.1
Item
Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on June
26, 2014, as corrected by the Certificate of Correction of the Company filed with the Secretary of State of the
State of Delaware on June 30, 2014. (Incorporated by reference to Annex B-1 to the Iron Mountain Incorporated
Proxy Statement for the Special Meeting of Stockholders, filed with the SEC on December 23, 2014.)
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
Certificate of Merger, filed by the Company, effective as of January 20, 2015. (Incorporated by reference to the
Company’s Current Report on Form 8 K dated January 21, 2015.)
Bylaws of the Company. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2014.)
Senior Subordinated Indenture, dated as of September 23, 2011, among the Company, the Guarantors named
therein and The Bank of New York Mellon Trust Company, N.A., as trustee. (Incorporated by reference to the
Company’s Current Report on Form 8 K dated September 29, 2011)
Second Supplemental Indenture, dated as of August 10, 2012, among the Company, the Guarantors named
therein and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 53/4% Senior
Subordinated Notes due 2024. (Incorporated by reference to the Company’s Current Report on Form 8 K dated
August 10, 2012.)
Third Supplemental Indenture, dated as of January 20, 2015, among the Company, the Company’s predecessor
immediately prior to its conversion to a REIT (the “Predecessor Registrant”), the Guarantors named therein and
The Bank of New York Trust Company, N.A., as trustee. (Incorporated by reference to the Company’s Current
Report on Form 8 K dated January 21, 2015.)
Senior Indenture, dated as of August 13, 2013, among the Company, the Guarantors named therein and Wells
Fargo Bank, National Association, as trustee. (Incorporated by reference to the Company’s Current Report on
Form 8 K dated August 13, 2013.)
First Supplemental Indenture, dated as of August 13, 2013, among the Company, the Guarantors named therein
and Wells Fargo Bank, National Association, as trustee, relating to the 6% Senior Notes due 2023. (Incorporated
by reference to the Company’s Current Report on Form 8 K dated August 13, 2013.)
Second Supplemental Indenture, dated as of January 20, 2015, among the Company, the Predecessor Registrant,
the Guarantors named therein and Wells Fargo Bank, National Association, as trustee. (Incorporated by
reference to the Company’s Current Report on Form 8 K dated January 21, 2015.)
Senior Indenture, dated as of May 27, 2016, among the Company, the Guarantors named therein and Wells Fargo
Bank, National Association, as trustee, relating to the 4.375% Senior Notes due 2021. (Incorporated by reference
to the Company’s Current Report on Form 8-K dated May 27, 2016.)
Senior Indenture, dated as of May 27, 2016, among Iron Mountain US Holdings, Inc., the Company, the
Guarantors named therein and Wells Fargo Bank, National Association, as trustee, relating to the 5.375% Senior
Notes due 2026. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 27,
2016.)
Senior Indenture, dated as of September 15, 2016, among Iron Mountain Canada Operations ULC, the Company,
the Guarantors named therein and Wells Fargo Bank, National Association, as trustee, relating to the 5.375%
CAD Senior Notes due 2023. (Incorporated by reference to the Company’s Current Report on Form 8-K dated
September 15, 2016.)
Senior Indenture, dated as of May 23, 2017, among the Company, the Guarantors named therein, Wells Fargo
Bank, National Association, as trustee, and Société Générale Bank & Trust, as paying agent, registrar and
transfer agent, relating to the 3.000% Euro Senior Notes due 2025. (Incorporated by reference to the Company’s
Current Report on Form 8-K dated May 23, 2017.)
Senior Indenture, dated as of September 18, 2017, among the Company, the Guarantors named therein and Wells
Fargo Bank, National Association, as trustee, relating to the 4.875% Senior Notes due 2027. (Incorporated by
reference to the Company’s Current Report on Form 8-K dated September 18, 2017.)
Senior Indenture, dated as of November 13, 2017, among the Company, the Guarantors named therein, Wells
Fargo Bank, National Association, as trustee, and Société Générale Bank & Trust, as paying agent, registrar and
transfer agent, relating to the 3.875% GBP Senior Notes due 2025. (Incorporated by reference to the Company’s
Current Report on Form 8-K dated November 13, 2017.)
Senior Indenture, dated as of December 27, 2017, among the Company, the Guarantors named therein and Wells
Fargo Bank, National Association, as trustee, relating to the 5.25% Senior Notes due 2028. (Incorporated by
reference to the Company’s Current Report on Form 8-K dated December 27, 2017.)
172
Exhibit
4.14
4.15
4.16
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
Item
Senior Indenture, dated as of September 9, 2019, among the Company, the Subsidiary Guarantors and Wells
Fargo Bank, National Association, as trustee (Incorporated by reference to the Company's Current Report on
Form 8-K dated September 9, 2019.)
Form of Stock Certificate representing shares of Common Stock, $0.01 par value per share, of the Company.
(Incorporated by reference to the Company’s Current Report on Form 8 K dated January 21, 2015.)
Description of Securities (Filed herewith.)
2008 Restatement of the Iron Mountain Incorporated Executive Deferred Compensation Plan. (#) (Incorporated
by reference to the Company’s Annual Report on Form 10 K for the year ended December 31, 2007)
First Amendment to 2008 Restatement of the Iron Mountain Incorporated Executive Deferred Compensation
Plan. (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the year ended
December 31, 2008.)
Third Amendment to 2008 Restatement of the Iron Mountain Incorporated Executive Deferred Compensation
Plan. (#) (Incorporated by reference to the Company’s Quarterly Report on Form 10 Q for the quarter ended
June 30, 2012.)
Fourth Amendment to 2008 Restatement of the Iron Mountain Incorporated Executive Deferred Compensation
Plan. (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the year ended
December 31, 2012.)
Iron Mountain Incorporated 1995 Stock Incentive Plan, as amended. (#) (Incorporated by reference to Iron
Mountain /DE’s Current Report on Form 8 K dated April 16, 1999.)
Iron Mountain Incorporated 2002 Stock Incentive Plan. (#) (Incorporated by reference to the Company’s Annual
Report on Form 10 K for the year ended December 31, 2002.)
Third Amendment to the Iron Mountain Incorporated 2002 Stock Incentive Plan. (#) (Incorporated by reference
to the Company’s Current Report on Form 8-K dated June 11, 2008.)
Fourth Amendment to the Iron Mountain Incorporated 2002 Stock Incentive Plan. (#) (Incorporated by reference
to the Company’s Current Report on Form 8 K dated December 10, 2008.)
Fifth Amendment to the Iron Mountain Incorporated 2002 Stock Incentive Plan. (#) (Incorporated by reference
to the Company’s Current Report on Form 8 K dated June 9, 2010.)
Sixth Amendment to the Iron Mountain Incorporated 2002 Stock Incentive Plan. (#) (Incorporated by reference
to the Company’s Quarterly Report on Form 10 Q for the quarter ended June 30, 2011.)
Iron Mountain Incorporated 2014 Stock and Cash Incentive Plan. (#) (Incorporated by reference to Annex C to
the Iron Mountain Incorporated Proxy Statement for the Special Meeting of Stockholders, filed with the SEC on
December 23, 2014.)
First Amendment to the Iron Mountain Incorporated 2014 Stock and Cash Incentive Plan. (#) (Incorporated by
reference to the Company’s Current Report on Form 8-K dated May 23, 2017.)
Second Amendment to the Iron Mountain Incorporated 2014 Stock and Cash Incentive Plan. (#) (Incorporated
by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.)
Form of Iron Mountain Incorporated Amended and Restated Non Qualified Stock Option Agreement. (#)
(Incorporated by reference to the Company’s Annual Report on Form 10 K for the year ended December 31,
2004.)
Form of Iron Mountain Incorporated Incentive Stock Option Agreement. (#) (Incorporated by reference to the
Company’s Annual Report on Form 10 K for the year ended December 31, 2004.)
Form of Iron Mountain Incorporated 1995 Stock Incentive Plan Non Qualified Stock Option Agreement (version
1). (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the year ended
December 31, 2004.)
Form of Iron Mountain Incorporated 1995 Stock Incentive Plan Amended and Restated Iron Mountain
Non Qualified Stock Option Agreement. (#) (Incorporated by reference to the Company’s Annual Report on
Form 10 K for the year ended December 31, 2004.)
Form of Iron Mountain Incorporated 1995 Stock Incentive Plan Incentive Stock Option Agreement. (#)
(Incorporated by reference to the Company’s Annual Report on Form 10 K for the year ended December 31,
2004.)
Form of Iron Mountain Incorporated 1995 Stock Incentive Plan Non Qualified Stock Option Agreement (version
2). (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the year ended
December 31, 2004.)
173
Exhibit
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
Item
Form of Iron Mountain Incorporated 2002 Stock Incentive Plan Stock Option Agreement (version 2B). (#)
(Incorporated by reference to the Company’s Annual Report on Form 10 K for the year ended December 31,
2013.)
Form of Performance Unit Agreement pursuant to the Iron Mountain Incorporated 2002 Stock Incentive Plan
(version 3). (#) (Incorporated by reference to the Company’s Quarterly Report on Form 10 Q for the quarter
ended March 31, 2013.)
Form of Performance Unit Agreement pursuant to the Iron Mountain Incorporated 2002 Stock Incentive Plan
(version 20). (#) (Incorporated by reference to the Company’s Quarterly Report on Form 10 Q for the quarter
ended March 31, 2013.)
Form of Performance Unit Agreement pursuant to the Iron Mountain Incorporated 2002 Stock Incentive Plan
(version 21). (#) (Incorporated by reference to the Company’s Current Report on Form 8 K dated March 19,
2014.)
Form of Restricted Stock Unit Agreement pursuant to the Iron Mountain Incorporated 2002 Stock Incentive Plan
(version 3). (#) (Incorporated by reference to the Company’s Quarterly Report on Form 10 Q for the quarter
ended June 30, 2012.)
Form of Restricted Stock Unit Agreement pursuant to the Iron Mountain Incorporated 2002 Stock Incentive Plan
(version 12). (#) (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017.)
Form of Restricted Stock Unit Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash
Incentive Plan (version 1). (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the
year ended December 31, 2014.)
Form of Restricted Stock Unit Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash
Incentive Plan (version 2). (#) (Incorporated by reference to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2017.)
Form of Restricted Stock Unit Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash
Incentive Plan (version 3). (#) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2019.)
Form of Stock Option Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash Incentive
Plan (version 1). (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the year
ended December 31, 2014.)
Form of Stock Option Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash Incentive
Plan (version 2). (#) (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2017.)
Form of Stock Option Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash Incentive
Plan (version 3). (#) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019.)
Form of Stock Option Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash Incentive
Plan (version 4). (#) (Filed herewith.)
Form of Performance Unit Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash
Incentive Plan (version 1). (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the
year ended December 31, 2016.)
Form of Performance Unit Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash
Incentive Plan (version 2). (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the
year ended December 31, 2016.)
Form of Performance Unit Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash
Incentive Plan (version 3). (#) (Incorporated by reference to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2017.)
Form of Performance Unit Agreement pursuant to the Iron Mountain Incorporated 2014 Stock and Cash
Incentive Plan (version 4). (#) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2019).
Change in Control Agreement, dated September 8, 2008, between the Company and Ernest W. Cloutier. (#)
(Incorporated by reference to the Company’s Quarterly Report on Form 10 Q for the quarter ended March 31,
2014.)
Employment Offer Letter, dated November 30, 2012, from the Company to William L. Meaney. (#)
(Incorporated by reference to the Company’s Current Report on Form 8 K dated December 3, 2012.)
Contract of Employment with Iron Mountain, between Patrick Keddy and Iron Mountain (UK) Ltd., effective as
of April 2, 2015. (#) (Incorporated by reference to the Company’s Annual Report on Form 10 K for the year
ended December 31, 2015.)
174
Exhibit
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
21.1
23.1
31.1
31.2
32.1
32.2
Item
Ernest Cloutier Secondment Letter, dated March 27, 2017. (#) (Incorporated by reference to the Company’s
Quarterly Report on Form 10 Q for the quarter ended March 31, 2017.)
Restated Compensation Plan for Non-Employee Directors. (#) (Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 2018.)
Iron Mountain Incorporated Director Deferred Compensation Plan. (#) (Incorporated by reference to the
Company’s Annual Report on Form 10 K for the year ended December 31, 2007.)
The Iron Mountain Companies Severance Plan. (#) (Incorporated by reference to the Company’s Current Report
on Form 8 K, dated March 13, 2012.)
Amended and Restated Severance Plan Severance Program No. 1. (#) (Incorporated by reference to the
Company’s Quarterly Report on Form 10 Q for the quarter ended March 31, 2012.)
First Amendment to Amended and Restated Severance Plan Severance Program No. 1. (#) (Incorporated by
reference to the Company’s Annual Report on Form 10 K for the year ended December 31, 2012.)
Second Amendment to The Iron Mountain Companies Severance Plan Severance Program No. 1. (#)
(Incorporated by reference to the Company’s Current Report on Form 8 K dated December 19, 2014.)
Severance Program No. 2. (#) (Incorporated by reference to the Company’s Current Report on Form 8 K dated
December 3, 2012.)
Credit Agreement, dated as of June 27, 2011, as amended and restated as of August 21, 2017, among the
Company, Iron Mountain Information Management, LLC, certain other subsidiaries of the Company party
thereto, the lenders and other financial institutions party thereto, JPMorgan Chase Bank, N.A., Toronto Branch,
as Canadian Administrative Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent. (Incorporated by
reference to the Company’s Current Report on Form 8 K dated August 21, 2017.)
First Amendment, dated as of December 12, 2017, to Credit Agreement, dated as of June 27, 2011, as amended
and restated as of August 21, 2017, among the Company, Iron Mountain Information Management, LLC, certain
other subsidiaries of the Company party thereto, the lenders and other financial institutions party thereto,
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent, and JPMorgan Chase Bank,
N.A., as Administrative Agent. (Incorporated by reference to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2017.)
Second Amendment, dated as of March 22, 2018, to Credit Agreement, dated as of June 27, 2011, as amended
and restated as of August 21, 2017, among the Company, Iron Mountain Information Management, LLC, certain
other subsidiaries of the Company party thereto, the lenders and other financial institutions party thereto,
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent, and JPMorgan Chase Bank,
N.A., as Administrative Agent. (Incorporated by reference to the Company’s Current Report on Form 8-K dated
March 22, 2018.)
Third Amendment and Refinancing Facility Agreement, dated as of June 4, 2018, to Credit Agreement, dated as
of June 27, 2011, as amended and restated as of August 21, 2017, among the Company, Iron Mountain
Information Management, LLC, certain other subsidiaries of the Company party thereto, the lenders and other
financial institutions party thereto, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative
Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent. (Incorporated by reference to the Company’s
Current Report on Form 8-K dated June 4, 2018.)
Fourth Amendment, dated as of December 20, 2019, to Credit Agreement, dated as of June 27, 2011, as amended
and restated as of August 21, 2017, among the Company, Iron Mountain Information Management, LLC, certain
other subsidiaries of the Company party thereto, the lenders and other financial institutions party thereto,
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent, and JPMorgan Chase Bank,
N.A., as Administrative Agent. (Filed herewith.)
Incremental Term Loan Activation Notice, dated as of March 22, 2018, among Iron Mountain Information
Management, LLC and the lenders party thereto. (Incorporated by reference to the Company’s Current Report on
Form 8-K dated March 22, 2018.)
Subsidiaries of the Company. (Filed herewith.)
Consent of Deloitte & Touche LLP (Iron Mountain Incorporated, Delaware). (Filed herewith.)
Rule 13a 14(a) Certification of Chief Executive Officer. (Filed herewith.)
Rule 13a 14(a) Certification of Chief Financial Officer. (Filed herewith.)
Section 1350 Certification of Chief Executive Officer. (Furnished herewith.)
Section 1350 Certification of Chief Financial Officer. (Furnished herewith.)
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its
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101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
175
Exhibit
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Item
101.LAB Inline XBRL Taxonomy Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
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Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)
176
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
IRON MOUNTAIN INCORPORATED
By:
/s/ DANIEL BORGES
Daniel Borges
Senior Vice President, Chief Accounting Officer
(Principal Accounting Officer)
Dated: February 13, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
/s/ WILLIAM L. MEANEY
William L. Meaney
/s/ BARRY A. HYTINEN
Barry A. Hytinen
/s/ DANIEL BORGES
Daniel Borges
Title
President and Chief Executive Officer and
Director (Principal Executive Officer)
Date
February 13, 2020
Executive Vice President and Chief
Financial Officer (Principal Financial
Officer)
February 13, 2020
Senior Vice President, Chief Accounting
Officer (Principal Accounting Officer)
February 13, 2020
/s/ JENNIFER M. ALLERTON
Director
February 13, 2020
Jennifer M. Allerton
/s/ TED R. ANTENUCCI
Director
February 13, 2020
Ted R. Antenucci
/s/ PAMELA M. ARWAY
Director
February 13, 2020
Pamela M. Arway
/s/ CLARKE H. BAILEY
Clarke H. Bailey
Director
February 13, 2020
/s/ KENT P. DAUTEN
Director
February 13, 2020
Kent P. Dauten
/s/ PAUL F. DENINGER
Director
February 13, 2020
Paul F. Deninger
177
Name
Title
Date
/s/ MONTE E. FORD
Monte E. Ford
Director
February 13, 2020
/s/ PER-KRISTIAN HALVORSEN Director
February 13, 2020
Per-Kristian Halvorsen
/s/ ROBIN L. MATLOCK
Robin L. Matlock
Director
February 13, 2020
/s/ WENDY J. MURDOCK
Director
February 13, 2020
Wendy J. Murdock
/s/ WALTER C. RAKOWICH
Director
February 13, 2020
Walter. C. Rakowich
/s/ DOYLE R. SIMONS
Director
February 13, 2020
Doyle R. Simons
/s/ ALFRED J. VERRECCHIA
Director
February 13, 2020
Alfred J. Verrecchia
178
1, 3, 4
Walter C. Rakowich
Retired Executive
Former CEO of Prologis
San Francisco, CA
Doyle R. Simons 2, 4
Retired Executive
Former CEO of Weyerhaeuser
Seattle, WA
CORPORATE DIRECTORS AND OFFICERS
(As of 03/01/20)
DIRECTORS
Alfred J. Verrecchia 3, 6
Chairperson of the Board of Directors
Iron Mountain Incorporated
Boston, MA
Jennifer Allerton 1, 5
Retired Executive
Hoffmann La Roche Ltd
Basel, Switzerland
Ted R. Antenucci 1, 4
President and Chief Executive Officer
Catellus Development Corporation
Oakland, CA
Pamela M. Arway 2, 3
Retired Executive
American Express Company, Inc.
New York, NY
Clarke H. Bailey 3, 5
Chief Executive Officer and
Chairperson of the Board of Directors EDCI
Holdings, Inc.
New York, NY
Kent P. Dauten 1, 3, 4
Chairman
Keystone Capital, Inc.
Deerfield, IL
SENIOR OFFICERS
William L. Meaney
President and Chief Executive Officer
Ernest W. Cloutier
Executive Vice President
and General Manager, Global Records and
Information Management
Deirdre Evens
Executive Vice President and General
Manager, Records and Information
Management, North America
Barry A. Hytinen
Executive Vice President and
Chief Financial Officer
Paul F. Deninger 2, 4
Retired Senior Managing Director
Evercore Inc.
Waltham, MA
Monte E. Ford 2, 5
Principal Partner
CIO Strategy Exchange
Westlake, TX
Per-Kristian Halvorsen 2, 5
Retired Executive Intuit Inc.
Mountain View, CA
2, 4
Robin L. Matlock
SVP and Chief Marketing Officer
VMware, Inc.
Palo Alto, CA
William L. Meaney
President and Chief Executive Officer
Iron Mountain Incorporated
Boston, MA
Wendy Murdock 2, 4
Retired Executive
MasterCard Worldwide
New York, NY
Mark Kidd
Executive Vice President and
General Manager, Data Centers
Deborah Marson
Executive Vice President,
General Counsel and Secretary
Fidelma Russo
Executive Vice President
and Chief Technology Officer
John Tomovcsik
Executive Vice President
and Chief Operating Officer
Member of Audit Committee (Mr. Rakowich is Chairperson)
Member of the Compensation Committee (Ms. Arway is Chairperson)
Member of the Nominating and Governance Committee (Mr. Verrecchia is Chairperson)
Member of the Finance Committee (Mr. Dauten is Chairperson)
1
2
3
4
5 Member of the Risk and Safety Committee (Mr. Bailey is Chairperson)
6 Independent Chairperson of the Board
CORPORATE DIRECTORS AND OFFICERS
(As of 03/01/20)
CORPORATE INFORMATION
Walter C. Rakowich 1, 3
Retired Executive
Former CEO of Prologis
San Francisco, CA
Doyle R. Simons 2, 4
Retired Executive
Former CEO of Weyerhaeuser
Seattle, WA
STOCKHOLDER INFORMATION
Transfer Agent and Registrar
Computershare
877/897-6892
201/680-6578
(outside the United States,
US territories & Canada)
800/231-5469 (hearing impaired—TDD phone)
shrrelations@cpushareownerservices.com
www.computershare.com/investor
Address stockholder inquiries and send certificates
for transfer and address changes to:
Iron Mountain Incorporated
c/o Computershare Investor Services
P.O. Box 505000, Louisville, KY 40233-5000
Overnight delivery
Computershare Investor Services
462 South 4th Street, Suite 1600
Louisville, KY 40202
Copies of the Annual Report on Form 10-K
are available upon request by contacting
the company at the address below,
attention: Investor Relations
Corporate Headquarters
Iron Mountain Incorporated
One Federal Street
Boston, MA 02110
800/935-6966
www.ironmountain.com
Common Stock Data
Traded: NYSE Symbol: IRM
Beneficial Stockholders:
267,484 as of March 16, 2020
Investor Relations
Greer Aviv
Senior Vice President, Investor Relations
Iron Mountain Incorporated
One Federal Street
Boston, MA 02110
617/535-2887
Annual Meeting Date
Iron Mountain Incorporated will conduct
its annual meeting of stockholders on
Wednesday May 13, 2020, 9:00am ET
via live audio webcast, accessed by visiting
https://www.virtualshareholdermeeting.com/IRM2020
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116
Chairperson of the Board of Directors EDCI
Boston, MA
DIRECTORS
Alfred J. Verrecchia 3, 6
Chairperson of the Board of Directors
Iron Mountain Incorporated
Boston, MA
Jennifer Allerton 1, 5
Retired Executive
Hoffmann La Roche Ltd
Basel, Switzerland
Ted R. Antenucci 1, 4
President and Chief Executive Officer
Catellus Development Corporation
Oakland, CA
Pamela M. Arway 2, 3
Retired Executive
American Express Company, Inc.
New York, NY
Clarke H. Bailey 3, 5
Chief Executive Officer and
Holdings, Inc.
New York, NY
Kent P. Dauten 1, 3, 4
Chairman
Keystone Capital, Inc.
Deerfield, IL
SENIOR OFFICERS
William L. Meaney
President and Chief Executive Officer
Ernest W. Cloutier
Executive Vice President
and General Manager, Global Records and
Information Management
Deirdre Evens
Executive Vice President and General
Manager, Records and Information
Management, North America
Barry A. Hytinen
Executive Vice President and
Chief Financial Officer
Paul F. Deninger 2, 4
Retired Senior Managing Director
Evercore Inc.
Waltham, MA
Monte E. Ford 2, 5
Principal Partner
CIO Strategy Exchange
Westlake, TX
Per-Kristian Halvorsen 2, 5
Retired Executive Intuit Inc.
Mountain View, CA
Robin L. Matlock
2, 4
SVP and Chief Marketing Officer
VMware, Inc.
Palo Alto, CA
William L. Meaney
President and Chief Executive Officer
Iron Mountain Incorporated
Wendy Murdock 2, 4
Retired Executive
MasterCard Worldwide
New York, NY
Mark Kidd
Executive Vice President and
General Manager, Data Centers
Deborah Marson
Executive Vice President,
General Counsel and Secretary
Fidelma Russo
Executive Vice President
and Chief Technology Officer
John Tomovcsik
Executive Vice President
and Chief Operating Officer
1
2
3
4
Member of Audit Committee (Mr. Rakowich is Chairperson)
Member of the Compensation Committee (Ms. Arway is Chairperson)
Member of the Nominating and Governance Committee (Mr. Verrecchia is Chairperson)
Member of the Finance Committee (Mr. Dauten is Chairperson)
5 Member of the Risk and Safety Committee (Mr. Bailey is Chairperson)
6 Independent Chairperson of the Board
OPERATIONAL LOCATIONS
(As of 12/31/19)
Asia Pacific
Australia
China
Hong Kong-SAR
India
Indonesia
Malaysia
New Zealand
Philippines
Singapore
South Korea
Thailand
Europe
Armenia
Austria
Belarus
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
England
Estonia
Finland
France
Germany
Greece
Hungary
Kazakhstan
Latvia
Lithuania
Netherlands
Northern Ireland
Norway
Poland
Republic of Ireland
Romania
Russia
Scotland
Serbia
Slovakia
Spain
Sweden
Switzerland
Ukraine
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Middle East and Africa
Turkey
South Africa
United Arab Emirates
North America
Canada
United States
IRM Stock Performance
Comparison of 60 Month Cumulative Total Return Among Iron
Mountain, the MSCI REIT Index, the S&P 500 and the Russell 1000
s
r
a
l
l
o
D
200
175
150
125
100
75
50
Iron
Mountain,
Inc.
Russell
1000
S&P
500
MSCI
REIT
Index
12/31/2014
12/31/2015
12/31/2016
12/31/2017
12/31/2018
12/31/2019
Note: Fiscal year end December 31, 2019
Source: FactSet
This graph compares the change in the cumulative total return on our common stock to the cumulative
total returns of the S&P 500 Index, the Russell 1000 Index and the MSCI REIT Index for the period
from December 31, 2014, through December 31, 2019. This comparison assumes an investment of $100
on December 31, 2014, and the reinvestments of any dividends.
4AUG201721502439
OPERATIONAL LOCATIONS
(As of 12/31/19)
Asia Pacific
Australia
China
Hong Kong-SAR
India
Indonesia
Malaysia
New Zealand
Philippines
Singapore
South Korea
Thailand
Europe
Armenia
Austria
Belarus
Belgium
Bulgaria
Croatia
Cyprus
Denmark
England
Estonia
Czech Republic
Finland
France
Germany
Greece
Hungary
Kazakhstan
Latvia
Lithuania
Netherlands
Poland
Romania
Russia
Scotland
Serbia
Slovakia
Spain
Sweden
Northern Ireland
Norway
Switzerland
Ukraine
Republic of Ireland
Argentina
Latin America
Brazil
Chile
Colombia
Mexico
Peru
Middle East and Africa
Turkey
South Africa
United Arab Emirates
North America
Canada
United States
IRM Stock Performance
Comparison of 60 Month Cumulative Total Return Among Iron
Mountain, the MSCI REIT Index, the S&P 500 and the Russell 1000
Iron
Inc.
Mountain,
Russell
1000
S&P
500
MSCI
REIT
Index
s
r
a
l
l
o
D
200
175
150
125
100
75
50
12/31/2014
12/31/2015
12/31/2016
12/31/2017
12/31/2018
12/31/2019
Note: Fiscal year end December 31, 2019
Source: FactSet
This graph compares the change in the cumulative total return on our common stock to the cumulative
total returns of the S&P 500 Index, the Russell 1000 Index and the MSCI REIT Index for the period
from December 31, 2014, through December 31, 2019. This comparison assumes an investment of $100
on December 31, 2014, and the reinvestments of any dividends.
4AUG201721502439