filings.toolsItem 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
105K characters. Original on sec.gov · Markdown
Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 1 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
| MARCH 31, 2022 | DECEMBER 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 195,660 | $ | 255,828 | |||||||
| Accounts receivable (less allowances of $61,167 and $62,009 as of March 31, 2022 and December 31, 2021, respectively) | 1,063,723 | 961,419 | |||||||||
| Prepaid expenses and other | 268,312 | 224,020 | |||||||||
| Total Current Assets | 1,527,695 | 1,441,267 | |||||||||
| Property, Plant and Equipment: | |||||||||||
| Property, plant and equipment | 8,748,937 | 8,647,303 | |||||||||
| Less—Accumulated depreciation | (4,078,290) | (3,979,159) | |||||||||
| Property, Plant and Equipment, Net | 4,670,647 | 4,668,144 | |||||||||
| Other Assets, Net: | |||||||||||
| Goodwill | 5,023,691 | 4,463,531 | |||||||||
| Customer and supplier relationships and other intangible assets | 1,581,429 | 1,181,043 | |||||||||
| Operating lease right-of-use assets | 2,343,627 | 2,314,422 | |||||||||
| Other | 480,887 | 381,624 | |||||||||
| Total Other Assets, Net | 9,429,634 | 8,340,620 | |||||||||
| Total Assets | $ | 15,627,976 | $ | 14,450,031 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Current portion of long-term debt | $ | 91,180 | $ | 309,428 | |||||||
| Accounts payable | 424,064 | 369,145 | |||||||||
| Accrued expenses and other current liabilities (includes current portion of operating lease liabilities) | 883,323 | 1,032,537 | |||||||||
| Deferred revenue | 301,965 | 307,470 | |||||||||
| Total Current Liabilities | 1,700,532 | 2,018,580 | |||||||||
| Long-term Debt, net of current portion | 10,143,011 | 8,962,513 | |||||||||
| Long-term Operating Lease Liabilities, net of current portion | 2,196,846 | 2,171,472 | |||||||||
| Other Long-term Liabilities | 407,826 | 144,053 | |||||||||
| Deferred Income Taxes | 347,562 | 223,934 | |||||||||
| Commitments and Contingencies | |||||||||||
| Redeemable Noncontrolling Interests | 73,428 | 72,411 | |||||||||
| 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 290,550,440 and 289,757,061 shares as of March 31, 2022 and December 31, 2021, respectively) | 2,906 | 2,898 | |||||||||
| Additional paid-in capital | 4,409,051 | 4,412,553 | |||||||||
| (Distributions in excess of earnings) Earnings in excess of distributions | (3,359,876) | (3,221,152) | |||||||||
| Accumulated other comprehensive items, net | (294,358) | (338,347) | |||||||||
| Total Iron Mountain Incorporated Stockholders' Equity | 757,723 | 855,952 | |||||||||
| Noncontrolling Interests | 1,048 | 1,116 | |||||||||
| Total Equity | 758,771 | 857,068 | |||||||||
| Total Liabilities and Equity | $ | 15,627,976 | $ | 14,450,031 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
| THREE MONTHS ENDED MARCH 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Revenues: | |||||||||||
| Storage rental | $ | 751,070 | $ | 708,056 | |||||||
| Service | 496,976 | 373,984 | |||||||||
| Total Revenues | 1,248,046 | 1,082,040 | |||||||||
| Operating Expenses: | |||||||||||
| Cost of sales (excluding depreciation and amortization) | 546,622 | 451,909 | |||||||||
| Selling, general and administrative | 280,723 | 258,723 | |||||||||
| Depreciation and amortization | 183,615 | 165,642 | |||||||||
| Acquisition and Integration Costs | 15,661 | — | |||||||||
| Restructuring Charges | — | 39,811 | |||||||||
| (Gain) Loss on disposal/write-down of property, plant and equipment, net | (705) | (4,451) | |||||||||
| Total Operating Expenses | 1,025,916 | 911,634 | |||||||||
| Operating Income (Loss) | 222,130 | 170,406 | |||||||||
| Interest Expense, Net (includes Interest Income of $1,648 and $2,571 for the three months ended March 31, 2022 and 2021, respectively) | 114,442 | 104,422 | |||||||||
| Other Expense (Income), Net | 55,901 | 4,713 | |||||||||
| Net Income (Loss) Before Provision (Benefit) for Income Taxes | 51,787 | 61,271 | |||||||||
| Provision (Benefit) for Income Taxes | 10,080 | 14,640 | |||||||||
| Net Income (Loss) | 41,707 | 46,631 | |||||||||
| Less: Net (Loss) Income Attributable to Noncontrolling Interests | (592) | 1,028 | |||||||||
| Net Income (Loss) Attributable to Iron Mountain Incorporated | $ | 42,299 | $ | 45,603 | |||||||
| Net Income (Loss) Per Share Attributable to Iron Mountain Incorporated: | |||||||||||
| Basic | $ | 0.15 | $ | 0.16 | |||||||
| Diluted | $ | 0.14 | $ | 0.16 | |||||||
| Weighted Average Common Shares Outstanding—Basic | 290,328 | 288,756 | |||||||||
| Weighted Average Common Shares Outstanding—Diluted | 291,846 | 289,528 | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 3 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS) (UNAUDITED)
| THREE MONTHS ENDED MARCH 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net Income (Loss) | $ | 41,707 | $ | 46,631 | |||||||
| Other Comprehensive Income (Loss): | |||||||||||
| Foreign Currency Translation Adjustment | 27,453 | (66,355) | |||||||||
| Change in Fair Value of Derivative Instruments | 16,766 | 15,206 | |||||||||
| Total Other Comprehensive Income (Loss) | 44,219 | (51,149) | |||||||||
| Comprehensive Income (Loss) | 85,926 | (4,518) | |||||||||
| Comprehensive (Loss) Income Attributable to Noncontrolling Interests | (362) | 897 | |||||||||
| Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated | $ | 86,288 | $ | (5,415) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
| THREE MONTHS ENDED MARCH 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| IRON MOUNTAIN INCORPORATED STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | (DISTRIBUTIONS IN EXCESS OF EARNINGS) EARNINGS IN EXCESS OF DISTRIBUTIONS | ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET | NONCONTROLLING INTERESTS | REDEEMABLE NONCONTROLLING INTERESTS | |||||||||||||||||||||||||||||||||||||||||||||
| TOTAL | SHARES | AMOUNTS | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | 857,068 | 289,757,061 | $ | 2,898 | $ | 4,412,553 | $ | (3,221,152) | $ | (338,347) | $ | 1,116 | $ | 72,411 | |||||||||||||||||||||||||||||||||||
| Issuance and net settlement of shares under employee stock purchase plan and option plans and stock-based compensation | (1,502) | 793,379 | 8 | (1,510) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Change in equity related to redeemable noncontrolling interests | (1,992) | — | — | (1,992) | — | — | — | 1,992 | ||||||||||||||||||||||||||||||||||||||||||
| Parent cash dividends declared | (181,023) | — | — | — | (181,023) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | 27,155 | — | — | — | — | 27,223 | (68) | 298 | ||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments | 16,766 | — | — | — | — | 16,766 | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 42,299 | — | — | — | 42,299 | — | — | (592) | ||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests dividends | — | — | — | — | — | — | — | (681) | ||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | 758,771 | 290,550,440 | $ | 2,906 | $ | 4,409,051 | $ | (3,359,876) | $ | (294,358) | $ | 1,048 | $ | 73,428 | |||||||||||||||||||||||||||||||||||
| THREE MONTHS ENDED MARCH 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| IRON MOUNTAIN INCORPORATED STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | (DISTRIBUTIONS IN EXCESS OF EARNINGS) EARNINGS IN EXCESS OF DISTRIBUTIONS | ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET | NONCONTROLLING INTERESTS | REDEEMABLE NONCONTROLLING INTERESTS | |||||||||||||||||||||||||||||||||||||||||||||
| TOTAL | SHARES | AMOUNTS | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | 1,136,729 | 288,273,049 | $ | 2,883 | $ | 4,340,078 | $ | (2,950,339) | $ | (255,893) | $ | — | $ | 59,805 | |||||||||||||||||||||||||||||||||||
| Issuance and net settlement of shares under employee stock purchase plan and option plans and stock-based compensation | 6,398 | 454,698 | 5 | 6,393 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Change in equity related to redeemable noncontrolling interests | 680 | — | — | 680 | — | — | — | (680) | ||||||||||||||||||||||||||||||||||||||||||
| Parent cash dividends declared | (178,685) | — | — | — | (178,685) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | (66,224) | — | — | — | — | (66,224) | — | (131) | ||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments | 15,206 | — | — | — | — | 15,206 | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 45,603 | — | — | — | 45,603 | — | — | 1,028 | ||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests equity contributions | — | — | — | — | — | — | — | 2,200 | ||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests dividends | — | — | — | — | — | — | — | (621) | ||||||||||||||||||||||||||||||||||||||||||
| Balance, March 30, 2021 | $ | 959,707 | 288,727,747 | $ | 2,888 | $ | 4,347,151 | $ | (3,083,421) | $ | (306,911) | $ | — | $ | 61,601 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 5 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
| THREE MONTHS ENDED MARCH 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net income (loss) | $ | 41,707 | $ | 46,631 | |||||||
| Adjustments to reconcile net income (loss) to cash flows from operating activities: | |||||||||||
| Depreciation | 120,393 | 114,449 | |||||||||
| Amortization (includes amortization of deferred financing costs and discounts of $4,389 and $4,127 for the three months ended March 31, 2022 and 2021, respectively) | 67,611 | 55,320 | |||||||||
| Revenue reduction associated with amortization of customer inducements and above- and below-market leases | 1,860 | 2,263 | |||||||||
| Stock-based compensation expense | 11,341 | 10,953 | |||||||||
| Benefit (provision) for deferred income taxes | (10,142) | (6,315) | |||||||||
| Loss on early extinguishment of debt | 671 | — | |||||||||
| (Gain) loss on disposal/write-down of property, plant and equipment, net | (705) | (4,451) | |||||||||
| Loss associated with OSG deconsolidation | 105,825 | — | |||||||||
| Gain associated with Clutter Transaction | (35,821) | — | |||||||||
| Foreign currency transactions and other, net | (7,219) | 9,220 | |||||||||
| (Increase) decrease in assets | (105,321) | (22,154) | |||||||||
| (Decrease) increase in liabilities | (135,694) | (137,087) | |||||||||
| Cash Flows from Operating Activities | 54,506 | 68,829 | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Capital expenditures | (161,050) | (145,528) | |||||||||
| Cash paid for acquisitions, net of cash acquired | (717,907) | — | |||||||||
| Acquisition of customer relationships | — | (874) | |||||||||
| Customer inducements | (1,913) | (1,457) | |||||||||
| Contract fulfillment costs | (14,237) | (16,719) | |||||||||
| Investments in joint ventures and other investments | — | (6,500) | |||||||||
| Proceeds from sales of property and equipment and other, net | 5,353 | 12,448 | |||||||||
| Cash Flows from Investing Activities | (889,754) | (158,630) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Repayment of revolving credit facility, term loan facilities and other debt | (2,278,884) | (415,030) | |||||||||
| Proceeds from revolving credit facility, term loan facilities and other debt | 3,254,197 | 625,689 | |||||||||
| Debt repayment and equity distribution to noncontrolling interests | (681) | (621) | |||||||||
| Parent cash dividends | (184,361) | (180,992) | |||||||||
| Net (payments) proceeds associated with employee stock-based awards | (12,843) | (4,556) | |||||||||
| Other, net | (5,875) | 5,000 | |||||||||
| Cash Flows from Financing Activities | 771,553 | 29,490 | |||||||||
| Effect of Exchange Rates on Cash and Cash Equivalents | 3,527 | (5,808) | |||||||||
| (Decrease) increase in Cash and Cash Equivalents | (60,168) | (66,119) | |||||||||
| Cash and Cash Equivalents, Beginning of Period | 255,828 | 205,063 | |||||||||
| Cash and Cash Equivalents, End of Period | $ | 195,660 | $ | 138,944 | |||||||
| Supplemental Information: | |||||||||||
| Cash Paid for Interest | $ | 179,079 | $ | 185,558 | |||||||
| Cash Paid for Income Taxes, Net | $ | 19,277 | $ | 20,847 | |||||||
| Non-Cash Investing and Financing Activities: | |||||||||||
| Financing Leases | $ | 5,190 | $ | 4,976 | |||||||
| Accrued Capital Expenditures | $ | 78,466 | $ | 59,490 | |||||||
| Deferred Purchase Obligation and Other | $ | 276,300 | $ | — | |||||||
| Dividends Payable | $ | 187,220 | $ | 185,560 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data) (Unaudited)
1. GENERAL
The unaudited condensed consolidated financial statements of Iron Mountain Incorporated, a Delaware corporation (“IMI”), and its subsidiaries (“we” or “us”), have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to those rules and regulations, but we believe that the disclosures included herein are adequate to make the information presented not misleading. The interim condensed consolidated financial statements are presented herein and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair presentation. Interim results are not necessarily indicative of results for a full year.
The Condensed Consolidated Financial Statements and Notes thereto, which are included herein, should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended December 31, 2021 included in our Annual Report on Form 10-K filed with the SEC on February 24, 2022 (our “Annual Report”).
We have been organized and have operated as a real estate investment trust for United States federal income tax purposes (“REIT”) beginning with our taxable year ended December 31, 2014.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and cash invested in highly liquid short-term securities, which have remaining maturities at the date of purchase of less than 90 days. Cash and cash equivalents are carried at cost, which approximates fair value.
B. ACCOUNTS RECEIVABLE
We maintain an allowance for doubtful accounts and a credit memo reserve for estimated losses resulting from the potential inability of our customers to make required payments and potential disputes regarding billing and service issues. The rollforward of the allowance for doubtful accounts and credit memo reserves for the three months ended March 31, 2022 is as follows:
| Balance as of December 31, 2021 | $ | 62,009 | |||||||||||||||||||||||||||
| Credit memos charged to revenue | 12,352 | ||||||||||||||||||||||||||||
| Allowance for bad debts charged to expense | 6,699 | ||||||||||||||||||||||||||||
| Deductions and other(1) | (19,893) | ||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | 61,167 | |||||||||||||||||||||||||||
(1)Primarily consists of the issuance of credit memos, the write-off of accounts receivable, allowances associated with businesses acquired and the impact associated with currency translation adjustments.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 7 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. INVENTORY
Inventories are stated at the lower of cost or net realizable value, based on a first-in, first-out methodology. Our inventory primarily consists of information technology-related assets including memory, central processing units, hard drives, adaptors and networking. All of our inventory is considered finished goods. Inventory is included as a component of Prepaid expenses and other in our Condensed Consolidated Balance Sheets. At March 31, 2022, we have inventory of approximately $24,900, net of related reserves for obsolete, excess and slow-moving inventory, which was acquired as part of the ITRenew Transaction (as defined in Note 3). We had no inventory at December 31, 2021.
D. LEASES
We lease facilities for certain warehouses, data centers and office space. We also have land leases, including those on which certain facilities are located. Operating and financing lease right-of-use assets and lease liabilities as of March 31, 2022 and December 31, 2021 are as follows:
| DESCRIPTION | MARCH 31, 2022 | DECEMBER 31, 2021 | ||||||||||||
| Assets: | ||||||||||||||
| Operating lease right-of-use assets | $ | 2,343,627 | $ | 2,314,422 | ||||||||||
| Financing lease right-of-use assets, net of accumulated depreciation(1) | 284,468 | 298,049 | ||||||||||||
| Liabilities: | ||||||||||||||
| Current | ||||||||||||||
| Operating lease liabilities | $ | 265,186 | $ | 259,957 | ||||||||||
| Financing lease liabilities(1) | 39,397 | 41,168 | ||||||||||||
| Long-term | ||||||||||||||
| Operating lease liabilities | $ | 2,196,846 | $ | 2,171,472 | ||||||||||
| Financing lease liabilities(1) | 301,603 | 315,561 |
(1)Financing lease right-of-use assets, current financing lease liabilities and long-term financing lease liabilities are included within Property, Plant and Equipment, Net, Current portion of long-term debt and Long-term Debt, net of current portion, respectively, within our Condensed Consolidated Balance Sheets.
The components of the lease expense for the three months ended March 31, 2022 and 2021 are as follows:
| THREE MONTHS ENDED MARCH 31, | ||||||||||||||||||||||||||
| DESCRIPTION | 2022 | 2021 | ||||||||||||||||||||||||
| Operating lease cost(1) | $ | 143,530 | $ | 132,675 | ||||||||||||||||||||||
| Financing lease cost: | ||||||||||||||||||||||||||
| Depreciation of financing lease right-of-use assets | $ | 11,454 | $ | 12,648 | ||||||||||||||||||||||
| Interest expense for financing lease liabilities | 4,678 | 4,975 |
(1)Operating lease cost, the majority of which is included in Cost of sales, includes variable lease costs of $30,508 and $28,368 for the three months ended March 31, 2022 and 2021, respectively.
| 8 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Other information: Supplemental cash flow information relating to our leases for the three months ended March 31, 2022 and 2021 is as follows:
| THREE MONTHS ENDED MARCH 31, | ||||||||||||||
| CASH PAID FOR AMOUNTS INCLUDED IN MEASUREMENT OF LEASE LIABILITIES: | 2022 | 2021 | ||||||||||||
| Operating cash flows used in operating leases | $ | 101,605 | $ | 93,645 | ||||||||||
| Operating cash flows used in financing leases (interest) | 4,678 | 4,975 | ||||||||||||
| Financing cash flows used in financing leases | 10,362 | 12,441 | ||||||||||||
| NON-CASH ITEMS: | ||||||||||||||
| Operating lease modifications and reassessments | $ | 23,767 | $ | 31,994 | ||||||||||
| New operating leases (including acquisitions and sale-leaseback transactions) | 125,902 | 48,200 |
E. GOODWILL
Our reporting units as of December 31, 2021 are described in detail in Note 2.k. to Notes to Consolidated Financial Statements included in our Annual Report. The goodwill associated with acquisitions completed during the first three months of 2022 (as described in Note 3) has been incorporated into our reporting units as they existed as of December 31, 2021.
The changes in the carrying value of goodwill attributable to each reportable operating segment for the three months ended March 31, 2022 are as follows:
| GLOBAL RIM BUSINESS | GLOBAL DATA CENTER BUSINESS | CORPORATE AND OTHER BUSINESS | TOTAL CONSOLIDATED | ||||||||||||||||||||
| Goodwill balance, net of accumulated amortization as of December 31, 2021 | $ | 3,976,261 | $ | 426,074 | $ | 61,196 | $ | 4,463,531 | |||||||||||||||
| Non-tax deductible goodwill acquired during the period | 978 | — | 580,150 | 581,128 | |||||||||||||||||||
| Fair value and other adjustments(1) | (16,993) | — | — | (16,993) | |||||||||||||||||||
| Currency effects | (672) | (2,702) | (601) | (3,975) | |||||||||||||||||||
| Goodwill balance, net accumulated amortization as of March 31, 2022 | $ | 3,959,574 | $ | 423,372 | $ | 640,745 | $ | 5,023,691 | |||||||||||||||
| Accumulated goodwill impairment balance as of March 31, 2022 | $ | 132,409 | $ | — | $ | 26,011 | $ | 158,420 |
(1) This amount represents an adjustment to goodwill as a result of the deconsolidation of certain businesses, as described in Note 2.k.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 9 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. FAIR VALUE MEASUREMENTS
The assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2022 and December 31, 2021 are as follows:
| FAIR VALUE MEASUREMENTS AT MARCH 31, 2022 USING | ||||||||||||||||||||||||||
| DESCRIPTION | TOTAL CARRYING VALUE AT MARCH 31, 2022 | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | ||||||||||||||||||||||
| Money Market Funds | $ | 28,718 | $ | — | $ | 28,718 | $ | — | ||||||||||||||||||
| Time Deposits | 3,167 | — | 3,167 | — | ||||||||||||||||||||||
| Trading Securities | 10,442 | 10,355 | 87 | — | ||||||||||||||||||||||
| Derivative Assets | 19,443 | — | 19,443 | — | ||||||||||||||||||||||
| Deferred Purchase Obligation (as defined in Note 3) | 275,100 | — | — | 275,100 | ||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2021 USING | ||||||||||||||||||||||||||
| DESCRIPTION | TOTAL CARRYING VALUE AT DECEMBER 31, 2021 | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | ||||||||||||||||||||||
| Money Market Funds | $ | 101,022 | $ | — | $ | 101,022 | $ | — | ||||||||||||||||||
| Time Deposits | 2,238 | — | 2,238 | — | ||||||||||||||||||||||
| Trading Securities | 11,147 | 11,062 | 85 | — | ||||||||||||||||||||||
| Derivative Assets | 11,021 | — | 11,021 | — | ||||||||||||||||||||||
| Derivative Liabilities | 8,344 | — | 8,344 | — |
There were no material items that are measured at fair value on a non-recurring basis at March 31, 2022 and December 31, 2021, other than (i) those disclosed in Note 2.o. to Notes to Consolidated Financial Statements included in our Annual Report, (ii) assets acquired and liabilities assumed through the ITRenew Transaction (as defined and described in Note 3), (iii) our investment in the Clutter JV (as defined in Note 4), and (iv) the fair value of our retained investment of our deconsolidated businesses (as described in Note 2.k.), all of which are based on Level 3 inputs. The fair value of the Deferred Purchase Obligation associated with the ITRenew Transaction was determined utilizing a Monte-Carlo model and takes into account our current forecasted projections as it relates to the underlying performance of the business.
| 10 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET
The changes in accumulated other comprehensive items, net for the three months ended March 31, 2022 and 2021 are as follows:
| THREE MONTHS ENDED MARCH 31, 2022 | THREE MONTHS ENDED MARCH 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
| FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS | CHANGE IN FAIR VALUE OF DERIVATIVE INSTRUMENTS | TOTAL | FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS | CHANGE IN FAIR VALUE OF DERIVATIVE INSTRUMENTS | TOTAL | |||||||||||||||||||||||||||||||||||||||||||||
| Beginning of Period | $ | (341,024) | $ | 2,677 | $ | (338,347) | $ | (206,190) | $ | (49,703) | $ | (255,893) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation and other adjustments | 27,223 | — | 27,223 | (66,224) | — | (66,224) | ||||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments | — | 16,766 | 16,766 | — | 15,206 | 15,206 | ||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive (loss) income | 27,223 | 16,766 | 43,989 | (66,224) | 15,206 | (51,018) | ||||||||||||||||||||||||||||||||||||||||||||
| End of Period | $ | (313,801) | $ | 19,443 | $ | (294,358) | $ | (272,414) | $ | (34,497) | $ | (306,911) |
H. REVENUES
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 (collectively, “Contract Fulfillment Costs”). Contract Fulfillment Costs as of March 31, 2022 and December 31, 2021 are as follows:
| MARCH 31, 2022 | DECEMBER 31, 2021 | |||||||||||||||||||||||||||||||||||||
| GROSS CARRYING AMOUNT | ACCUMULATED AMORTIZATION | NET CARRYING AMOUNT | GROSS CARRYING AMOUNT | ACCUMULATED AMORTIZATION | NET CARRYING AMOUNT | |||||||||||||||||||||||||||||||||
| Intake Costs asset | $ | 71,731 | $ | (45,432) | $ | 26,299 | $ | 71,336 | $ | (42,678) | $ | 28,658 | ||||||||||||||||||||||||||
| Commissions asset | 121,501 | (54,356) | 67,145 | 114,791 | (50,553) | 64,238 | ||||||||||||||||||||||||||||||||
Deferred revenue liabilities are reflected in our Condensed Consolidated Balance Sheets as follows:
| DESCRIPTION | LOCATION IN BALANCE SHEET | MARCH 31, 2022 | DECEMBER 31, 2021 | |||||||||||||||||
| Deferred revenue - Current | Deferred revenue | $ | 301,965 | $ | 307,470 | |||||||||||||||
| Deferred revenue - Long-term | Other Long-term Liabilities | 31,532 | 33,691 |
DATA CENTER LESSOR CONSIDERATIONS
Our Global Data Center Business features storage rental provided to customers at contractually specified rates over a fixed contractual period, which are accounted for in accordance with Accounting Standards Codification (“ASC”) No. 842 (“ASC 842”), Leases, as amended. Storage rental revenue, including revenue associated with power and connectivity, associated with our Global Data Center Business for the three months ended March 31, 2022 and 2021 are as follows:
| THREE MONTHS ENDED MARCH 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Storage rental revenue(1) | $ | 87,451 | $ | 67,157 |
(1)Revenue associated with power and connectivity included within storage rental revenue was $28,318 and $13,133 for the three months ended March 31, 2022 and 2021, respectively.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 11 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
I. STOCK-BASED COMPENSATION
Our stock-based compensation expense includes 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, the “Employee Stock-Based Awards”).
2022 RETIREMENT ELIGIBLE CRITERIA
For our Employee Stock-Based Awards made on or after March 1, 2022, we have included the following retirement provision:
-
Upon an award recipient's retirement on or after attaining age 55 with at least five years of service, if the sum of (i) the award recipient’s age at retirement and (ii) the award recipient’s years of service with us totals at least 65, the award recipient is entitled to continued vesting of any outstanding Employee Stock-Based Awards, provided that their retirement occurs on or after a minimum of six months from the grant date (the “Retirement Criteria”).
-
Accordingly, (i) grants of Employee Stock-Based Awards to an employee who has met the Retirement Criteria on or before the date of grant, or will meet the Retirement Criteria before the six month anniversary in the year of the grant, will be expensed over six months from the date of grant and (ii) grants of Employee Stock-Based Awards to employees who will meet the 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 Retirement Criteria.
-
Stock options and RSUs granted to award recipients who meet the Retirement Criteria will be delivered to the award recipient based upon the original vesting schedule. If an award recipient retires and has met the Retirement Criteria, stock options will remain exercisable until the original expiration date of the stock options. PUs granted to award recipients who meet the Retirement Criteria will 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
Stock-based compensation expense for the Employee Stock-Based Awards for the three months ended March 31, 2022 and 2021 is as follows:
| THREE MONTHS ENDED MARCH 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Stock-based compensation expense | $ | 11,341 | $ | 10,953 | |||||||||||||||||||
As of March 31, 2022, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards is $85,449.
RESTRICTED STOCK UNITS AND PERFORMANCE UNITS
The fair value of RSUs and earned PUs that vested during the three months ended March 31, 2022 and 2021 is as follows:
| THREE MONTHS ENDED MARCH 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Fair value of RSUs vested | $ | 18,415 | $ | 19,861 | |||||||||||||||||||
| Fair value of earned PUs that vested | 4,346 | 5,591 |
J. ACQUISITION AND INTEGRATION COSTS
Acquisition and integration costs represent operating expenditures directly associated with the closing and integration activities of our business acquisitions that have closed, or are highly probable of closing, and include (i) advisory, legal and professional fees to complete business acquisitions and (ii) costs to integrate acquired businesses into our existing operations, including move, severance, facility upgrade and system integration costs (collectively, “Acquisition and Integration Costs”). Acquisition and Integration Costs do not include costs associated with the formation of joint ventures or costs associated with the acquisition of customer relationships. Total Acquisition and Integration Costs for the three months ended March 31, 2022 and 2021 is $15,661 and $0, respectively.
| 12 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
K. OTHER EXPENSE (INCOME), NET
Consolidated other expense (income), net for the three months ended March 31, 2022 and 2021 consists of the following:
| THREE MONTHS ENDED MARCH 31, | ||||||||||||||||||||||||||
| DESCRIPTION | 2022 | 2021 | ||||||||||||||||||||||||
| Foreign currency transaction (gains) losses, net | $ | (13,201) | $ | 2,314 | ||||||||||||||||||||||
| Debt extinguishment expense | 671 | — | ||||||||||||||||||||||||
| Other, net(1) | 68,431 | 2,399 | ||||||||||||||||||||||||
| Other Expense (Income), Net | $ | 55,901 | $ | 4,713 |
(1)On March 24, 2022, as a result of our loss of control, we deconsolidated the businesses included in the acquisition of OSG Records Management (Europe) Limited, excluding Ukraine. We recognized a loss of approximately $105,800 associated with the deconsolidation to Other expense (income), net in the first quarter of 2022 representing the difference between the net asset value prior to the deconsolidation and subsequent remeasurement of the retained investment to fair value of zero. We have concluded that the deconsolidation does not meet the criteria to be reported as discontinued operations in our consolidated financial statements, as it does not represent a strategic shift that will have a major effect on our operations and financial results. The loss was partially offset by a gain of approximately $35,800 associated with the Clutter Transaction (as defined in Note 4).
L. INCOME TAXES
We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year.
Our effective tax rates for the three months ended March 31, 2022 and 2021 are as follows:
| THREE MONTHS ENDED MARCH 31, | |||||||||||||||||||||||
| 2022**(1)** | 2021**(2)** | ||||||||||||||||||||||
| Effective Tax Rate | 19.5 | % | 23.9 | % |
(1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended March 31, 2022 were the benefits derived from the dividends paid deduction, the differences in the tax rates to which our foreign earnings are subject, and a release of valuation allowances on deferred tax assets of our U.S. taxable REIT subsidiaries (“TRS”) of approximately $9,900 as a result of the ITRenew Transaction.
(2)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended March 31, 2021 were the benefits derived from the dividends paid deduction and the impacts of differences in the tax rates to which our foreign earnings are subject.
M. INCOME (LOSS) PER SHARE—BASIC AND DILUTED
The calculation of basic and diluted income (loss) per share for the three months ended March 31, 2022 and 2021 are as follows:
| THREE MONTHS ENDED MARCH 31, | ||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Net Income (Loss) | $ | 41,707 | $ | 46,631 | ||||||||||||||||
| Less: Net (Loss) Income Attributable to Noncontrolling Interests | (592) | 1,028 | ||||||||||||||||||
| Net Income (Loss) Attributable to Iron Mountain Incorporated (utilized in numerator of Earnings Per Share calculation) | $ | 42,299 | $ | 45,603 | ||||||||||||||||
| Weighted-average shares—basic | 290,328,000 | 288,756,000 | ||||||||||||||||||
| Effect of dilutive potential stock options | 995,625 | 56,437 | ||||||||||||||||||
| Effect of dilutive potential RSUs and PUs | 521,977 | 715,850 | ||||||||||||||||||
| Weighted-average shares—diluted | 291,845,602 | 289,528,287 | ||||||||||||||||||
| Net Income (Loss) Per Share Attributable to Iron Mountain Incorporated: | ||||||||||||||||||||
| Basic | $ | 0.15 | $ | 0.16 | ||||||||||||||||
| Diluted | $ | 0.14 | $ | 0.16 | ||||||||||||||||
| Antidilutive stock options, RSUs and PUs, excluded from the calculation | 755,580 | 4,708,068 |
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 13 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
3. ACQUISITIONS
In order to expand our asset lifecyle management (“ALM”) operations, on January 25, 2022, we acquired an approximately 80% interest in Intercept Parent, Inc. (“ITRenew”), at an agreed upon purchase price of $725,000, subject to certain working capital adjustments at, and subsequent to, the closing (the “ITRenew Transaction”). At closing, we paid $748,846 and acquired $30,720 of cash on hand, for a net purchase price of $718,126 for the ITRenew Transaction. The acquisition agreement provides us the option to purchase, and provides the shareholders of ITRenew the option to sell, the remaining approximately 20% interest in ITRenew as follows: (i) approximately 16% on or after the second anniversary of the ITRenew Transaction and (ii) approximately 4% on or after the third anniversary of the ITRenew Transaction (collectively, the “Remaining Interests”). The total payments for the Remaining Interests, based on the achievement of certain targeted performance metrics, will be no less than $200,000 and no more than $531,000 (the “Deferred Purchase Obligation”). The maximum amount of the Deferred Purchase Obligation would require achievement of the targeted performance metrics at approximately two times the level that is assumed in our current fair value estimate of the Deferred Purchase Obligation of $275,100. From January 25, 2022, we will consolidate 100% of the revenues and expenses associated with this business. The Deferred Purchase Obligation is reflected as a long-term liability in our Condensed Consolidated Balance Sheet at March 31, 2022, and, accordingly, we have not reflected any non-controlling interests associated with the ITRenew Transaction as the Remaining Interests have non-substantive equity interest rights. Subsequent increases or decreases in the fair value estimate of the Deferred Purchase Obligation will be included as a component of Other expense (income), net in our Consolidated Statements of Operations until the Deferred Purchase Obligation is settled or paid. ITRenew is presented as a component of our Corporate and Other Business segment and primarily operates in the United States.
| 14 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
3. ACQUISITIONS (CONTINUED)
PRELIMINARY PURCHASE PRICE ALLOCATION
A summary of the cumulative consideration paid and the preliminary allocation of the purchase price paid for all of our 2022 acquisitions through March 31, 2022 is as follows:
| THREE MONTHS ENDED MARCH 31, 2022 | |||||
| Cash Paid (gross of cash acquired)(1) | $ | 748,846 | |||
| Deferred Purchase Obligation and Other(2) | 276,300 | ||||
| Total Consideration | 1,025,146 | ||||
| Fair Value of Identifiable Assets Acquired and Liabilities Assumed: | |||||
| Cash | 30,720 | ||||
| Accounts Receivable, Prepaid Expenses and Other Assets | 71,892 | ||||
| Property, Plant and Equipment | 7,600 | ||||
| Customer and Supplier Relationship Intangible Assets(3) | 488,080 | ||||
| Other Intangible Assets(3) | 47,300 | ||||
| Operating Lease Right-of-Use Assets | 30,395 | ||||
| Accounts Payable, Accrued Expenses and Other Liabilities | (60,014) | ||||
| Operating Lease Liabilities | (30,395) | ||||
| Deferred Income Taxes | (141,560) | ||||
| Total Fair Value of Identifiable Net Assets Acquired | 444,018 | ||||
| Goodwill Initially Recorded(4) | $ | 581,128 |
(1)Cash paid for acquisitions, net of cash acquired in our Condensed Consolidated Statement of Cash Flows includes contingent and other payments received of $219 for the three months ended March 31, 2022 related to acquisitions made in the years prior to 2022.
(2)At March 31, 2022, we included approximately $275,100 in Other long-term liabilities related to the fair value estimate of the Deferred Purchase Obligation for the Remaining Interests. Deferred Purchase Obligation and Other also includes approximately $1,200 of purchase price associated with the acquisition of a records and information management business completed in 2022.
(3)The preliminary weighted average life of the intangible assets associated with the ITRenew Transaction is approximately 11 years.
(4)Goodwill 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.
The preliminary purchase price allocations that are not finalized as of March 31, 2022 relate to the final assessment of the fair values of intangible assets (primarily customer and supplier relationship intangible assets) and property, plant and equipment associated with the acquisitions we closed in 2022. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined, but no later than the one year measurement period, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. Adjustments recorded during the three months ended March 31, 2022 were not material to our results from operations.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 15 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
4. INVESTMENTS
In February 2022, the joint venture formed by MakeSpace Labs, Inc. and us (the “MakeSpace JV”) entered into an agreement with Clutter, Inc. (“Clutter”) pursuant to which the equityholders of the MakeSpace JV contributed their ownership interests in the MakeSpace JV and Clutter’s shareholders contributed their ownership interests in Clutter to create a newly formed venture (the “Clutter JV”). In exchange for our 49.99% interest in the MakeSpace JV, we received an approximate 27% interest in the Clutter JV (the “Clutter Transaction”). As a result of the Clutter Transaction, we recognized a gain related to our contributed interest in the MakeSpace JV of approximately $35,800, which was recorded to Other, net, a component of Other expense (income), net.
The following joint ventures are accounted for as equity method investments and are presented as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheets. The carrying values and equity interests in our joint ventures at March 31, 2022 and December 31, 2021 are as follows:
| MARCH 31, 2022 | DECEMBER 31, 2021 | |||||||||||||||||||||||||
| CARRYING VALUE | EQUITY INTEREST | CARRYING VALUE | EQUITY INTEREST | |||||||||||||||||||||||
| Joint venture with Web Werks India Private Limited | $ | 51,258 | 38.50 | % | $ | 51,140 | 38.50 | % | ||||||||||||||||||
| Joint venture with AGC Equity Partners (the “Frankfurt JV”) | 26,472 | 20.00 | % | 26,167 | 20.00 | % | ||||||||||||||||||||
| MakeSpace JV | — | — | % | 30,154 | 49.99 | % | ||||||||||||||||||||
| Clutter JV | 66,625 | 26.76 | % | — | — | % |
5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Derivative instruments we are party to include: (i) interest rate swap agreements (which are designated as cash flow hedges) and (ii) cross-currency swap agreements (which are designated as net investment hedges).
INTEREST RATE SWAP AGREEMENTS DESIGNATED AS CASH FLOW HEDGES
In March 2018, we entered into interest rate swap agreements to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness. These swap agreements expired in March 2022. 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. As of March 31, 2022, we had $350,000 in notional value of interest rate swap agreements outstanding, which expire in March 2024. 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 rates as specified in the interest rate swap agreements.
We have designated these interest rate swap agreements as cash flow hedges. Unrealized gains are recognized as assets, while unrealized losses are recognized as liabilities.
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%. These cross-currency swap agreements expire in August 2023 (“August 2023 Cross-Currency Swap Agreements”).
In September 2020, 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 $359,200 at an interest rate of 4.5% for approximately 300,000 Euros at a weighted average interest rate of approximately 3.4%. These cross-currency swap agreements expire in February 2026 (“February 2026 Cross-Currency Swap Agreements”).
| 16 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (CONTINUED)
We have designated these cross-currency swap agreements as a hedge of net investment against certain of our Euro denominated subsidiaries and they require an exchange of the notional amounts at maturity. These cross-currency swap agreements are marked to market at each reporting period, representing the fair values of the cross-currency swap agreements, and any changes in fair value are recognized as a component of Accumulated other comprehensive items, net. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities.
Assets (liabilities) recognized in our Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, by derivative instrument, are as follows:
| DERIVATIVE INSTRUMENTS**(1)** | MARCH 31, 2022 | DECEMBER 31, 2021 | ||||||||||||
| Cash Flow Hedges*(2)* | ||||||||||||||
| Interest Rate Swap Agreements | $ | 3,790 | $ | (7,680) | ||||||||||
| Net Investment Hedges*(3)* | ||||||||||||||
| August 2023 Cross-Currency Swap Agreements | $ | 219 | $ | (664) | ||||||||||
| February 2026 Cross-Currency Swap Agreements | 15,434 | 11,021 |
(1)Our derivative assets are included as a component of Other within Other assets, net in our Condensed Consolidated Balance Sheets and our derivative liabilities are included as a component of (i) Accrued expenses and other current liabilities or (ii) Other long-term liabilities in our Condensed Consolidated Balance Sheets. As of March 31, 2022, $19,443 is included within Other assets. As of December 31, 2021, $11,021 is included within Other assets, $2,082 is included within Accrued expense and other current liabilities and $6,262 is included within Other long-term liabilities.
(2)As of March 31, 2022, cumulative net gains of $3,790 are recorded within Accumulated other comprehensive items, net associated with these interest rate swap agreements.
(3)As of March 31, 2022, cumulative net gains of $15,653 are recorded within Accumulated other comprehensive items, net associated with these cross-currency swap agreements.
Unrealized gains (losses) recognized during the three months ended March 31, 2022 and 2021, by derivative instrument, are as follows:
| THREE MONTHS ENDED MARCH 31, | ||||||||||||||||||||||||||
| DERIVATIVE INSTRUMENTS**(1)** | 2022 | 2021 | ||||||||||||||||||||||||
| Cash Flow Hedges | ||||||||||||||||||||||||||
| Interest Rate Swap Agreements | $ | 11,470 | $ | 4,201 | ||||||||||||||||||||||
| Net Investment Hedges | ||||||||||||||||||||||||||
| August 2023 Cross-Currency Swap Agreements | $ | 883 | $ | 4,751 | ||||||||||||||||||||||
| February 2026 Cross-Currency Swap Agreements | 4,413 | 6,254 |
(1)These amounts are recognized as unrealized gains (losses), a component of Accumulated other comprehensive items, net.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 17 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
6. DEBT
Long-term debt is as follows:
| MARCH 31, 2022 | DECEMBER 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 650,000 | $ | (10,096) | $ | 639,904 | $ | 650,000 | $ | — | $ | (5,174) | $ | (5,174) | $ | — | |||||||||||||||||||||||||||||||||||||
| Term Loan A | 250,000 | — | 250,000 | 250,000 | 203,125 | — | 203,125 | 203,125 | |||||||||||||||||||||||||||||||||||||||||||||
| Term Loan B | 671,153 | (4,683) | 666,470 | 672,000 | 672,847 | (4,995) | 667,852 | 675,500 | |||||||||||||||||||||||||||||||||||||||||||||
| Australian Dollar Term Loan (the “AUD Term Loan”) | 226,517 | (517) | 226,000 | 229,130 | 223,182 | (656) | 222,526 | 223,530 | |||||||||||||||||||||||||||||||||||||||||||||
| UK Bilateral Revolving Credit Facility (the “UK Bilateral Facility”) | 183,870 | (525) | 183,345 | 183,870 | 189,168 | (709) | 188,459 | 189,168 | |||||||||||||||||||||||||||||||||||||||||||||
| 37/8% GBP Senior Notes due 2025 (the “GBP Notes”) | 525,342 | (3,554) | 521,788 | 521,560 | 540,481 | (3,912) | 536,569 | 542,508 | |||||||||||||||||||||||||||||||||||||||||||||
| 47/8% Senior Notes due 2027 (the “47/8% Notes due 2027”)(1) | 1,000,000 | (7,821) | 992,179 | 987,500 | 1,000,000 | (8,176) | 991,824 | 1,030,000 | |||||||||||||||||||||||||||||||||||||||||||||
| 51/4% Senior Notes due 2028 (the “51/4% Notes due 2028”)(1) | 825,000 | (7,085) | 817,915 | 814,688 | 825,000 | (7,380) | 817,620 | 862,125 | |||||||||||||||||||||||||||||||||||||||||||||
| 5% Senior Notes due 2028 (the “5% Notes due 2028”)(1) | 500,000 | (4,582) | 495,418 | 485,000 | 500,000 | (4,763) | 495,237 | 513,750 | |||||||||||||||||||||||||||||||||||||||||||||
| 47/8% Senior Notes due 2029 (the “47/8% Notes due 2029”)(1) | 1,000,000 | (10,849) | 989,151 | 950,000 | 1,000,000 | (11,211) | 988,789 | 1,022,500 | |||||||||||||||||||||||||||||||||||||||||||||
| 51/4% Senior Notes due 2030 (the “51/4 Notes due 2030”)(1) | 1,300,000 | (12,535) | 1,287,465 | 1,261,000 | 1,300,000 | (12,911) | 1,287,089 | 1,355,250 | |||||||||||||||||||||||||||||||||||||||||||||
| 41/2% Senior Notes due 2031 (the “41/2% Notes”)(1) | 1,100,000 | (11,093) | 1,088,907 | 1,009,250 | 1,100,000 | (11,404) | 1,088,596 | 1,094,500 | |||||||||||||||||||||||||||||||||||||||||||||
| 5% Senior Notes due 2032 (the “5% Notes due 2032”) | 750,000 | (13,499) | 736,501 | 705,000 | 750,000 | (13,782) | 736,218 | 767,813 | |||||||||||||||||||||||||||||||||||||||||||||
| 55/8% Senior Notes due 2032 (the “55/8% Notes”)(1) | 600,000 | (6,001) | 593,999 | 590,250 | 600,000 | (6,147) | 593,853 | 637,500 | |||||||||||||||||||||||||||||||||||||||||||||
| Real Estate Mortgages, Financing Lease Liabilities and Other | 446,394 | (795) | 445,599 | 446,394 | 460,648 | (840) | 459,808 | 460,648 | |||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable Securitization Program | 300,000 | (450) | 299,550 | 300,000 | — | (450) | (450) | — | |||||||||||||||||||||||||||||||||||||||||||||
| Total Long-term Debt | 10,328,276 | (94,085) | 10,234,191 | 9,364,451 | (92,510) | 9,271,941 | |||||||||||||||||||||||||||||||||||||||||||||||
| Less Current Portion | (91,180) | — | (91,180) | (310,084) | 656 | (309,428) | |||||||||||||||||||||||||||||||||||||||||||||||
| Long-term Debt, Net of Current Portion | $ | 10,237,096 | $ | (94,085) | $ | 10,143,011 | $ | 9,054,367 | $ | (91,854) | $ | 8,962,513 |
(1) Collectively, the “Parent Notes”.
See Note 7 to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding our long-term debt, including the direct obligors of each of our debt instruments as well as information regarding the fair value of our debt instruments (including the levels of the fair value hierarchy used to determine the fair value of our debt instruments). The levels of the fair value hierarchy used to determine the fair value of our debt as of March 31, 2022 are consistent with the levels of the fair value hierarchy used to determine the fair value of our debt as of December 31, 2021 (which are disclosed in our Annual Report).
| 18 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
6. DEBT (CONTINUED)
CREDIT AGREEMENT
Our credit agreement (the “Credit Agreement”) consists of a revolving credit facility (the “Revolving Credit Facility”), a term loan A (the “Term Loan A”) and a term loan B (the “Term Loan B”). On March 18, 2022, we entered into an amendment to the Credit Agreement, which included the following changes:
(i) extended the maturity date of the Revolving Credit Facility and Term Loan A from June 3, 2023 to March 18, 2027;
(ii) refinanced and increased the borrowing capacity that IMI and certain of its United States and foreign subsidiaries are able to borrow under the Revolving Credit Facility from $1,750,000 to $2,250,000;
(iii) refinanced the existing Term Loan A with a new $250,000 Term Loan A; and
(iv) increased the net total lease adjusted leverage ratio maximum allowable from 6.5x to 7.0x and removed the net secured lease adjusted leverage ratio requirement.
On March 18, 2022, we borrowed the full amount of the Term Loan A. As of March 31, 2022, we had $650,000, $250,000 and $672,000 of outstanding borrowings under the Revolving Credit Facility, Term Loan A and Term Loan B, respectively. In addition, we also had various outstanding letters of credit totaling $3,056. The remaining amount available for borrowing under the Revolving Credit Facility as of March 31, 2022 was $1,596,944 (which represents the maximum availability as of such date). Additionally, the Credit Agreement permits us to incur incremental indebtedness thereunder by adding new term loans or revolving loans or by increasing the principal amount of any existing loans thereunder, subject to a cap contained therein.
The average interest rate in effect under the Credit Agreement was 2.2% and 1.9% as of March 31, 2022 and December 31, 2021, respectively.
| REVOLVING CREDIT FACILITY $2,250,000 | TERM LOAN A $250,000 | TERM LOAN B $700,000 | ||||||||||||||||||
| Outstanding borrowings $650,000 | Aggregate outstanding principal amount $250,000 | Aggregate outstanding principal amount $672,000 | ||||||||||||||||||
| 2.2% Interest rate | 2.1% Interest rate | 2.9% Interest rate | ||||||||||||||||||
| As of March 31, 2022 | As of March 31, 2022 | As of March 31, 2022 |
| AUSTRALIAN DOLLAR TERM LOAN | ||||||||||||||
| On March 18, 2022, Iron Mountain Australia Group Pty, Ltd. (“IM Australia”), a wholly owned subsidiary of IMI, amended its AUD Term Loan to (i) extend the maturity date from September 22, 2022 to September 30, 2026 and (ii) decrease the interest rate from BBSY (an Australian benchmark variable interest rate) plus 3.875% to BBSY plus 3.625%. All other terms of the AUD Term Loan remain consistent with what was disclosed in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report. The interest rate in effect under the AUD Term Loan was 3.9% and 4.0% as of March 31, 2022 and December 31, 2021, respectively. | OUTSTANDING BORROWINGS AU$305,889 INTEREST RATE 3.9% As of March 31, 2022 | |||||||||||||
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 19 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
6. DEBT (CONTINUED)
CASH POOLING
We currently utilize four separate cash pooling arrangements. We utilize two separate cash pooling arrangements with Bank Mendes Gans (“BMG”), one of which we utilize to manage global liquidity requirements for our qualified REIT subsidiaries ("QRS”) (the “BMG QRS Cash Pool”) and the other for our TRSs (the “BMG TRS Cash Pool”). We utilize two separate cash pooling arrangements with JP Morgan Chase Bank, N.A. (“JPM”), one of which we utilize to manage global liquidity requirements for our QRSs in the Asia Pacific region (the “JPM QRS Cash Pool”) and the other for our TRSs in the Asia Pacific region (the “JPM TRS Cash Pool”) (collectively, the “JPM Cash Pools”).
The approximate amount of the net cash position for our cash pools and the approximate amount of the gross position and outstanding debit balances for each of these pools as of March 31, 2022 and December 31, 2021 are as follows:
| MARCH 31, 2022 | DECEMBER 31, 2021 | ||||||||||||||||||||||||||||||||||
| GROSS CASH POSITION | OUTSTANDING DEBIT BALANCES | NET CASH POSITION | GROSS CASH POSITION | OUTSTANDING DEBIT BALANCES | NET CASH POSITION | ||||||||||||||||||||||||||||||
| BMG QRS Cash Pool | $ | 554,600 | $ | (553,100) | $ | 1,500 | $ | 552,900 | $ | (552,100) | $ | 800 | |||||||||||||||||||||||
| BMG TRS Cash Pool | 552,900 | (551,700) | 1,200 | 606,000 | (603,900) | 2,100 | |||||||||||||||||||||||||||||
| JPM QRS Cash Pool | 13,600 | (13,500) | 100 | 9,400 | (9,200) | 200 | |||||||||||||||||||||||||||||
| JPM TRS Cash Pool | 17,000 | (16,600) | 400 | 12,000 | (9,900) | 2,100 |
The net cash position balances as of March 31, 2022 and December 31, 2021 are reflected as cash and cash equivalents in our Condensed Consolidated Balance Sheets.
LETTERS OF CREDIT
As of March 31, 2022, we had outstanding letters of credit totaling $36,498,of which $3,056 reduce our borrowing capacity under the Revolving Credit Facility (as described above). The letters of credit expire at various dates between April 2022 and January 2033.
DEBT COVENANTS
The Credit Agreement, our bond indentures and other agreements governing our indebtedness contain certain restrictive financial and operating covenants, including covenants that restrict our ability to complete acquisitions, pay cash dividends, incur indebtedness, make investments, sell assets and take other specified corporate actions. The covenants do not contain a rating trigger. Therefore, a change in our debt rating would not trigger a default under the Credit Agreement, our bond indentures or other agreements governing our indebtedness. The Credit Agreement requires that we satisfy a fixed charge coverage ratio and a net total lease adjusted leverage ratio on a quarterly basis and our bond indentures require that, among other things, we satisfy a leverage ratio (not lease adjusted) or a fixed charge coverage ratio (not lease adjusted), as a condition to taking actions such as paying dividends and incurring indebtedness.
The Credit Agreement uses earnings before interest, taxes, depreciation and amortization and rent expense (“EBITDAR”) based calculations and the bond indentures use earnings before interest, taxes, depreciation and amortization (“EBITDA”) based calculations as the primary measures of financial performance for purposes of calculating leverage and fixed charge coverage ratios. The EBITDAR- and EBITDA-based leverage calculations include our consolidated subsidiaries, other than those we have designated as “Unrestricted Subsidiaries” as defined in the Credit Agreement and bond indentures. Generally, the Credit Agreement and the bond indentures use a trailing four fiscal quarter basis for purposes of the relevant calculations and require certain adjustments and exclusions for purposes of those calculations, which make the calculation of financial performance for purposes of those calculations under the Credit Agreement and bond indentures not directly comparable to Adjusted EBITDA as presented herein. We are in compliance with our leverage and fixed charge coverage ratios under the Credit Agreement, our bond indentures and other agreements governing our indebtedness as of March 31, 2022 and December 31, 2021. Noncompliance with these leverage and fixed charge coverage ratios would have a material adverse effect on our financial condition.
| 20 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
7. COMMITMENTS AND CONTINGENCIES
We are involved in litigation from time to time in the ordinary course of business, including litigation arising from damage to customer assets in our facilities caused by fires and other natural disasters. While the outcome of such litigation is inherently uncertain, we do not believe any current litigation will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
We have estimated a reasonably possible range for all loss contingencies and believe it is reasonably possible that we could incur aggregate losses in addition to amounts currently accrued for all matters up to an additional $25,000 over the next several years, of which certain amounts would be covered by insurance or indemnity arrangement.
8. STOCKHOLDERS' EQUITY MATTERS
In fiscal year 2021 and the three months ended March 31, 2022, our board of directors declared the following dividends:
| DECLARATION DATE | DIVIDEND PER SHARE | RECORD DATE | TOTAL AMOUNT | PAYMENT DATE | ||||||||||||||||||||||
| February 24, 2021 | $ | 0.6185 | March 15, 2021 | $ | 178,569 | April 6, 2021 | ||||||||||||||||||||
| May 6, 2021 | 0.6185 | June 15, 2021 | 179,026 | July 6, 2021 | ||||||||||||||||||||||
| August 5, 2021 | 0.6185 | September 15, 2021 | 179,080 | October 6, 2021 | ||||||||||||||||||||||
| November 4, 2021 | 0.6185 | December 15, 2021 | 179,132 | January 6, 2022 | ||||||||||||||||||||||
| February 24, 2022 | 0.6185 | March 15, 2022 | 179,661 | April 6, 2022 |
On April 28, 2022, we declared a dividend to our stockholders of record as of June 15, 2022 of $0.6185 per share, payable on July 6, 2022.
9. SEGMENT INFORMATION
Our three reportable operating segments as of December 31, 2021 are described in Note 11 to Notes to Consolidated Financial Statements included in our Annual Report and are as follows:
-
Global Records and Information Management (“Global RIM”) Business
-
Global Data Center Business
-
Corporate and Other Business
The operations associated with acquisitions completed during the first three months of 2022 have been incorporated into our existing reportable operating segments.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 21 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
9. SEGMENT INFORMATION (CONTINUED)
An analysis of our business segment information and reconciliation to the accompanying Condensed Consolidated Financial Statements for the three months ended March 31, 2022 and 2021 is as follows:
| THREE MONTHS ENDED MARCH 31, | ||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Global RIM Business | ||||||||||||||||||||
| Total Revenues | $ | 1,043,582 | $ | 967,294 | ||||||||||||||||
| Adjusted EBITDA | 451,249 | 408,562 | ||||||||||||||||||
| Global Data Center Business | ||||||||||||||||||||
| Total Revenues | $ | 96,987 | $ | 71,108 | ||||||||||||||||
| Adjusted EBITDA | 41,977 | 30,432 | ||||||||||||||||||
| Corporate and Other Business | ||||||||||||||||||||
| Total Revenues | $ | 107,477 | $ | 43,638 | ||||||||||||||||
| Adjusted EBITDA | (62,232) | (58,429) | ||||||||||||||||||
| Total Consolidated | ||||||||||||||||||||
| Total Revenues | $ | 1,248,046 | $ | 1,082,040 | ||||||||||||||||
| Adjusted EBITDA | 430,994 | 380,565 | ||||||||||||||||||
Adjusted EBITDA for each segment is defined as net income (loss) before interest expense, net, provision (benefit) for income taxes, depreciation and amortization (inclusive of our share of Adjusted EBITDA from our unconsolidated joint ventures), and excluding certain items we do not believe to be indicative of our core operating results, specifically:
| EXCLUDED | ||||||||
| •Acquisition and Integration Costs | •Other expense (income), net | |||||||
| •Restructuring Charges | •Stock-based compensation expense | |||||||
| •(Gain) loss on disposal/write-down of property, plant and equipment, net (including real estate) | ||||||||
Internally, we use Adjusted EBITDA as the basis for evaluating the performance of, and allocating resources to, our operating segments.
| 22 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
9. SEGMENT INFORMATION (CONTINUED)
A reconciliation of Net Income (Loss) to Adjusted EBITDA on a consolidated basis for the three months ended March 31, 2022 and 2021 is as follows:
| THREE MONTHS ENDED MARCH 31, | ||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Net Income (Loss) | $ | 41,707 | $ | 46,631 | ||||||||||||||||
| Add/(Deduct): | ||||||||||||||||||||
| Interest expense, net | 114,442 | 104,422 | ||||||||||||||||||
| Provision (benefit) for income taxes | 10,080 | 14,640 | ||||||||||||||||||
| Depreciation and amortization | 183,615 | 165,642 | ||||||||||||||||||
| Acquisition and Integration Costs | 15,661 | — | ||||||||||||||||||
| Restructuring Charges | — | 39,811 | ||||||||||||||||||
| (Gain) loss on disposal/write-down of property, plant and equipment, net (including real estate) | (705) | (4,451) | ||||||||||||||||||
| Other expense (income), net, excluding our share of losses (gains) from our unconsolidated joint ventures | 53,515 | 2,121 | ||||||||||||||||||
| Stock-based compensation expense | 11,341 | 10,733 | ||||||||||||||||||
| Our share of Adjusted EBITDA reconciling items from our unconsolidated joint ventures | 1,338 | 1,016 | ||||||||||||||||||
| Adjusted EBITDA | $ | 430,994 | $ | 380,565 |
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 23 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
9. SEGMENT INFORMATION (CONTINUED)
Information as to our revenues by product and service lines by segment for the three months ended March 31, 2022 and 2021 are as follows:
| THREE MONTHS ENDED MARCH 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Global RIM Business | |||||||||||||||||||||||
| Records Management(1) | $ | 802,553 | $ | 752,123 | |||||||||||||||||||
| Data Management(1) | 117,722 | 118,414 | |||||||||||||||||||||
| Information Destruction(1)(2) | 123,307 | 96,757 | |||||||||||||||||||||
| Data Center(1) | — | — | |||||||||||||||||||||
| Global Data Center Business | |||||||||||||||||||||||
| Records Management(1) | $ | — | $ | — | |||||||||||||||||||
| Data Management(1) | — | — | |||||||||||||||||||||
| Information Destruction(1)(2) | — | — | |||||||||||||||||||||
| Data Center(1) | 96,987 | 71,108 | |||||||||||||||||||||
| Corporate and Other Business | |||||||||||||||||||||||
| Records Management(1) | $ | 33,689 | $ | 26,967 | |||||||||||||||||||
| Data Management(1) | 14,141 | 16,671 | |||||||||||||||||||||
| Information Destruction(1)(2)(3) | 59,647 | — | |||||||||||||||||||||
| Data Center(1) | — | — | |||||||||||||||||||||
| Total Consolidated | |||||||||||||||||||||||
| Records Management(1) | $ | 836,242 | $ | 779,090 | |||||||||||||||||||
| Data Management(1) | 131,863 | 135,085 | |||||||||||||||||||||
| Information Destruction(1)(2)(3) | 182,954 | 96,757 | |||||||||||||||||||||
| Data Center(1) | 96,987 | 71,108 | |||||||||||||||||||||
(1)Each of these offerings has a component of revenue that is storage rental related and a component that is service revenues, except for information destruction, which does not have a storage rental component.
(2)Includes secure shredding services.
(3)Includes product revenue from ITRenew.
10. RELATED PARTIES
In October 2020, in connection with the formation of the Frankfurt JV, we entered into agreements whereby we will earn various fees, including (i) special project revenue and (ii) property management and construction and development fees for services we are providing to the Frankfurt JV (the “Frankfurt JV Agreements”). Revenues and expenses associated with the Frankfurt JV Agreements are presented as a component of our Global Data Center Business segment. During the three months ended March 31, 2022 and March 31, 2021, we recognized revenue of approximately $7,100 and $1,060, respectively, associated with the Frankfurt JV Agreements.
In March 2019, in connection with the formation of the MakeSpace JV, we entered into a storage and service agreement with the MakeSpace JV to provide certain storage and related services to the MakeSpace JV (the “MakeSpace Agreement”). In February 2022, in connection with the formation of the Clutter JV, we terminated the MakeSpace Agreement and entered into a storage and service agreement with the Clutter JV to provide certain storage and related services to the Clutter JV (the “Clutter Agreement”). Revenues and expenses associated with the MakeSpace Agreement and Clutter Agreement are presented as a component of our Global RIM Business segment. We recognized total revenue of approximately $7,000 and $7,500 for the three months ended March 31, 2022 and March 31, 2021, respectively, associated with the MakeSpace Agreement and Clutter Agreement.
| 24 | IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
11. 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”) which we completed as of December 31, 2021.
The implementation of Project Summit resulted in total operating expenditures (“Restructuring Charges”) of approximately $450,000 that primarily consisted of: (1) employee severance costs; (2) internal costs associated with the development and implementation of Project Summit initiatives; (3) professional fees, primarily related to third party consultants who assisted with the design and execution of various initiatives as well as project management activities and (4) system implementation and data conversion costs. As Project Summit was completed as of December 31, 2021, there were no Restructuring Charges for the three months ended March 31, 2022. Total Restructuring Charges for the three months ended March 31, 2021 was $39,811 and consisted of (i) employee severance costs of $3,808 and (ii) professional fees and other costs of $36,003.
| IRON MOUNTAIN MARCH 31, 2022 FORM 10-Q | 25 |
Part I. Financial Information
Previous: Cover and table of contents · Next: Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS