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.

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, 2014, we had $33,860 of restricted cash associated with a collateral trust agreement with our insurance carrier related to our workers' compensation self-insurance program included in current assets on our Consolidated Balance Sheet. The restricted cash consisted primarily of United States Treasuries. We had no restricted cash at December 31, 2015.

d. Foreign Currency

Local currencies are the functional currencies for our operations outside the United States, with the exception of certain foreign holding companies and our financing centers in Switzerland, 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 items, net component of Iron Mountain Incorporated Stockholders' Equity and Noncontrolling Interests in the accompanying Consolidated Balance Sheets. 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, including those related to (1) our previously outstanding 7¹/₄% GBP Senior Subordinated Notes due 2014 (the "7 ¹/₄% Notes"), (2) our previously outstanding 6³/₄% Euro Senior Subordinated Notes due 2018 (the "6³/₄% Notes"), (3) borrowings in certain foreign currencies under our Revolving Credit Facility and our Former Revolving Credit Facility (each as defined in Note 4) and (4) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered permanently invested, are included in other expense (income), net, in the accompanying Consolidated Statements of Operations.

The total loss on foreign currency transactions for the years ended December 31, 2013, 2014 and 2015 is as follows:



	Year Ended December 31,
	2013		2014		2015
Total loss on foreign currency transactions	$	36,201	$	58,316	$	70,851

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, 2014 and 2015, none of our derivative instruments contained credit-risk related contingent features.

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):




	Range
Buildings and building improvements	5 to 40
Leasehold improvements	5 to 10 or life of the lease (whichever is shorter)
Racking	1 to 20 or life of the lease (whichever is shorter)
Warehouse equipment/vehicles	1 to 10
Furniture and fixtures	3 to 10
Computer hardware and software	2 to 5

Property, plant and equipment (including capital leases in the respective category), at cost, consist of the following:



	December 31,
	2014		2015
Land	$	205,463	$	218,174
Buildings and building improvements	1,409,330		1,507,224
Leasehold improvements	467,176		447,449
Racking	1,559,383		1,556,749
Warehouse equipment/vehicles	341,393		335,728
Furniture and fixtures	53,189		50,307
Computer hardware and software	501,882		515,688
Construction in progress	130,889		112,917
	$	4,668,705	$	4,744,236

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. Major improvements to leased buildings are capitalized as leasehold improvements and depreciated.

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. 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, 2013, 2014 and 2015, we capitalized $39,487, $19,419 and $26,201 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.

During the years ended December 31, 2013 and 2014, we wrote off previously deferred software costs associated with internal use software development projects that were discontinued after implementation, which resulted in a loss on disposal/write-down of property, plant and equipment (excluding real estate), net in the accompanying Consolidated Statements of Operations, by segment as follows:



	Year Ended December 31,
	2013		2014		2015
North American Records and Information Management Business	$	800	$	1,000	$	—
North American Data Management Business	—		—		—
Western European Business	—		300
Other International Business	—		—		—
Corporate and Other Business	300		—		—
	$	1,100	$	1,300	$	—

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. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset, which is then depreciated over the useful life of the related asset. The liability is increased over time through accretion expense (included in depreciation expense) such that the liability will equate to the future cost to retire the long-lived asset at the expected retirement date. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or realizes a gain or loss upon settlement. Our 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 obligation 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.

A reconciliation of liabilities for asset retirement obligations (included in other long-term liabilities) is as follows:



	December 31,
	2014			2015
Asset Retirement Obligations, beginning of the year	$	11,809		$	12,897
Liabilities Incurred	1,366			1,030
Liabilities Settled	(1,199		)	(966		)
Accretion Expense	1,121			1,241
Foreign Currency Exchange Movement	(200		)	(205		)
Asset Retirement Obligations, end of the year	$	12,897		$	13,997

g. Goodwill and Other 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. Separable intangible assets that are not deemed to have indefinite lives are amortized over their useful lives. We annually, or more frequently if events or circumstances warrant, assess whether a change in the lives over which our intangible assets are amortized is necessary.

We have selected October 1 as our annual goodwill impairment analysis date. We performed our annual goodwill impairment analysis as of October 1, 2013, 2014 and 2015 and concluded that goodwill was not impaired as of those dates. As of December 31, 2015, no factors were identified that would alter our October 1, 2015 goodwill analysis. In making this assessment, we relied on 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. When changes occur in the composition of one or more reporting units, the goodwill is reassigned to the reporting units affected based on their relative fair values.

Our reporting units at which level we performed our goodwill impairment analysis as of October 1, 2014 were as follows: (1) North American Records and Information Management; (2) technology escrow services that protect and manage source code (the “Intellectual Property Management” reporting unit); (3) the storage, assembly and detailed reporting of customer marketing literature and delivery to sales offices, trade shows and prospective customers’ sites based on current and prospective customer orders (the “Fulfillment Services” reporting unit); (4) North American Data Management; (5) Adjacent Businesses (which was formerly referred to as the "Emerging Businesses" reporting unit and, at the time of our October 1, 2014 goodwill impairment analysis, primarily related to our data center business in the United States and which is a component of our Corporate and Other Business segment); (6) the United Kingdom, Ireland, Norway, Austria, Belgium, France, Germany, Netherlands, Spain and Switzerland (the “New Western Europe” reporting unit); (7) the remaining countries in Europe in which we operate, excluding Russia, Ukraine and Denmark (the “Emerging Markets - Eastern Europe” reporting unit); (8) Latin America; (9) Australia and Singapore; (10) China and Hong Kong (the "Greater China" reporting unit); (11) India; and (12) Russia, Ukraine and Denmark.

The carrying value of goodwill, net for each of our reporting units as of December 31, 2014 was as follows:



	Carrying Value as of December 31, 2014
North American Records and Information Management(1)	$	1,397,484
Intellectual Property Management(1)	38,491
Fulfillment Services(1)	3,247
North American Data Management(2)	375,957
Adjacent Businesses(3)	—
New Western Europe(4)(6)	354,049
Emerging Markets - Eastern Europe(5)	87,408
Latin America(5)	107,240
Australia and Singapore(5)	55,779
Greater China(5)	3,500
India(5)	—
Russia, Ukraine and Denmark(5)	628
Total	$	2,423,783

_______________________________________________________________________________


(1)	This reporting unit is included in the North American Records and Information Management Business segment.


(2)	This reporting unit is included in the North American Data Management Business segment.


(3)	This reporting unit is included in the Corporate and Other Business segment.


(4)	This reporting unit is included in the Western European Business segment.


(5)	This reporting unit is included in the Other International Business segment.

(6)

As of December 31, 2014, the goodwill associated with our operations in Norway was included in the New Western Europe reporting unit. As of December 31, 2015, as a result of changes in the senior management of our business in Norway, which impacted both our reportable operating segments (see Note 9 for a description of our reportable operating segments) as well as our reporting units (described more fully below), the goodwill associated with our operations in Norway is included in the Emerging Markets - Europe reporting unit (defined below).

Beginning January 1, 2015, as a result of the changes in our reportable operating segments associated with our reorganization (described more fully in Note 9), we reassessed the composition of our reporting units. As part of this reassessment, we determined that our North American Records and Information Management Business segment now consists of two reporting units: (1) North American Records and Information Management (which includes Intellectual Property Management and Fulfillment Services) and (2) North American Secure Shredding. Also as part of this reassessment, we determined that our Western European Business segment consisted of two reporting units: (1) the United Kingdom, Ireland and Norway (the “UKI and Norway” reporting unit) and (2) Austria, Belgium, France, Germany, Netherlands, Spain and Switzerland (the “Continental Western Europe” reporting unit). We have reassigned goodwill associated with the reporting units impacted by the reorganization among the new reporting units on a relative fair value basis. The fair value of each of our new reporting units noted above was determined based on the application of a combined weighted average approach of fair value multiples of revenue and earnings and discounted cash flow techniques.

As a result of the change in the composition of our reporting units noted above, we concluded that we had an interim triggering event, and, therefore, during the first quarter of 2015, we performed an interim goodwill impairment test, as of January 1, 2015, for the North American Records and Information Management, North American Secure Shredding, UKI and Norway and Continental Western Europe reporting units. We concluded that the goodwill for each of our new reporting units was not impaired as of such date.

Our reporting units at which level we performed our goodwill impairment analysis as of October 1, 2015 were as follows: (1) North American Records and Information Management; (2) North American Secure Shredding; (3) North American Data Management; (4) Adjacent Businesses - Data Centers (which consists primarily of our data center business in the United States); (5) Adjacent Businesses - Consumer Storage (which consists of a consumer storage business with operations in the United States acquired in April 2015); (6) UKI and Norway; (7) Continental Western Europe; (8) Emerging Markets - Eastern Europe; (9) Latin America; (10) Australia and Singapore; (11) Greater China; (12) India; and (13) Russia, Ukraine and Denmark. We concluded that the goodwill for each of our reporting units was not impaired as of such date.

During the fourth quarter of 2015, as a result of changes in the management of certain of our businesses in Europe and Asia Pacific, we reassessed the composition of our reporting units as well as our reportable operating segments (see Note 9 for a description of our reportable operating segments). As part of this reassessment, we determined that our former Russia, Ukraine and Denmark reporting unit, as well as our business in Norway (which was previously managed along with our operations in the United Kingdom and Ireland within our UKI and Norway reporting unit) are being managed in conjunction with the businesses included in our Emerging Markets - Eastern Europe reporting unit. This newly formed reporting unit, which consists of (i) our former Emerging Markets - Eastern Europe reporting unit, (ii) our former Russia, Ukraine and Denmark reporting unit, and (iii) our business in Norway is referred to herein as the “Emerging Markets - Europe” reporting unit. Our businesses in the United Kingdom and Ireland will continue to be managed as a separate reporting unit (the “UKI” reporting unit). Additionally, we determined that our business in Singapore, which was previously managed along with our operations in Australia, is now being managed along with our businesses in our Greater China reporting unit. This newly formed reporting unit, which includes (i) our former Greater China reporting unit and (ii) our business in Singapore is referred to herein as the "Southeast Asia" reporting unit. Australia will be managed on a standalone basis (the “Australia” reporting unit).

As a result of the change in the composition of our reporting units noted above, we concluded that we had an interim triggering event, and, therefore, during the fourth quarter of 2015, we performed an interim goodwill impairment test, for the UKI, Emerging Markets-Europe, Australia and Southeast Asia reporting units. We concluded that the goodwill for each of our new reporting units was not impaired as of such date.

Additionally, in December 2015, we acquired Crozier Fine Arts ("Crozier"), a storage, logistics and transportation business for high value paintings, photographs and other types of art. We determined that Crozier will be managed as a separate component within our Adjacent Businesses operating segment and, therefore, constitutes a separate reporting unit (the "Adjacent Businesses - Fine Arts" reporting unit).

The carrying value of goodwill, net for each of our reporting units as of December 31, 2015 was as follows:



	Carrying Value as of December 31, 2015
North American Records and Information Management(1)	$	1,342,723
North American Secure Shredding(1)	73,021
North American Data Management(2)	369,907
Adjacent Businesses - Data Centers(3)	—
Adjacent Businesses - Consumer Storage(3)	4,636
Adjacent Businesses - Fine Arts(3)	21,550
UKI(4)	260,202
Continental Western Europe(4)	63,442
Emerging Markets - Europe(5)	87,378
Latin America(5)	78,537
Australia(5)	47,786
Southeast Asia(5)	5,683
India(5)	6,113
Total	$	2,360,978

_______________________________________________________________________________

(1)This reporting unit is included in the North American Records and Information Management Business segment.

(2)This reporting unit is included in the North American Data Management Business segment.

(3)This reporting unit is included in the Corporate and Other Business segment.

(4)This reporting unit is included in the Western European Business segment.

(5)This reporting unit is included in the Other International Business segment.

Reporting unit valuations have been determined using a combined approach based on the present value of future cash flows and market multiples of revenues and earnings. The income approach incorporates many assumptions including future growth rates, discount factors, expected capital expenditures and income tax cash flows. Changes in economic and operating conditions impacting these assumptions 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, 2014 and 2015 is as follows:



	North American Records and Information Management Business			North American Data Management Business			Western European Business			Other International Business			Corporate and Other Business		Total Consolidated
Gross Balance as of December 31, 2013	$	1,671,927		$	438,423		$	440,454		$	232,881		$	—	$	2,783,685
Deductible goodwill acquired during the year	7,745			1,936			—			30,117			—		39,798
Non-deductible goodwill acquired during the year	7,045			—			3,405			33,869			—		44,319
Allocated to divestiture (see Note 16)	—			—			(4,032		)	(3,718		)	—		(7,750		)
Fair value and other adjustments(1)	(26,898		)	(6,724		)	—			(386		)	—		(34,008		)
Currency effects	(14,610		)	(3,653		)	(34,257		)	(31,305		)	—		(83,825		)
Gross Balance as of December 31, 2014	1,645,209			429,982			405,570			261,458			—		2,742,219
Deductible goodwill acquired during the year	29			7			—			—			26,186		26,222
Non-deductible goodwill acquired during the year	2,730			567			1,936			9,064			—		14,297
Fair value and other adjustments(2)	104			(25		)	(448		)	(353		)	—		(722		)
Currency effects	(27,647		)	(6,925		)	(25,909		)	(44,543		)	—		(105,024		)
Gross Balance as of December 31, 2015	$	1,620,425		$	423,606		$	381,149		$	225,626		$	26,186	$	2,676,992
Accumulated Amortization Balance as of December 31, 2013	$	206,706		$	54,204		$	59,253		$	170		$	—	$	320,333
Currency effects	(719		)	(179		)	(980		)	(19		)	—		(1,897		)
Accumulated Amortization Balance as of December 31, 2014	205,987			54,025			58,273			151			—		318,436
Currency effects	(1,306		)	(326		)	(768		)	(22		)	—		(2,422		)
Accumulated Amortization Balance as of December 31, 2015	$	204,681		$	53,699		$	57,505		$	129		$	—	$	316,014
Net Balance as of December 31, 2014	$	1,439,222		$	375,957		$	347,297		$	261,307		$	—	$	2,423,783
Net Balance as of December 31, 2015	$	1,415,744		$	369,907		$	323,644		$	225,497		$	26,186	$	2,360,978
Accumulated Goodwill Impairment Balance as of December 31, 2014	$	85,909		$	—		$	46,500		$	—		$	—	$	132,409
Accumulated Goodwill Impairment Balance as of December 31, 2015	$	85,909		$	—		$	46,500		$	—		$	—	$	132,409

_______________________________________________________________________________


(1)	Total fair value and other adjustments primarily include $(32,265) in net adjustments to deferred income taxes and $(443) related to property, plant and equipment and other assumed liabilities, as well as $(1,300) of cash received related to certain 2013 acquisitions.

(2)

Total fair value and other adjustments primarily include $622 in net adjustments to deferred income taxes and $(5,036) related to customer relationships and acquisition costs and other assumed liabilities (which represent adjustments within the applicable measurement period, to provisional amounts recognized in purchase accounting), as well as $3,692 of cash paid related to certain 2014 acquisitions.

h. Long-Lived Assets

We review long-lived assets and all amortizable 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 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 the operation is determined to be unable to recover the carrying amount of its 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.

Consolidated loss on disposal/write-down of property, plant and equipment (excluding real estate), net was $430 for the year ended December 31, 2013 and consisted of $1,700 of asset write-offs in our North American Records and Information Management Business segment, approximately $300 of asset write-offs in our Corporate and Other Business segment, approximately $600 of asset write-offs associated with our Western European Business segment and approximately $300 of asset write-offs associated with our Other International Business segment, partially offset by gains of approximately $2,500 on the retirement of leased vehicles accounted for as capital lease assets primarily associated with our North American Records and Information Management Business segment. Consolidated loss on disposal/write-down of property, plant and equipment (excluding real estate), net was $1,065 for the year ended December 31, 2014 and consisted primarily of losses associated with the write-off of certain software associated with our North American Records and Information Management Business segment. Consolidated loss on disposal/write-down of property, plant and equipment (excluding real estate), net was $3,000 for the year ended December 31, 2015 and consisted primarily of approximately $1,800 of losses associated with the write-off of certain property in our Western European Business segment, as well as $1,500 of losses associated with the write-off of certain property in our North American Records and Information Management Business segment, partially offset by gains on the retirement of leased vehicles accounted for as capital lease assets primarily associated with our North American Records and Information Management Business segment.

Gain on sale of real estate, net of tax, which consists primarily of the sale of buildings in the United Kingdom and Canada, for the years ended December 31, 2013, 2014 and 2015 is as follows:



	Year Ended December 31,
	2013			2014			2015
Gain on sale of real estate	$	1,847		$	10,512		$	1,059
Tax effect on gain on sale of real estate	(430		)	(2,205		)	(209		)
Gain on sale of real estate, net of tax	$	1,417		$	8,307		$	850

i. Customer Relationship Intangible Assets, Customer Inducements and Other 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 20 years at December 31, 2015). The value of customer relationship intangible assets is calculated based upon estimates of their fair value utilizing an income approach based on the present value of expected future cash flows.

Costs related to the acquisition of large volume accounts are capitalized. Free intake costs to transport boxes to one of our facilities, which include labor and transportation charges ("Move Costs"), are amortized over periods ranging from one to 30 years (weighted average of 25 years at December 31, 2015), and are included in depreciation and amortization in the accompanying Consolidated Statements of Operations. 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 one to 15 years (weighted average of six years at December 31, 2015) to the storage and service revenue line items in the accompanying Consolidated Statements of Operations. Move Costs 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.

Other intangible assets, including noncompetition agreements and trademarks, are capitalized and amortized over periods ranging from five to 10 years (weighted average of seven years at December 31, 2015).

The gross carrying amount and accumulated amortization are as follows:



	December 31,
Gross Carrying Amount	2014		2015
Customer relationship intangible assets and Customer Inducements	$	904,866	$	937,174
Other intangible assets (included in other assets, net)	10,630		11,111
Accumulated Amortization
Customer relationship intangible assets and Customer Inducements	$	297,029	$	333,860
Other intangible assets (included in other assets, net)	8,608		8,325

The amortization expense for the years ended December 31, 2013, 2014 and 2015 is as follows:



	Year Ended December 31,
	2013		2014		2015
Customer relationship intangible assets and Customer Inducements:
Amortization expense included in depreciation and amortization	$	37,725	$	46,733	$	43,614
Amortization expense offsetting revenues	11,788		11,715		11,670
Other intangible assets:
Amortization expense included in depreciation and amortization	1,456		1,853		631

Estimated amortization expense for existing intangible assets (excluding deferred financing costs, as disclosed in Note 2.j) is as follows:



	Estimated Amortization
	Included in Depreciation and Amortization		Charged to Revenues
2016	$	45,763	$	7,445
2017	45,012		5,526
2018	44,139		4,296
2019	42,666		2,491
2020	40,831		1,704

j. Deferred Financing Costs

Deferred financing costs are amortized over the life of the related debt using the effective interest rate method. 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.

In the fourth quarter of 2015, we adopted Accounting Standards Update No. 2015-03 (“ASU 2015-03”, which is discussed in greater detail in Note 2.w). ASU 2015-03 required retrospective application. Therefore, our financial statements and notes to those financial statements contained herein have been adjusted to reflect the impact of adopting ASU 2015-03. The net carrying value of deferred financing costs (including deferred financing costs associated with the Credit Agreement and the Former Credit Agreement, each as discussed and defined in Note 4) which were formerly presented within Other Assets, net are now presented within Long-term Debt, net of current portion on our Consolidated Balance Sheets.

As of December 31, 2014 and 2015, gross carrying amount of deferred financing costs was $63,033 and $70,549, respectively, and accumulated amortization of those costs was $15,956 and $12,250, respectively.

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
2016	$	10,525
2017	10,525
2018	10,289
2019	9,066
2020	6,685

k. Prepaid Expenses and Accrued Expenses

Prepaid expenses and accrued expenses with items greater than 5% of total current assets and liabilities shown separately, respectively, consist of the following:



	December 31,
	2014		2015
Income tax receivable	$	41,559	$	33,173
Other	97,910		109,778
Prepaid expenses	$	139,469	$	142,951



	December 31,
	2014		2015
Interest	$	69,525	$	68,316
Payroll and vacation	75,050		50,143
Incentive compensation	66,552		61,422
Self-insured liabilities (Note 10.b.)	33,381		33,508
Other	159,977		137,672
Accrued expenses	$	404,485	$	351,061

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) and technology escrow services that protect and manage source code. Service revenues include charges for related service activities, which include: (1) the handling of records, including the addition of new records, temporary removal of records from storage, refiling of removed records and the destruction of records; (2) courier operations, consisting primarily of the pickup and delivery of records upon customer request; (3) secure shredding of sensitive documents and the related sale of recycled paper, the price of which can fluctuate from period to period; (4) other services, including the scanning, imaging and document conversion services of active and inactive records, or Document Management Solutions ("DMS"), which relate to physical and digital records, and project revenues; (5) customer termination and permanent removal fees; (6) data restoration projects; (7) special project work; (8) the storage, assembly, and detailed reporting of customer marketing literature and delivery to sales offices, trade shows and prospective customers' sites based on current and prospective customer orders; (9) consulting services; and (10) other technology services and product sales (including specially designed storage containers and related supplies).

We recognize revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) services have been rendered; (3) the sales price is fixed or determinable; and (4) collectability of the resulting receivable is reasonably assured. 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, 2015, have historically not been significant.

m. Rent Normalization

We have entered into various leases for buildings that expire over various terms. Certain leases have fixed escalation clauses (excluding those tied to the consumer price index or other inflation-based indices) or other features (including return to original condition, primarily in the United Kingdom) which require normalization of the rental expense over the life of the lease, resulting in deferred rent being reflected as a liability in the accompanying Consolidated Balance Sheets. In addition, we have assumed various above and below market leases in connection with certain of our acquisitions. The difference between the present value of these lease obligations and the market rate at the date of the acquisition was recorded as either a deferred rent liability or deferred rent asset (which is a component of Other within Other Assets, net in our Consolidated Balance Sheets) and is being amortized to rent expense over the remaining lives of the respective leases.

n. Stock-Based Compensation

We record stock-based compensation expense, utilizing the straight-line method, for the cost of stock options, restricted stock, restricted stock units ("RSUs"), performance units ("PUs") and shares of stock issued under our employee stock purchase plan ("ESPP") (together, "Employee Stock-Based Awards").

Stock-based compensation expense for Employee Stock-Based Awards included in the accompanying Consolidated Statements of Operations for the years ended December 31, 2013, 2014 and 2015 was $30,354 ($22,085 after tax or $0.12 per basic and $0.11 per diluted share), $29,624 ($21,886 after tax or $0.11 per basic and diluted share) and $27,585 ($19,679 after tax or $0.09 per basic and diluted share), respectively.

Stock-based compensation expense for Employee Stock-Based Awards included in the accompanying Consolidated Statements of Operations related to continuing operations is as follows:



	Year Ended December 31,
	2013		2014		2015
Cost of sales (excluding depreciation and amortization)	$	293	$	680	$	220
Selling, general and administrative expenses	30,061		28,944		27,365
Total stock-based compensation	$	30,354	$	29,624	$	27,585

The benefits associated with the tax deductions in excess of recognized compensation cost are required to be reported as financing activities in the accompanying Consolidated Statements of Cash Flows. This requirement impacts reported operating cash flows and reported financing cash flows. As a result, net financing cash flows from continuing operations included $2,389, $(60) and $327 for the years ended December 31, 2013, 2014 and 2015, respectively, from the benefits (deficiency) of tax deductions compared to recognized compensation cost. The tax benefit of any resulting excess tax deduction increases the Additional Paid-in Capital ("APIC") pool. Any resulting tax deficiency is deducted from the APIC pool.

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. Certain of the options we issue become exercisable ratably over a period of ten years from the date of grant and have a contractual life of 12 years from the date of grant, unless the holder's employment is terminated sooner. As of December 31, 2015, ten-year vesting options represented 7.4% of total outstanding options. Certain of the options we issue become exercisable ratably over a period of five years from the date of grant and have a contractual life of ten years from the date of grant, unless the holder's employment is terminated sooner. As of December 31, 2015, five-year vesting options represented 41.0% of total outstanding options. The remainder of options we issue become exercisable ratably over a period of three years from the date of grant and have a contractual life of ten years from the date of grant, unless the holder's employment is terminated sooner. As of December 31, 2015, three-year vesting options represented 51.6% of total outstanding options. Our non-employee directors are considered employees for purposes of our stock option plans and stock option reporting. Options granted to our non-employee directors become exercisable immediately upon grant.

Our equity compensation plans generally provide that any unvested options and other awards granted thereunder shall vest immediately if an employee is terminated, or terminates his or her own employment for good reason (as defined in each plan), in connection with a vesting change in control (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 (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 7,750,000. The 2014 Plan permits us to continue to grant awards through January 20, 2025.

A total of 43,253,839 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 2014 Plan or the ESPP, at December 31, 2015 was 455,811.

The weighted average fair value of options granted in 2013, 2014 and 2015 was $7.69, $5.70 and $4.84 per share, respectively. These values were estimated on the date of grant using the Black-Scholes option pricing model. The following table summarizes the weighted average assumptions used for grants in the year ended December 31:



Weighted Average Assumptions	2013		2014		2015
Expected volatility	33.8	%	34.0	%	28.4	%
Risk-free interest rate	1.13	%	2.04	%	1.70	%
Expected dividend yield	3	%	4	%	5	%
Expected life	6.3 years		6.7 years		5.4 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.

A summary of option activity for the year ended December 31, 2015 is as follows:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2014	3,678,246		$	23.37
Granted	787,224		42.21
Exercised	(719,300	)	21.23
Forfeited	(34,144	)	25.64
Expired	(23,212	)	22.19
Outstanding at December 31, 2015	3,688,814		$	27.79	5.56	$	12,086
Options exercisable at December 31, 2015	2,386,622		$	22.96	3.96	$	11,472
Options expected to vest	1,241,658		$	36.56	8.48	$	595

The aggregate intrinsic value of stock options exercised for the years ended December 31, 2013, 2014 and 2015 is as follows:



	Year Ended December 31,
	2013		2014		2015
Aggregate intrinsic value of stock options exercised	$	11,024	$	23,178	$	9,056

Restricted Stock and Restricted Stock Units

Under our various equity compensation plans, we may also grant restricted stock or RSUs. Our restricted stock and RSUs generally have a vesting period of between three and five years from the date of grant. However, beginning in 2015, RSUs granted to our non-employee directors now 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 restricted stock and 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, 2013, 2014 and 2015, is as follows:



	Year Ended December 31,
	2013		2014		2015
Cash dividends accrued on RSUs	$	1,854	$	3,698	$	2,508
Cash dividends paid on RSUs	820		1,377		2,927

The fair value of restricted stock and RSUs vested during the years ended December 31, 2013, 2014 and 2015, are as follows:



	Year Ended December 31,
	2013		2014		2015
Fair value of restricted stock vested	$	1	$	1	$	—
Fair value of RSUs vested	16,638		22,535		24,345

A summary of restricted stock and RSU activity for the year ended December 31, 2015 is as follows:



	Restricted Stock and RSUs		Weighted- Average Grant-Date Fair Value
Non-vested at December 31, 2014	1,405,569		$	28.78
Granted	623,936		37.42
Vested	(696,871	)	31.26
Forfeited	(115,037	)	32.86
Non-vested at December 31, 2015	1,217,597		$	33.68

Performance Units

Under our various equity compensation plans, we may also make awards of PUs. For the majority of PUs, the number of PUs earned is determined based on our performance against predefined targets of revenue or revenue growth and return on invested capital ("ROIC"). The number of PUs earned may range from 0% to 150% (for PUs granted prior to 2014) and 0% to 200% (for PUs granted in 2014 and thereafter) 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 either the one-year performance period (for PUs granted prior to 2014) or the three-year performance period (for PUs granted in 2014 and thereafter). Certain PUs granted in 2013, 2014 and 2015 will be earned based on a market condition associated with the total return on our common stock in relation to a subset of the Standard & Poor's 500 Index rather than the revenue growth and ROIC 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. For those PUs subject to a one-year performance period, employees who subsequently terminate their employment after the end of the one-year performance period and on or after attaining age 55 and completing ten years of qualifying service (the "Retirement Criteria") shall immediately and completely vest in any PUs earned based on the actual achievement against the predefined targets as discussed above (but delivery of the shares remains deferred). As a result, PUs subject to a one-year performance period are generally expensed over the shorter of (1) the vesting period, (2) achievement of the Retirement Criteria, which may occur as early as January 1 of the year following the year of grant or (3) a maximum of three years. For those PUs subject to a three-year performance period, employees who terminate their employment during the performance period and on or after meeting the Retirement Criteria are eligible for pro-rated vesting, subject to the actual achievement against the predefined targets 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 subject to a three-year performance period 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, 2013, 2014 and 2015, are as follows:



	Year Ended December 31,
	2013		2014		2015
Cash dividends accrued on PUs	$	681	$	1,341	$	874
Cash dividends paid on PUs	—		312		1,015

During the years ended December 31, 2013, 2014 and 2015, we issued 198,869, 225,429 and 159,334 PUs, respectively. The majority of our PUs are earned based on our performance against revenue or revenue growth and ROIC targets during their applicable performance period; therefore, we forecast the likelihood of achieving the predefined revenue, revenue growth and ROIC targets in order to calculate the expected PUs to be earned. We record a compensation charge based on either the forecasted PUs to be earned (during the applicable performance period) or the actual PUs earned (at the one-year anniversary date for PUs granted prior to 2014 and at the three-year anniversary date for PUs granted in 2014 and thereafter) over the vesting period for each of the awards. For PUs earned based on a market condition, we utilize a Monte Carlo simulation to determine the fair value of these awards at the date of grant, and such fair value is expensed over the three-year performance period. As of December 31, 2015, we expected 0% and 100% achievement of the predefined revenue, revenue growth and ROIC targets associated with the awards of PUs made in 2014 and 2015, respectively.

The fair value of PUs that vested during the years ended December 31, 2013, 2014 and 2015, is as follows:



	Year Ended December 31,
	2013		2014		2015
Fair value of earned PUs that vested	$	2,962	$	1,216	$	2,107

A summary of PU activity for the year ended December 31, 2015 is as follows:



	Original PU Awards		PU Adjustment(1)		Total PU Awards		Weighted- Average Grant-Date Fair Value
Non-vested at December 31, 2014	461,666		(82,609	)	379,057		$	30.80
Granted	159,334		—		159,334		39.24
Vested	(80,035	)	(4,350	)	(84,385	)	29.62
Forfeited	(20,201	)	—		(20,201	)	31.27
Non-vested at December 31, 2015	520,764		(86,959	)	433,805		$	34.11

_______________________________________________________________________________


(1)	Represents an increase or decrease in the number of original PUs awarded based on either (a) the final performance criteria achievement at the end of the defined performance period of such PUs or (b) 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, 2013, 2014 and 2015, there were 144,432 shares, 115,046 shares and 122,209 shares, respectively, purchased under the ESPP. As of December 31, 2015, we have 838,429 shares available under the ESPP.

_______________________________________________________________________________

As of December 31, 2015, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $35,303 and is expected to be recognized over a weighted-average period of 1.9 years.

We generally issue shares of our common stock for the exercises of stock options, restricted stock, 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.

We had not previously provided incremental federal and certain state income taxes on net tax over book outside basis differences related to the earnings of our foreign subsidiaries because our intent, prior to our conversion to a REIT, was to reinvest our current and future undistributed earnings of certain foreign subsidiaries indefinitely outside the United States. As a result of our conversion to a REIT, it is no longer our intent to indefinitely reinvest our current and future undistributed foreign earnings outside the United States, and, therefore, during 2014, we recognized an increase in our tax provision from continuing operations in the amount of $46,356, representing incremental federal and state income taxes and foreign withholding taxes on such foreign earnings. We continue to provide incremental federal and state income taxes on net book over outside basis differences related to the earnings of our foreign subsidiaries. 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.

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 options, warrants or convertible securities) that were outstanding during the period, unless the effect is antidilutive.

The following table presents the calculation of basic and diluted income (loss) per share:



	Year Ended December 31,
	2013		2014			2015
Income (loss) from continuing operations	$	99,161	$	328,955		$	125,203
Total income (loss) from discontinued operations (see Note 14)	$	831	$	(209	)	$	—
Net income (loss) attributable to Iron Mountain Incorporated	$	96,462	$	326,119		$	123,241
Weighted-average shares—basic	190,994,000		195,278,000			210,764,000
Effect of dilutive potential stock options	995,836		913,926			834,659
Effect of dilutive potential restricted stock, RSUs and PUs	422,045		557,269			519,426
Weighted-average shares—diluted	192,411,881		196,749,195			212,118,085
Earnings (losses) per share—basic:
Income (loss) from continuing operations	$	0.52	$	1.68		$	0.59
Total income (loss) from discontinued operations (see Note 14)	$	—	$	—		$	—
Net income (loss) attributable to Iron Mountain Incorporated—basic	$	0.51	$	1.67		$	0.58
Earnings (losses) per share—diluted:
Income (loss) from continuing operations	$	0.52	$	1.67		$	0.59
Total income (loss) from discontinued operations (see Note 14)	$	—	$	—		$	—
Net income (loss) attributable to Iron Mountain Incorporated—diluted	$	0.50	$	1.66		$	0.58
Antidilutive stock options, RSUs and PUs, excluded from the calculation	903,416		872,039			1,435,297

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 charge-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,	Balance at Beginning of the Year		Credit Memos Charged to Revenue		Allowance for Bad Debts Charged to Expense		Other(1)			Deductions(2)			Balance at End of the Year
2013	$	25,209	$	49,483	$	11,321	$	3,612		$	(54,980	)	$	34,645
2014	34,645		47,137		14,209		(572		)	(63,278		)	32,141
2015	32,141		42,497		15,326		(4,511		)	(54,006		)	31,447

_______________________________________________________________________________


(1)	Primarily consists of recoveries of previously written-off accounts receivable, allowances of businesses acquired and the impact associated with currency translation adjustments.


(2)	Primarily consists of the issuance of credit memos and the write-off of accounts receivable.

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), restricted cash (primarily United States Treasuries) and accounts receivable. The only significant concentrations of liquid investments as of December 31, 2014 related to cash and cash equivalents and restricted cash held on deposit and as of December 31, 2015 related to cash and cash equivalents. At December 31, 2014, we had money market funds with two "Triple A" rated money market funds and time deposits with three global banks. At December 31, 2015, we had time deposits with four 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 $50,000 or in any one financial institution to a maximum of $75,000. As of December 31, 2014 and 2015, our cash and cash equivalents and restricted cash balance was $159,793 and $128,381, respectively. At December 31, 2014, our cash and cash equivalents included money market funds of $36,828, which were invested substantially in United States Treasuries and time deposits of $16,204. At December 31, 2015, our cash and cash equivalents included time deposits of $18,645.

s. Fair Value Measurements

Entities are permitted under GAAP to elect to measure many 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, 2014 and 2015, respectively, are as follows:



			Fair Value Measurements at December 31, 2014 Using
Description	Total Carrying Value at December 31, 2014		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Money Market Funds(1)	$	36,828	$	—		$	36,828		$	—
Time Deposits(1)	16,204		—			16,204			—
Trading Securities	13,172		12,428		(2)	744		(1)	—
Available-for-Sale Securities	1,457		1,457		(2)	—			—
Derivative Liabilities(3)	2,411		—			2,411			—



			Fair Value Measurements at December 31, 2015 Using
Description	Total Carrying Value at December 31, 2015		Quoted prices in active markets (Level 1)				Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Time Deposits(1)	$	18,645	$	—			$	18,645		$	—
Trading Securities	10,371		9,514		(2	)	857		(1)	—
Available-for-Sale Securities	624		624		(2	)	—			—

_______________________________________________________________________________


(1)	Money market funds, time deposits and certain trading securities are measured based on quoted prices for similar assets and/or subsequent transactions.


(2)	Available-for-sale securities and certain trading securities are measured at fair value using quoted market prices.

(3)

Our derivative liabilities primarily relate to short-term (six months or less) foreign currency contracts that we have entered into to hedge certain of our intercompany exposures, as more fully disclosed at Note 3. We calculate the fair value of such forward contracts by adjusting the spot rate utilized at the balance sheet date for translation purposes by an estimate of the forward points observed in active markets.

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, 2013, 2014 and 2015, except goodwill calculated based on Level 3 inputs, as more fully disclosed in Note 2.g and the assets and liabilities associated with acquisitions, as more fully disclosed in Note 6.

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, 2014 and 2015.

t. Trading and Available-for-Sale Securities

As of December 31, 2014 and 2015, we have one trust that holds marketable securities. As of December 31, 2014 and 2015, the fair value of the money market and mutual funds included in this trust amounted to $13,172 and $10,371, respectively, and were included in prepaid expenses and other in the accompanying Consolidated Balance Sheets. We classified these marketable securities included in the trust as trading, and included in other expense (income), net in the accompanying Consolidated Statements of Operations are realized and unrealized net gains (losses) of $2,283, $1,112 and $56 for the years ended December 31, 2013, 2014 and 2015, respectively, related to these marketable securities.

As of December 31, 2014 and 2015, we had an investment in Crossroads Systems, Inc. ("Crossroads"). Our investment in Crossroads represented approximately 4% and 2% of the total shares outstanding of Crossroads as of December 31, 2014 and 2015, respectively. The carrying value of our investment in Crossroads as of December 31, 2014 and 2015 was $1,457 and $624, respectively, and is included in other assets in the accompanying Consolidated Balance Sheets. This investment, which is publicly traded, is classified as available-for-sale and is carried at fair value with corresponding changes to fair value recorded in accumulated other comprehensive items, net.

u. Accumulated Other Comprehensive Items, Net

The changes in accumulated other comprehensive items, net for the years ended December 31, 2013, 2014 and 2015 is as follows:



	Foreign Currency Translation Adjustments			Market Value Adjustments for Securities			Total
Balance as of December 31, 2012	$	20,314		$	—		$	20,314
Other comprehensive (loss) income:
Foreign currency translation adjustments	(29,900		)	—			(29,900		)
Market value adjustments for securities	—			926			926
Total other comprehensive (loss) income	(29,900		)	926			(28,974		)
Balance as of December 31, 2013	$	(9,586	)	$	926		$	(8,660	)
Other comprehensive (loss) income:
Foreign currency translation adjustments	(66,424		)	—			(66,424		)
Market value adjustments for securities	—			53			53
Total other comprehensive (loss) income	(66,424		)	53			(66,371		)
Balance as of December 31, 2014	$	(76,010	)	$	979		$	(75,031	)
Other comprehensive (loss) income:
Foreign currency translation adjustments	(99,641		)	—			(99,641		)
Market value adjustments for securities	—			(245		)	(245		)
Total other comprehensive (loss) income	(99,641		)	(245		)	(99,886		)
Balance as of December 31, 2015	$	(175,651	)	$	734		$	(174,917	)

v. Other Expense (Income), Net

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



	Year Ended December 31,
	2013			2014			2015
Foreign currency transaction losses (gains), net	$	36,201		$	58,316		$	70,851
Debt extinguishment expense, net	43,724			16,495			27,305
Other, net	(4,723		)	(9,624		)	434
	$	75,202		$	65,187		$	98,590

w. New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 provides additional 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. Further disclosures will be required to provide a better understanding of revenue that has been recognized and revenue that is expected to be recognized in the future from existing contracts. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"). ASU 2015-14 defers the effective date of ASU 2014-09 for one year, making it effective for us on January 1, 2018, with early adoption permitted as of January 1, 2017. We are currently evaluating the impact ASU 2014-09 will have on our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles of current United States auditing standards. Specifically, the amendments (1) provide a definition of the term “substantial doubt”, (2) require an evaluation every reporting period, including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is still present, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for us on January 1, 2017, with early adoption permitted. We do not believe that the adoption of ASU 2014-15 will have an impact on our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for us on January 1, 2016. We do not believe that the adoption of ASU 2015-02 will have an impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. We adopted ASU 2015-03 during the fourth quarter of 2015. The adoption of ASU 2015-03 did not materially impact our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified, with the prior period impact of the adjustment being disclosed within the consolidated financial statements. We adopted ASU 2015-16 during the third quarter of 2015. The adoption of ASU 2015-16 did not materially impact our consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). ASU No. 2015-17 eliminates the requirement for reporting entities to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, reporting entities will be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015‑17 is effective for us on January 1, 2017, with early adoption permitted. The amendments in ASU 2015-17 may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The adoption of ASU 2015-17 will require the reclassification of certain deferred tax assets to noncurrent in our consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The pronouncement also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is effective for us on January 1, 2018. We do not believe that the adoption of ASU 2016-01 will have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 will be effective for us on January 1, 2019, with early adoption permitted. We are currently in the process of assessing the impact of ASU 2016-02 on our consolidated financial statements.