Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

This Note 2 to Notes to Condensed Consolidated Financial Statements provides information and disclosure regarding certain of our significant accounting policies and should be read in conjunction with Note 2 to Notes to Consolidated Financial Statements included in our Annual Report, which may provide additional information with regard to the accounting policies set forth herein and other of our significant accounting policies.

a. 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 Europe, 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, Redeemable Noncontrolling Interests and Noncontrolling Interests in the accompanying Condensed 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 (i) borrowings in certain foreign currencies under our Revolving Credit Facility (as defined and discussed more fully in Note 5), (ii) our Euro Notes (as defined and discussed more fully in Note 5), and (iii) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered permanently invested, are included in Other Expense (Income), Net, in the accompanying Condensed Consolidated Statements of Operations.

Total loss on foreign currency transactions for the three and six months ended June 30, 2016 and 2017 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Total loss on foreign currency transactions	$	17,193	$	20,199	$	4,651	$	16,035

b.    Goodwill and Other Intangible Assets

Goodwill

Goodwill is not amortized but is reviewed annually for impairment, or more frequently if impairment indicators arise. We have selected October 1 as our annual goodwill impairment review date. We performed our most recent annual goodwill impairment review as of October 1, 2016 and concluded there was no impairment of goodwill at such date. As of December 31, 2016 and June 30, 2017, no factors were identified that would alter our October 1, 2016 goodwill impairment analysis. In making this assessment, we considered a number of factors including operating results, business plans, anticipated future cash flows, transactions and marketplace data. There are inherent uncertainties related to these factors and our judgment in applying them to the analysis of goodwill impairment. 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 as of December 31, 2016 are described in detail in Note 2.h. to Notes to Consolidated Financial Statements included in our Annual Report. The goodwill associated with acquisitions completed during the first six months of 2017 (which are described in Note 4) has been incorporated into our reporting units as they existed as of December 31, 2016. During the six months ended June 30, 2017, there were certain changes to the composition of our reporting units, which are described below.

i. Impact of Russia and Ukraine Divestment

Prior to the Russia and Ukraine Divestment (as defined in Note 10), our businesses in Russia and Ukraine were a component of our Northern and Eastern Europe reporting unit. As disclosed in Note 10, on May 30, 2017, Iron Mountain EES Holdings Ltd. ("IM EES"), a consolidated subsidiary of IMI, sold our records and information management operations in Russia and Ukraine. As a result of the Russia and Ukraine Divestment, $3,515 of goodwill associated with our Northern and Eastern Europe reporting unit was allocated, on a relative fair value basis, to the Russia and Ukraine Divestment and included in the carrying value of the divested businesses. See Note 10 for additional information regarding the Russia and Ukraine Divestment.

ii. Northern and Eastern Europe, Africa and India reporting units

During the second quarter of 2017, as a result of changes in the management of our businesses included in our Other International Business segment, we reassessed the composition of our reporting units. As a result of this reassessment, we determined that our businesses in our former Africa and India reporting unit, which included our businesses in South Africa and India, as well as our business in the United Arab Emirates which was acquired in the first quarter of 2017, were now being managed in conjunction with our businesses included in our Northern and Eastern Europe reporting unit. This newly formed reporting unit, which consists of (i) the businesses included in our former Northern and Eastern Europe reporting unit and (ii) our businesses in the United Arab Emirates, South Africa and India is referred to as the Northern/Eastern Europe and Middle East, Africa and India, or NEE and MEAI, reporting unit.

iii. North American Secure Shredding reporting unit

During the second quarter of 2017, we reassessed the composition of our reporting units included in our North American Records and Information Management Business segment. As a result of this reassessment, we determined that the discrete financial information and operating results of our North American Secure Shredding business are no longer being regularly reviewed by the segment manager of our North American Records and Information Management Business segment. Therefore, we have concluded that our secure shredding operations in North America no longer constitute a separate reporting unit and that our North American Records and Information Management Business segment consists of one reporting unit, which is referred to as the North American Records and Information Management reporting unit.

The changes in the carrying value of goodwill attributable to each reportable operating segment for the six months ended June 30, 2017 are 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, 2016	$	2,485,806		$	559,443	$	405,571	$	743,126		$	25,922	$	4,219,868
Deductible goodwill acquired during the year	409			—		—		925			717		2,051
Non-deductible goodwill acquired during the year	—			—		—		13,777			—		13,777
Goodwill allocated to Russia and Ukraine Divestment (see Note 10)	—			—		—		(3,515		)	—		(3,515		)
Fair value and other adjustments(1)	(24,801		)	545		9,749		20,194			—		5,687
Currency effects	6,374			1,900		22,513		35,887			—		66,674
Gross Balance as of June 30, 2017	$	2,467,788		$	561,888	$	437,833	$	810,394		$	26,639	$	4,304,542
Accumulated Amortization Balance as of December 31, 2016	$	204,895		$	53,753	$	56,150	$	49		$	—	$	314,847
Currency effects	243			61		613		16			—		933
Accumulated Amortization Balance as of June 30, 2017	$	205,138		$	53,814	$	56,763	$	65		$	—	$	315,780
Net Balance as of December 31, 2016	$	2,280,911		$	505,690	$	349,421	$	743,077		$	25,922	$	3,905,021
Net Balance as of June 30, 2017	$	2,262,650		$	508,074	$	381,070	$	810,329		$	26,639	$	3,988,762
Accumulated Goodwill Impairment Balance as of December 31, 2016	$	85,909		$	—	$	46,500	$	—		$	—	$	132,409
Accumulated Goodwill Impairment Balance as of June 30, 2017	$	85,909		$	—	$	46,500	$	—		$	—	$	132,409

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(1) Total fair value and other adjustments include $5,687 in net adjustments primarily related to property, plant and equipment, customer relationship intangible assets and deferred income taxes (which represent adjustments within the applicable measurement period to provisional amounts recognized in purchase accounting).

Finite-lived intangible assets

Customer relationship intangible assets, which are acquired through either business combinations or acquisitions of customer relationships, are amortized over periods ranging from eight to 30 years and are included in depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations. 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 costs ("Move Costs"), are amortized over periods ranging from eight to 30 years and are included in depreciation and amortization in the accompanying Condensed 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 three to 15 years and are included in storage and service revenue in the accompanying Condensed 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 finite-lived intangible assets, including trade names, noncompetition agreements and trademarks, are capitalized and amortized over periods ranging from three to 10 years and are included in depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations.

The components of our finite-lived intangible assets as of December 31, 2016 and June 30, 2017 are as follows:

	December 31, 2016							June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationship intangible assets and Customer Inducements	$	1,604,020	$	(351,497	)	$	1,252,523	$	1,702,665	$	(405,650	)	$	1,297,015
Other finite-lived intangible assets (included in other assets, net)	24,788		(7,989		)	16,799		20,885		(9,008		)	11,877
Total	$	1,628,808	$	(359,486	)	$	1,269,322	$	1,723,550	$	(414,658	)	$	1,308,892

Amortization expense associated with finite-lived intangible assets and revenue reduction associated with the amortization of Permanent Withdrawal Fees for the three and six months ended June 30, 2016 and 2017 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Amortization expense associated with finite-lived intangible assets	$	21,492	$	25,784	$	33,306	$	50,899
Revenue reduction associated with amortization of Permanent Withdrawal Fees	3,157		2,748		6,100		5,906

c.    Stock-Based Compensation

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

Stock-based compensation expense for Employee Stock-Based Awards for the three and six months ended June 30, 2016 was $9,028 ($7,011 after tax or $0.03 per basic and diluted share) and $15,913 ($11,925 after tax or $0.05 per basic and diluted share), respectively. Stock-based compensation expense for Employee Stock-Based Awards for the three and six months ended June 30, 2017 was $8,543 ($5,945 after tax or $0.02 per basic and diluted share) and $15,092 ($10,530 after tax or $0.04 per basic and diluted share), respectively.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Cost of sales (excluding depreciation and amortization)	$	25	$	27	$	52	$	55
Selling, general and administrative expenses	9,003		8,516		15,861		15,037
Total stock-based compensation	$	9,028	$	8,543	$	15,913	$	15,092

Stock Options

A summary of our stock options outstanding as of June 30, 2017 by vesting terms is as follows:

	June 30, 2017
	Stock Options Outstanding	% of Stock Options Outstanding
Three-year vesting period (10 year contractual life)	3,543,414	85.7	%
Five-year vesting period (10 year contractual life)	515,916	12.5	%
Ten-year vesting period (12 year contractual life)	73,738	1.8	%
	4,133,068	100.0	%

The weighted average fair value of stock options granted for the six months ended June 30, 2016 and 2017 was $2.49 and $4.26 per share, respectively. These values were estimated on the date of grant using the Black-Scholes option pricing model. The weighted average assumptions used for grants in the respective periods are as follows:

	Six Months Ended June 30,
Weighted Average Assumptions	2016		2017
Expected volatility	27.2	%	25.8	%
Risk-free interest rate	1.32	%	1.96	%
Expected dividend yield	7	%	6	%
Expected life	5.6 years		5.0 years

Expected volatility is calculated utilizing daily historical volatility over a period that equates to the expected life of the option. The risk-free interest rate was based on the United States Treasury interest rates whose term is consistent with the expected life (estimated period of time outstanding) of the stock options. Expected dividend yield is considered in the option pricing model and represents our current annualized expected per share dividends over the current trade price of our common stock. The expected life of the stock options granted is estimated using the historical exercise behavior of employees.

A summary of stock option activity for the six months ended June 30, 2017 is as follows:

	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Average Intrinsic Value
Outstanding at December 31, 2016	3,451,698		$	31.79
Granted	1,007,224		36.89
Exercised	(300,271	)	22.77
Forfeited	(23,802	)	33.89
Expired	(1,781	)	38.83
Outstanding at June 30, 2017	4,133,068		$	33.68	7.47	$	13,556
Options exercisable at June 30, 2017	1,970,057		$	30.68	5.78	$	12,024
Options expected to vest	2,024,082		$	36.41	8.99	$	1,448

The aggregate intrinsic value of stock options exercised for the three and six months ended June 30, 2016 and 2017 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Aggregate intrinsic value of stock options exercised	$	9,926	$	1,935	$	11,359	$	3,847

Restricted Stock Units

Under our various equity compensation plans, we may also grant RSUs. Our RSUs generally have a vesting period of between three and five years from the date of grant. However, RSUs granted to our non-employee directors vest immediately upon grant.

All RSUs accrue dividend equivalents associated with the underlying stock as we declare dividends. Dividends will generally be paid to holders of RSUs in cash upon the vesting date of the associated RSU and will be forfeited if the RSU does not vest. The fair value of RSUs is the excess of the market price of our common stock at the date of grant over the purchase price (which is typically zero).

Cash dividends accrued and paid on RSUs for the three and six months ended June 30, 2016 and 2017 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Cash dividends accrued on RSUs	$	616	$	662	$	1,247	$	1,345
Cash dividends paid on RSUs	196		84		1,831		1,939

The fair value of RSUs vested during the three and six months ended June 30, 2016 and 2017 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Fair value of RSUs vested	$	2,807	$	2,047	$	17,785	$	16,073

A summary of RSU activity for the six months ended June 30, 2017 is as follows:

	RSUs		Weighted- Average Grant-Date Fair Value
Non-vested at December 31, 2016	1,163,393		$	33.21
Granted	584,089		36.68
Vested	(497,339	)	32.32
Forfeited	(50,356	)	34.68
Non-vested at June 30, 2017	1,199,787		$	35.21

Performance Units

Under our various equity compensation plans, we may also make awards of PUs. For the majority of outstanding PUs, the number of PUs earned is determined based on our performance against predefined targets of revenue and return on invested capital ("ROIC"). The number of PUs earned may range from 0% to 200% of the initial award. The number of PUs earned is determined based on our actual performance as compared to the targets at the end of a three-year performance period. Certain PUs that we grant will be earned based on a market condition associated with the total return on our common stock in relation to either (i) a subset of the Standard & Poor's 500 Index (for certain PUs granted prior to 2017), or (ii) a subset of the MSCI United States REIT Index (for certain PUs granted in 2017), rather than the revenue and ROIC targets noted above. The number of PUs earned based on the applicable 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. PUs awarded to employees who terminate their employment during the three-year performance period and on or after attaining age 55 and completing 10 years of qualifying service are eligible for pro-rated vesting, subject to the actual achievement against the predefined targets or a market condition as discussed above, based on the number of full years of service completed following the grant date (but delivery of the shares remains deferred). As a result, PUs are generally expensed over the three-year performance period.

All PUs accrue dividend equivalents associated with the underlying stock as we declare dividends. Dividends will generally be paid to holders of PUs in cash upon the settlement date of the associated PU and will be forfeited if the PU does not vest.

Cash dividends accrued and paid on PUs for the three and six months ended June 30, 2016 and 2017 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Cash dividends accrued on PUs	$	263	$	321	$	525	$	645
Cash dividends paid on PUs	—		—		645		205

During the six months ended June 30, 2017, we issued 229,692 PUs. The majority of our PUs are earned based on our performance against revenue and ROIC targets during their applicable performance period; therefore, we forecast the likelihood of achieving the predefined revenue 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 performance period) or the actual PUs earned (at the three-year anniversary of the grant date) over the vesting period for each of the awards. The fair value of PUs based on our performance against revenue and ROIC targets is the excess of the market price of our common stock at the date of grant over the purchase price (which is typically zero). For PUs earned based on a market condition, we utilize a Monte Carlo simulation to fair value these awards at the date of grant, and such fair value is expensed over the three-year performance period. As of June 30, 2017, we expected 25%, 100% and 100% achievement of the predefined revenue and ROIC targets associated with the awards of PUs made in 2015, 2016 and 2017, respectively.

The fair value of earned PUs that vested during the three and six months ended June 30, 2016 and 2017 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Fair value of earned PUs that vested	$	1,174	$	—	$	5,255	$	905

A summary of PU activity for the six months ended June 30, 2017 is as follows:

	Original PU Awards		PU Adjustment(1)		Total PU Awards		Weighted- Average Grant-Date Fair Value
Non-vested at December 31, 2016	559,340		(121,038	)	438,302		$	33.67
Granted	229,692		—		229,692		41.93
Vested	(32,776	)	—		(32,776	)	27.60
Forfeited/Performance or Market Conditions Not Achieved	(9,106	)	(129,029	)	(138,135	)	29.03
Non-vested at June 30, 2017	747,150		(250,067	)	497,083		$	39.17

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(1) Represents an increase or decrease in the number of original PUs awarded based on either the final performance criteria or market condition achievement at the end of the performance period of such PUs or a change in estimated awards based on the forecasted performance against the predefined targets.

Employee Stock Purchase Plan

We offer an ESPP in which participation is available to substantially all United States and Canadian employees who meet certain service eligibility requirements. The price for shares purchased under the ESPP is 95% of the market price of our common stock 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 six months ended June 30, 2016 and 2017, there were 56,662 shares and 60,167 shares, respectively, purchased under the ESPP. As of June 30, 2017, we had 667,427 shares available under the ESPP.

_______________________________________________________________________________

As of June 30, 2017, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $53,729 and is expected to be recognized over a weighted-average period of 2.2 years.

We generally issue shares of our common stock for the exercises of stock options, the vesting of RSUs and PUs and under our ESPP from unissued reserved shares.

d.    Income (Loss) Per Share—Basic and Diluted

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

The calculation of basic and diluted income (loss) per share for the three and six months ended June 30, 2016 and 2017 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2017			2016		2017
(Loss) income from continuing operations	$	(14,720	)	$	83,148		$	48,321	$	141,992
Less: Net income (loss) attributable to noncontrolling interests	835			2,492			1,102		2,874
(Loss) income from continuing operations (utilized in numerator of Earnings Per Share calculation)	$	(15,555	)	$	80,656		$	47,219	$	139,118
Income (loss) from discontinued operations, net of tax	$	1,587		$	(2,026	)	$	1,587	$	(2,363	)
Net (loss) income attributable to Iron Mountain Incorporated	$	(13,968	)	$	78,630		$	48,806	$	136,755
Weighted-average shares—basic	246,387,000			264,217,000			228,957,000		264,036,000
Effect of dilutive potential stock options	—			395,044			622,293		428,403
Effect of dilutive potential RSUs and PUs	—			318,375			450,100		405,640
Weighted-average shares—diluted	246,387,000			264,930,419			230,029,393		264,870,043
(Losses) earnings per share—basic:
(Loss) income from continuing operations	$	(0.06	)	$	0.31		$	0.21	$	0.53
Income (loss) from discontinued operations, net of tax	0.01			(0.01		)	0.01		(0.01		)
Net (loss) income attributable to Iron Mountain Incorporated(1)	$	(0.06	)	$	0.30		$	0.21	$	0.52
(Losses) earnings per share—diluted:
(Loss) income from continuing operations	$	(0.06	)	$	0.30		$	0.21	$	0.53
Income (loss) from discontinued operations, net of tax	0.01			(0.01		)	0.01		(0.01		)
Net (loss) income attributable to Iron Mountain Incorporated(1)	$	(0.06	)	$	0.30		$	0.21	$	0.52
Antidilutive stock options, RSUs and PUs, excluded from the calculation	1,594,475			2,701,129			2,208,135		2,597,692

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(1) Columns may not foot due to rounding.

e.    Income Taxes

We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Discrete items and changes in our estimate of the annual effective tax rate are recorded in the period they occur. Our effective tax rate is subject to variability in the future due to, among other items: (1) changes in the mix of income between our qualified REIT subsidiaries ("QRSs") and our domestic taxable REIT subsidiaries ("TRSs"), as well as among the jurisdictions in which we operate; (2) tax law changes; (3) volatility in foreign exchange gains and losses; (4) the timing of the establishment and reversal of tax reserves; and (5) our ability to utilize net operating losses that we generate.

For the three months ended June 30, 2016, we had a net loss from continuing operations before provision of income taxes of $3,881 and a provision for income taxes of $10,839; as such, our effective tax rate for the three months ended June 30, 2016 is not meaningful. Our effective tax rate for the six months ended June 30, 2016 was 32.0%. The primary reconciling items between the federal statutory tax rate of 35.0% and our overall effective tax rates for the three and six months ended June 30, 2016 were the benefit derived from the dividends paid deduction and differences in the rates of tax at which our foreign earnings are subject, including foreign exchange gains and losses in different jurisdictions with different tax rates. Our effective tax rates for the three and six months ended June 30, 2017 were 18.1% and 16.2%, respectively. The primary reconciling items between the federal statutory tax rate of 35.0% and our overall effective tax rate for the three months ended June 30, 2017 were the benefit derived from the dividends paid deduction and differences in the rates of tax at which our foreign earnings are subject. The primary reconciling items between the federal statutory tax rate of 35.0% and our overall effective tax rate for the six months ended June 30, 2017 were the benefit derived from the dividends paid deduction, differences in the rates of tax at which our foreign earnings are subject and a release of valuation allowances on certain of our foreign net operating losses of $7,511 as a result of the merger of certain of our foreign subsidiaries.

During 2016, as a result of the closing of the Recall Transaction and the subsequent integration of Recall's operations into our operations, we reassessed our intentions regarding the indefinite reinvestment of current and future undistributed earnings of our foreign subsidiaries outside the United States (the "2016 Indefinite Reinvestment Assessment"). As a result of the 2016 Indefinite Reinvestment Assessment, we concluded that it is our intent to indefinitely reinvest our current and future undistributed earnings of our unconverted foreign TRSs outside the United States. Accordingly, we no longer provide incremental foreign withholding taxes on the retained book earnings of these unconverted foreign TRSs. As a REIT, future repatriation of incremental undistributed earnings of our foreign subsidiaries will not be subject to federal or state income tax, with the exception of foreign withholding taxes in limited instances; however, such future repatriations will require distribution in accordance with REIT distribution rules, and any such distribution may then be taxable, as appropriate, at the stockholder level. We continue, however, to provide for incremental foreign withholding taxes on net book over outside basis differences related to the earnings of our foreign QRSs and certain of our converted TRSs.

f.    Concentrations of Credit Risk

Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents (including time deposits) and accounts receivable. The only significant concentrations of liquid investments as of December 31, 2016 and June 30, 2017, respectively, related to cash and cash equivalents. At December 31, 2016 and June 30, 2017, we had time deposits with six global banks and seven global banks, respectively. As of December 31, 2016 and June 30, 2017, our cash and cash equivalents was $236,484 and $291,019, respectively, including time deposits of $22,240 and $43,792, respectively.

g.    Fair Value Measurements

Our financial assets or liabilities that are carried at fair value are required to be measured using inputs from the three levels of the fair value hierarchy. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The three levels of the fair value hierarchy are as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

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

The assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2016 and June 30, 2017, respectively, are as follows:

			Fair Value Measurements at December 31, 2016 Using
Description	Total Carrying Value at December 31, 2016		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Time Deposits(1)	$	22,240	$	—		$	22,240		$	—
Trading Securities	10,659		10,181		(2)	478		(1)	—

			Fair Value Measurements at June 30, 2017 Using
Description	Total Carrying Value at June 30, 2017		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Time Deposits(1)	$	43,792	$	—		$	43,792		$	—
Trading Securities	11,031		10,766		(2)	265		(1)	—
Derivative Assets(3)	2,674		—			2,674			—

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(1) Time deposits and certain trading securities (included in Prepaid expenses and other in our Condensed Consolidated Balance Sheets) are measured based on quoted prices for similar assets and/or subsequent transactions.

(2) Certain trading securities are measured at fair value using quoted market prices.

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

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 at December 31, 2016 and June 30, 2017, with the exception of: (i) goodwill (as disclosed in Note 2.b.); (ii) the assets and liabilities acquired through acquisitions (as disclosed in Note 6 to Notes to Consolidated Financial Statements included in our Annual Report and Note 4); (iii) the Access Contingent Consideration (as defined and disclosed in Note 10); (iv) the redemption value of certain redeemable noncontrolling interests (as disclosed in Note 2.x. in Notes to Consolidated Financial Statements included in our Annual Report); and (v) our investment in OSG Records Management (Europe) Limited (as disclosed in Note 10), all of which are based on Level 3 inputs.

The fair value of our long-term debt, which was determined based on either Level 1 inputs or Level 3 inputs, is disclosed in Note 5. Long-term debt is measured at cost in our Condensed Consolidated Balance Sheets as of December 31, 2016 and June 30, 2017.

h.    Accumulated Other Comprehensive Items, Net

The changes in accumulated other comprehensive items, net for the three months ended June 30, 2016 and 2017, respectively, are as follows:

	Foreign Currency Translation Adjustments			Market Value Adjustments for Securities		Total
Balance as of March 31, 2016	$	(152,160	)	$	—	$	(152,160	)
Other comprehensive income (loss):
Foreign currency translation adjustments	2,871			—		2,871
Total other comprehensive income (loss)	2,871			—		2,871
Balance as of June 30, 2016	$	(149,289	)	$	—	$	(149,289	)

	Foreign Currency Translation Adjustments			Market Value Adjustments for Securities		Total
Balance as of March 31, 2017	$	(161,239	)	$	—	$	(161,239	)
Other comprehensive income (loss):
Foreign currency translation adjustments(1)	7,649			—		7,649
Total other comprehensive income (loss)	7,649			—		7,649
Balance as of June 30, 2017	$	(153,590	)	$	—	$	(153,590	)

The changes in accumulated other comprehensive items, net for the six months ended June 30, 2016 and 2017, respectively, are as follows:

	Foreign Currency Translation Adjustments			Market Value Adjustments for Securities			Total
Balance as of December 31, 2015	$	(175,651	)	$	734		$	(174,917	)
Other comprehensive income (loss):
Foreign currency translation adjustments	26,362			—			26,362
Market value adjustments for securities	—			(734		)	(734		)
Total other comprehensive income (loss)	26,362			(734		)	25,628
Balance as of June 30, 2016	$	(149,289	)	$	—		$	(149,289	)

	Foreign Currency Translation Adjustments			Market Value Adjustments for Securities		Total
Balance as of December 31, 2016	$	(212,573	)	$	—	$	(212,573	)
Other comprehensive income (loss):
Foreign currency translation adjustments(1)	58,983			—		58,983
Total other comprehensive income (loss)	58,983			—		58,983
Balance as of June 30, 2017	$	(153,590	)	$	—	$	(153,590	)

______________________________________________________________

(1) During the three and six months ended June 30, 2017, approximately $29,100 of cumulative translation adjustment associated with our businesses in Russia and Ukraine was reclassified from accumulated other comprehensive items, net and was included in the gain on sale associated with the Russia and Ukraine Divestment (see Note 10).

i.    Other Expense (Income), Net

Other expense (income), net for the three and six months ended June 30, 2016 and 2017 consists of the following:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2017			2016			2017
Foreign currency transaction losses (gains), net	$	17,193		$	20,199		$	4,651		$	16,035
Debt extinguishment expense	9,283			—			9,283			—
Other, net	(835		)	(39,565		)	(230		)	(41,765		)
	$	25,641		$	(19,366	)	$	13,704		$	(25,730	)

Other, net for the three and six months ended June 30, 2017 includes a gain of $38,869 associated with the Russia and Ukraine Divestment (see Note 10).

j.    Property, Plant and Equipment and Long-Lived Assets

During the three and six months ended June 30, 2016, we capitalized $5,135 and $8,538 of costs, respectively, associated with the development of internal use computer software projects. During the three and six months ended June 30, 2017, we capitalized $6,637 and $11,920 of costs, respectively, associated with the development of internal use computer software projects.

Consolidated gain on disposal/write-down of property, plant and equipment (excluding real estate), net for the three and six months ended June 30, 2016 was $626 and $1,077, respectively, and $216 and $675 for the three and six months ended June 30, 2017, respectively. These gains are primarily associated with the retirement of leased vehicles accounted for as capital lease assets within our North American Records and Information Management Business segment.

Gain on sale of real estate, net of tax, for the three and six months ended June 30, 2017 consists of the sale of land and a building in the United States for net proceeds of approximately $12,700, which resulted in a gain of $1,563.

k.    New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 modifies the process by which entities will test goodwill for impairment. Under existing GAAP, when the carrying value of a reporting unit exceeds the reporting unit’s fair value, an entity would then proceed to a “Step 2” goodwill impairment analysis, which requires calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities, as if that reporting unit had been acquired in a business combination. Under ASU 2017-04, a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of the reporting unit’s goodwill. We adopted ASU 2017-04 in the first quarter of 2017 and it did not impact our consolidated financial statements.

As Yet Adopted Accounting Pronouncements

a. ASU 2014-09

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 provides guidance for management to reassess revenue recognition as it relates to: (1) transfer of control, (2) variable consideration, (3) allocation of transaction price based on relative standalone selling price, (4) licenses, (5) time value of money, and (6) contract costs.

ASU 2014-09 will replace the current revenue recognition criteria under GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of ASU 2014-09 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for such goods or services. The two permitted transition methods under ASU 2014-09 are: (i) the full retrospective method, whereby ASU 2014-09 would be applied to each prior reporting period presented and the cumulative effect of adoption would be recognized at the earliest period shown, or (ii) the modified retrospective method, whereby the cumulative effect of applying ASU 2014-09 would be recognized at the date of initial application. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 for one year, making ASU 2014-09 effective for us on January 1, 2018, with early adoption permitted as of January 1, 2017. We will adopt ASU 2014-09 as of January 1, 2018 using the modified retrospective method.

During 2015, we established a project team responsible for the assessment and implementation of ASU 2014-09. We utilized a bottoms-up approach to analyze the impact of ASU 2014-09 on our contracts with customers by reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of ASU 2014-09 to our contracts with customers. We are currently in the process of designing and implementing appropriate changes to our business processes, systems and controls to support the accounting and the financial disclosure requirements under ASU 2014-09. We have been closely monitoring the FASB activity related to specific interpretative issues pertaining to ASU 2014-09. During the second half of 2016, we substantially completed our evaluation of the potential changes resulting from the adoption of ASU 2014-09 on our accounting and the financial disclosure requirements and are now moving into the more detailed quantification of the impacts of adopting ASU 2014-09, the more significant of which are discussed below. Based on our analysis to date, we expect that the most significant impacts associated with adopting ASU 2014-09 compared to current GAAP will relate to (i) the deferral of certain commissions on our long-term storage contracts (“Accounting for Commissions”) and (ii) certain policy changes related to initial moves of physical storage, which will be subject to new cost guidance (“Accounting for Initial Moves”).

i. Accounting for Commissions

Under current GAAP, commissions that we pay related to our long-term storage contracts are expensed as incurred. Under ASU 2014-09, however, certain commissions will be capitalized and amortized over the period of expected earned revenue. In the year of adoption, this will result in increased intangible contract assets on our Consolidated Balance Sheet, a reduction in selling, general and administrative expenses and a corresponding increase in amortization expense (assuming consistent levels of spending up through the adoption date) on our Consolidated Statement of Operations and an increase in cash flows from operating activities and a corresponding increase in cash used for investing activities on our Consolidated Statement of Cash Flows.

ii. Accounting for Initial Moves

Under current GAAP, intake costs not charged to transport boxes to one of our facilities, which include labor and transportation costs, are capitalized and amortized as a component of depreciation and amortization in our Consolidated Statements of Operations. Under ASU 2014-09, however, the revenue and costs associated with all initial moves of physical storage, regardless of whether or not the services associated with such initial moves are provided to the customer at no charge, will be deferred and recognized over the period consistent with the transfer of the service to the customer to which the asset relates. In the year of adoption, this will result in decreased intangible assets and increased deferred revenue on our Consolidated Balance Sheet, a reduction in cost of sales and a corresponding increase in amortization expense (assuming consistent levels of spending up through the adoption date) on our Consolidated Statement of Operations and an increase in cash flows from operating activities and a corresponding increase in cash used for investing activities on our Consolidated Statement of Cash Flows.

b. Other As Yet Adopted Accounting Pronouncements

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, while eliminating the available-for-sale classification for equity securities with readily determinable fair values and the cost method for equity investments without readily determinable fair values. ASU 2016-01 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 will adopt ASU 2016-01 on January 1, 2018 and are currently evaluating the impact ASU 2016-01 will have on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016-02 also will require certain qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 will be effective for us on January 1, 2019, with early adoption permitted. We will adopt ASU 2016-02 on January 1, 2019 and are currently evaluating the impact ASU 2016-02 will have on our consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). ASU 2016-18 provides guidance on the classification of restricted cash in the statement of cash flows. ASU 2016-18 is effective for us on January 1, 2018, with early adoption permitted and is required to be adopted on a retrospective basis. We do not believe that the adoption of ASU 2016-18 will have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 provides greater clarity on the definition of a business to assist entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. ASU 2017-01 is effective for us on January 1, 2018, with early adoption permitted. We are currently evaluating the impact ASU 2017-01 will have on our consolidated financial statements.