Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Summary of Significant Accounting Policies

Changes in the carrying value of goodwill attributable to each reportable operating segment

	North American Business			International Business			Total Consolidated
Gross Balance as of December 31, 2012	$	2,023,971		$	631,528		$	2,655,499
Deductible goodwill acquired during the year		9,877			16,304			26,181
Non-deductible goodwill acquired during the year		—			32,903			32,903
Fair value and other adjustments		191			(408	)		(217	)(1)
Currency effects		(8,038	)		(9,832	)		(17,870	)
Gross Balance as of September 30, 2013	$	2,026,001		$	670,495		$	2,696,496
Accumulated Amortization Balance as of December 31, 2012	$	261,664		$	59,076		$	320,740
Currency effects		(399	)		74			(325	)
Accumulated Amortization Balance as of September 30, 2013	$	261,265		$	59,150		$	320,415
Net Balance as of December 31, 2012	$	1,762,307		$	572,452		$	2,334,759
Net Balance as of September 30, 2013	$	1,764,736		$	611,345		$	2,376,081
Accumulated Goodwill Impairment Balance as of December 31, 2012	$	85,909		$	46,500		$	132,409
Accumulated Goodwill Impairment Balance as of September 30, 2013	$	85,909		$	46,500		$	132,409

(1)

Total fair value and other adjustments primarily include $(143) in net adjustments to property, plant and equipment, net, customer relationships and deferred income taxes made within one year from the date of the acquisition, as well as $74 of cash received related to acquisitions made in previous years.

Components of amortizable intangible assets

The components of our amortizable intangible assets as of September 30, 2013 are as follows:

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer Relationships and Acquisition Costs	$	749,818	$	(261,510	)	$	488,308
Core Technology(1)		3,786		(3,448	)		338
Trademarks and Non-Compete Agreements(1)		5,786		(3,633	)		2,153
Deferred Financing Costs		61,955		(14,939	)		47,016
Total	$	821,345	$	(283,530	)	$	537,815

(1)

Included in Other Assets, net in the accompanying Consolidated Balance Sheets.

Stock-based compensation expense for Employee Stock-Based Awards related to continuing operations

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2013		2012		2013
Cost of sales (excluding depreciation and amortization)	$	329	$	115	$	846	$	257
Selling, general and administrative expenses		4,353		9,308		19,953		22,759
Total stock-based compensation	$	4,682	$	9,423	$	20,799	$	23,016

Summary of the weighted average assumptions used for stock option grants

	Nine Months Ended September 30,
Weighted Average Assumptions	2012			2013
Expected volatility		33.8	%		33.8	%
Risk-free interest rate		1.24	%		1.13	%
Expected dividend yield		3	%		3	%
Expected life		6.3 years			6.3 years

Summary of stock option activity

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2012		5,908,102		$	23.39
Granted		261,698			33.03
Exercised		(804,055	)		22.37
Forfeited		(102,981	)		21.69
Expired		(5,875	)		28.15
Outstanding at September 30, 2013		5,256,889		$	24.05		5.47	$	18,964
Options exercisable at September 30, 2013		3,766,531		$	23.69		4.85	$	14,220
Options expected to vest		1,412,455		$	24.92		7.04	$	4,512

Aggregate intrinsic value of stock options exercised

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2013		2012		2013
Aggregate intrinsic value of stock options exercised	$	4,440	$	318	$	7,812	$	10,414

Summary of restricted stock and RSU activity

	Restricted Stock and RSUs			Weighted- Average Grant-Date Fair Value
Non-vested at December 31, 2012		1,303,664		$	29.89
Granted		638,469			35.35
Vested		(474,586	)		29.97
Forfeited		(54,458	)		29.95
Non-vested at September 30, 2013		1,413,089		$	32.33

Summary of Performance Unit (PU) activity

	Original PU Awards			PU Adjustment(1)			Total PU Awards			Weighted- Average Grant-Date Fair Value
Non-vested at December 31, 2012		236,093			(4,447	)		231,646		$	29.12
Granted		198,869			(25,536	)		173,333			38.81
Vested		(34,393	)		613			(33,780	)		29.48
Forfeited		(6,395	)		—			(6,395	)		30.77
Non-vested at September 30, 2013		394,174			(29,370	)		364,804		$	33.66

(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.

Calculation of basic and diluted net income (loss) per share attributable to the entity

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2013			2012			2013
Income (Loss) from continuing operations	$	53,719	$	5,528		$	156,233		$	51,416
Total income (loss) from discontinued operations (see Note 10)	$	32	$	(571	)	$	(7,585	)	$	1,515
Net income (loss) attributable to Iron Mountain Incorporated	$	52,809	$	4,047		$	146,214		$	49,997
Weighted-average shares—basic		171,776,000		191,332,000			171,464,000			190,789,000
Effect of dilutive potential stock options		950,922		597,275			808,365			1,109,935
Effect of dilutive potential restricted stock, RSUs and PUs		320,537		338,617			227,899			416,231
Weighted-average shares—diluted		173,047,459		192,267,892			172,500,264			192,315,166
Earnings (Losses) per share—basic:
Income (Loss) from continuing operations	$	0.31	$	0.03		$	0.91		$	0.27
Total income (loss) from discontinued operations (see Note 10)	$	—	$	—		$	(0.04	)	$	0.01
Net income (loss) attributable to Iron Mountain Incorporated—basic	$	0.31	$	0.02		$	0.85		$	0.26
Earnings (Losses) per share—diluted:
Income (Loss) from continuing operations	$	0.31	$	0.03		$	0.91		$	0.27
Total income (loss) from discontinued operations (see Note 10)	$	—	$	—		$	(0.04	)	$	0.01
Net income (loss) attributable to Iron Mountain Incorporated—diluted	$	0.31	$	0.02		$	0.85		$	0.26
Antidilutive stock options, RSUs and PUs, excluded from the calculation		821,862		2,014,108			1,584,179			864,521

Assets and liabilities carried at fair value measured on a recurring basis

			Fair Value Measurements at December 31, 2012 Using
Description	Total Carrying Value at December 31, 2012		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Money Market Funds(1)	$	68,800	$	—		$	68,800		$	—
Time Deposits(1)		149,829		—			149,829			—
Trading Securities		11,071		10,525	(2)		546	(1)		—
Derivative Liabilities(3)		1,522		—			1,522			—

			Fair Value Measurements at September 30, 2013 Using
Description	Total Carrying Value at September 30, 2013		Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Money Market Funds(1)	$	72,942	$	—		$	72,942		$	—
Time Deposits(1)		6,418		—			6,418			—
Trading Securities		12,156		11,568	(2)		588	(1)		—
Derivative Assets(3)		85		—			85			—
Derivative Liabilities(3)		7,059		—			7,059			—

(1)

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

(2)

Securities are measured at fair value using quoted market prices.

(3)

Our derivative assets and liabilities primarily relate to short-term (six months or less) foreign currency contracts that we have entered into to hedge our intercompany exposures denominated in British pounds sterling and Australian dollars. 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.

Other expense (income), net

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2013			2012			2013
Foreign currency transaction (gains) losses, net	$	(1,131	)	$	2,612		$	8,055		$	22,543
Debt extinguishment expense, net		10,628			43,662			10,628			43,662
Other, net		(1,751	)		(321	)		(4,175	)		(2,238	)
	$	7,746		$	45,953		$	14,508		$	63,967