IRON MOUNTAIN INC

Previous wording

In September 2022, we announced Project Matterhorn, a global program designed to accelerate the growth of our business. Project Matterhorn investments focus on transforming our operating model to a global operating model. Project Matterhorn focuses on the formation of a solution-based sales approach that is designed to allow us to optimize our shared services and best practices to better serve our customers' needs. We are investing to accelerate growth and to capture a greater share of the large, global addressable markets in which we operate. We expect to incur approximately $150.0 million in costs annually related to Project Matterhorn from 2023 through 2025. Costs are comprised of (1) restructuring costs, which include (i) site consolidation and other related exit costs, (ii) employee severance costs and (iii) certain professional fees associated with these activities and (2) other transformation costs, which include professional fees such as project management costs and costs for third party consultants who are assisting in the enablement our growth initiatives. The following chart presents (in thousands) total Restructuring and other transformation costs related to Project Matterhorn from the inception of Project Matterhorn through December 31, 2023 and for the years ended December 31, 2023 and 2022:

Current wording

In September 2022, we announced Project Matterhorn, a global program designed to accelerate the growth of our business. Project Matterhorn investments focus on transforming our operating model to a global operating model. Project Matterhorn focuses on the formation of a solution-based sales approach that is designed to allow us to optimize our shared services and best practices to better serve our customers' needs. We are investing to accelerate growth and to capture a greater share of the large, global addressable markets in which we operate. We have incurred approximately $378.5 million in Restructuring and other transformation costs from the inception of Project Matterhorn through December 31, 2024. We expect to incur approximately $150.0 million in costs related to Project Matterhorn during the year ending December 31, 2025, at which point the program is expected to be completed. Costs are comprised of (1) restructuring costs, which include (i) site consolidation and other related exit costs, (ii) employee severance costs and (iii) certain professional fees associated with these activities, and (2) other transformation costs, which include professional fees such as project management costs and costs for third party consultants who are assisting in the enablement of our growth initiatives. The following chart presents (in thousands) total Restructuring and other transformation costs related to Project Matterhorn from the inception of Project Matterhorn through December 31, 2024 and for the years ended December 31, 2024 and 2023:

Previous wording

•Our organic service revenue growth is primarily due to increases in our service activity. We expect organic service revenue growth in 2024 to benefit from our new and existing digital offerings and ALM, as well as our traditional services.

Current wording

•Our organic service revenue growth is primarily due to increases in our service activity. We expect organic service revenue growth in 2025 to benefit from our new and existing Global Digital Solutions offerings and ALM, as well as our traditional services.

Previous wording

•We expect continued total revenue and Adjusted EBITDA growth in 2024 as a result of our focus on new product and service offerings, innovation, customer solutions and market expansion in line with our Project Matterhorn objectives.

Current wording

•We expect continued total revenue and Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") growth in 2025 as a result of our focus on new product and service offerings, innovation, customer solutions and market expansion in line with our Project Matterhorn objectives.

Previous wording

Our revenues consist of storage rental revenues as well as service revenues and are reflected net of sales and value-added taxes. Storage rental revenues, which are considered a key driver of financial performance for the storage and information management services industry, consist primarily of recurring periodic rental charges related to the storage of materials or data (generally on a per unit basis) that are typically retained by customers for many years and of revenues associated with our data center operations. Service revenues include charges for related service activities, the most significant of which include: (1) the handling of records, including the addition of new records, temporary removal of records from storage, refiling of removed records, customer termination and permanent withdrawal fees, project revenues and courier operations consisting primarily of the pickup and delivery of records upon customer request; (2) destruction services, consisting primarily of (i) secure shredding of sensitive documents and the subsequent sale of shredded paper for recycling, the price of which can fluctuate from period to period, and (ii) the decommissioning, data erasure, processing and disposition or sale of IT hardware and component assets; (3) digital solutions, including the scanning, imaging and document conversion services of active and inactive records, and consulting services; and (4) data center services, including set up, monitoring and support of our customers' assets which are protected in our data center facilities, and special project services, including data center fitout. Our Records Management and Data Management service revenue growth is being negatively impacted by declining activity rates as stored records and tapes are becoming less active and more archival. While customers continue to store their records and tapes with us, they are less likely than they have been in the past to retrieve records for research and other purposes, thereby reducing service activity levels.

Current wording

Our revenues consist of storage rental revenues and service revenues and are reflected net of sales and value-added taxes. Storage rental revenues, which are considered a key driver of financial performance for the storage and information management services industry, consist primarily of recurring periodic rental charges related to the storage of materials or data (generally on a per unit basis) that are typically retained by customers for many years and of revenues associated with our data center operations. Service revenues include charges for related service activities, the most significant of which include: (1) the handling of records, including the addition of new records, temporary removal of records from storage, refiling of removed records, customer termination and permanent withdrawal fees, project revenues and courier operations, consisting primarily of the pickup and delivery of records upon customer request; (2) secure shredding of sensitive documents and the subsequent sale of shredded paper for recycling, the price of which can fluctuate from period to period; (3) the decommissioning, data erasure, processing and disposition, and recycling or sale of IT hardware and component assets; (4) digital solutions, including the scanning, imaging and document conversion services of active and inactive records, consulting services and the sale of software as a service; and (5) data center services, including set up, monitoring and support of our customers' assets which are protected in our data center facilities, and special project services, including data center fitout.

Previous wording

Cost of sales (excluding depreciation and amortization) consists primarily of labor, including wages and benefits for field personnel, facility occupancy costs (including rent and utilities), transportation expenses (including vehicle leases and fuel), other product cost of sales and other equipment costs and supplies. Of these, labor and facility occupancy costs are the most significant. Selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, IT, sales, account management and marketing personnel, as well as expenses related to communications, travel, professional fees, bad debts, training, office equipment and supplies.

Current wording

Cost of sales (excluding depreciation and amortization) consists primarily of labor, including wages and benefits for field personnel, facility occupancy costs (including rent and utilities), data center pass-through power costs, transportation expenses (including vehicle leases and fuel), other product cost of sales and other equipment costs and supplies. Of these, labor and facility occupancy costs are the most significant. Selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, IT, sales, account management and marketing personnel, as well as expenses related to communications, travel, professional fees, bad debts, training, office equipment and supplies.

Previous wording

Trends in facility occupancy costs are impacted by:•the total number of facilities we occupy;•the mix of properties we own versus properties we lease;•fluctuations in per square foot occupancy costs; and•the levels of utilization of these properties.Trends in total wages and benefits in dollars and as a percentage of total revenue are influenced by:•changes in headcount and compensation levels;•achievement of incentive compensation targets;•workforce productivity; and•variability in costs associated with medical insurance and workers’ compensation.The expansion of our international businesses has impacted the major cost of sales components and selling, general and administrative expenses.•Our international operations are more labor intensive relative to revenue than our operations in North America and, therefore, labor costs are a higher percentage of international operational revenue.•The overhead structure of our expanding international operations has generally not achieved the same level of overhead leverage as our North American operations, which has resulted in an increase in selling, general and administrative expenses as a percentage of revenue as our international operations become a larger percentage of our consolidated results.

Current wording

Trends in facility occupancy costs are impacted by:•the total number of facilities we occupy;•the mix of properties we own versus properties we lease;•fluctuations in per square foot occupancy costs;•the levels of utilization of these properties; and•data center power costs.Trends in total wages and benefits in dollars and as a percentage of total revenue are influenced by:•changes in headcount and compensation levels;•achievement of incentive compensation targets;•workforce productivity; and•variability in costs associated with medical insurance and workers’ compensation.

Previous wording

Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include racking structures, buildings, building and leasehold improvements and computer systems hardware and software. Amortization relates primarily to customer and supplier relationship intangible assets, Contract Costs (as defined below in Critical Accounting Estimates) and data center lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Current wording

Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include buildings, building and leasehold improvements, data center infrastructure, racking structures and computer systems hardware and software. Amortization relates primarily to customer and supplier relationship intangible assets, Contract Costs (as defined below in Critical Accounting Estimates) and data center lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Previous wording

The percentage of United States dollar-reported revenues for all other foreign currencies was 12.7% for both of the years ended December 31, 2023 and 2022.

Current wording

The percentage of United States dollar-reported revenues for all other foreign currencies was 13.6% and 14.5% for the years ended December 31, 2024 and 2023, respectively.

Previous wording

(2)Includes foreign currency transaction losses (gains), net, debt extinguishment expense and other, net. See Note 2.v. to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding the components of Other expense (income), net.

Current wording

(2)Includes foreign currency transaction (gains) losses, net, debt extinguishment expense and other, net. See Note 2.v. to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding the components of Other expense (income), net.

Previous wording

(2)The differences between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the years ended December 31, 2023 and 2022 are primarily due to (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Our structural tax rate for purposes of the calculation of Adjusted EPS for the years ended December 31, 2023 and 2022 was 12.3% and 15.2%, respectively.

Current wording

(2)The differences between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the years ended December 31, 2024 and 2023 are primarily due to (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Our structural tax rate for purposes of the calculation of Adjusted EPS for the years ended December 31, 2024 and 2023 was 15.6% and 12.3%, respectively.

Previous wording

(1)Includes depreciation expense related to owned real estate assets (land improvements, buildings, building improvements, leasehold improvements and racking), excluding depreciation related to real estate financing leases.

Current wording

(1)Includes depreciation expense related to owned real estate assets (land improvements, buildings, building and leasehold improvements, data center infrastructure and racking structures), excluding depreciation related to real estate financing leases.

Previous wording

(2)Tax expense associated with the gain on sale of real estate for the years ended December 31, 2023 and 2022 was approximately $0.5 million and $0.8 million, respectively.

Current wording

(2)Tax expense associated with the gain on sale of real estate for the years ended December 31, 2024 and 2023 was approximately $1.1 million and $0.5 million, respectively.

Previous wording

(4)Represents the tax impact of (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but has an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Discrete tax items resulted in a (benefit) provision for income taxes of $(18.1) million and $(11.9) million for the years ended December 31, 2023 and 2022, respectively.

Current wording

(4)Represents the tax impact of (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but has an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Discrete tax items resulted in a (benefit) provision for income taxes of $(6.2) million and $(18.1) million for the years ended December 31, 2024 and 2023, respectively.

Previous wording

The costs associated with the initial movement of customer records into physical storage and certain commissions are considered costs to obtain or fulfill customer contracts (collectively, "Contract Costs"). Contract Costs are generally amortized over a three year term, which we have determined is consistent with the transfer of the underlying performance obligations to which the assets relate. Different determinations on term length would result in differences in the amount and timing of amortization expense recognized.

Current wording

Certain costs to fulfill or obtain customer contracts and certain initial direct costs of obtaining data center leases, including the costs associated with the initial movement of customer records into physical storage and certain commission expenses, are collectively referred to as "Contract Costs". Contract Costs are capitalized and amortized as a component of depreciation and amortization in our Consolidated Statements of Operations, generally over a three year term, which we have determined is consistent with the transfer of the underlying performance obligations to which the assets relate. Different determinations on term length would result in differences in the amount and timing of amortization expense recognized.

Previous wording

Accounting for acquisitions of a business has resulted in the capitalization of the cost in excess of the estimated fair value of the net assets acquired in each of these acquisitions as goodwill. We estimate the fair values of the assets acquired in each acquisition as of the date of acquisition and these estimates are subject to adjustment based on the final assessments of the fair value of intangible assets (primarily customer and supplier relationship and data center lease-based intangible assets), property, plant and equipment (primarily building, building improvements, leasehold improvements, data center infrastructure and racking structures), operating leases, contingencies and income taxes (primarily deferred income taxes). See Note 3 to Notes to Consolidated Financial Statements included in this Annual Report for a description of recent acquisitions.

Current wording

Accounting for acquisitions of a business has resulted in the capitalization of the cost in excess of the estimated fair value of the net assets acquired in each of these acquisitions as goodwill. We estimate the fair values of the assets acquired in each acquisition as of the date of acquisition and these estimates are subject to adjustment based on the final assessments of the fair value of intangible assets (primarily customer and supplier relationship and data center lease-based intangible assets), property, plant and equipment (primarily buildings, building and leasehold improvements, data center infrastructure and racking structures), operating leases, contingencies and income taxes (primarily deferred income taxes). See Note 3 to Notes to Consolidated Financial Statements included in this Annual Report for a description of recent acquisitions.

Previous wording

Of the net assets acquired in our acquisitions, the fair value of owned buildings, including building improvements, customer and supplier relationship and data center lease-based intangible assets, racking structures and operating leases are generally the most common and most significant. For significant acquisitions or acquisitions involving new markets or new products, we generally use third parties to assist us in estimating the fair value of owned buildings, including building improvements, customer and supplier relationship and lease-based intangible assets and market rental rates for acquired operating leases. For acquisitions that are not significant or do not involve new markets or new products, we generally use third parties to assist us in estimating the fair value of acquired owned buildings, including building improvements, and market rental rates for acquired operating leases. When not using third party appraisals of the fair value of acquired net assets, the fair value of acquired customer and supplier relationship intangible assets, above and below market in-place operating leases, and racking structures is determined internally. We use discounted cash flow models to determine the fair value of customer and supplier relationship intangible assets, which requires a significant amount of judgment by management, including estimating expected lives of the relationships, expected future cash flows and discount rates. The fair value of above and below market in-place operating leases is determined internally using a discounted cash flow model, utilizing the difference in cash flows between the contractual lease payments over the remaining lease term and estimated market rental rates on comparable assets at the time of the acquisition. The fair value of acquired racking structures is determined internally by taking current estimated replacement cost at the date of acquisition for the quantity of racking structures acquired, discounted to take into account the quality (e.g. age, material and type) of the racking structures. We determine the fair value of tangible data center assets using an estimated replacement cost at the date of acquisition, then discounting for age, economic and functional obsolescence.

Current wording

Of the net assets acquired in our acquisitions, the fair value of owned buildings, including data center infrastructure and building improvements, customer and supplier relationship and data center lease-based intangible assets, racking structures and operating leases are generally the most common and most significant. For significant acquisitions or acquisitions involving new markets or new products, we generally use third parties to assist us in estimating the fair value of owned buildings, including data center infrastructure and building improvements, customer and supplier relationship and lease-based intangible assets and market rental rates for acquired operating leases. For acquisitions that are not significant or do not involve new markets or new products, we generally use third parties to assist us in estimating the fair value of owned buildings, including data center infrastructure and building improvements, and market rental rates for acquired operating leases. When not using third party appraisals of the fair value of acquired net assets, the fair value of acquired customer and supplier relationship intangible assets, above and below market in-place operating leases, and racking structures is determined internally. When estimating fair values internally, we use discounted cash flow models to determine the fair value of customer and supplier relationship intangible assets, which requires a significant amount of judgment by management, including estimating expected lives of the relationships, expected future cash flows and discount rates. The fair value of above and below market in-place operating leases is determined internally using a discounted cash flow model, utilizing the difference in cash flows between the contractual lease payments over the remaining lease term and estimated market rental rates on comparable assets at the time of the acquisition. The fair value of acquired racking structures is determined internally by taking current estimated replacement cost at the date of acquisition for the quantity of racking structures acquired, discounted to take into account the quality (e.g. age, material and type) of the racking structures. We determine the fair value of tangible data center assets using an estimated replacement cost at the date of acquisition, then discounting for age, economic and functional obsolescence.

Previous wording

The fair value of the Deferred Purchase Obligation associated with the ITRenew Transaction (each as defined in Note 3 to Notes to Consolidated Financial Statements included in this Annual Report) was determined utilizing a Monte-Carlo simulation model and takes into account our forecasted projections as it relates to the underlying performance of the business. The Monte-Carlo simulation model incorporates assumptions as to expected gross profits over the applicable achievement period, including adjustments for the volatility of timing and amount of the associated revenue and costs, as well as discount rates that account for the risk of the underlying arrangement and overall market risks.

Current wording

The fair value of the deferred purchase obligation associated with the ITRenew Transaction (as defined in Note 3 to Notes to Consolidated Financial Statements included in this Annual Report) was determined utilizing a Monte-Carlo simulation model and takes into account our forecasted projections as it relates to the underlying performance of the business. The Monte-Carlo simulation model incorporates assumptions as to expected gross profits over the applicable achievement period, including adjustments for the volatility of timing and amount of the associated revenue and costs, as well as discount rates that account for the risk of the underlying arrangement and overall market risks.

Previous wording

Our estimates of fair value are based upon assumptions believed to be reasonable at that time but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur, which may affect the accuracy of such assumptions. Total property, plant and equipment acquired in our 2023 acquisitions was approximately $140.7 million.

Current wording

Our estimates of fair value are based upon assumptions believed to be reasonable at that time but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur, which may affect the accuracy of such assumptions. Total supplier relationship intangible assets acquired in our 2024 acquisitions was approximately $131.5 million.

Previous wording

We review long-lived assets and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Examples of events or circumstances that may be indicative of impairment include, but are not limited to:

Current wording

We review long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Examples of events or circumstances that may be indicative of impairment include, but are not limited to:

Previous wording

Based on our goodwill impairment analysis as of October 1, 2023, all of our reporting units had estimated fair values exceeding their carrying values by greater than 30%. The Global Data Center and ALM reporting units represented approximately $1,058.4 million, or 21.1%, of our consolidated goodwill balance at December 31, 2023, and their fair values are most sensitive to changes in our assumptions. The following is a summary of the Global Data Center and ALM reporting units including the goodwill balance (in thousands), the percentage by which the fair value of the reporting units exceeded their carrying values and certain key assumptions used by us in determining the fair value of the reporting units as of October 1, 2023:

Current wording

Based on our goodwill impairment analysis as of October 1, 2024, all of our reporting units had estimated fair values exceeding their carrying values by greater than 35%. The ALM reporting unit represented approximately $749.6 million, or 14.7%, of our consolidated goodwill balance at December 31, 2024, and its fair value is most sensitive to changes in our assumptions. The following is a summary of the ALM reporting unit including the goodwill balance (in thousands), the percentage by which the fair value of the reporting unit exceeded its carrying value and certain key assumptions used by us in determining the fair value of the reporting unit as of October 1, 2024:

Previous wording

(1)For purposes of our goodwill impairment analysis, the term "capital expenditures" includes both growth investment and recurring capital expenditures. The capital expenditure assumptions in our goodwill impairment analysis for our Global Data Center reporting unit include significant growth investment in the next three years.

Current wording

(1)For purposes of our goodwill impairment analysis, the term "capital expenditures" includes both growth investment and recurring capital expenditures.

Previous wording

The fair values of our reporting units are generally determined using a combined approach based on the present value of future cash flows (the "Discounted Cash Flow Model") and market multiples (the "Market Approach"). There are inherent uncertainties and judgments involved when determining the fair value of the reporting units for purposes of our annual goodwill impairment testing. The following includes supplemental information to the table above for the Global Data Center and ALM reporting units where the estimated fair value exceeded their respective carrying values by approximately 31.2% and 37.7% as of October 1, 2023. The fair value of our Global Data Center reporting unit was determined using a combined Discounted Cash Flow Model and Market Approach, while the fair value of our ALM reporting unit was determined using a Discounted Cash Flow Model approach. We do not use a Market Approach when determining the fair value of our ALM reporting unit given a lack of directly comparable publicly traded guideline companies to ALM. The success of these businesses and the achievement of certain key assumptions developed by management and used in the Discounted Cash Flow Model are contingent upon various factors including, but not limited to, (i) achieving growth from existing customers, (ii) sales to new customers, (iii) increased market penetration, (iv) accuracy in the timing and costs of capital investments related to expansions and (v) market pricing trends of IT hardware and component assets.

Current wording

The fair values of our reporting units are generally determined using a combined approach based on the present value of future cash flows (the "Discounted Cash Flow Model") and market multiples (the "Market Approach"). There are inherent uncertainties and judgments involved when determining the fair value of the reporting units for purposes of our annual goodwill impairment testing. The following includes supplemental information to the table above for the ALM reporting unit where the estimated fair value exceeded its carrying value by approximately 57.4% as of October 1, 2024. The fair value of our ALM reporting unit was determined using a Discounted Cash Flow Model approach. We do not use a Market Approach when determining the fair value of our ALM reporting unit given a lack of directly comparable publicly traded guideline companies to ALM. The success of these businesses and the achievement of certain key assumptions developed by management and used in the Discounted Cash Flow Model are contingent upon various factors including, but not limited to, (i) achieving growth from existing customers, (ii) sales to new customers, (iii) increased market penetration and (iv) market pricing trends of IT hardware and component assets.

Previous wording

Our ALM business provides hyperscale and corporate IT infrastructure managers with services and solutions that enable the decommissioning, data erasure, processing and disposition or sale of IT hardware and component assets. ALM services are enabled by: (i) secure logistics, chain of custody and complete asset traceability practices; (ii) environmentally-responsible asset processing and recycling; and (iii) data sanitization and asset refurbishment services that enable value recovery through asset remarketing. The assumptions we used in determining fair value reflect the ongoing and anticipated expansion of these services, the maintenance and further development of the supplier relationships required to expand this business and meet customer demand and decommissioning schedules of our supplier's IT hardware and component assets, as well as demand for such assets at that time. The assumptions used also reflect the continued stabilization and improvement in market pricing for IT hardware and component assets from pricing observed as compared to recent history.

Current wording

Our ALM business provides hyperscale and corporate IT infrastructure managers with services and solutions that enable the decommissioning, data erasure, processing and disposition, and recycling or sale of IT hardware and component assets. ALM services are enabled by: (i) secure logistics, chain of custody and complete asset traceability practices; (ii) environmentally-responsible asset processing and recycling; and (iii) data sanitization and asset refurbishment services that enable value recovery through asset remarketing. The assumptions we used in determining fair value reflect the ongoing and anticipated expansion of these services, the maintenance and further development of the supplier relationships required to expand this business and meet customer demand and decommissioning schedules of our supplier's IT hardware and component assets, as well as demand for such assets at that time. The assumptions used also reflect market pricing for IT hardware and component assets that is consistent with pricing we observed in the current year.

Previous wording

Key factors that could reasonably be expected to have a negative impact on the estimated fair value of these reporting units and potentially result in impairment charges include, but are not limited to: (i) a deterioration in general economic conditions, (ii) significant adverse changes in regulatory factors or in the business climate and (iii) adverse actions or assessment by regulators, all of which could result in adverse changes to the key assumptions used in valuing the reporting units. The inability to meet the assumptions used in the Discounted Cash Flow Model and Market Approach for each of the reporting units, or future adverse market conditions not currently known, could lead to a fair value that is less than the carrying value in any one of our reporting units.

Current wording

Key factors that could reasonably be expected to have a negative impact on the estimated fair value of these reporting units and potentially result in impairment charges include, but are not limited to: (i) a deterioration in general economic conditions, (ii) significant adverse changes in regulatory factors or in the business climate, (iii) adverse actions or assessment by regulators and (iv) changes in market trends due to the evolution of technology, all of which could result in adverse changes to the key assumptions used in valuing the reporting units. The inability to meet the assumptions used in the Discounted Cash Flow Model and Market Approach for each of the reporting units, or future adverse market conditions not currently known, could lead to a fair value that is less than the carrying value in any one of our reporting units.

Previous wording

•a hypothetical decrease of 10% in the expected annual future cash flows of these reporting units, with all other assumptions unchanged, would have decreased the estimated fair value of our reporting units as of October 1, 2023 by a range of approximately 7.7% to 11.5% but would not, however, have resulted in the carrying value of any of our reporting units exceeding their estimated fair value; and

Current wording

•a hypothetical decrease of 10% in the expected annual future cash flows of these reporting units, with all other assumptions unchanged, would have decreased the estimated fair value of our reporting units as of October 1, 2024 by a range of approximately 9.9% to 12.5% but would not, however, have resulted in the carrying value of any of our reporting units exceeding their estimated fair value; and

Previous wording

•a hypothetical increase of 100 basis points in the discount rate, with all other assumptions unchanged, would have decreased the estimated fair value of our reporting units as of October 1, 2023 by a range of approximately 2.7% to 15.4% but would not, however, have resulted in the carrying value of any of our reporting units exceeding their estimated fair value.

Current wording

•a hypothetical increase of 100 basis points in the discount rate, with all other assumptions unchanged, would have decreased the estimated fair value of our reporting units as of October 1, 2024 by a range of approximately 3.8% to 14.0% but would not, however, have resulted in the carrying value of any of our reporting units exceeding their estimated fair value.

Previous wording

At December 31, 2023, we have federal net operating loss carryforwards of $109.6 million, which can be carried forward indefinitely, of which $88.7 million is expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $133.5 million, with various expiration dates (and in some cases no expiration date), subject to a valuation allowance of approximately 73.8%. If actual results differ unfavorably from certain of our estimates used, we may not be able to realize all or part of our net deferred income tax assets and additional valuation allowances may be required. Although we believe our estimates are reasonable, no assurance can be given that our estimates reflected in the tax provisions and accruals will equal our actual results. These differences could have a material impact on our income tax provision and operating results in the period in which such determination is made.

Current wording

At December 31, 2024, we have federal net operating loss carryforwards of $95.5 million and disallowed interest expense carryforwards of $152.2 million, both of which can be carried forward indefinitely, and of which $89.2 million and $68.7 million, respectively, are expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $146.6 million and foreign disallowed interest expense carryforwards of $17.7 million, with various expiration dates (and in some cases no expiration date), subject to valuation allowances of approximately 72.0% and 46.5%, respectively. If actual results differ unfavorably from certain of our estimates used, we may not be able to realize all or part of our net deferred income tax assets and additional valuation allowances may be required. Although we believe our estimates are reasonable, no assurance can be given that our estimates reflected in the tax provisions and accruals will equal our actual results. These differences could have a material impact on our income tax provision and operating results in the period in which such determination is made.

Previous wording

We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. As of December 31, 2023 and 2022, we had approximately $23.6 million and $27.8 million, respectively, of reserves related to uncertain tax positions. The reversal of these reserves will be recorded as a reduction of our income tax provision if sustained. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes in our estimates.

Current wording

We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. As of December 31, 2024 and 2023, we had approximately $25.9 million and $23.6 million, respectively, of reserves related to uncertain tax positions. The reversal of these reserves will be recorded as a reduction of our income tax provision if sustained. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes in our estimates.

Previous wording

During 2021, as a result of the enactment of a tax law and the closing of various acquisitions, we concluded that it is no longer our intention to reinvest our undistributed earnings of our foreign TRSs indefinitely outside the United States. 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. However, such future repatriations may require distributions to our stockholders in accordance with REIT distribution rules, and any such distribution may then be taxable, as appropriate, at the stockholder level. We expect to provide for foreign withholding taxes on the current and future earnings of all of our foreign subsidiaries as the result of such reassessment.

Current wording

We provide for foreign withholding taxes on the undistributed earnings of our foreign TRSs because it is not our intention to reinvest the undistributed earnings of our foreign TRSs indefinitely outside the United States. As a REIT, future repatriation of incremental undistributed earnings of our foreign subsidiaries will not be subject to federal or state income tax.

Previous wording

For the year ended December 31, 2023, the increase in reported revenue was primarily driven by organic storage rental revenue growth. Foreign currency exchange rate fluctuations decreased our reported revenue growth rate by 0.2% in the year ended December 31, 2023 compared to the prior year period.

Current wording

For the year ended December 31, 2024, the increase in reported revenue was primarily driven by reported storage rental revenue growth and reported service revenue growth.

Previous wording

•an increase in labor costs driven by an increase in service activity, primarily within our Global RIM Business;

Current wording

•an increase in labor costs driven by an increase in service activity, primarily within our Global RIM Business, and the impact of recent acquisitions;

Previous wording

•an increase in facilities expenses driven by increases in rent expense, reflecting the impact from our sale-leaseback activity during the years ended December 31, 2022 and 2023, as well as increases in utilities costs;

Current wording

•an increase in facilities expenses driven by increases in rent expense, utilities and real estate taxes;

Previous wording

•a decrease in product cost of sales in our ALM business as a result of component price declines, partially offset by increased volume; and

Current wording

•an increase in product cost of sales in our ALM business as a result of higher product volumes and our acquisition of Regency Technologies.

Previous wording

•an increase in general, administrative and other expenses, primarily driven by recent acquisitions;

Current wording

•an increase in general, administrative and other expenses, primarily driven by higher compensation expense, recent acquisitions, professional fees and IT costs; and

Previous wording

•an increase in sales, marketing and account management expenses, driven by higher compensation expense, primarily reflecting increased headcount; and

Current wording

•a decrease in sales, marketing and account management expenses, driven by lower compensation expense, primarily offset by increased professional fees and marketing costs.

Previous wording

Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include racking structures, buildings, building and leasehold improvements and computer systems hardware and software. Amortization relates primarily to customer and supplier relationship intangible assets, Contract Costs and data center lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Current wording

Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include buildings, building and leasehold improvements, data center infrastructure, racking structures and computer systems hardware and software. Amortization relates primarily to customer and supplier relationship intangible assets, Contract Costs and data center lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Previous wording

Depreciation expense increased $46.9 million, or 9.8%, on a reported dollar basis for the year ended December 31, 2023 compared to the year ended December 31, 2022. See Note 2.i. to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding the useful lives over which our property, plant and equipment is depreciated.

Current wording

Depreciation expense increased $103.4 million, or 19.7%, on a reported dollar basis for the year ended December 31, 2024 compared to the year ended December 31, 2023. See Note 2.i. to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding the useful lives over which our property, plant and equipment is depreciated.

Previous wording

Amortization expense increased $1.7 million, or 0.7%, on a reported dollar basis for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Current wording

Amortization expense increased $21.3 million, or 8.5%, on a reported dollar basis for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Previous wording

Acquisition and Integration Costs for the years ended December 31, 2023 and 2022 was approximately $25.9 million and $47.7 million, respectively.

Current wording

Acquisition and Integration Costs for the years ended December 31, 2024 and 2023 were approximately $35.8 million and $25.9 million, respectively.

Previous wording

Restructuring and other transformation costs for the years ended December 31, 2023 and 2022 were approximately $175.2 million and $41.9 million, respectively, and related to operating expenses associated with the implementation of Project Matterhorn.

Current wording

Restructuring and other transformation costs for the years ended December 31, 2024 and 2023 were approximately $161.4 million and $175.2 million, respectively, and related to operating expenses associated with the implementation of Project Matterhorn.