EX-99.1 2 e19494ex99_1.txt PRESS RELEASE Exhibit 99.1 Iron Mountain Incorporated Reports Third Quarter 2004 Financial Results * Total Revenues are $459 Million, Up 20% * Operating Income is $85 Million; Up 10% * Net Income is $0.14 per Diluted Share * Shredding, Digital Services Contributing to Revenue Growth * Acquisition of Connected Corporation Expected to Close in Early November BOSTON, Oct. 28 /PRNewswire-FirstCall/ -- Iron Mountain Incorporated (NYSE: IRM), the leader in records and information management services, today reported higher revenues and operating income for the third quarter ended September 30, 2004. Net income for the quarter was $0.14 per diluted share. Iron Mountain's total consolidated revenues for the quarter ended September 30, 2004 grew to $459 million, an increase of 20% compared with the quarter ended September 30, 2003. For the quarter, storage revenues grew 18% and service revenues grew 23% compared to the prior year. Storage revenues, which are considered a key performance indicator for the records and information management services industry, are largely recurring since customers typically retain their records for many years. This marks the 63rd consecutive quarter for which the Company has reported increased storage revenues. For the third quarter of 2004, the storage and service revenue internal growth rates were 8% and 5%, respectively, yielding a total internal revenue growth rate of 7%. Richard Reese, the Company's Chairman and CEO, stated, "Iron Mountain is making important strides strategically in what has been a very active 2004. We have become the largest North American provider of integrated shredding services, we have consolidated ownership of important international businesses, and we are starting to see good progress in our digital services business. Operationally, our businesses performed as we expected this quarter, with the exception of our U.S. paper-based Records Management business, where margins were lower than anticipated. We have taken steps intended to return these margins to their normal levels. Our growing investment in our sales and marketing organization, while dampening near-term margins, is beginning to pay dividends." Operating income before depreciation and amortization ("OIBDA") was $127 million, or 27.7% of revenues, for the quarter ended September 30, 2004 compared to $110 million, or 28.9% of revenues, for the quarter ended September 30, 2003. See Appendix A at the end of this press release for a discussion of OIBDA and the required reconciliation to the appropriate GAAP measures. Operating income for the third quarter of 2004 was $85 million, or 19% of revenues, compared to $77 million, or 20% of revenues, for the same period in 2003. Net income for the quarter was $18 million, or $0.14 per diluted share, an increase of 25% from $15 million, or $0.11 per diluted share, for the same period in 2003. All per share amounts have been adjusted to reflect the three-for-two stock split, effected in the form of a dividend, paid on June 30, 2004. Included in net income for the third quarter of 2004 is $3 million, or $0.01 per diluted share, of other income, net comprised primarily of foreign currency related net gains due to the strengthening of the Canadian Dollar, which were partially offset by net losses due to the weakening of the Euro. The net effect of the exchange rate fluctuations relative to the British Pound Sterling was less than $0.2 million due primarily to the implementation of the Company's hedging strategy relative to that currency. Included in net income for the third quarter of 2003 is $10 million, or $0.05 per diluted share, of other expense, net comprised primarily of $5 million of foreign currency related net losses, due primarily to the weakening of the Canadian Dollar and $5 million of charges for the early extinguishment of debt related to the Company's 2003 refinancing activities. For the nine months ended September 30, 2004, the Company reported total consolidated revenues of $1.34 billion, an increase of 22%, with storage revenues growing at 21% and service revenues growing at 25% compared to the prior year. For the nine-month period, storage and service revenue internal growth rates were 8% and 5%, respectively, yielding a total internal revenue growth rate of 7%. OIBDA was $377 million, or 28.2% of revenues, for the nine months ended September 30, 2004 compared to $312 million, or 28.6% of revenues, for the nine months ended September 30, 2003. Operating income for the first nine months of 2004 was $258 million, or 19% of revenues, compared to $218 million, or 20% of revenues, for the same period in 2003. Net income was $64 million, or $0.49 per diluted share, for the first nine months of 2004, compared to $56 million, or $0.43 per diluted share, for the same period in 2003. Included in net income for the first nine months of 2004 is $4 million, or $0.02 per diluted share, of other expense, net comprised of a $2 million foreign currency related net losses, due primarily to the weakening of the British Pound Sterling, and $2 million of charges for the early extinguishment of debt related to the Company's 2004 refinancing activities. Included in net income for the first nine months of 2003 is $2 million, or $0.01 per diluted share, of other expense, net comprised primarily of a $19 million foreign currency related net gains, due primarily to the strengthening of the Canadian Dollar offset by $21 million of charges for the early extinguishment of debt related to the Company's 2003 refinancing activities. In line with its strategy, Iron Mountain continued to make selected acquisitions, opportunistically buying attractive businesses that provide a strong platform for future growth by expanding the Company's geographical footprint and information management product offerings and enhancing its existing operations. Since the end of July, the Company has completed six acquisitions for total consideration of approximately $19 million in cash. These acquisitions have expanded the Company's operations in important international markets (Eastern Europe, Brazil), strengthened the Company's secure shredding business in California and Virginia and enhanced its records management presence in California. In addition, the Company announced on October 12, 2004, the signing of a definitive agreement to acquire Framingham, MA-based Connected Corporation in a cash transaction valued at approximately $117 million. The acquisition builds on Iron Mountain's mission to protect its customers' information and to protect its customers through compliant information management. Connected Corporation is a technology and market leader in the protection, archiving and recovery of distributed data. The transaction is expected to close in early November. Financial Performance Outlook The following statements are based on current expectations and do not include the potential impact of any future acquisitions. These statements are forward-looking, and actual results may differ materially. Please refer to the cautionary language included in this press release when considering this information. The Company undertakes no obligation to update this information (dollars in millions): Full Year Ending December 31, 2004 Previous Current Low High Low High Revenues $1,765 $1,800 $1,794 $1,804 Operating Income 335 354 335 341 Depreciation & Amortization 163 159 ~163 Capital Expenditures 210 240 210 240 Iron Mountain's conference call to discuss the third quarter 2004 financial results will be held today at 11:00 a.m. Eastern Time. In order to further enhance the overall quality of its investor communications, the Company will simulcast the conference call on its website at http://www.ironmountain.com, the content of which is not part of this earnings release. A slide presentation providing summary financial and statistical information that will be discussed on the conference call will also be posted to the website and available for real-time viewing. The slide presentation and replays of the conference call will be available on the website for future reference. About Iron Mountain Iron Mountain Incorporated is the world's trusted partner for outsourced records and information management services. Founded in 1951, the Company has grown to service more than 200,000 customer accounts throughout the United States, Canada, Europe and Latin America. Iron Mountain offers records management services for both physical and digital media, disaster recovery support services, and consulting -- services that help businesses save money and manage risks associated with legal and regulatory compliance, protection of vital information, and business continuity challenges. For more information, visit http://www.ironmountain.com. Certain Important Factors This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws, and is subject to the safe-harbor created by such Act. Forward-looking statements include our fourth quarter and full year 2004 financial performance outlook and statements regarding our goals, beliefs, future growth strategies, objectives, plans or current expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those contemplated in the forward-looking statements. Such factors include, but are not limited to: (i) changes in customer preferences and demand for the Company's services; (ii) changes in the price for the Company's services relative to the cost of providing such services; (iii) the cost and availability of financing for contemplated growth; (iv) the Company's ability or inability to complete acquisitions on satisfactory terms and to integrate acquired companies efficiently; (v) in the various digital businesses in which the Company is engaged, capital and technical requirements will be beyond the Company's means, markets for the Company's services will be less robust than anticipated, or competition will be more intense than anticipated; (vi) the possibility that business partners upon which the Company depends for technical assistance or management and acquisition expertise outside the United States will not perform as anticipated; (vii) changes in the political and economic environments in the countries in which the Company's international subsidiaries operate; and (viii) other trends in competitive or economic conditions affecting Iron Mountain's financial condition or results of operations not presently contemplated. Iron Mountain undertakes no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. NOTE: Condensed Consolidated Financial Statements of Iron Mountain Incorporated follow. IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands except Per Share Data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2003 2004 2003 2004 REVENUES: Storage $222,973 $263,867 $634,773 $768,232 Service and Storage Material Sales 158,785 195,463 458,066 570,430 Total Revenues 381,758 459,330 1,092,839 1,338,662 OPERATING EXPENSES: Cost of Sales (Excluding Depreciation) 171,355 209,797 493,538 608,934 Selling, General and Administrative 98,087 122,508 285,377 353,456 Depreciation and Amortization 33,197 42,269 93,911 119,912 Loss (Gain) on Disposal / Writedown of Property, Plant and Equipment, Net 1,870 (246) 1,886 (1,260) Total Operating Expenses 304,509 374,328 874,712 1,081,042 OPERATING INCOME 77,249 85,002 218,127 257,620 INTEREST EXPENSE, NET 38,790 54,313 110,752 140,431 OTHER EXPENSE (INCOME), NET 10,343 (2,979) 2,361 4,236 Income Before Provision for Income Taxes and Minority Interest 28,116 33,668 105,014 112,953 PROVISION FOR INCOME TAXES 12,012 14,293 44,635 46,668 MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES 1,310 925 4,168 1,981 Net Income $14,794 $18,450 $56,211 $64,304 NET INCOME PER SHARE - BASIC $0.12 $0.14 $0.44 $0.50 NET INCOME PER SHARE - DILUTED $0.11 $0.14 $0.43 $0.49 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 127,955 129,288 127,817 128,934 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 130,089 131,366 130,035 131,056 Operating Income before Depreciation and Amortization $110,446 $127,271 $312,038 $377,532 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) (Unaudited) December 31, September 30, 2003 2004 ASSETS CURRENT ASSETS: Cash and Cash Equivalents $74,683 $44,428 Accounts Receivable (less allowances of $20,922 and $14,010, respectively) 279,800 343,941 Other Current Assets 117,100 91,259 Total Current Assets 471,583 479,628 PROPERTY, PLANT AND EQUIPMENT: Property, Plant and Equipment at Cost 1,950,893 2,143,420 Less: Accumulated Depreciation (458,626) (567,974) Property, Plant and Equipment, net 1,492,267 1,575,446 OTHER ASSETS: Goodwill, net 1,776,279 1,943,622 Other Non-current Assets, net 151,970 207,532 Total Other Assets 1,928,249 2,151,154 Total Assets $3,892,099 $4,206,228 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current Portion of Long-term Debt $115,781 $17,923 Other Current Liabilities 468,964 452,454 Total Current Liabilities 584,745 470,377 LONG-TERM DEBT, NET OF CURRENT PORTION 1,974,147 2,330,155 OTHER LONG-TERM LIABILITIES 191,308 228,848 MINORITY INTERESTS 75,785 11,735 SHAREHOLDERS' EQUITY 1,066,114 1,165,113 Total Liabilities and Shareholders' Equity $3,892,099 $4,206,228 APPENDIX A Operating Income Before Depreciation and Amortization The Company uses Operating Income Before Depreciation and Amortization ("OIBDA"), an integral part of its planning and reporting systems, to evaluate the operating performance of the consolidated business. As such, the Company believes OIBDA provides current and potential investors with relevant and useful information regarding its ability to grow revenues faster than operating expenses. Additionally, the Company uses multiples of current and projected OIBDA in conjunction with its discounted cash flow models to determine its overall enterprise valuation and to evaluate acquisition targets. OIBDA is not a measurement of financial performance under accounting principles generally accepted in the United States, or GAAP, and should not be considered as a substitute for operating or net income or cash flows from operating activities (as determined in accordance with GAAP). Following is a reconciliation of operating income before depreciation and amortization to operating income and net income (in millions): Three Months Nine Months Ended Ended September 30, September 30, 2003 2004 2003 2004 OIBDA (Operating Income Before Depreciation and Amortization) (1) $110 $127 $312 $378 Less: Depreciation and Amortization 33 42 94 120 Operating Income (1) $77 $85 $218 $258 Less: Interest Expense, net 39 54 111 140 Other (Income) Expense, net 10 (3) 2 4 Provision for Income Taxes 12 14 45 47 Minority Interest 1 1 4 2 Net Income (1) (2) $15 $18 $56 $64 Major Components of Other (Income) Expense, net: Foreign Exchange Effects $5 $(3) $(19) $2 Debt Extinguishment Charges $5 $-- $21 $2 (1) Includes $2 million and $1 million of losses on Disposal / Write-down of Property, Plant and Equipment, net for the quarters ended September 30, 2003 and 2004, respectively and $2 million of losses and $1 million of gains on Disposal / Write-down of Property, Plant and Equipment, net for the nine months ended September 30, 2003 and 2004, respectively. (2) Columns may not foot due to rounding. Contact: Stephen P. Golden Director of Investor Relations (617) 535-4799 SOURCE Iron Mountain Incorporated -0- 10/28/2004 /CONTACT: Stephen P. Golden, Director of Investor Relations of Iron Mountain Incorporated, +1-617-535-4799/ /Photo: http://www.newscom.com/cgi-bin/prnh/20030505/IRMLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com / /Web site: http://www.ironmountain.com / (IRM) CO: Iron Mountain Incorporated ST: Massachusetts IN: FIN SU: ERN ERP CCA