-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GyLudcaxUvYOV3HZ0xkirbtPoFVTrgNadiKyJbpb0jcrxcz2CBXwk/BXMMUYf4M8 iP/MUgHu3tjW7tJCu7N6Sg== 0001144204-08-042993.txt : 20080731 0001144204-08-042993.hdr.sgml : 20080731 20080731100507 ACCESSION NUMBER: 0001144204-08-042993 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20080731 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080731 DATE AS OF CHANGE: 20080731 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN INC CENTRAL INDEX KEY: 0001020569 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC WAREHOUSING & STORAGE [4220] IRS NUMBER: 232588479 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13045 FILM NUMBER: 08980725 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6175354766 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02111 FORMER COMPANY: FORMER CONFORMED NAME: IRON MOUNTAIN INC/PA DATE OF NAME CHANGE: 20000201 FORMER COMPANY: FORMER CONFORMED NAME: PIERCE LEAHY CORP DATE OF NAME CHANGE: 19960807 8-K 1 v121385_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 31, 2008 IRON MOUNTAIN INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation) 1-13045 23-2588479 (Commission File Number) (IRS Employer Identification No.) 745 Atlantic Avenue Boston, Massachusetts 02111 (Address of principal executive offices, including zip code) (617) 535-4766 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (7 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On July 31, 2008, the Company issued a press release setting forth the Company's results of operations and financial condition for its fiscal quarter ended June 30, 2008 and its financial outlook for 2008. A copy of the Company's press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (d) Exhibits 99.1 Press Release of Iron Mountain Incorporated dated July 31, 2008 (furnished herewith). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IRON MOUNTAIN INCORPORATED (Registrant) By: /s/ Brian McKeon ------------------------ Name: Brian McKeon Title: EVP and Chief Financial Officer Date: July 31, 2008 EX-99.1 2 v121385_ex99-1.txt Investor Relations Contact: Stephen P. Golden Vice President, Investor Relations sgolden@ironmountain.com - ------------------------ (617) 535-2994 FOR IMMEDIATE RELEASE Iron Mountain Reports Second Quarter 2008 Financial Results o Revenue and OIBDA up 15% for Q2 driven by solid performance across business segments o Operating income increased 11% to $124 million; net income $0.18 per diluted share o Company announces positive revisions to full year guidance based on solid first half performance BOSTON - July 31, 2008 - Iron Mountain Incorporated (NYSE: IRM), the global leader in information protection and storage services, today announced its financial results for the quarter ended June 30, 2008, reporting strong revenue and operating income before depreciation and amortization (OIBDA) growth and earnings of $0.18 per diluted share. Iron Mountain posted strong year-over-year revenue growth of 15% in the second quarter supported by internal growth of 9%, with acquisitions and favorable foreign currency changes contributing approximately 6% to total growth. The Company drove strong revenue gains across its North American Physical, International Physical and Worldwide Digital business segments. Total revenue growth was highlighted by continued strength in service revenue growth, supported by international gains and strong performance in the digital business. OIBDA of $197 million for the quarter exceeded the Company's forecasted range reflecting benefits from strong revenue growth and a 17% year-over-year increase in gross profit. Net income for the quarter was $36 million, or $0.18 per diluted share, and capital expenditures were in line with Company expectations for the quarter. "We are pleased with our strong second quarter results and solid first half performance. We're driving solid growth across our business, reflecting our team's focus on disciplined execution in servicing our customers," said Bob Brennan, President and CEO. "We continue to advance our growth strategy, reflected in solid growth in service revenues, expansion of our international business and strong performance in our developing digital business." Key Financial Highlights - Q2 2008 Iron Mountain's total consolidated revenues for the quarter grew 15% over the prior year period to $769 million driven by solid internal growth of 9% and augmented by several acquisitions completed in 2007, most notably ArchivesOne, Inc., RMS Services - USA, Inc. and Stratify, Inc. Storage internal growth of 8% was as expected. Core service internal revenue growth of 9% was supported by continued strength in shredding services and strong performance in the physical data protection business. Complementary service revenues posted 9% internal growth highlighted by strength in digital services, physical data protection and recycled paper revenues. See Appendix A at the end of this press release for a presentation of Selected Financial Data. --more-- Iron Mountain Reports Second Quarter 2008 Financial Results / Page 2 The Company posted a 17% increase in gross profits for the quarter driven primarily by strong revenue growth combined with real estate and productivity gains. Gross profit margin improved from 53.9% in the second quarter of 2007 to 54.9% in the second quarter of 2008 due to higher storage gross margins, increased recycled paper revenues and strength in the digital service businesses. These benefits more than offset the impact of the shift in revenue mix, as labor and transportation intensive services such as secure shredding and Document Management Solutions (DMS) grew faster than storage. OIBDA for the quarter grew 15% over the prior year period to $197 million, reflecting the Company's revenue performance and gross margin gains. Selling, general and administrative costs increased 20% in the quarter, ahead of revenue gains, reflecting impacts from integration of recent acquisitions and increased investments in security, new products and infrastructure enhancements initiated in 2007. The impact of these investments is expected to moderate later this year. See Appendix B 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 second quarter of 2008 was $124 million, up 11% compared to the same period in 2007, as OIBDA gains were partially offset by increased depreciation and amortization expense, driven primarily by higher levels of capital expenditures in 2007 and acquisitions. Net income for the quarter was $36 million, or $0.18 per diluted share, including other expense, net of $4 million, or $0.01 per diluted share. The components of other expense, net, including the impact of foreign currency fluctuations are detailed in the table below. The Company's effective tax rate for the quarter was 41.0%, including approximately 3% related to the net tax impact of discrete items, including the interest on its tax reserves. Based on the current view of its 2008 projected tax position, the Company expects its tax rate before the impact of any foreign currency rate fluctuations and other discrete items for 2008 to be approximately 38%. Included in the 38% rate for 2008 is approximately 2% resulting from the unbenefited net operating losses of certain start-up entities. Beyond 2008, we expect our tax rate before the impact of any foreign currency rate fluctuations and other discrete items to decrease over time to approximately 36%. The Company's Free Cash Flow before Acquisitions and Discretionary Investments for the six months ended June 30, 2008 was $20 million reflecting higher capital expenditures as the higher 2007 year end accrual reversed into the first quarter and higher use of working capital compared to the same period in 2007. The use of working capital was driven by increased accounts receivable balances due to sales growth, and reductions in accounts payable and accrued expense balances due to the payment of annual bonuses, and the timing of normal payroll and accounts payable cycles relative to quarter end. See Appendix B at the end of this press release for a discussion of FCF and the required reconciliation to the appropriate GAAP measures. Acquisitions Iron Mountain's acquisition strategy focuses on acquiring attractive businesses that provide a strong platform for future growth by expanding the Company's geographic footprint and service offerings while enhancing its existing operations. Since the end of the first quarter, the Company completed two acquisitions, a records management business in North America and a DMS business in France, entered the Swiss market via a minority interest in a local records management business and acquired the remaining 29% minority interest in its Brazilian business. In addition, the Company divested itself of its North American commodity product sales business effective June 1, 2008. Consistent with its treatment of acquisitions, the Company will eliminate all revenues associated with its data products business from the calculation of its internal growth in 2008 and 2009. Adjusting for this divestiture had no impact on the Company's internal growth rates for its first quarter ended March 31, 2008. --more-- Iron Mountain Reports Second Quarter 2008 Financial Results / Page 3 Financial Performance Outlook Iron Mountain is issuing its financial performance outlook for the third quarter ending September 30, 2008 and making positive revisions to its outlook for the full year ending December 31, 2008. This guidance is based on current expectations and does not include the potential impact of any future acquisitions. For the full year, the Company is targeting 12% to 13% revenue growth and 11% to 14% OIBDA growth, performance consistent with its long-term financial goals. Please note that targeted OIBDA growth excludes current and prior year impacts from asset dispositions. The Company's outlook for the full year ending December 31, 2008 set forth below includes the $3 million loss on asset write-offs reported year-to-date 2008 (dollars in millions):
Full Year Ending December 31, 2008 ------------------------------------------------------ Quarter Ending September 30, 2008 Previous Current ------------------------ ------------------------ ------------------------- Low High Low High Low High ----------- ------------ ------------ ----------- ------------ ------------ Revenues $755 $775 $3,015 $3,080 $3,050 $3,090 Operating Income 119 129 474 499 478 498 Depreciation & Amortization ~75 ~292 ~295 Capital Expenditures 440 480 440 480 Internal Revenue Growth 7% 9% 7% 9%
Iron Mountain's conference call to discuss its second quarter 2008 financial results and third quarter and full year 2008 outlook 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 Web site at 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 Web site and available for real-time viewing. The slide presentation and replays of the conference call will be available on the Web site for future reference. About Iron Mountain Iron Mountain Incorporated (NYSE:IRM) helps organizations around the world reduce the costs and risks associated with information protection and storage. The Company offers comprehensive records management and data protection solutions, along with the expertise and experience to address complex information challenges such as rising storage costs, litigation, regulatory compliance and disaster recovery. Founded in 1951, Iron Mountain is a trusted partner to more than 100,000 corporate clients throughout North America, Europe, Latin America and Asia Pacific. For more information, visit the Company's Web site at www.ironmountain.com. --more-- Iron Mountain Reports Second Quarter 2008 Financial Results / Page 4 Forward Looking Statements 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 2008 financial performance outlook and statements regarding our goals, beliefs, future growth strategies, investments, objectives, plans and 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) the cost to comply with current and future legislation, regulations and customer demands relating to privacy issues; (ii) the impact of litigation that may arise in connection with incidents in which we fail to protect the Company's customers' information; (iii) changes in the price for the Company's services relative to the cost of providing such services; (iv) changes in customer preferences and demand for the Company's services; (v) in the various digital businesses in which the Company is engaged, the cost of capital and technical requirements, demand for the Company's services or competition for customers; (vi) the Company's ability or inability to complete acquisitions on satisfactory terms and to integrate acquired companies efficiently; (vii) the cost or potential liabilities associated with real estate necessary for the Company's business; (viii) the performance of business partners upon whom the Company depends for technical assistance or management and acquisition expertise outside the United States; (ix) changes in the political and economic environments in the countries in which the Company's international subsidiaries operate; (x) claims that the Company's technology violates the intellectual property rights of a third party; (xi) other trends in competitive or economic conditions affecting Iron Mountain's financial condition or results of operations not presently contemplated; and (xii) other risks described more fully in the Company's most recently filed Annual Report on Form 10-K under "Item 1A. Risk Factors". Except as required by law, 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. -- more -- Iron Mountain Reports Second Quarter 2008 Financial Results / Page 5 APPENDIX A Selected Financial Data: (dollars in millions, except per share data) Q2/2007 Q2/2008 Inc (Dec) ----------------------------- Revenues $ 669 $ 769 15% Gross Profit (excluding D&A) $ 361 $ 422 17% Gross Margin % 53.9% 54.9% OIBDA $ 172 $ 197 15% OIBDA Margin % 25.7% 25.6% Operating Income $ 111 $ 124 11% Interest Expense, net $ 61 $ 60 (2)% Net Income $ 39 $ 36 (8)% EPS - Diluted $0.19 $ 0.18 Components of Other Income (Expense), net: Foreign Currency Exchange Gains (Losses) $ 4 $ (4) Insurance Related Gains 3 -- Debt Extinguishment Charges (4) -- Q2/2008 YTD/2008 ------------ ------------ Components of Revenue Growth: Storage internal growth rate 8% 8% Service internal growth rate 9% 9% ------------ ------------ Total internal growth rate 9% 9% Impact of acquisitions 4% 5% Impact of foreign currency fluctuations 3% 3% ------------ ------------ Total revenue growth 15% 17% ------------ ------------ NOTE: Column may not foot due to rounding. APPENDIX B Operating Income Before Depreciation and Amortization Iron Mountain 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. 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. The Company believes OIBDA and OIBDA Margin provide current and potential investors with relevant and useful information regarding its ability to generate cash flow to support business investment and its ability to grow revenues faster than operating expenses. 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). -- more -- Iron Mountain Reports Second Quarter 2008 Financial Results / Page 6 Following is a reconciliation of operating income before depreciation and amortization to operating income and net income (in millions):
Three Months Ended Six Months Ended June 30, June 30, --------------------------------------------------- 2007 2008 2007 2008 ------------ ------------ ------------ ------------ OIBDA (Operating Income Before Depreciation and Amortization) $ 172 $ 197 $ 328 $ 373 Less: Depreciation and Amortization 60 73 117 142 ----- ----- ----- ----- Operating Income $ 111 $ 124 $ 211 $ 230 Less: Interest Expense, net 61 60 112 120 Other Income (Expense), net 3 3 (4) 11 Provision for Income Taxes 14 25 36 43 Minority Interest -- -- 1 -- ----- ----- ----- ----- Net Income $ 39 $ 36 $ 74 $ 69 ===== ===== ===== =====
NOTE: Columns may not foot due to rounding. Free Cash Flows Before Acquisitions and Discretionary Investments, or FCF FCF is defined as Cash Flows From Operating Activities less capital expenditures (excluding real estate), net of proceeds from the sales of property and equipment and other, net, and additions to customer acquisition costs. Our management uses this measure when evaluating the operating performance and profitability of our consolidated business. FCF is a useful measure in determining our ability to generate cash flows in excess of our capital expenditures (both growth and maintenance) and our customer acquisition costs. As such, we believe this measure provides relevant and useful information to our current and potential investors. FCF should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as cash flows from operating activities (as determined in accordance with GAAP). Following is a reconciliation of Free Cash Flows Before Acquisitions and Discretionary Investments to Cash Flows from Operating Activities (in millions):
Six Months Ended June 30, -------------------------- 2007 2008 -------------------------- Free Cash Flows Before Acquisitions and Discretionary Investments $ 59 $ 20 Add: Capital Expenditures (excluding real estate), net 139 163 Additions to Customer Acquisition Costs 9 7 ----------- ---------- Cash Flows From Operating Activities $207 $190 =========== ==========
NOTE: Columns may not foot due to rounding. -- more -- Iron Mountain Reports Second Quarter 2008 Financial Results / Page 7 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands except Per Share Data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------------------------------------- 2007 2008 2007 2008 ------------------------------------------------------- REVENUES: Storage $ 368,679 $ 416,195 $ 720,844 $ 820,512 Service and Storage Material Sales 300,010 352,662 580,357 697,729 ------- ------- --------- --------- Total Revenues 668,689 768,857 1,301,201 1,518,241 OPERATING EXPENSES: Cost of Sales (Excluding Depreciation and Amortization) 307,963 346,971 602,968 694,722 Selling, General and Administrative 188,845 225,932 369,350 448,160 Depreciation and Amortization 60,290 72,907 117,462 142,437 Loss (Gain) on Disposal / Writedown of Property, Plant and Equipment, Net 357 (839) 394 2,706 ------- ------- --------- --------- Total Operating Expenses 557,455 644,971 1,090,174 1,288,025 ------- ------- --------- --------- OPERATING INCOME 111,234 123,886 211,027 230,216 INTEREST EXPENSE, NET 61,222 59,757 119,776 111,557 OTHER (INCOME) EXPENSE, NET (3,235) 3,532 (10,958) (2,503) ------- ------- --------- --------- Income Before Provision for Income Taxes and Minority Interest 53,247 60,597 110,428 112,943 PROVISION FOR INCOME TAXES 14,024 24,859 36,107 43,131 MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES, NET 171 (148) 562 444 ------- ------- --------- --------- Net Income $ 39,052 $ 35,886 $ 73,759 $ 69,368 NET INCOME PER SHARE - BASIC $ 0.20 $ 0.18 $ 0.37 $ 0.35 ======= ======= ========= ========= NET INCOME PER SHARE - DILUTED $ 0.19 $ 0.18 $ 0.37 $ 0.34 ======= ======= ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 199,792 200,855 199,511 200,863 ======= ======= ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 201,742 203,038 201,579 203,229 ======= ======= ========= ========= Operating Income before Depreciation and Amortization $ 171,524 $ 196,793 $ 328,489 $ 372,653 ======= ======= ========= =========
-- more -- Iron Mountain Reports Second Quarter 2008 Financial Results / Page 8 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) (Unaudited)
December 31, June 30, 2007 2008 ----------- ----------- ASSETS CURRENT ASSETS: Cash and Cash Equivalents $ 125,607 $ 203,197 Accounts Receivable (less allowances of $19,246 and $19,954, respectively) 564,049 603,419 Other Current Assets 132,740 148,533 ----------- ----------- Total Current Assets 822,396 955,149 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT: Property, Plant and Equipment at Cost 3,522,525 3,672,255 Less: Accumulated Depreciation (1,186,564) (1,300,916) ----------- ----------- Property, Plant and Equipment, net 2,335,961 2,371,339 ----------- ----------- OTHER ASSETS: Goodwill, net 2,574,292 2,583,428 Other Non-current Assets, net 575,272 598,694 ----------- ----------- Total Other Assets 3,149,564 3,182,122 ----------- ----------- Total Assets $ 6,307,921 $ 6,508,610 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current Portion of Long-term Debt $ 33,440 $ 98,839 Other Current Liabilities 732,237 656,769 ----------- ----------- Total Current Liabilities 765,677 755,608 LONG-TERM DEBT, NET OF CURRENT PORTION 3,232,848 3,318,950 OTHER LONG-TERM LIABILITIES 504,852 529,440 MINORITY INTERESTS 9,089 4,270 STOCKHOLDERS' EQUITY 1,795,455 1,900,342 ----------- ----------- Total Liabilities and Stockholders' Equity $ 6,307,921 $ 6,508,610 =========== ===========
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