-----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, HEgLi8CHzgNU7IJIerWfsTSKOo9APLzrnIkZJnG8WvOsNEqKgQohK6WMyPjXAC3n zsvz43vb+LNAJ85s6uRuZQ== 0001144204-08-060205.txt : 20081030 0001144204-08-060205.hdr.sgml : 20081030 20081030143944 ACCESSION NUMBER: 0001144204-08-060205 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20081030 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081030 DATE AS OF CHANGE: 20081030 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: 081150641 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 v130133_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): October 30, 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 October 30, 2008, the Company issued a press release setting forth the Company's results of operations and financial condition for its fiscal quarter ended September 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 October 30, 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: October 30, 2008 EX-99.1 2 v130133_ex99-1.txt [LOGO OF IRON MOUNTAIN] Investor Relations Contact: Stephen P. Golden Vice President, Investor Relations sgolden@ironmountain.com (617) 535-2994 FOR IMMEDIATE RELEASE Iron Mountain Reports Third Quarter 2008 Financial Results o Q3 revenue up 12% year-over-year driven by solid 8% internal growth and balanced performance across business segments o OIBDA (excluding asset gains and losses) increases 14% year-over-year on revenue growth, gross margin gains and disciplined cost management; operating income increases to $136 million o Significant strengthening of U.S. Dollar drives $16 million, non-cash charge and higher tax provision o Revisions made to full year 2008 guidance to reflect projected impacts from recent changes in foreign currency exchange rates BOSTON - October 30, 2008 - Iron Mountain Incorporated (NYSE: IRM), the global leader in information protection and storage services, today announced its financial results for the quarter ended September 30, 2008, reporting strong revenue and operating income before depreciation and amortization (OIBDA) growth and earnings of $0.06 per diluted share. Iron Mountain posted strong year-over-year revenue growth of 12% in the third quarter supported by internal growth of 8%, with acquisitions and foreign currency rate changes contributing approximately 4% to total growth. The Company drove solid 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 strong overall performance in the North American physical business. OIBDA of $211 million for the quarter exceeded the Company's forecasted range driven by a 14% year-over-year increase in gross profit, reflecting strong revenue gains and continued improvements in gross margins. "While considerable volatility in foreign exchange rates impacts our reported results, our underlying operational performance and outlook remain strong, reflecting the resiliency of our business model," said Bob Brennan, President and CEO. "We are pleased with our strong third quarter operating results and continued solid business performance. These results reflect solid growth across our segments, driven by our team's focus on disciplined execution in servicing our customers. We also continue to exercise financial discipline in the current environment, maintaining strong liquidity and financing capacity." Net income for the quarter of $11 million, or $0.06 per diluted share, was impacted by the significant strengthening of the U.S. dollar since the end of the second quarter of 2008. Declines of approximately 9% in currencies such as the British pound sterling and the Euro versus the U.S. dollar during the quarter resulted in a net $16 million non-cash charge in other expense, net as the Company marked its U.S. dollar denominated third party and intercompany debt to market. The net $16 million expense includes offsetting foreign currency gains and losses, which are incurred in different tax jurisdictions. As a result, the Company recorded an additional $20 million of non-cash tax provision. For the quarter, these non-cash charges impacted earnings by $0.17 per diluted share and raised the effective tax rate to 81.6%. --more-- Iron Mountain Reports Third Quarter 2008 Financial Results / Page 2 Key Financial Highlights - Q3 2008 Iron Mountain's total consolidated revenues for the quarter grew 12% over the prior year period to $784 million driven by solid internal growth of 8% 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 13% was supported by continued strength in shredding services, strong performance in the physical data protection business and increased fuel surcharges. Complementary service revenue internal growth was modest, as expected, due primarily to the completion of large special projects in Europe and some softness in the more discretionary revenues such as fulfillment services and software license sales. See Appendix A at the end of this press release for a presentation of Selected Financial Data. The Company posted a 14% increase in gross profits for the quarter driven primarily by strong revenue growth. Gross profit margin improved from 54.0% in the third quarter of 2007 to 55.1% in the third quarter of 2008 due to improved storage gross margins in North America, Latin America and Asia Pacific, and increased service margins, supported in part by higher recycled paper revenues. 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 10% over the prior year period to $211 million, reflecting the Company's revenue performance and gross margin gains. Selling, general and administrative costs increased 14% in the quarter, slightly ahead of revenue gains, reflecting impacts from the integration of recent acquisitions and increased investments in security, new products and infrastructure enhancements initiated in 2007. The impacts of these investments moderated in the third quarter and are expected to moderate further in the fourth quarter. 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 third quarter of 2008 was $136 million, up 6% 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 $11 million, or $0.06 per diluted share, including other expense, net of $16 million, driven by foreign currency rate fluctuations. The components of other expense, net, are detailed in the table below. The Company's effective tax rate for the quarter before the impact of any foreign currency rate fluctuations and other discrete items was approximately 40%, which is higher than the expected rate of 38% due to an increase in the estimate of disallowed interest expense deductions at certain foreign subsidiaries. The net tax impact of the foreign currency rate fluctuations as described above added approximately 42% to the effective rate. 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 39%. Included in the 39% 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 by approximately 2%. The Company's Free Cash Flow before Acquisitions and Discretionary Investments for the nine months ended September 30, 2008 was $86 million. Higher cash flows from operating activities compared to the comparable prior year period were more than offset by increased capital expenditures as the higher 2007 year end accrual reversed into the first quarter of 2008. See Appendix B at the end of this press release for a discussion of FCF and the required reconciliation to the appropriate GAAP measures. --more-- Iron Mountain Reports Third Quarter 2008 Financial Results / Page 3 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 second quarter, the Company completed the previously announced acquisition of a DMS business in France. Financial Performance Outlook Iron Mountain is refining its financial performance 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 now targeting 11%-12% revenue growth and 11%-13% OIBDA growth (excluding gains and losses from asset disposals/write-offs). This performance is consistent with its long-term financial goals. Reductions in the company's full year revenue and OIBDA guidance are driven by the significant strengthening of the U.S. dollar against the major currencies, which lowers results reported in US dollars. The Company's outlook for the fourth quarter of 2008 set forth below includes a reduction of about 5% in both revenue and OIBDA driven by the strengthening U.S. dollar, which more than offset the impact of higher than expected performance in the third quarter. Also included in the full year outlook is the $5 million loss on asset write-offs reported year-to-date 2008 plus the $2 million write-off associated with planned real estate moves expected to be recorded in the quarter ending December 31, 2008 (dollars in millions):
Full Year Ending December 31, 2008 ------------------------------------------------------ Quarter Ending December 31, 2008 Previous Current ---------------- ---------------- ----------------- Low High Low High Low High ---------------- ---------------- ----------------- Revenues $ 732 $ 762 $ 3,050 $ 3,090 $ 3,035 $ 3,065 Operating Income 106 121 478 498 473 488 Depreciation & Amortization ~78 ~295 ~295 Capital Expenditures ~440 ~430 Internal Revenue Growth 7% 9% 7% 9%
Iron Mountain's conference call to discuss its third quarter 2008 financial results and third quarter and full year 2008 outlook will be held today at 8:30 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 120,000 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 Third 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 Third Quarter 2008 Financial Results / Page 5 APPENDIX A Selected Financial Data: (dollars in millions, except per share data) Q3/2007 Q3/2008 Inc (Dec) ------- ------- -------- Revenues $ 702 $ 784 12% Gross Profit (excluding D&A) $ 379 $ 432 14% Gross Margin % 54.0% 55.1% OIBDA $ 192 $ 211 10% OIBDA Margin % 27.4% 26.9% Operating Income $ 129 $ 136 6% Interest Expense, net $ 58 $ 59 3% Provision for income taxes $ 11 $ 50 370% Effective tax rate 17.0% 81.6% Net Income $ 51 $ 11 (78)% EPS - Diluted $0.25 $0.06 Components of Other Income (Expense), net: Foreign Currency Exchange Gains (Losses) $ (9) $ (16) Q3/2008 YTD/2008 ------- -------- Components of Revenue Growth: Storage internal growth rate 8% 8% Service internal growth rate 9% 9% ------- -------- Total internal growth rate 8% 8% Impact of acquisitions >2% >4% Impact of foreign currency fluctuations >1% >2% ------- -------- Total revenue growth 12% 15% ------- -------- 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 Third 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 Nine Months Ended September 30, September 30, ------------------ ------------------- 2007 2008 2007 2008 -------- -------- -------- -------- OIBDA (Operating Income Before Depreciation and Amortization) $ 192 $ 211 $ 520 $ 584 Less: Depreciation and Amortization 63 75 181 217 Operating Income $ 129 $ 136 $ 340 $ 367 Less: Interest Expense, net 58 59 169 179 Other Income (Expense), net (9) (16) 2 (13) Provision for Income Taxes 11 50 47 93 Minority Interest 1 -- 1 -- -------- -------- -------- -------- Net Income $ 51 $ 11 $ 125 $ 81 ======== ======== ======== ========
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): Nine Months Ended September 30, ------------------- 2007 2008 -------- -------- Free Cash Flows Before Acquisitions and Discretionary Investments $ 95 $ 86 Add: Capital Expenditures (excluding real estate), net 221 254 Additions to Customer Acquisition Costs 12 10 -------- -------- Cash Flows From Operating Activities $ 328 $ 350 ======== ======== NOTE: Columns may not foot due to rounding. -- more -- Iron Mountain Reports Third 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 Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2007 2008 2007 2008 ----------- ----------- ----------- ----------- REVENUES: Storage $ 383,390 $ 421,673 $ 1,104,234 $ 1,242,185 Service and Storage Material Sales 318,443 362,665 898,800 1,060,394 ----------- ----------- ----------- ----------- Total Revenues 701,833 784,338 2,003,034 2,302,579 OPERATING EXPENSES: Cost of Sales (Excluding Depreciation and Amortization) 322,598 352,251 925,566 1,046,973 Selling, General and Administrative 192,274 218,958 561,624 667,118 Depreciation and Amortization 63,207 74,856 180,669 217,293 (Gain) Loss on Disposal / Writedown of Property, Plant and (5,033) 1,928 (4,639) 4,634 ----------- ----------- ----------- ----------- Equipment, Net Total Operating Expenses 573,046 647,993 1,663,220 1,936,018 ----------- ----------- ----------- ----------- OPERATING INCOME 128,787 136,345 339,814 366,561 INTEREST EXPENSE, NET 57,556 59,423 169,113 179,199 OTHER EXPENSE (INCOME), NET 8,504 15,660 (2,454) 13,157 ----------- ----------- ----------- ----------- Income Before Provision for Income Taxes and Minority 62,727 61,262 173,155 174,205 Interest PROVISION FOR INCOME TAXES 10,647 50,010 46,754 93,141 MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES, NET 746 (62) 1,308 382 ----------- ----------- ----------- ----------- Net Income $ 51,334 $ 11,314 $ 125,093 $ 80,682 =========== =========== =========== =========== NET INCOME PER SHARE - BASIC $ 0.26 $ 0.06 $ 0.63 $ 0.40 =========== =========== =========== =========== NET INCOME PER SHARE - DILUTED $ 0.25 $ 0.06 $ 0.62 $ 0.40 =========== =========== =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 200,203 201,575 199,742 201,100 =========== =========== =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 202,111 203,518 201,757 203,325 =========== =========== =========== =========== Operating Income before Depreciation and Amortization $ 191,994 $ 211,201 $ 520,483 $ 583,854 =========== =========== =========== ===========
-- more -- Iron Mountain Reports Third Quarter 2008 Financial Results / Page 8 IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) (Unaudited)
December 31, September 30, 2007 2008 ----------- ----------- ASSETS CURRENT ASSETS: Cash and Cash Equivalents $ 125,607 $ 318,244 Accounts Receivable (less allowances of $19,246 and $18,685, respectively) 564,049 610,472 Other Current Assets 132,740 153,584 ----------- ----------- Total Current Assets 822,396 1,082,300 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT: Property, Plant and Equipment at Cost 3,522,525 3,747,368 Less: Accumulated Depreciation (1,186,564) (1,356,255) ----------- ----------- Property, Plant and Equipment, net 2,335,961 2,391,113 ----------- ----------- OTHER ASSETS: Goodwill, net 2,574,292 2,581,278 Other Non-current Assets, net 575,272 583,003 ----------- ----------- Total Other Assets 3,149,564 3,164,281 ----------- ----------- Total Assets $ 6,307,921 $ 6,637,694 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current Portion of Long-term Debt $ 33,440 $ 22,367 Other Current Liabilities 732,237 759,218 ----------- ----------- Total Current Liabilities 765,677 781,585 LONG-TERM DEBT, NET OF CURRENT PORTION 3,232,848 3,393,367 OTHER LONG-TERM LIABILITIES 504,852 561,900 MINORITY INTERESTS 9,089 3,376 STOCKHOLDERS' EQUITY 1,795,455 1,897,466 ----------- ----------- Total Liabilities and Stockholders' Equity $ 6,307,921 $ 6,637,694 =========== ===========
# # # -----END PRIVACY-ENHANCED MESSAGE-----