-----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, Ud5mj2SSCaBCUg/+sonUyBQy4yG34nepB6nPQnQTiO5K0pkT3+UeJv58+sEinkx+ y384Hn7yCo2kO3ma6zulQg== 0000891092-04-000957.txt : 20040226 0000891092-04-000957.hdr.sgml : 20040226 20040226095647 ACCESSION NUMBER: 0000891092-04-000957 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040226 ITEM INFORMATION: FILED AS OF DATE: 20040226 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRON MOUNTAIN INC/PA CENTRAL INDEX KEY: 0001020569 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC WAREHOUSING & STORAGE [4220] IRS NUMBER: 232588479 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13045 FILM NUMBER: 04629111 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: PIERCE LEAHY CORP DATE OF NAME CHANGE: 19960807 8-K 1 e17052_8k.txt CURRENT REPORT 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): February 26, 2004 IRON MOUNTAIN INCORPORATED (Exact name of registrant as specified in its charter) PENNSYLVANIA (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) Item 12. Results of Operations and Financial Condition. On February 26, 2004, the Company issued a press release setting forth the Company's results of operations and financial condition for its year ended December 31, 2003. A copy of the Company's press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. 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/ Jean A. Bua. ---------------- Name: Jean A. Bua Title: Vice President and Corporate Controller Date: February 26, 2004 EX-99.1 3 e17052ex99_1.txt PRESS RELEASE Exhibit 99.1 Iron Mountain Incorporated Reports 2003 Financial Results -- Total Revenues Exceed $1.5 Billion, Up 14% -- Operating Income is $305 Million, Up 21% -- Net Income is $0.98 per Diluted Share -- Company Generates $83 Million of Free Cash Flow Before Acquisitions and Investments -- Company Doubles Size of European Operations with Hays IMS Acquisition BOSTON, Feb. 26 /PRNewswire-FirstCall/-- Iron Mountain Incorporated (NYSE: IRM), the leader in records and information management services, today announced its financial results for the year ended December 31, 2003. Total revenues exceeded $1.5 billion and operating income surpassed $300 million for the year ended December 31, 2003 marking the 10th consecutive year for which the Company has reported both higher revenues and operating income. The Company also reported net income of $0.98 per diluted share and $83 million of free cash flow before acquisitions and investments for the year. Richard Reese, the Company's Chairman and CEO, stated, "2003 was another solid year for Iron Mountain. Our revenues exceeded $1.5 billion for the first time in our history and we doubled our presence in Europe with the strategic acquisition of Hays. We drove increased profitability by mining efficiencies in our operations, which enabled us to further invest in sales and marketing and information technology systems to support our continued growth. As a result, the free cash flow story continued to unfold as predicted. Today, we see tremendous opportunities before us and we are focusing our efforts on aligning the organization to capture these opportunities." Iron Mountain's total consolidated revenues for the year ended December 31, 2003 grew to $1,501 million, an increase of 14% compared with the year ended December 31, 2002. For the year, storage revenues grew 15% and service revenues grew 12% 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 60th consecutive quarter for which the Company has reported increased quarterly storage revenues. For 2003, the storage and service revenue internal growth rates were 8% and 3%, respectively, yielding a total internal revenue growth rate of 6%. The storage internal growth rate of 8% matched the growth rate of 2002. Core service revenues continued to grow ahead of storage revenues, and combined, they yielded a total core revenue growth rate of 9%. As expected, overall service revenue growth was impacted by a decline in complementary service revenues primarily in the Company's North American business units. The Company experienced lower levels of special projects and product sales, most notably data product sales, compared with 2002. Operating income for 2003 was $305 million, or 20% of revenues, compared to $253 million, or 19% of revenues, for 2002. Operating income before depreciation and amortization ("OIBDA") increased 21% to $436 million, or 29.0% of revenues, for the year ended December 31, 2003 from $362 million, or 27.4% of revenues, for the year ended December 31, 2002. The increase in operating income, OIBDA and OIBDA margin for 2003 was due to an increase in gross margin, resulting primarily from improved labor management, lower annual incentive compensation expense and reduced bad debt expense. Due to the success of the centralized collection efforts over the past two years and the resulting improvements to the accounts receivable aging, the Company was able to significantly reduce its reserve for doubtful accounts in 2003. The Company uses 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. Operating income before depreciation and amortization 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). In accordance with Securities and Exchange Commission Regulation G, a reconciliation of OIBDA to Operating Income to Net Income appears later in this press release. Net income for the year was $85 million, or $0.98 per diluted share, compared to $58 million, or $0.68 per diluted share, for 2002. Included in net income for 2003 is $3 million of other income, net comprised of a $30 million foreign currency gain, due primarily to the strengthening of the Canadian dollar and the British pound sterling against the U.S. Dollar, which was partially offset by $28 million of charges for the early extinguishment of debt related to the Company's 2003 refinancing activities. Included in net income for 2002 is $1 million of other expense, net comprised primarily of a $5 million foreign currency gain, which was offset by $5 million of charges for the early extinguishment of debt related to the Company's 2002 refinancing activities. Also included in net income for 2002 is a $6 million charge representing the cumulative effect of a change in accounting principle recorded in the first quarter of 2002 related to the impairment of goodwill associated with the Company's investment in South America. Company Generates $83 Million of Cash Flow Before Acquisitions and Investments Cash flows from operating activities grew to $289 million for the year ended December 31, 2003, an increase of 13% compared to 2002. This growth in cash flows from operating activities combined with a much more modest increase in net capital expenditures enabled the Company to generate $83 million of free cash flow before acquisitions and investments, an increase of 47% compared to 2002. 2002 2003 (Dollars in Millions) Cash Flows Provided by Operating Activities $255 $289 Less: Capital Expenditures, net 190 193 Customer Acquisition Costs 8 13 Free Cash Flow Before Acquisitions and Investments $57 $83 Cash Paid for Acquisitions and Investments, net $49 $381 As previously reported, Iron Mountain acquired the U.S. and European records management business of Hays plc in July 2003 for approximately $333 million. This transaction effectively doubled the size of Iron Mountain Europe Ltd ("IME"), the Company's 50.1% owned European joint venture, both in the U.K. and Continental Europe. The Hays integration is proceeding as expected and IME continues to perform well. In addition, the Company expects to complete the acquisition of the remaining 49.9% equity interest in IME from Mentmore plc, for total consideration of approximately $154 million in cash, by the end of February 2004. This transaction will give Iron Mountain 100% ownership of IME, affording it full access to all future cash flows and greater strategic and financial flexibility. The Company was very active in the high-yield debt market in 2003, as it took full advantage of the favorable interest rate environment to refinance several of its higher interest rate notes. Beginning in November 2002 and continuing through 2003, the Company closed four high-yield transactions and refinanced $485 million of high-yield debt. Primarily as a result of these transactions and lower variable interest rates, the Company was able to reduce its weighted average interest rate from 8.3% at December 31, 2002 to 7.7% at December 31, 2003. In 2004, the Company successfully completed its first sterling denominated high-yield offering raising GBP 150 million ($275 million) at an interest rate of 7.25%. Proceeds from this transaction will be used primarily to fund the acquisition of Mentmore plc's 49.9% equity interest in IME. In addition, the Company called the remaining $20 million of Iron Mountain Canada Corporation's 8.125% Senior Notes due 2008 and will record a charge of approximately $2 million in the first quarter of 2004 related to this transaction. Following is a reconciliation of OIBDA to operating income to net income (in millions): Year ended December 31, 2002 2003 OIBDA (Operating Income Before Depreciation and Amortization) (1) $362 $436 Less: Depreciation and Amortization 109 131 Operating Income (1) $253 $305 Less: Interest Expense, net 137 150 Other (Income) Expense, net 1 (3) Provision for Income Taxes 48 67 Minority Interest 4 6 Income From Discontinued Operations (1) -- Cumulative Effect of Change in Accounting Principle 6 -- Net Income (1) $58 $85 Major Components of Other (Income) Expense, net: Foreign Exchange Effects $(5) $(30) Debt Extinguishment Charges $5 $ 28 (1) Includes a $1 million Loss on Disposal/Write-down of Property, Plant and Equipment, net for each of the years ended December 31, 2002 and 2003, respectively. 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 Three Months Ending December 31, 2004 March 31, 2004 Low High Low High Revenues $1,700 $1,750 $417 $430 Operating Income 315 350 75 82 Depreciation & Amortization 160 155 ~38 Capital Expenditures 210 240 Iron Mountain's conference call to discuss the 2003 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 www.ironmountain.com. 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 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 is subject to the safe harbor created by such Act. Forward-looking statements include our first quarter and full year 2004 financial performance outlook and statements regarding our goals, beliefs, 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) changes in the political and economic environments in the countries in which the Company's international subsidiaries operate; (vii) the possibility that business partners upon whom the Company depends for technical assistance or management and acquisition expertise outside the United States will not perform as anticipated; 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 Twelve Months Ended December 31, December 31, 2002 2003 2002 2003 Revenues: Storage $197,739 $240,262 $759,536 $875,035 Service and Storage Material Sales 142,727 168,228 558,961 626,294 Total Revenues 340,466 408,490 1,318,497 1,501,329 Operating Expenses: Cost of Sales (Excluding Depreciation) 160,588 187,209 622,299 680,747 Selling, General and Administrative 81,558 98,264 333,050 383,641 Depreciation and Amortization 28,533 37,007 108,992 130,918 Merger-Related Expenses 26 -- 796 -- Loss (Gain) on Disposal / Write down of Property, Plant and Equipment, Net 2,695 (756) 774 1,130 Total Operating Expenses 273,400 321,724 1,065,911 1,196,436 Operating Income 67,066 86,766 252,586 304,893 Interest Expense, Net 34,947 39,716 136,632 150,468 Other Expense (income), Net 3,743 (4,925) 1,435 (2,564) Income from Continuing Operations Before Provision for Income Taxes and Minority Interest 28,376 51,975 114,519 156,989 Provision for Income Taxes 11,821 22,095 47,318 66,730 Minority Interest in Earnings of Subsidiaries, Net 1,187 1,454 3,629 5,622 Income from Continuing Operations Before Discontinued Operations and Cumulative Effect of Change in Accounting Principle 15,368 28,426 63,572 84,637 Income from discontinued operations (net of tax) 1,116 -- 1,116 -- Cumulative Effect of Change in Accounting Principle(Net of Minority Interest) (1) -- -- (6,396) -- Net Income $16,484 $28,426 $58,292 $84,637 Income From Continuing Operations Before discontinued operations and Cumulative Effect of Change in Accounting Principle Per Share - basic $0.18 $0.33 $0.75 $0.99 Income From Continuing Operations Before discontinued operations and Cumulative Effect of Change in Accounting Principle Per Share - diluted $0.18 $0.33 $0.74 $0.98 Net Income Per Share - Basic $ 0.19 $ 0.33 $0.69 $0.99 Net Income Per Share - Diluted $ 0.19 $ 0.33 $0.68 $0.98 Weighted Average Common Shares Outstanding - Basic 84,928 85,434 84,651 85,267 Weighted Average Common Shares Outstanding - Diluted 86,208 86,803 86,071 86,718 Operating Income before Depreciation and Amortization $95,599 $123,773 $361,578 $435,811 (1) Represents the non-cash charge related to the impairment of goodwill associated with the Company's investment in South America due primarily to the deterioration of the economy and the devaluation of the currency in Argentina. Iron Mountain Incorporated Condensed Consolidated Balance Sheets (Amounts in Thousands) (Unaudited) December 31, December 31, 2002 2003 ASSETS Current Assets: Cash and Cash Equivalents $56,292 $74,683 Accounts Receivable (less allowances of $20,274 and $18,310, respectively) 225,416 279,800 Other Current Assets 85,332 117,100 Total Current Assets 367,040 471,583 Property, Plant and Equipment: Property, Plant and Equipment at Cost 1,577,588 1,950,893 Less: Accumulated Depreciation (338,400) (458,626) Property, Plant and Equipment, net 1,239,188 1,492,267 Other Assets: Goodwill, net 1,544,974 1,776,279 Other Non-current Assets, net 79,453 151,970 Total Other Assets 1,624,427 1,928,249 Total Assets $3,230,655 $3,892,099 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current Portion of Long-term Debt $69,732 $115,781 Other Current Liabilities 358,230 468,964 Total Current Liabilities 427,962 584,745 Long-term Debt, Net of Current Portion 1,662,365 1,974,147 Other Long-term Liabilities 133,335 191,308 Minority Interests 62,132 75,785 Shareholders' Equity 944,861 1,066,114 Total Liabilities and Shareholders' Equity $3,230,655 $3,892,099 Contact: Stephen P. Golden Director of Investor Relations (617) 535-4799 SOURCE Iron Mountain Incorporated -0- 02/26/2004 /CONTACT: Stephen P. Golden, Director of Investor Relations, Iron Mountain Incorporated, +1-617-535-4799 / /LOGO: http://www.newscom.com/cgi-bin/prnh/20030505/IRMLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, 888-776-6555 or 212-782-2840/ /Web site: http://www.ironmountain.com/ (IRM) CO: Iron Mountain Incorporated ST: Massachusetts IN: CPR SU: CCA ERN -----END PRIVACY-ENHANCED MESSAGE-----