Exhibit 99.1
Iron Mountain Incorporated Reports Third Quarter 2003 Financial Results
* Total Revenues are $382 Million; Up 15%
* Operating Income is $77 Million; Up 17%
* Net Income is $0.17 per Diluted Share
* Company Reaffirms 2003 Full Year Guidance
BOSTON, Oct. 29 /PRNewswire-FirstCall/ -- Iron Mountain Incorporated
(NYSE: IRM), the leader in records and information management services, today
reported higher revenues and operating income for the quarter ended September
30, 2003. In addition, the Company reaffirmed its previously released
guidance for the full year 2003. Net Income is $0.17 per diluted share for
the quarter.
Iron Mountain's total consolidated revenues for the quarter ended
September 30, 2003 grew to $382 million, an increase of 15% compared with the
quarter ended September 30, 2002. For the quarter, storage revenues grew 17%
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 59th
consecutive quarter for which the Company has reported increased storage
revenues.
For the third quarter of 2003, the storage and service revenue internal
growth rates were 9% and 2%, respectively, yielding a total internal revenue
growth rate of 6%. The storage internal growth rate continued its upward
trend and core service revenues, at 9%, grew in line with storage growth.
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 the same periods in 2002. The
year over year comparison of complementary service revenues was made more
difficult by the particularly strong service revenues reported in the third
quarter of 2002. The Company believes that service revenues will likely grow
at a slower rate than storage revenues for the balance of the year due to
continued lower growth rates in complementary services.
Richard Reese, the Company's Chairman and CEO, stated, "The Company
continued to report solid results for the third quarter with both revenue and
operating income at or above the top end of our guidance. Storage internal
growth rates continued to tick up, margins expanded and we continued to
generate free cash flow before acquisitions and investments on a year-to-date
basis. As we anticipated, we saw slower internal growth rates in certain
complementary service lines. In Europe, our integration of the Hays IMS
acquisition is proceeding as planned and here in the U.S., we continued to
expand our secure shredding footprint via acquisitions and Greenfield start-up
operations."
Today's earnings announcement introduces a non-GAAP measure, operating
income before depreciation and amortization, or OIBDA, which the Company will
report going forward as one of its key financial metrics. Operating income
before depreciation and amortization is the metric that most closely resembles
what the Company has historically referred to as Adjusted EBITDA. Currently,
the only difference between the two metrics is the inclusion in OIBDA of gains
and losses on the disposal or write-downs of property, plant and equipment,
net. Prior to 2003, other charges such as merger-related expenses and stock
compensation expense had been excluded from Adjusted EBITDA as well.
The Company believes that operating income before depreciation and
amortization is useful because it is an important financial measure used in
evaluating the Company's performance, as it is an internally generated source
of funds for investment in continued growth and for servicing indebtedness.
Holders of the Company's publicly issued debt use OIBDA-based calculations,
referred to as Adjusted EBITDA, as important criteria for evaluating the
Company. As a result, all of its bond indentures and covenants include OIBDA-
based calculations, called Adjusted EBITDA, as primary measures of financial
performance. 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.
Operating income before depreciation and amortization was $110 million, or
28.9% of revenues, for the quarter ended September 30, 2003 compared to $95
million, or 28.5% of revenues, for the quarter ended September 30, 2002.
Operating income for the third quarter of 2003 was $77 million, or 20% of
revenues, compared to $66 million, or 20% of revenues, for the same period in
2002. Net income for the quarter was $15 million, or $0.17 per diluted share,
compared to $16 million, or $0.18 per diluted share, for the same period in
2002. Included in net income for 2003 is $10 million of other expense, net
comprised of a $5 million charge for the early extinguishment of debt related
to the partial redemption of the 8-1/8% senior notes of the Company's
subsidiary, Iron Mountain Canada Corporation, and a $5 million foreign
currency related net loss. The loss is due primarily to the weakening of the
Canadian Dollar against the U.S. Dollar in the third quarter. Gains related
to the strengthening of the pound Sterling against the U.S. Dollar were offset
by our hedging activities related to that currency.
For the nine months ended September 30, 2003, the Company reported total
consolidated revenues of $1,093 million, an increase of 12% with storage
revenues growing at 13% and service revenues growing at 10% compared to the
prior year. For the nine-month period, storage and service revenue internal
growth rates were 9% and 4%, respectively, yielding a total internal revenue
growth rate of 7%.
OIBDA was $312 million, or 28.6% of revenues, for the nine months ended
September 30, 2003 compared to $266 million, or 27.2% of revenues, for the
nine months ended September 30, 2002.
Operating income for the first nine months of 2003 was $218 million, or
20% of revenues, compared to $186 million, or 19% of revenues, for the same
period in 2002. Net income from continuing operations before extraordinary
items was $56 million, or $0.65 per diluted share, for the first nine months
of 2003, compared to $48 million, or $0.56 per diluted share, for the same
period in 2002.
Included in income from continuing operations before extraordinary items
for the first nine months of 2003 is $2 million of other expense, net
comprised of a $19 million foreign currency gain, due primarily to the
strengthening of the Canadian Dollar and the pound Sterling against the U.S.
Dollar, which was more than offset by $21 million of charges for the early
extinguishment of debt related to the Company's 2003 refinancing activities.
Included in income from continuing operations before extraordinary items for
the first nine months of 2002 is $2 million of other income, net comprised
primarily of a $4 million foreign currency gain partially offset by $1 million
of charges for the early extinguishment of debt related to the Company's 2002
refinancing activities.
Net Income for the first nine months of 2003 was $56 million, or $0.65 per
diluted share, compared to $42 million, or $0.49 per diluted share, for the
same period in 2002. Included in net income for 2002 is a $6 million after
tax 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.
Following is a reconciliation of operating income before depreciation and
amortization (OIBDA) to operating income and net income (in millions):
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2003 2002 2003
OIBDA (Operating Income
Before Depreciation
and Amortization) (1) $94.9 $110.4 $266.0 $312.0
Less: Depreciation and
Amortization 28.9 33.2 80.5 93.9
Operating Income (1) $66.0 $77.2 $185.5 $218.1
Less: Interest Expense,
net 36.0 38.8 101.7 110.7
Other (Income) Expense,
net 2.7 10.3 (2.3) 2.4
Provision for Income
Taxes 11.2 12.0 35.5 44.6
Minority Interest 0.4 1.3 2.4 4.2
Cumulative Effect of
Change in Accounting
Principle -- -- 6.4 --
Net Income (1) $15.7 $14.8 $41.8 $56.2
Major Components of
Other (Income)
Expense, net:
Foreign Exchange Effects $2.6 $4.8 $(3.7) $(18.8)
Debt Extinguishment
Charges $-- $5.5 $1.2 $ 21.2
(1) Includes $0.1 million and $1.9 million of losses on Disposal / Write-
down of Property, Plant and Equipment, net for the quarters ended September
30, 2002 and 2003, respectively and a $1.9 million gain and a $1.9 million
loss on Disposal / Write-down of Property, Plant and Equipment, net for the
nine months ended September 30, 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.
The Company is reaffirming its financial guidance for the full year ending
December 31, 2003, which was most recently issued on July 31, 2003, and
includes the estimated impact of the Hays IMS acquisition (dollars in
millions):
Full Year Ending
December 31, 2003
Low High
Revenues $1,480 $1,510
Operating Income 273 293
Depreciation & Amortization 133 127
Capital Expenditures 190 215
Internal Growth 6% 8%
As previously announced, the Company will be providing financial guidance
for 2004 at its upcoming Investor Day. The 6th annual event will be held on
Thursday, November 20, 2003 in New York City and broadcast on the Company's
website at www.ironmountain.com.
Iron Mountain's conference call to discuss the third quarter 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 150,000 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 full year 2003 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) 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.
Contact: Stephen P. Golden
Director of Investor Relations
(617) 535-4799
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,
2002 2003 2002 2003
Revenues:
Storage $191,377 $222,973 $561,797 $634,773
Service and Storage
Material Sales 141,736 158,785 416,234 458,066
Total Revenues 333,113 381,758 978,031 1,092,839
Operating Expenses:
Cost of Sales
(Excluding
Depreciation) 153,858 171,355 461,711 493,538
Selling, General
and Administrative 83,986 98,087 251,492 285,377
Depreciation and
Amortization 28,950 33,197 80,459 93,911
Merger-Related Expenses 190 -- 770 --
Loss (Gain) on
Disposal / Writedown
of Property, Plant and
Equipment, Net 139 1,870 (1,921) 1,886
Total Operating
Expenses 267,123 304,509 792,511 874,712
Operating Income 65,990 77,249 185,520 218,127
Interest Expense, Net 36,017 38,790 101,685 110,752
Other Expense (income),
Net 2,648 10,343 (2,308) 2,361
Income from
Continuing
Operations Before
Provision for Income
Taxes and Minority
Interest 27,325 28,116 86,143 105,014
Provision for Income
Taxes 11,241 12,012 35,497 44,635
Minority Interest in
Earnings of
Subsidiaries, Net 387 1,310 2,442 4,168
Income from Continuing
Operations Before
Cumulative Effect of
Change in Accounting
Principle 15,697 14,794 48,204 56,211
Cumulative Effect of
Change in Accounting
Principle (Net of
Minority Interest) (1) -- -- (6,396) --
Net Income $15,697 $14,794 $41,808 $56,211
Income From Continuing
Operations Before
Cumulative Effect of
Change in Accounting
Principle Per Share
- Basic $ 0.19 $ 0.17 $0.57 $ 0.66
Income From Continuing
Operations Before
Cumulative Effect of
Change in Accounting
Principle Per Share
- Diluted $ 0.18 $ 0.17 $0.56 $ 0.65
Net Income Per
Share - Basic $ 0.19 $ 0.17 $ 0.49 $ 0.66
Net Income Per
Share - Diluted $ 0.18 $ 0.17 $ 0.49 $ 0.65
Weighted Average
Common Shares
Outstanding - Basic 84,769 85,303 84,558 85,211
Weighted Average
Common Shares
Outstanding - Diluted 85,997 86,726 86,026 86,690
Operating Income before
Depreciation and
Amortization $94,940 $110,446 $265,979 $312,038
(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, September 30,
2002 2003
ASSETS
Current Assets:
Cash and Cash Equivalents $56,292 $23,544
Accounts Receivable
(less allowances of $20,274
and $22,657, respectively) 225,416 276,391
Other Current Assets 85,332 96,183
Total Current Assets 367,040 396,118
Property, Plant and Equipment:
Property, Plant and Equipment at Cost 1,577,588 1,897,790
Less: Accumulated Depreciation (338,400) (424,314)
Property, Plant and Equipment, net 1,239,188 1,473,476
Other Assets:
Goodwill, net 1,544,974 1,726,402
Other Non-current Assets, net 79,453 143,545
Total Other Assets 1,624,427 1,869,947
Total Assets $3,230,655 $3,739,541
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-term Debt $69,732 $60,812
Other Current Liabilities 358,230 412,314
Total Current Liabilities 427,962 473,126
Long-term Debt, Net of Current Portion 1,662,365 2,002,160
Other Long-term Liabilities 133,335 169,719
Minority Interests 62,132 72,186
Shareholders' Equity 944,861 1,022,350
Total Liabilities and Shareholders' Equity $3,230,655 $3,739,541
SOURCE Iron Mountain Incorporated
-0- 10/29/2003
/CONTACT: Stephen P. Golden, Director of Investor Relations of Iron
Mountain, +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: PUB FIN
SU: ERN CCA MAV