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 /
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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