Iron Mountain Incorporated Announces Plans to Consolidate Its Synthetic Lease Facilities.Business/Technology Editors BOSTON--(BUSINESS WIRE)--Nov. 14, 2002 The Company Makes Minor Adjustments to Its Third Quarter Results and Reaffirms Its 2002 Financial Guidance Iron Mountain Incorporated Iron Mountain Inc is a company specializing in data storage. The best known Iron Mountain storage facility is a high-security storage facility in a former limestone mine located near Butler, Pennsylvania in the USA in operation since 1950. (NYSE NYSE See: New York Stock Exchange : IRM (1) (Information Resource Management) See Information Systems and information management. (2) (Inherited Rights Mask) In NetWare 3.x and 4. ), the global leader in records and information management services, today announced that it intends to take actions in the fourth quarter that will result in a change in the characterization A rather long and fancy word for analyzing a system or process and measuring its "characteristics." For example, a Web characterization would yield the number of current sites on the Web, types of sites, annual growth, etc. of two of its synthetic lease Synthetic Lease An operating lease that is structured in a way so that it is not recorded as a liability on the balance sheet. Instead, it is considered to be an expense on the income statement. facilities by the end of the year. In addition, the Company announced that it has taken actions to recharacterize its other synthetic lease facility as of September September: see month. 30, 2002. These actions resulted in minor adjustments to the Company's previously reported financial results for the third quarter of 2002. In light of impending im·pend intr.v. im·pend·ed, im·pend·ing, im·pends 1. To be about to occur: Her retirement is impending. 2. changes in the accounting rules currently being considered by the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). (FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ) related to the off-balance sheet treatment of special purpose entities, the Company had undertaken an internal analysis of its synthetic lease program to determine the nature and timing of the future treatment of these transactions. During that analysis, and subsequent to its third quarter earnings release and conference call, the Company found a technical documentation error, unique to the most recent of its three synthetic lease facilities that required a change in characterization for the properties in that facility. As a result, the Company changed the related accounting for these properties. These changes have been reflected in the Company's 10-Q for the third quarter of 2002. "It is important to note that this is not an economic issue. This recharacterization Recharacterization The treatment of a contribution as being made to another type of IRA instead of the IRA that the contribution was initially made. Notes: For instance, an individual may make a participant contribution to a Traditional IRA, but may later recharacterize is not significant to our financial statements. There is no change to our cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and Iron Mountain's business is as solid as ever," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a Reese REESE Research and Evaluation on Education in Science and Engineering (National Science Foundation) , the Company's Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The fact that we were going to change our approach to these properties at some point should not be news to anyone. During our internal analysis of our program, we discovered a documentation error that affected one of our synthetic lease facilities. This documentation error has been corrected. However, since it existed at the end of the quarter, we felt that it was appropriate to make the necessary correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. as soon as possible. We realize that the recharacterization of all of our lease facilities at the same time would have been preferable. The timing here is less than ideal, but given the documentation error, it was the right thing to do. We expect to take actions this quarter that will result in a similar recharacterization of our remaining synthetic lease facilities by the end of this year. When we complete this plan, we will be ahead of the accounting treatment that is likely to be required by the FASB sometime next year. Our approach allows us to continue to enjoy the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. economic benefits of this financing strategy." The impact of the changes in characterization on the Company's financial statements, effective September 30, 2002, is consistent with its previous disclosures on this matter as described in the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial section of its recent periodic reports. For the nine months ended September 30, 2002, the Company's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and Adjusted EBITDA increased $3.4 million and there was no change in the Company's Cash Flows Provided by Operating Activities. The effect of this change in characterization and related accounting for these leases on the Company's Balance Sheet and Statement of Operations See Income statement. for the same period is: (i) an increase in Net Property, Plant and Equipment of $87.1 million; (ii) an increase in Long-term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $88.3 million; and (iii) a decrease in Net Income of $0.7 million, or $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. For a reconciliation of these changes and the results announced in the Company's press release dated October October: see month. 31, 2002, please refer to the attached table. Additionally, we expect to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. the related special purpose entity that is the lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. during the fourth quarter of this year. This will result in additional changes to the Balance Sheet related to an interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. within that entity. This swap was entered into to ensure a stable rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. expense for the Company. Likewise, this will not impact the Company's Cash Flows Provided by Operating Activities. See Summary of Significant Accounting Policies section of the Company's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. filed today. The effect of this change on the Company's leverage ratios is minor and consistant with its previous disclosures. There is no change to the bank leverage ratio. The bond leverage ratio, as calculated under the indentures at September 30, 2002, became 4.5 versus maximum limits of 6.0 to 6.5. Had all three synthetic lease facilities been recorded on our balance sheet at September 30, this bond ratio would have been 4.8. Iron Mountain Reaffirms Its 2002 Financial Guidance The following guidance excludes all revenue, expenses and capital expenditures associated with the development or introduction of Iron Mountain's digital service offerings. The Company expects its revenues to be in the range of $1,285 million to $1,305 million. The Company's previous guidance for Adjusted EBITDA was $354 million to $360 million. The aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. recharacterization will increase Adjusted EBITDA by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $5 million. Therefore, the updated guidance is for Adjusted EBITDA to be in the range of $359 million to $365 million. The Company will update its guidance for 2003 at its 5th Annual Investor Day to be held in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY on Thursday Thursday: see week. November November: see month. 21, 2002. About Iron Mountain Iron Mountain Incorporated was founded in 1951 as one of the first records management companies. Today, Iron Mountain is the global leader in records and information management services, providing services to over 150,000 customer accounts in 81 markets in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and 47 markets outside of the United States. Its diversified diversified (di·verˑ·s customer base includes more than half of the Fortune 500 and numerous commercial, legal, banking, healthcare, accounting, insurance, entertainment and government organizations. The Company operates over 650 records management facilities in the United States, Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , and Latin
America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . For more information, visit www.ironmountain.com.Certain Important Factors This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, and is subject to the safe-harbor created by such Act. Forward-looking statements include our full year 2002 and 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) the cost and availability of financing for contemplated growth; (ii) changes in customer preferences and demand for the Company's services; (iii) changes in the price for the Company's services relative to the cost of providing such services; (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 on which the Company is embarking, 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 (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features. to these forward-looking statements that may be made to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events.
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands except Per Share Data)
(Unaudited)
Three Months Ended September 30, 2002
-------------------------------------
As Reported Adjustments As Adjusted
----------- ------------ -----------
REVENUES:
Storage $ 191,377 $ 191,377
Service and Storage Material
Sales 137,214 137,214
--------- ---------
Total Revenues 328,591 328,591
OPERATING EXPENSES:
Cost of Sales (Excluding
Depreciation) 152,728 (3,392) 149,336
Selling, General and
Administrative 83,805 83,805
Depreciation and Amortization 27,852 1,237 29,089
Merger-Related Expenses 190 190
--------- ---------
Total Operating Expenses 264,575 (2,155) 262,420
--------- ---------
OPERATING INCOME 64,016 2,155 66,171
INTEREST EXPENSE, NET 32,625 3,392 36,017
OTHER (EXPENSE) INCOME, NET (2,829) (2,829)
--------- ---------
Income (Loss) Before Provision
for Income Taxes and Minority
Interest 28,562 (1,237) 27,235
PROVISION FOR INCOME TAXES 11,750 (509) 11,241
MINORITY INTEREST IN EARNINGS
(LOSSES) OF SUBSIDIARIES 387 387
--------- ---------
Net Income (Loss) $ 16,425 (728) $ 15,697
========= =========
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE
PER SHARE - BASIC $ 0.19 $ (0.01) $ 0.19
========= =========
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE
PER SHARE - DILUTED $ 0.19 $ (0.01) $ 0.19
========= =========
NET INCOME (LOSS) PER SHARE
- BASIC $ 0.19 $ (0.01) $ 0.18
========= =========
NET INCOME (LOSS) PER SHARE
- DILUTED $ 0.19 $ (0.01) $ 0.18
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 84,769 84,769
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 85,997 85,997
========= =========
EBITDA $ 88,652 3,392 $ 92,044
========= =========
ADJUSTED EBITDA $ 92,058 3,392 $ 95,450
========= =========
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands except Per Share Data)
(Unaudited)
Nine Months Ended September 30, 2002
-------------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
REVENUES:
Storage $ 561,797 $ 561,797
Service and Storage Material
Sales 403,460 403,460
--------- ---------
Total Revenues 965,257 965,257
OPERATING EXPENSES:
Cost of Sales (Excluding
Depreciation) 452,329 (3,392) 448,937
Selling, General and
Administrative 250,963 250,963
Depreciation and Amortization 79,392 1,237 80,629
Merger-Related Expenses 770 770
--------- ---------
Total Operating Expenses 783,454 (2,155) 781,299
--------- --------- ---------
OPERATING INCOME 181,803 2,155 183,958
INTEREST EXPENSE, NET 98,293 3,392 101,685
OTHER (EXPENSE) INCOME, NET 5,092 5,092
--------- ---------
Income (Loss) Before Provision
for Income Taxes and Minority
Interest 88,602 (1,237) 87,365
PROVISION FOR INCOME TAXES
36,451 (509) 35,942
MINORITY INTEREST IN EARNINGS
(LOSSES) OF SUBSIDIARIES 2,442 2,442
--------- ---------
Income (Loss) before
Extraordinary Item and
Cumulative Effect of Change
in Accounting Principle 49,709 (728) 48,981
EXTRAORDINARY CHARGE FROM EARLY
EXTINGUISHMENT OF DEBT (NET OF
TAX BENEFIT OF $445) (777) (777)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (NET OF
MINORITY INTEREST) (1) (6,396) (6,396)
--------- ---------
Net Income (Loss) $ 42,536 (728) $ 41,808
========= =========
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE
PER SHARE - BASIC $ 0.59 $ (0.01) $ 0.58
========= =========
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE
PER SHARE - DILUTED $ 0.58 $ (0.01) $ 0.57
========= =========
NET INCOME (LOSS) PER SHARE
- BASIC $ 0.50 $ (0.01) $ 0.49
========= =========
NET INCOME (LOSS) PER SHARE
- DILUTED $ 0.49 $ (0.01) $ 0.49
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 84,558 84,558
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 86,026 86,026
========= =========
EBITDA $ 263,845 3,392 $ 267,237
========= =========
ADJUSTED EBITDA $ 261,965 3,392 $ 265,357
========= =========
(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)
September 30, 2002
-------------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 27,597 $ 27,597
Accounts Receivable (less
allowance of $18,025) 228,605 228,605
Other Current Assets 64,960 64,960
---------- ---------
Total Current Assets 321,162 321,162
---------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment
at Cost 1,334,366 88,303 1,422,669
Less: Accumulated Depreciation (312,358) (1,237) (313,595)
---------- ---------- ---------
Property, Plant and Equipment,
net 1,022,008 87,066 1,109,074
---------- ---------- ----------
OTHER ASSETS:
Goodwill, net 1,524,025 1,524,025
Other Non-current Assets, net 77,981 77,981
---------- ----------
Total Other Assets 1,602,006 1,602,006
---------- ----------
Total Assets $2,945,176 $ 87,066 $3,032,242
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-term
Debt $ 40,968 $ 40,968
Other Current Liabilities 328,338 328,338
---------- ----------
Total Current Liabilities 369,306 369,306
LONG-TERM DEBT, NET OF CURRENT
PORTION 1,458,179 88,303 1,546,482
OTHER LONG-TERM LIABILITIES 124,758 (509) 124,249
MINORITY INTERESTS 59,754 59,754
SHAREHOLDERS' EQUITY 933,179 (728) 932,451
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $2,945,176 $ 87,066 $3,032,242
========== ========== ==========
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