Iron Mountain Posts Q3

BOSTON -- 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, 2007, reporting strong revenue growth, higher operating income and earnings of $0.25 per diluted share. In a separate release, the Company announced the signing of a definitive agreement to acquire electronic discovery business, Stratify, Inc.

Iron Mountain posted solid operating income before depreciation and amortization ("OIBDA") growth of 28% in the third quarter supported by strong revenue growth, gross margin improvement and continued overhead expense control. Included in OIBDA for the quarter was a $5 million gain primarily associated with proceeds received in connection with the July 2006 warehouse fire in London. The Company had balanced revenue performance across its North American Physical, International Physical and Worldwide Digital business segments with overall gains supported by robust service revenue growth. Acquisitions and favorable foreign currency fluctuations also contributed about 6% to overall revenue growth.

"We continue to be pleased with the performance of the business this year," said Richard Reese, Chairman and CEO. "We are delivering solid revenue and OIBDA growth across our portfolio. The business is running well and we are continuing to invest as we grow, making investments consistent with our strategy that enhance our ability to provide comprehensive, end-to-end solutions to our customers' most complex information management challenges. Our pending acquisition of Stratify, Inc., announced earlier today, is one example of how we are investing within that context."

In keeping with its strategy to distribute new services and extend its leadership position in targeted digital markets, Iron Mountain announced the signing of a definitive agreement to acquire Stratify, Inc. for approximately $158 million in cash. Stratify, based in Mountain View, California, is a leader in advanced electronic discovery services for the legal market, offering in-depth discovery and data investigation solutions for AmLaw 200 law firms and leading Fortune 500 corporations. This acquisition is subject to regulatory review and customary closing conditions and is expected to be completed by the end of the year.

Key Financial Highlights - Q3/2007Iron Mountain's total consolidated revenues for the quarter grew 18% to $702 million driven by solid internal growth of 12% and augmented by several acquisitions, most notably ArchivesOne, Inc. and RMS Services - USA, Inc. The Company's overall revenue growth was highlighted by continued strength in service revenue internal growth (16%) led by increased special project revenues in both North America and Europe and strong recycled paper revenues. Solid storage (8%) and core service (10%) internal revenue growth rates were also key factors in the Company's revenue performance for the quarter.

OIBDA for the quarter grew 28% to $192 million, including the $5 million gain, reflecting the impact of the Company's robust revenue performance and solid cost leverage, benefiting from continued control of overhead spending. Selling, general & administrative expenses decreased 70 basis points as a percentage of revenues. Additionally, the Company posted a moderate increase in gross margin resulting primarily from increased higher margin service revenues. This improvement more than offset dilutive margin impacts from acquisitions and increased real estate taxes and property insurance costs. 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 increased 33% to $129 million, indicative of higher OIBDA and higher depreciation and amortization expense reflecting the impact of recent acquisitions. Net income for the quarter was $51 million, or $0.25 per diluted share, including other expense, net of $9 million, or $0.03 per share. The components of other expense, net, including the impact of foreign currency fluctuations are detailed in the table below.

Iron Mountain Inc.