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Iron Mountain Reports Second Quarter 2013 Financial Results

  Iron Mountain Reports Second Quarter 2013 Financial Results

 Consistent Constant Dollar Storage Rental Growth of 3% Supports Solid Second
                               Quarter Results

            Continued Progress on International Margin Improvement

  Company Updates Full-year 2013 Guidance to Reflect Foreign Currency Impact

Business Wire

BOSTON -- August 1, 2013

Iron Mountain Incorporated (NYSE: IRM), the storage and information management
company, today reported financial and operating results for the second quarter
ended June 30, 2013. Total reported revenues were $755 million, compared with
$752 million in 2012. On a constant dollar (C$) basis, total revenue growth
was 1.3%, reflecting storage rental revenue gains of 3.0%, partially offset by
a modest decline in total service revenues. Adjusted OIBDA was $233 million,
compared with $239 million in 2012. Adjusted EPS was $0.29 per share ($0.14
per share on a GAAP basis), compared with $0.37 per share ($0.24 per share on
a GAAP basis), in 2012.

For the year to date, total reported revenues and Adjusted OIBDA were
consistent with the same period in 2012 at approximately $1.5 billion and $460
million, respectively. Adjusted EPS was $0.56 per share ($0.24 per share on a
GAAP basis), compared with $0.66 per share ($0.60 per share on a GAAP basis),
for the same period in 2012.

Second quarter and year-to-date reported Adjusted OIBDA were reduced by
approximately $5 million due to the effect of an increase in legal accruals
which impacted second quarter and year-to-date Adjusted EPS by $0.02 per
share.

Reconciliations of supplemental non-GAAP measures to GAAP measures may be
found in Appendix A or by visiting the Investor Relations page at
www.ironmountain.com under “Supplemental Data.”

“Our financial and operating results for the second quarter reflect our
continued focus on sustaining the durability of our storage rental business,
enhancing the profitability of our International operations and supporting
future growth through attractive acquisitions,” said William Meaney, Iron
Mountain’s president and chief executive officer. “During the quarter, we
achieved solid constant dollar storage rental growth of 3.0%, reflecting
strong increases of 6.6% in our International business and consistent 1.8%
growth in North America.

“In addition, we continued to make good progress toward our goal, established
two years ago, to increase Adjusted OIBDA margins in our International
business to 25% by the end of 2013, achieving 24.6% for the first half of the
year. This progress reflects strong contribution from our United Kingdom and
western European businesses and improved efficiency from our business in
emerging markets,” Mr. Meaney said.

“Also during the quarter, we closed on three acquisitions that expanded our
presence in the United States, Brazil and France, and we have a solid pipeline
of attractive acquisitions in both our developed and emerging markets,” said
Mr. Meaney. “Overall, we are pleased with the performance of our business
year-to-date, which is in line with our expectations, and we will continue to
pursue investment opportunities that sustain our durable core business and
generate attractive returns.”

Financial Review

Consistent storage rental revenue growth, supported by regulatory and
compliance requirements, drove solid performance in the quarter and continued
to offset expected service declines. Global storage rental revenue growth was
3.0% C$ for the quarter, driven by 5.6% internal growth in the International
business, 1.2% internal growth in North America and benefits from
acquisitions.

Global records management volume grew by 1.4% on a year-over-year basis,
supported by strong 6.7% volume growth in the International business,
primarily driven by solid increases from emerging markets in central Europe
and recently completed acquisitions. Records management volume growth rates in
the International business remained strong, but moderated in the second
quarter, reflecting reduced growth rate benefit from the acquisition of Grupo
Store in Brazil that was completed during the second quarter of 2012. North
America records management net pricing increased by approximately 1.2% in the
second quarter, while foreign currency rate changes in the second quarter
reduced reported revenue growth rates by approximately 0.5%.

As the company has previously noted, service revenue declines reflect a trend
toward reduced retrieval/re-file activity and related transportation revenues.
As anticipated, declines in service revenues moderated during the second
quarter to (1.1)% C$ due to strong growth in Document Management Services
(DMS), increased special records management project volume and more favorable
year-over-year comparisons, offset by a decrease in activity-based services.
Shredding volumes increased in North America, but were offset by a decrease in
recycled paper pricing when compared with prior year averages.

Adjusted OIBDA margins for the second quarter decreased by 90 basis points
compared with the second quarter of 2012, primarily driven by the $5 million
in legal accruals noted earlier (a 60 basis point impact) and service revenue
declines. Year-to-date Adjusted OIBDA margins in North America remained solid
at 41.7%, with the International business achieving 24.6%. Excluding the legal
accrual impacts, year-to-date Adjusted OIBDA margins improved by 20 basis
points.

The decline in Adjusted EPS for the quarter compared to the same prior-year
period was due primarily to an additional 20 million fully diluted weighted
average shares outstanding, including the 17 million new shares issued in
connection with the special dividend paid in November 2012, higher interest
expense and the legal accrual noted earlier. These impacts more than offset
lower income tax expense in the period.

Free Cash Flow (FCF) for the first half of 2013 before acquisitions, real
estate and capital expenditures, operating costs and cash taxes related to the
proposed conversion to a real estate investment trust, or REIT, was $154
million, compared with $117 million for the same period in 2012. Capital
expenditures for the first half of 2013 (excluding $28 million of real estate
and $14 million of REIT-related capital expenditures), totaled $86 million, or
5.7% of revenues. The company’s liquidity position remains strong at $794
million and its consolidated leverage ratio of net debt to EBITDA (as defined
by its senior credit facility) was 4.1x at quarter end.

Dividends

On June 6, 2013, Iron Mountain’s board of directors declared a quarterly cash
dividend of $0.27 per share for stockholders of record as of June 25, 2013,
which was paid on July 15, 2013.

Financial Performance Outlook

Today the company updated its 2013 full-year guidance primarily to reflect the
impact from foreign currency exchange rate (FX) changes from the beginning of
the year. These FX changes are estimated to reduce full-year revenues by
approximately $40 million, or 1.3%. The company also updated full-year
interest expense and depreciation and amortization estimates, reflecting
impacts from recently completed acquisitions. This guidance is based on
current expectations and does not include the potential impact of any future
acquisitions or divestitures (dollars in millions, except per share data):

                         FY/2013 Outlook                    
($MM except per              Current         Previous         C$ Growth
share data)
Revenues                     $3,000 -        $3,020 -            1% -
                             $3,050             $3,100              3%^(1)
Adjusted OIBDA^(2)           $900 - $925        $905 - $935         0% - 2%
Adjusted EPS^(2)(3)          $1.05 -            $1.13 - $1.24
                             $1.14
Investments:
Capex (ex RE)^(2)(4)         ~$210              ~$215
Real Estate^(5)              ~$80               ~$75
FCF (ex RE) ^ (2)            $320 - $360        $320 - $360

(1) Includes 0% - 2% internal revenue growth
(2) These items exclude costs and expenditures associated with the proposed
REIT conversion
(3) Both the current and previous guidance have been adjusted to reflect the
increase in shares outstanding following the special dividend paid on November
21, 2012
(4) Includes ~$16 million for the relocation of the Boston headquarters
(5) Includes ~$35 million for data center construction

Iron Mountain’s conference call to discuss its second quarter 2013 financial
results and full-year outlook will be held today at 8:30 a.m. Eastern Time.
The company will simulcast the conference call on its Web site at
www.ironmountain.com, the content of which is not part of this earnings
release. A slide presentation providing summary financial and statistical
information that will be discussed on the conference call will also be posted
to the Web site and available for real-time viewing. The slide presentation,
replays of the conference call and related transcript will be available on the
Web site for future reference.

About Iron Mountain

Iron Mountain Incorporated (NYSE: IRM) is a leading provider of storage and
information management solutions. The company’s real estate network of over 64
million square feet across more than 1,000 facilities in 35 countries allows
it to serve customers around the world. And its solutions for records
management, data backup and recovery, document management and secure shredding
help organizations to lower storage costs, comply with regulations, recover
from disaster, and better use their information for business advantage.
Founded in 1951, Iron Mountain stores and protects billions of information
assets, including business documents, backup tapes, electronic files and
medical data. Visitwww.ironmountain.com for more information.

Forward Looking Statements

This press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and other
securities laws and is subject to the safe-harbor created by such Act.
Forward-looking statements include our 2013 financial performance outlook and
statements regarding our operations, economic performance, financial
condition, goals, beliefs, future growth strategies, investment objectives,
plans and current expectations, such as our expected target leverage ratio,
our acquisition pipeline, expected Adjusted OIBDA margins in our International
business, our proposed conversion to a REIT and the estimated range of tax
payments and other costs expected to be incurred in connection with our
proposed conversion to a REIT. These forward-looking statements are subject to
various known and unknown risks, uncertainties and other factors. When we use
words such as "believes," "expects," "anticipates," "estimates" or similar
expressions, we are making forward-looking statements. Although we believe
that our forward-looking statements are based on reasonable assumptions, our
expected results may not be achieved, and actual results may differ materially
from our expectations. Important factors that could cause actual results to
differ from expectations include, among others: (i) with regard to our
estimated tax and other REIT conversion costs, our estimates may not be
accurate, and such costs may turn out to be materially different than our
estimates due to unanticipated outcomes in the private letter rulings from the
U.S Internal Revenue Service, changes in our support functions and support
costs, the unsuccessful execution of internal planning, including
restructurings and cost reduction initiatives, or other factors;(ii) the cost
to comply with current and future laws, regulations and customer demands
relating to privacy issues; (iii)the impact of litigation or disputes that
may arise in connection with incidents in which we fail to protect our
customers' information; (iv)changes in the price for our storage and
information management services relative to the cost of providing such storage
and information management services; (v)changes in customer preferences and
demand for our storage and information management services; (vi) the adoption
of alternative technologies and shifts by our customers to storage of data
through non-paper based technologies; (vii)the cost or potential liabilities
associated with real estate necessary for our business; (viii)the performance
of business partners upon whom we depend for technical assistance or
management expertise outside the U.S.; (ix)changes in the political and
economic environments in the countries in which our international subsidiaries
operate; (x) claims that our technology violates the intellectual property
rights of a third party; (xi) changes in the cost of our debt; (xii) the
impact of alternative, more attractive investments on dividends; (xiii) our
ability or inability to complete acquisitions on satisfactory terms and to
integrate acquired companies efficiently; (xiv) other trends in competitive or
economic conditions affecting our financial condition or results of operations
not presently contemplated; and (xv) other risks described more fully in the
Company’s most recently filed Annual Report on Form 10-K filed on March 1,
2013, under “Item 1A. Risk Factors,” and other documents that the Company
files with the Securities and Exchange Commission from time to time. Except as
required by law, the Company 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.

APPENDIX A

We have presented in this earnings release financial data (Adjusted OIBDA,
Adjusted OIBDA Margin %, Adjusted EPS and FCF) that exclude certain costs
associated with the company’s 2011 proxy contest, the work of the Strategic
Review Special Committee of the board of directors and the company’s proposed
REIT conversion (collectively, “REIT Costs”). Reconciliations of supplemental
non-GAAP measures to GAAP measures are presented below or by visiting the
Investor Relations page at www.ironmountain.com under “Supplemental Data.” We
believe the adjusted data provides meaningful supplemental information
regarding the company’s operating results primarily because they exclude
amounts we do not consider part of ongoing operating results when planning and
forecasting and assessing the performance of the organization or our
individual operating segments. We believe that the adjusted data also
facilitates the comparison by management and investors of results for current
periods and guidance for future periods with results for past periods.

Selected Financial Data:
(dollars
in
millions,      Q2/2012   Q2/2013   Inc        YTD       YTD       Inc
except per                                 (Dec)         2012        2013        (Dec)
share
data)
Revenues           $ 752     $ 755     0.3%          $ 1,499   $ 1,502   0.2%
                                                                                 
Gross
Profit             $ 439       $ 434       (1.2)%        $ 870       $ 860       (1.2)%
(excluding
D&A)
Gross                58.4%       57.5%                     58.1%       57.2%
Margin %
                                                                                 
Adjusted           $ 239       $ 233       (2.6)%        $ 461       $ 460       (0.3)%
OIBDA
Adjusted
OIBDA                31.8%       30.8%                     30.8%       30.6%
Margin %
                                                                                 
Operating          $ 159       $ 132       (16.9)%       $ 301       $ 255       (15.2)%
Income
Interest
Expense,           $ 58        $ 63        8.2%          $ 117       $ 126       7.8%
net
                                                                                 
Income
from               $ 41        $ 28        (33.5)%       $ 103       $ 46        (55.2)%
Continuing
Operations
Adj. EPS
from
Continuing         $ 0.37      $ 0.29      (21.6)%       $ 0.66      $ 0.56      (15.2)%
Operations
– FD
                                                                                 

Non-GAAP Measures

We have presented supplemental non-GAAP financial measures as part of this
earnings release. A reconciliation is provided below that reconciles each
non-GAAP measure to its most comparable GAAP measure. This presentation of
non-GAAP financial measures should not be considered in isolation from, or as
a substitute for, the most directly comparable GAAP measures. We believe that
these non-GAAP financial measures provide meaningful supplemental information
regarding the Company’s operating results primarily because they exclude
amounts we do not consider part of ongoing operating results when planning and
forecasting and assessing the performance of the organization or our
individual operating segments. We believe that our non-GAAP financial measures
also facilitate the comparison by management and investors of results for
current periods and guidance for future periods with results for past periods.

Adjusted Operating Income Before Depreciation, Amortization, Intangible
Impairments, and REIT Costs, or Adjusted OIBDA

Adjusted OIBDA is defined as operating income before depreciation,
amortization, intangible impairments, gain (loss) on disposal/write-down of
property, plant and equipment, net, and REIT Costs. Adjusted OIBDA Margin is
calculated by dividing Adjusted OIBDA by total revenues. These measures are an
integral part of the internal reporting system we use to assess and evaluate
the operating performance of our business. We use multiples of current or
projected Adjusted OIBDA in conjunction with our discounted cash flow models
to determine our overall enterprise valuation and to evaluate acquisition
targets. We believe Adjusted OIBDA and Adjusted OIBDA Margin provide our
current and potential investors with relevant and useful information regarding
our ability to generate cash flow to support business investment.

Adjusted Earnings Per Share from Continuing Operations, or Adjusted EPS

Adjusted EPS is defined as reported earnings per share from continuing
operations excluding: (1) (gain) loss on the disposal/write-down of property,
plant and equipment, net; (2) intangible impairments; (3) other (income)
expense, net; (4) REIT Costs; and (5) the tax impact of reconciling items and
discrete tax items. We do not believe these excluded items to be indicative of
our ongoing operating results, and they are not considered when we are
forecasting our future results. We believe Adjusted EPS is of value to our
current and potential investors when comparing our results from past, present
and future periods.

Free Cash Flows before Acquisitions and Discretionary Investments, or FCF

FCF is defined as Cash Flows from Operating Activities from continuing
operations less capital expenditures (excluding real estate and capital
expenditures associated with the REIT conversion), net of proceeds from the
sales

of property and equipment and other, net, and additions to customer
relationship and acquisition costs. REIT Costs are also excluded from FCF. Our
management uses this measure when evaluating the operating performance of our
consolidated business. We believe this measure provides relevant and useful
information to our current and potential investors. FCF is a useful measure in
determining our ability to generate excess cash that may be used for
reinvestment in the business, discretionary deployment in investments such as
real estate or acquisition opportunities, returning of capital to our
stockholders and voluntary prepayments of indebtedness.

Following are reconciliations of the above-described measures to the most
directly comparable GAAP measures:

Adjusted OIBDA reconciled to operating income (in millions):

                                 Three Months Ended    Six Months Ended
                                     June 30,                 June 30,
                                     2012       2013        2012     2013
Adjusted OIBDA                       $  239       $ 233       $  461     $ 460
Less: Depreciation &                    78          79           156       159
Amortization
(Gain) Loss on
disposal/write-down of PP&E,            (1)         (2)          --        (2)
net
REIT Costs                             3          24          5        49
Operating Income                     $  159       $ 132       $  301     $ 255
                                                                           

Adjusted EPS from Continuing Operations – Fully Diluted reconciled to Reported
EPS from Continuing Operations – Fully Diluted:

                        Three Months Ended         Six Months Ended
                            June 30,                      June 30,
                            2012        2013            2012        2013
Adjusted EPS from
Continuing                  $ 0.37        $ 0.29          $ 0.66        $ 0.56
Operations – FD
Less: (Gain) Loss
on                            --            (0.01)          --            (0.01)
disposal/write-down
of PP&E, net
Other (Income)                0.06          0.08            0.04          0.09
Expense, net
REIT Costs                    0.02          0. 13           0.03          0.26
Tax impact of
reconciling items            0.05         (0.05)         (0.01)       (0.02)
and discrete tax
items
Reported EPS from
Continuing                  $ 0.24        $ 0.14          $ 0.60        $ 0.24
Operations – FD
                                                                        
Weighted average
common shares                172,231      192,569        172,227      192,339
outstanding – FD
(000s)
                                                                          

Free Cash Flows before Acquisitions and Discretionary Investments reconciled
to Cash Flows from Operating Activities from Continuing Operations (in
millions):

                                                         Six Months Ended
                                                             June 30,
                                                              2012    2013
Free Cash Flows Before Acquisitions and                      $ 117      $ 154
Discretionary Investments
Add: Capital Expenditures (excluding real estate),             95         126
net
Additions to Customer Acquisition Costs                        8          8
Less: REIT Conversion Costs, net of tax                        (3)        (34)
REIT Cash Taxes                                                --         (28)
REIT Conversion Capital Expenditures                          --        (14)
Cash Flows from Operating Activities from Continuing         $ 217      $ 213
Operations
                                                                          
                                                                          

IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands except Per Share Data)
(Unaudited)
                                             
                       Three Months Ended            Six Months Ended
                       June 30,                      June 30,
                       2012        2013            2012          2013
REVENUES:
Storage Rental         $ 433,436     $ 441,571       $ 858,777       $ 884,040
Service                 318,729      313,150        639,886        617,712
                                                                     
Total Revenues           752,165       754,721         1,498,663       1,501,752
                                                                     
OPERATING
EXPENSES:
Cost of Sales
(Excluding
Depreciation             313,060       321,056         628,358         642,132
and
Amortization)
Selling,
General and              203,515       224,531         414,175         447,982
Administrative
Depreciation
and                      77,510        78,928          155,518         159,129
Amortization
(Gain) Loss on
Disposal /
Write-down of           (607)        (1,663)        112            (2,202)
Property,
Plant and
Equipment, Net
                                                                     
Total
Operating               593,478      622,852        1,198,163      1,247,041
Expenses
                                                                     
OPERATING                158,687       131,869         300,500         254,711
INCOME
                                                                     
INTEREST                 58,216        62,989          117,000         126,171
EXPENSE, NET
OTHER EXPENSE,          10,066       15,275         6,762          18,014
NET
                                                                     
Income from
Continuing
Operations               90,405        53,605          176,738         110,526
before
Provision for
Income Taxes
                                                                     
PROVISION FOR           48,964       26,067         74,224         64,638
INCOME TAXES
INCOME FROM
CONTINUING               41,441        27,538          102,514         45,888
OPERATIONS
(LOSS) INCOME
FROM
DISCONTINUED             (639)         (98)            (5,732)         2,086
OPERATIONS,
NET OF TAX
LOSS ON SALE
OF
DISCONTINUED            (1,885)      -              (1,885)        -
OPERATIONS,
NET OF TAX
NET INCOME               38,917        27,440          94,897          47,974
                                                                     
Less: Net
Income
Attributable            862          876            1,492          2,024
to the
Noncontrolling
Interests
                                                                     
Net Income
Attributable
to Iron                $ 38,055      $ 26,564        $ 93,405        $ 45,950
Mountain
Incorporated
                                                                     
EARNINGS
(LOSSES) PER
SHARE – BASIC:
INCOME FROM
CONTINUING             $ 0.24        $ 0.14          $ 0.60          $ 0.24
OPERATIONS
TOTAL (LOSS)
INCOME FROM            $ (0.01)      $ (0.00)        $ (0.04)        $ 0.01
DISCONTINUED
OPERATIONS
Net Income
Attributable
to Iron                $ 0.22        $ 0.14          $ 0.55          $ 0.24
Mountain
Incorporated
EARNINGS
(LOSSES) PER
SHARE –
DILUTED:
INCOME FROM
CONTINUING             $ 0.24        $ 0.14          $ 0.60          $ 0.24
OPERATIONS
TOTAL (LOSS)
INCOME FROM            $ (0.01)      $ (0.00)        $ (0.04)        $ 0.01
DISCONTINUED
OPERATIONS
Net Income
Attributable
to Iron                $ 0.22        $ 0.14          $ 0.54          $ 0.24
Mountain
Incorporated
                                                                     
DIVIDENDS
DECLARED PER           $ 0.2700      $ 0.2700        $ 0.5200        $ 0.5400
COMMON SHARE
WEIGHTED
AVERAGE COMMON
SHARES                  171,296      190,823        171,308        190,518
OUTSTANDING –
BASIC
WEIGHTED
AVERAGE COMMON
SHARES                  172,231      192,569        172,227        192,339
OUTSTANDING –
DILUTED
                                                                     
Adjusted
Operating
Income before          $ 238,938     $ 232,670       $ 461,489       $ 460,146
Depreciation
and
Amortization
                                                                       
                                                                       

IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(Unaudited)
                                                               
                                                 December 31,    June 30,
                                                 2012            2013
ASSETS
                                                                 
CURRENT ASSETS:
Cash and Cash Equivalents                        $ 243,415       $ 258,866
Restricted Cash                                    33,612          33,613
Accounts Receivable (less allowances of $25,209    572,200         581,481
and $26,764, respectively)
Other Current Assets                              174,865        172,022
Total Current Assets                              1,024,092      1,045,982
                                                                 
PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment at Cost              4,443,323       4,465,713
Less: Accumulated Depreciation                    (1,965,596)    (2,013,404)
Property, Plant and Equipment, net                2,477,727      2,452,309
                                                                 
OTHER ASSETS:
Goodwill, net                                      2,334,759       2,317,157
Other Non-current Assets, net                    521,761         519,371
Total Other Assets                                2,856,520      2,836,528
                                                                 
Total Assets                                     $ 6,358,339     $ 6,334,819
                                                                 
LIABILITIES AND EQUITY
                                                                 
CURRENT LIABILITIES:
Current Portion of Long-term Debt                $ 92,887        $ 324,682
Other Current Liabilities                         812,066        748,243
Total Current Liabilities                          904,953         1,072,925
                                                                 
LONG-TERM DEBT, NET OF CURRENT PORTION             3,732,116       3,614,018
OTHER LONG-TERM LIABILITIES                        558,822         554,337
COMMITMENTS AND CONTINGENCIES
TOTAL IRON MOUNTAIN INCORPORATED STOCKHOLDERS’     1,149,971       1,080,273
EQUITY
NONCONTROLLING INTERESTS                          12,477         13,266
                                                                 
TOTAL EQUITY                                      1,162,448      1,093,539
                                                                 
Total Liabilities and Equity                     $ 6,358,339     $ 6,334,819

Contact:

Iron Mountain Incorporated
Melissa Marsden, 617-535-8595
Senior Vice President, Investor Relations
Melissa.marsden@ironmountain.com
or
Stephen P. Golden, 617-535-4766
Vice President, Investor Relations
sgolden@ironmountain.com