01—Abstract
Summary
Summary of the 10-K filed March 1, 2011. Cited figures are marked; the original filing is the authoritative source.
Iron Mountain Incorporated's 2010 annual report describes a global information management business serving more than 150,000 corporate clients in over 35 countries, with total 2010 revenues of $3.13 billiona (up 3.8% from $3.01 billion in 2009) and internal revenue growth of 2.3%.
Storage revenues grew 3.8% to $1.73 billion and service revenues rose to $1.40 billionb. Operating income fell 41.0% to $323.6 million because of a $283.8 million non-cash goodwill impairment charge tied to the Worldwide Digital Business segment, which produced a net loss attributable to Iron Mountain Incorporated of $53.9 million, or $(0.27) per diluted share. Adjusted OIBDA rose 8.9% to $945.5 million, and the margin improved to 30.2% of revenues from 28.8%.
Cash generation and shareholder returns were central to the year. Operating cash flow was $625.1 millionc, and free cash flow before acquisitions and discretionary investments was $373.4 million. The company initiated a quarterly dividend in 2010 and raised it to $0.1875 per share in December 2010, and it authorized up to $350.0 million in share repurchases, of which $238.5 million remained at year-end.
Total long-term debt was $3.01 billiond against total equity of $1.96 billion, a debt-to-equity ratio of 1.53. Management expects 2011 internal revenue growth of approximately 0% to 2%. Subsequent events include the January 2011 redemption of the remaining $231.3 million of 7 3/4% Notes and the acquisition of the remaining 80% of its Polish joint venture for an estimated $69.5 million.
Known legal matters include a Brazilian labor suit, a patent infringement suit over Connected backup technology seeking about $26 million, and claims arising from a 2006 London warehouse fire. The company states that none of these is expected to have a material impact on its results or financial condition.
02—Key points
Key Highlights
- Total 2010 revenues of $3.13 billion, up 3.8%; internal revenue growth of 2.3%, with storage revenues up 3.8% to $1.73 billion
- Operating income fell 41.0% to $323.6 million after a $283.8 million goodwill impairment in the Worldwide Digital Business segment
- Net loss attributable to Iron Mountain Incorporated of $53.9 million, or $(0.27) per diluted share, versus net income of $220.9 million in 2009
- Adjusted OIBDA rose 8.9% to $945.5 million, with Adjusted OIBDA margin of 30.2% versus 28.8% in 2009
- Operating cash flow of $625.1 million and free cash flow before acquisitions and discretionary investments of $373.4 million in 2010
- Quarterly dividend raised to $0.1875 per share in December 2010, a 200% increase over the prior $0.0625 quarterly dividend; $238.5 million remained under the $350.0 million repurchase authorization at year-end
- Debt to equity ratio of 1.53 with total long-term debt of $3.01 billion; January 2011 redemption of the remaining $231.3 million of 7 3/4% Notes and acquisition of the remaining 80% of the Polish joint venture for an estimated $69.5 million
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed March 1, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $2.89B$2.77B | +4.3% |
| SG&A Expenses | $772.81M$749.93M | +3.1% |
| Operating Expenses | $2.34B$2.23B | +5.2% |
| Operating Income | $547.55M$545.23M | +0.4% |
| Interest Expense | $204.56M$212.54M | −3.8% |
| Net Income | -$52.68M$219.38M | −124.0% |
| EPS (Basic) | $-0.29$1.07 | −127.1% |
| EPS (Diluted) | $-0.29$1.07 | −127.1% |
| Shares Outstanding (Basic) | 201.99M202.81M | −0.4% |
| Shares Outstanding (Diluted) | 201.99M204.27M | −1.1% |
05—Questions
Frequently Asked Questions
Why did operating income drop so sharply in 2010 despite revenue growth?
Operating income fell $225.0 million, or 41.0%, to $323.6 million, mainly because of a $283.8 million non-cash goodwill impairment charge related to the Worldwide Digital Business segment. The company cited a reduced forecast of revenue and operating results, lower eDiscovery pricing and smaller matter sizes, discontinued software projects, and the sale of the domain name management product line as the triggering factors.
What is the company's outlook for internal revenue growth in 2011?
Management expects consolidated internal revenue growth for 2011 of approximately 0% to 2%. It also expects capital expenditures of about $245.0 million in 2011, excluding potential future acquisitions and including about $20.0 million for real estate purchases.
How is the company returning cash to shareholders?
In 2010 the company began paying quarterly dividends, paying $0.0625 per share in each of the first three quarters and declaring $0.1875 per share for the fourth quarter, which was paid in January 2011. It repurchased $111.6 million of common stock during 2010 under a program authorized at $350.0 million in total. If the $0.1875 quarterly rate continues, the 2011 annual dividend payout is expected to be about $150.0 million.
How leveraged is Iron Mountain and what are its debt covenants?
Total long-term debt was $3.01 billion at December 31, 2010, against total equity of $1.96 billion, a debt to equity ratio of 1.53. The revolving and term loan leverage ratio was 2.9 against a maximum allowable 5.5, and the bond leverage ratio was 3.4 against a maximum of 6.5. About 87% of total debt was fixed-rate at year-end, or about 80% on a pro forma basis after the January 2011 note redemption.
What are the main legal and environmental risks disclosed?
The filing discloses a September 2010 Brazilian labor suit covering about 2,000 individuals, a patent infringement suit by Oasis Research over Connected backup technology seeking about $26 million, and claims arising from a July 2006 London warehouse fire. The company states that none of these is expected to have a material impact on its consolidated results or financial condition. It also notes it has not performed an in-depth environmental review of all its properties and may be liable for contamination costs.
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