Good morning, my name is Tina and I will be your conference operator today. At this time, I'd like to welcome everyone to the Iron Mountain Q1 2008 Earnings Webcast Conference Call. All lines have been placed on mute to prevent any backgrounds noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instruction] Mr. Golden, you may begin your conference.

Thank you and welcome everyone to our 2008 first quarter earnings conference call. After my announcements this morning, Richard Reese will give his state of the company remarks, followed by Brian McKeon, who will deliver the financial review. When Brian is finished, we will open up the phones for Q&A. For our custom, we have a user-controlled slide presentation on the Investor Relations page of our website at www.ironmountain.com. Referring now to slide two, today's earnings call and slide presentation will contain a number of forward-looking statements, most notably our outlook for our 2008 financial performance. All forward-looking statements are subject to risks and uncertainties. Please refer to today's press release or the Safe Harbor language on this slide for a discussion of the major risk factors that could cause our actual results to be materially different from those contemplated in our forward-looking statements. As you know, operating income before D&A are OIBDA and free cash flow before acquisitions and investments are metrics we speak to frequently and ones we believe to be important in evaluating our overall financial performance. We provide additional information and a reconciliation of these non-GAAP measures to the appropriate GAAP measures as required by Reg G at the Investor Relations page of our website as well in today's press release. Before I turn the call over to Richard, I would like to let you know that our 2007 Annual Report will be available on our website later today. I encourage you all to visit the site and take a look at the report. It's a great report, and hopefully you will find it useful. With that, I would like to introduce Richard Reese, our Chairman and CEO.

Thank you Steve and good morning everybody and welcome to this Q1 call. As you saw from our announcement today, our business is performing well and we're really on track for delivering against our annual financial goals. The strategy continues to match not just the financial performance, we are showing solid growth throughout our business and efficiency gains, which according to our strategy we are using to fund our new service expansion and expansion of our global footprint. So, basically as I have said many times, it has been business as usual and this was a good quarter, business as usual quarter for us. So, let’s talk a little bit about it. It was a good start for the year and gives us the confidence that we will have a year as we have forecast. But, as you know, most of the time we are able to bring our years in on an annual basis and again we expect to do it this year. We saw solid gains across most of… or all of our business segments and there was modest acquisition activity slower than last year, as we expected. We've told you before that last year was sort of an unusual high year for recent history, and we expect this year to be back down and in fact it is back down as we told you it would be. Good revenue growth of 18% and solid internal revenue of 9%. The quarter benefited from the acquisition activity that was strong last year and most of the deals closed after the end of first quarter. So, you will see that year-to-year comparison coming off a little bit as the year goes through. Also strong benefits from FX. FX added 3% to the total revenue growth, about a third of our…

Thanks, Richard. And good morning everybody. Q1 was a solid start to the year for Iron Mountain. We posted strong revenue and OIBDA gains with early year results ahead of our forecast. This reflects solid underlying business performance including better than expected results in certain aspects of our digital business combined with continued positive impacts from foreign exchange changes and high paper prices. We will begin today with the review of our Q1 results. I will also review our cash flow performance, capital spending trends and debt position through the first quarter and put these results in a context of our full year outlook. We will conclude with an update of our 2008 full-year guidance, which we've refined reflecting our solid early results. We will also share our outlook for the second quarter. Slide 4 highlights the key messages from today's review. Iron Mountain delivered strong financial results in Q1, with revenue up 18% and comparable OIBDA up 14%. We posted high revenue gains across all major business units, supported by 9% internal growth, the benefits of our major acquisitions, and favorable foreign currency movements. We also drove strong OIBDA growth in the quarter despite some dilutive impact from acquisitions completed last year and some carryover impacts from investments initiated in 2007. On a reported basis, OIBDA increased 12%. Included in OIBDA are net losses on asset write-downs of $3.5 million and $37,000 for Q1 2008 and Q1 2007 respectively. When excluding these losses from both years, comparable OIBDA grew 14%. As a result of our Q1 performance, we are refining our outlook for the full-year, raising the low end of our revenue and OIBDA forecast ranges. This reflects our confidence that we're on track towards achieving our full-year financial goals. Let’s move on to looking at the details on…

[Operator Instructions] Your first question comes from the line of Vance Edelson with Morgan Stanley.

National opportunity, do you see multinational corporations as wanting to consolidate their business globally towards Iron Mountain, or is it more they view on a country by country basis, how should we think about that?

A lot of ways, the answer is, there is no one answer. It depends on the company, industry and a lot of things. But, there is overall trend of wanting to consolidate... a variety of trends. One is to have fewer vendors period. Two, is to drive more purchasing leverage through doing that. The third thing is, as though, for compliance reasons, having fewer vendors makes it cheaper and easier to manage. Consistency at what you do on a global basis is coming more and more important. Having said that, all of that, you got to earn it locally. There is no... there are very few companies... there are more and more than it used to be that would make a true globalization, but the more... the general trend is to make more regional decisions under some consistent umbrella and so that's why we are trying to become strong in each of the major regions.

Okay. That's helpful. Could you elaborate on the destruction variability from quarter-to-quarter? Is that something that's predictable as in there are seasonal factors or is it less predictable and we are not going to really be able to accurately model how that ebbs and flows?

There is some variation and that is obviously driven… we have some advanced insight into that, but it's…

A lot of it is... there is… like a lot of things, there is lot of complex trends, but by and large, there is base line amount of that activity that sort of happens like clock work. And then what happens is and it doesn't take many very large customers to either do catch-up, that is, they’ll have to put a lot of stuff on hold, because of their retention programs, and we've seen this trend not very well managed. They are afraid of the litigation and the compliance issues of doing that, then they build a program, oftentimes we help them to do, and then they do a big catch-up, maybe two or three years backwards and it doesn't take... two or three of them do that in a quarter to make it rise. You also, by the way, sometimes see… I've seen this pattern before and I'm not... I don't know for fact that we are seeing this yet. But, I have seen this pattern where in tough times people stop destroying because they would rather pay the monthly storage price and just budget here, than the one-time fee to get rid of the box. They are protecting those...

And possible we may have seen some of that impact in Q1. I think in a full year basis we have a pretty good handle on that, but we again do see some fluctuations quarter-to-quarter.

Okay that makes sense. And then just one last question. Could you comment on increased energy cost and how you are passing that along to customers and whether impacts the business at all?

The energy costs are about 2% to 3% of our revenues and that's split pretty evenly between basically cost that flow through our facilities... energy for facilities, lighting, etcetera, and the other half is related to transportation. It is somewhat higher than that in the first quarter because we are… just the seasonality nature of our business. A significant number of our customers, we have fuel surcharge arrangements for the transportation fees, so that's something that we can't pass on. But, we did see some negative impact in our margins in Q1 that was an offsetting factor that...

In the short run, it's like a lot of businesses. The real variable stuff like and the rolling stock, we've been working over the last 18 months or so to put in our contracts and agreements, fuel surcharges. We are not a 100% there with all customers, but we are on a path to get there. So, we will have fluctuations and [inaudible] we can deal with it. But, the other piece coming through heat and light and facilities, you can’t index that so easily that shows up in price increases later. So, in the near term, we eat it and in the long-term, we’d expect to get it back.

Okay. That's helpful. Thanks guys.

Your next question comes from the line of Andrew Steinerman with Bear Stearns.

Hi, I am going to take debate on Richard's comments that quarter-to-quarter margins could be volatile. Just to kind of have clarity on this. When we look at the margins in the first quarter excluding the $4 million write-off, it would seem like the first quarter would be the low quarter for the year to make the overall margin goals that are implied in the middle of the guidance. I will also note, as you guys… historically out, that the first quarter of the year is usually the lowest quarter of the year on margin. So, when Richard called out volatility, did you mean that we could expect unusual volatility or normal volatility?

You're right on both points in terms of the implications for margins. The first quarter is historically our lowest margin quarter and part of that is driven by the energy cost we just spoke of. Our guidance would imply that we're going to have better and improving margins as we work through the year, both in terms of quarter-to-quarter and also on a year-on-year basis. There are two drivers to that. One is, we're expecting moderation in the cost growth later this year, Andrew, I just want to highlight it's probably going to be a bit more in Q4 than it is in Q2 and Q3, but we are expecting some improvement on that front. We are continuing to target improvement in gross margins driven in part by real estate efficiencies. So, we wouldn't read anything to Richard's comments signaling that we're expecting volatility this year quarter-to-quarter, just trying to highlight that margins do vary on a quarter-to-quarter basis and we are focused on delivering our full-year goals and we are going to manage that way.

That's great. Thank you.

Your next question comes from the line of David Gold with Sidoti.

Hi, good morning.

Hi, Dave.

A couple of clarifications or follow-up questions. One the comment… I mean the release, international special project revenue helping in the first quarter. Are those the same projects that you commented on that you are pointing to in fourth and first quarter that are running off as we speak a little bit?

Our commentary was talking actually about overall international complementary service growth, which includes Latin America and Asia-Pacific, which did quite well on that front in the first quarter. We did see growth in Europe as well and that is continuing to benefit from a project that we're expecting to wind down relatively… I think right after the first half of this year. We tried to highlight last year that they were two European projects that year-on-year we are going to lose about $25 million in annualized record… $25 million in revenue year-on-year and that is going to be a factor that is going to contribute to moderation. Our expectation, we are going to see lower levels of complementary service growth in the back half.

Got you. Okay. It's helpful. And then one other question, if you can comment or give a little bit more color on paper prices, have been strong year-to-year… if you can just remind us where we were a year ago versus this year?

In the first quarter of last year, we had paper prices in the range of about $150 per ton and right now we're in the $225 to $230 range and so that… we will start to see the… paper prices really ramped up post Q1 last year and they have kind of moderated in terms of their increases. They're a bit better than we thought they were when we were on our last quality, but we will see less growth than benefit from that if they hold at current levels as we work through the year.

Perfect, thanks so much.

Your next question comes from the line of Michel Morin with Merrill Lynch.

Yes, good morning. I am Michel Morin at Merrill Lynch. I think you alluded to some real estate efficiencies that might help the gross margin a little bit later on, are you referring to winding down the real estate rationalization project that’s in Pickferd [ph] or is that all behind us already?

I think we are referring just to broad base. Last year, we went long on some space and that hit our margin and we are absorbing it, we are taking fewer buildings this year for upping our capacity utilization and it’s flow through the year. You will that from time-to-time that same trend by the way. Some of it's opportunistic, some of it just, when you get the right circumstance, you take it. But, we work pretty long in a couple areas. The beauty of our business is, if you go long, it's just how fast you take to get utilization up. We are getting up just fine.

Okay. And then specific to the Pickferd’s rationalization project, is that behind you now?

We are still working through that in the UK. I know the big pieces, I think are behind us in some of the real-estate. The other thing we did in Australia is we chose to make that up a central management hub for accounting, consolidation and overhead staff for Asia-Pacific because of the small nature of a lot of the investments we are making there, so that, we added extra cost down there relative to the size of the business. So, that part, we haven't gone through yet, but the real state side, I think, is pretty much behind us.

Okay, great. That is helpful. On the SG&A side, you mentioned the number of items. I was wondering if you can elaborate a little bit on kind of what you have been doing and when you would expect to complete these projects? I think you specifically talked about building up the sales capability in continental Europe, I was wondering when that started and what's the time line of that is?

I don't want to say never, but the answer is, we have a long list of projects and things to invest in that can improve our business. So, whatever runs off through the rest of this year, I am sure will come up with another list for the next year. But, we’ll mange it within the context that we have said and that is, we are investing for growth in the business because of the opportunity. We are also committed to improving our operating results on a year-over-year basis as we go. So, we have a long list to pick and choose from. Those we pick and choose from the list, we factor all that in, and choose some.

All right that's fine. Thank you.

Your next question comes from the line of Scott Schneeberger with Oppenheimer.

Thanks, good morning. You have alluded in the past to some softness in the UK, I believe you wanted to make some improvements there. Please give a quick update on how you feel that’s progressing?

I think we have doing well. We have made some management changes internally and externally over the last let’s say 18 so much. We feel like our sales forces are doing pretty well right now over there, particularly in the UK. We are driving better control systems and processes that our margins… just a variety of things like that, we are making to get headway there.

I think our business is on plan as we are working through this year and we saw some constrain on growth from the increased destructions and terminations that Richard talked about last year. So, the overall growth rates have been below where we like it to be longer return, but I think we are on track.

But, all the right trends in place to make that step happen. What really drags the UK businesses is this public service business, which is the project that you hear us talking about. Just to give you a sense, its a different business, it came along, it’s a related business, but it has different financial characteristics. Although we do some of the same work even for governments, but primarily for private sectors around the world, this just happens to be relatively large and it's a kind of business you win a government contract to manage their information and records, the trend seems to be that on the contract you make a fair return, and then they... when they have budget money, they call you up and spend it, and when they don't, they don't. And it seems like the way they budget over there is they give them a lot one year and take it away the next. So, you have a good year, bad year, good year, bad year. The truth is they are all good business, and we reluctant to throw out good businesses who make good money and have good returns on capital, and it is one of them. So, sorry, we will have to keep finding probably.

Thanks. Brian indeed, just kind of following up on an earlier question on this government contract that's moving on through the year. I think you guys just said that it should continue until the middle of the year, is that a little bit longer tail than you had previously expected?

I am sorry if there is confusion on this. Last year, we highlighted we had two contracts contributed about $25 million in revenue to our results last year. One is done, and the other one is going to be completed on about the same timetable that we had anticipated. So, when we talked about this, we didn't get into specific quarterly impacts. It’s something when we put out our guidance for the full year of complementary growth of 2% to 10% that was a key factor and are thinking of whether that number was going to be down a bit year-on-year. So, we wanted to make sure to highlight that.

Okay, thanks. Shifting gears a bit. I am pretty excited about the Stratify acquisition and how that's progressing there. Could you speak a little bit to, one, the competitive and pricing environment in that space, and then two, will there be additional acquisitions that you will need to make to kind of pad what you have there? Just a little bit of color on each.

To answer your second one, never say never on anything. But, I don't see on the horizon the need to acquire in this space unless we find some really Wizbank [ph] something that we are missing. But, right now, we've got, in our opinion, the best Wizbank out there. In terms of pricing, it is a space you can get all kinds of prices quoted and different customers buy on different basis. But, our value proposition is to use technology to change the whole way that you run the process and in fact what you wind up doing is you reduce the legal review time, which is where all the real money is. We can reduce it substantially. We can save you 40% to 50% of the entire review cost and you may pay us more than you'd pay another technology provider who does simple things for you and then you pay your lawyers twice as much money if you would. But, net-net, if you look at the total cost, we are just dramatically cheap, it’s not price issue, it’s just making sure you understand what your cost are. Even better than that, the way we get at the information, the way we organize it, and the way we accomplish these things is that we also get deeper into the information and we know more about your data than you can find out otherwise using standard ways of looking at it. And that sometimes is between winning and losing. And that's big money. So, it's super stuff.

Okay, thanks. And one final one, if I could. Back at the Investor Day, some discussion of maybe changes in perhaps kind of foreshadowing there could be dividends, share repurchase pending, just could you update us on that front?

I guess I made a mistake, [inaudible] made in my life that to even talk about it... let me be clearly, so everybody on the call knows, what you are talking about. At Investor Day, I made this statement intentionally, but I made this statement that I had always told shareholders who have asked me over and over, when you are going to think about dividends and share repurchases and so forth. And always... my answer has always been is, I don't know. We are not thinking about it, because we aren’t anywhere close to even think about, but when we do, I will tell you. And the truth is, we have started to think about it. We look at the models. You look at the models. We know what the future looks like. And we know how to run the business in a levered model and we know that means no matter what we do, we are going to have a lot excess capital. Okay. So, what I said at Investor Day is, I am meeting my promise to you basically. I have started to think about it… we have started to think about it. We don't give these kind of things light thought, it's going to take us a while]. And no hurry, so, I am not trying to put a timeframe on it. But, I am telling it's close enough in my mind. This kind of things takes thought because you don't do things like start dividends willy-nilly because you turn then on, you can’t turn them off. There is a lot of ways to think about how to create shareholder volume and stock buybacks. Net-net of it is, I fully expect we will return cap, cash to shareholders in due course and we will try to do it an intelligent fashion that benefits our shareholders in the maximum profitable way. I am not going to go through all the things I have thought about, but we are working on it. Timeframe I wouldn't begin to give you a timeframe.

Yes, thanks very much.

Your next question comes from the line of Franco Turrinelli with William Blair.

Good morning, Richard.

How are you?

I guess, sort of similar questions to one that was placed earlier. I'm trying to understand that do you think about your services build-out, if you want to call it that way. If the plan would be to focus on the current areas of competence [inaudible] same kind of land grab that we’ve seen do in the traditional physical business or if you are really seeing more of an expansion of services has being part of the future?

Maybe it’s the third time I’ve said never say never in this call. But, the focus right now, Franco, is just as I have said before, we have accumulated a lot in these businesses we have, knowledge, skill and opportunity. So, the real focus is getting that to work together in the right ways. That doesn’t mean we will not find other opportunities to acquire, other opportunities to expand around the edges, or fill in low pieces here and there, but we have really set the table pretty well. It’s now about getting it all to work together and extracting the majorities of the value add of it. It's not a strategy of, let's just go out and buy, buy, buy, I am not really out to acquisitions, they are always part of our kit, our tool set. Okay. But it is a strategy, we have accumulated a lot. It is the strategy of building and making the stuff work together and you will get it in the market in the right timeframe, you can easily be ahead of our market or behind the market and those are the kind of things that I worry a lot about. You are right up the [inaudible] I am really already starting to focus lot of my time to do and what I plan to do personally a lot more. Okay.

Sure. That's helpful. This February, I was kind of looking back, the last time we talked about destruction was with a total of '03, which is an interesting reflection given what's happened since then.

Yes.

Thanks, Richard.

Your next question comes from the line of Edward Atorino with Benchmark.

Three questions. One on to Stratify, I understand that category has been growing about 30%, 35% in sort of the eDiscovery area, would you care to sort of talk about what Stratify has done against that kind of bogie? Second, SG&A expenses are almost 30% of revenues, I think that's is an all time high Richard. Is this sort of a new norm because of the change in mix and is there a long-term target? I thought one path to higher margin was to leverage higher revenues without higher SG&A. Could you talk about that a second? And then lastly what is sort of traditional box business doing? I know you talk about physical stuff, but what was the growth in the good old-fashioned box business and what percent of revenues is it now?

Let me try and take this on. In terms of the stratify growth, I think the growth ranges that you talked about are inline with what we are hoping to achieve in the business this year. So, I can't comment specifically on the market growth, but that's the kind of growth that we are hoping for on that front. In terms of SG&A spending, we've seen increases in SG&A as a percentage of revenue and part of that's driven by some changes in our business mix overtime and as Richard highlighted some of the acquired businesses particularly in the technologies space have relatively higher overhead base, also have higher gross margins in many cases and as we build our full year goals and what we are trying to achieve, we factor those type of dynamics... mixed dynamics into what we are looking to achieve. So, I think we are comfortable, we are on track for our full year goals and are on track towards our longer-term goals and that factors in potential changes in business mix over time.

So, this is sort of the “new norm”?

I don't know how would you define the norm, but I think...

It’s 9.7%.

I think our goals are to deliver good OIBDA performance relative to our revenue growth and we will balance and trade off impacts from business mix and gross margin and SG&A. Just in terms of the storage business, our global physical storage business was within our target range. It was at the lower end of target range at 7% to 9% and some of that's impacted by the high level destructions we saw late last year just falling over, but we are within our expected range for this year.

And what's the box business as a percent to total revenue now, US?

Box is roughly half.

Half? It’s the same overseas?

The overseas would be more skewed towards the box business. I don’t have the precise number, but...

It varies by region.

It varies by region, but yet you have skew to that.

Thanks.

I am going to try to meet my commitment to keeping the call to an hour and we are about a minute over that. So, we will take one more question and then we will wrap up.

Your final question comes from the line of Andrea Hirth with Robert Baird.

Good morning.

Good morning.

Good morning Andrea.

First just wondering on the international business. Does that business still grow in the double-digits, if you exclude special projects and acquisitions?

We are just checking right now, but...

Let us do a little math…

The internal growth was 12%. It would be close to that level, I think, excluded the complementary.

Okay. In terms of special projects, was there anything meaningful in new ways [ph] booked this quarter as far as special projects go?

Unless they were just huge, we don't have the visibility, it's so broadly dispersed across geography and customer bases to really know that on a cumulative basis. We know when you line up super, super giants.

Nothing that we are highlighting.

I think that we would know of is that way.

Okay. And then just want to look at pricing little bit, what was the contribution of pricing in the quarter?

We are making progress in storage pricing in North America and we were up. We did a little north of the 1% range last year and this year we are hoping to move it two percent plus and we feel we are on the right track on that front.

Okay. So, you still believe that you can get closer to 2% or above this year?

We are making progress.

Okay. And then just last question. This is in terms of the banks and financial institutions and all the turmoil they are experiencing. What has been the impact of that on your business and has it been meaningful yet or do you think that's still something that... maybe there will be lag effect and you will eventually see some more impact on that?

We haven't seen anything yet, most of our customers and as one [inaudible], it's more of an impact of working hard to integrate the programs and rationalize them and so forth. Yes, I think we'll see some more of that happening in time. But, the good news about our business is, even if some of them were to be in serious trouble, they still have to keep their records around. And typically they will get... they get litigated for years after that. We still I believe have the records for Directional Burn [ph] if I remember correctly, which we are paid for in advance a long time ago. So, I don't think we will see dramatic impact. I will tell you, we'll leverage model, we watch the capital market carefully, we have tremendous bank syndicates that we appreciate a lot and how your markets have been good to us. But, we always will do... we will watch those market carefully just to make sure that we have continued access to capital and play conservative as we go into what I believe personally will be some pretty tough times for companies. We won't get out of an economy un-scaled, nobody ever does. But I'd rather be here than in most companies I know of, looking what I think is going to happen over the next two or three year. So, obviously I am fairly gloomy about the outlook.

That's helpful. Great. Thanks. Nice quarter.

Thank you.

Thank you very much. We appreciate it and it’s a little over an hour. So, let me get on. Not a lot of summary except to just remind you it was a good quarter, but don't get too excited. We going to hit our year, so think about it from that perspective and hopefully you are hearing the message, we are trying to get you worrying about quarters and so on, because we are not running the business that way, and you spend a lot of time and energy worrying about stuff that don't need to be worried about. Trends are trends. But, in our business, they take a long time to unfold. You couldn't see it one quarter if you try it. Every time we tried, we've been wrong. Hopefully, you have gotten that message and then you gotten the message, we feel pretty good about our business and we are on track for the year. Just to remind those of you, Jeff and Steven will be at Merrill Lynch conference May 14 in New York City and Bob, Brain, and Steven and I will be at the William Blair Conference on June 18 in Chicago. So, we look forward to seeing many of you out there. Again, thank you for your time, your patience, and I appreciate you tolerating me for the 49th consecutive conference call and you are not over listening to me yet, but it's probably the last time I'll be dragging so long. So, have a very good day. Thank you.

Thank you. This concludes today's conference. You may now disconnect.