Good morning. My name is Bonnie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Iron Mountain Second Quarter Earnings Webcast Conference Call. [Operator Instructions] I would now like to turn the call over to Stephen Golden, Vice President of Investor Relations. Please go ahead, sir.

Thank you, and welcome, everyone, to our 2010 Second Quarter Earnings Conference Call. After my announcement this morning, Brian McKeon will review our financial results, followed by Bob Brennan's CEO remarks. When Bob is finished with his comments, we'll open up the phones for Q&A. Per 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 2. Today's earnings call and slide presentation will contain a number of forward-looking statements, most notably our outlook for our 2010 financial performance. All forward-looking statements are subject to risks and uncertainties. Please refer to today's press release, the Safe Harbor language on this slide and our most recently filed annual report on Form 10-K 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, we use several non-GAAP measures when presenting our financial results. Adjusted OIBDA, adjusted EPS and free cash flow before acquisitions and investments, among others, are metrics we speak to frequently and ones we believe to be important in evaluating our overall financial performance. We provide additional information and the reconciliations 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 as in today's press release. With that, I'd like to introduce our CFO, Brian McKeon.

Thanks, Stephen. Slide 3 highlights the key messages from today's review. We continued to drive strong financial performance in the second quarter. Adjusted OIBDA came in above the high end of our guidance range, driven by strong cost management and benefits from productivity initiatives that supported better-than-expected gross margin gains. Adjusted OIBDA increased 8% percent in Q2 and 10% year-to-date versus the prior year, and is on track towards our full-year growth targets. Adjusted EPS for the quarter was $0.28 per share, an increase of 13% compared to the same period last year. Our reported EPS was $0.20 per share including one-time impacts on other expense and our effective tax rate related to the strengthening of the U.S. dollar within the quarter. Revenue growth for the quarter was 5%, aided by favorable year-over-year changes in foreign exchange rates. Internal growth was 2% with consistent trends in core revenue growth. Revenue gains continue to be moderated by economic trends, which have pressured core service activity and storage growth. FX revenue benefits for the quarter were also about $9 million less than originally forecast given the recent strengthening of the U.S. dollar. Looking forward. We're maintaining our outlook for strong adjusted OIBDA growth this year, consistent with our prior guidance. We are adjusting our full-year revenue outlook to reflect recent changes in FX rates and consistent internal growth trends, which are below our original goals for improved 4% to 6% internal growth this year. Let's now turn to Slide 4 and begin our review of the second quarter results. Slide 4 compares our results for this quarter to the second quarter of 2009. As noted, Q2 was another strong quarter for financial performance. Enterprise revenue growth was a solid 5%, supported by favorable year-on-year currency rate changes. From a segment perspective, North…

Thanks, Brian, and good morning, everyone. As Brian mentioned, we delivered strong financial results in Q2 with adjusted OIBDA results exceeding the high end of our expectations. And we continue to deliver strong performance despite economic factors that are moderating our revenue growth. Today, I'm going to discuss how our business is doing in the current environment, such that we continued to deliver positive financial performance and position ourselves well for when the economy recovers. I'm also going to provide an update on our growth agenda, highlighting the progress we're making in key areas such as hybrid service expansion and go-to-market strength, as these are fundamental enablers of our long-term success. There are some key messages that I want to emphasize today. First, Iron Mountain's business continues to deliver strong financial results despite consistent macro impacts that are moderating our revenue growth. Second, we're making good progress on our growth agenda, positioning ourselves for strong long-term performance by focusing on areas we can control. Let's talk about our financial performance in Q2. We continue to demonstrate the attractiveness of the Iron Mountain business model as reflected in today's results. And as Brian pointed out at the close of his remarks, profitability and cash flow are all up significantly in the past four years. This performance is the direct result of our base business model, as well as our determination to implement operational excellence and process discipline across our company. We continue to strengthen the management of pricing, transportation, workflow in our record centers and the way we procure services. These actions support strong gross margin gains, and as you know, we're extending this capability globally, which along with our growth initiatives will help grow our international returns. We believe that being able to continue delivering strong financial performance will serve…

[Operator Instructions] Our first question comes from Andrew Steinerman of JPMorgan. Andrew Steinerman - JP Morgan Chase & Co: You mentioned North American price is plus 2%, and I heard the comment that CPI is tied to some of your contracts, so that could go up if CPI goes up. But my question is, we basically raise the overall margin for the year even though pricing is now, in North American box, plus 2% opposed to plus 3%. Does that mean that we're getting a lot more balance for productivity gains? And then my question is do you have any change of view on what your kind of long-term value, meaning price advantage, could be?

The point you raise is regarding the benefits that we're seeing, broad benefits that are helping to drive the gross margin gains. It's more than a pricing-only strategy. We've got benefits in terms of higher service margins from the productivity initiatives that we've advanced. On storage margins, we've had some benefit from pricing. But we've been very aggressively managing our facility utilization as a key initiative that's supporting that as well. Higher paper pricing is helping us. Energy, to a smaller degree, on a net basis has been a positive factor recently. So there're a number of factors that are helping us on that front, and we believe we can sustain that. And as we're extending many of these initiatives globally and heightening the focus on international margin improvement, we think that can be a -- this is clearly part of our long-term strategy. As far as your questions on pricing, our strategy has not changed. We continue to look to get a reasonable increase in pricing for the value of the services that we provide. We are reflecting some moderation. As you noted, for some customers, CPI-based escalators are built into their long-term contracts. That's moderated somewhat. We've seen some net business impacts. It's not one thing, but several factors and -- so that has moderated a bit. But our strategy is the same, and we delivering the same type of value and think we can sustain this as a economic driver over the long-term. Andrew Steinerman - JP Morgan Chase & Co: And you think you have more productivities to be gained even past 2010, right?

Absolutely.

Our next question comes from the line of Vance Edelson of Morgan Stanley.

So it sounds like the economy is still weighing on the business despite a general sense that there's been some improvement out there for most companies. How much of this would you chalk up to Iron Mountain's later cycle characteristics? And based on what you're seeing in the broader economy, is it reasonable to expect some top line acceleration over the coming year?

Well, I think what we tried to point out, Vance, was the work that we're doing on what we can control, right, which is the pursuit of new sales. And I tried to bring that to life in my remarks, that I'm very pleased with the progress that we're having there. As you know, it takes a while for it to flow through in an annuity model. At the same time, I spend a lot of time with our biggest customers, and I'm not seeing the general improvement that I read about sometimes. But fundamentally, our business correlates to the number of people that are in offices and cubes. And we're not seeing employment return into our customer base. Now that's somewhat anecdotal, but we spend a lot of time with our customers, and the fact is, I don't see a general improvement. I don't see it in the comparables that would point to either, where there's a big uptick in employment. And that's the biggest corollary for our business, as it relates to core volume growth and core service activity, is employment. And we're not seeing much of an improvement.

Yes. Vance, I'd say we're not implying that it's worse. But I think the improvement is something that we've yet to see flow through. And so right now, we're planning for consistent trends. It's below the goals that we had this year to improve, but we think we're well-positioned to have excellent performance and flow through when the economy improves. And we're looking forward to seeing the broader improvement.

Yes. That is to say that as employment improves, we expect service activities and volume to improve. And in the meantime, we're getting after what we can control through new sales performance. And again, while it takes a while for it to flow through in our model, we're pleased with the wins that we're generating in the marketplace.

And then on Legal. It sounds like that's been particularly weak. Any feel for when Legal, when that vertical turns around in relation to the broader economy? Is that going to be even more late-cycle than other verticals for you?

Feels that way. The thing I would tell you is that the way we're getting after it is to really increase our capability as it relates to discovery, because we already have the intellectual property in our other products. So that, in essence, we're making it easier for people to do that with us than with others. There is compression on the number of matters and the price per matter. But we think we're well positioned from a product perspective. And then if you look at it over the course of time, I don't expect litigation to go down.

More on the costs side. It sounds like there's more productivity gains ahead on the OpEx side. Can you say the same about CapEx, which has also been trimmed? Is there more to go there in terms of capital efficiency?

We are -- we believe we can sustain the efficiencies that we've driven. We'll -- our longer-term goal was to have spending in the 9% range as a percentage of sales, as you're aware. The -- we certainly believe we can maintain the efficiencies. The thing that will drive that number up, Vance, is volume growth improving. That's where our capital is very much aligned with our growth capacity. And so we think we can sustain those levels at good growth rates. And we're in the lower -- I think we're 8.3% in the most recent mid-point outlook. And we may see some increase in that over time as we see the volume improvements that we expect to drive.

Our next question comes from the line of Eric Boyer of Wells Fargo.

Bob, I think you referenced mid-single digit revenue growth, I believe for the longer term. I just want to make sure that is in line with the 6% to 10% you put forth at the Analyst Day. Or has the top end moderated a bit there for your longer-term outlook?

I'm talking more on a short-term basis than changing our longer-term outlook.

We're really enforcing the current environment that we're seeing. Our plans for 2010 and the comments today aren't a change in our perspective on the longer term potential of the business, but they're not intended to be a long-term forecast either.

Eric, it's more reacting to what we're seeing in volume as it relates to the employment picture. And we don't see that changing in the near term. So that's why we updated our guidance in the near term. It's only a near-term view.

Then International Physical. You had a tough comp in Q2. Can you give us an idea of what you're expecting in terms of the growth rate for the second half? Should we see that accelerate at all?

Q2 had an unusual lap in terms of a large project. So we should see more favorable compares on the complementary revenue side. The storage growth, as we mentioned, in our Q2 was 6% in International, and we're expecting consistent trends on the International business.

The internal core services growth. It hit -- I think it went negative for the first time. But do you think we're bottom out here? Or what are your expectations there for the second half?

I certainly don't expect it to worsen from here. We don't have any signs.

We're planning for a consistent trend. So I think it's -- we've seen this pressure, it wasn't a significant change quarter-to-quarter, obviously, we were flat in Q1. And we're planning for continued trends until we see changes in levels of business activity moving that -- moving the dial in a different direction.

Our next question comes from the line of Scott Schneeberger of Oppenheimer. Scott Schneeberger - Oppenheimer & Co. Inc.: Could you guys speak to what you're seeing out there with destructions? That had been elevated, and just curious how that's trending.

Similar trends. So it's remained at relatively higher levels. So a lot more of consistency in what were seeing than change. I think the -- we are making progress on the new sales front. That does take time to flow through. As we mentioned, we've seen some moderation at the margin on the pricing. And we've seen consistent trends in terms of destructions that reflect customers being very focused on inventory control, cost control in this environment. Scott Schneeberger - Oppenheimer & Co. Inc.: Could you speak to visibility? I know you've said in the past that you think the recovery in the business will come via complementary services to core services to core storage. Could you speak to that a little bit deeper? And then how much visibility into each of those that you feel you have?

We feel we have good visibility into the business that we're driving. And from a new sales perspective, a lot of what we're doing is an integrated value proposition. That's why I referred to some of the examples that I used where it's a combination of our digital capability and our physical capability. But we look at it by segment. We feel very good about the new sales performance as it relates to our core services, right, which is the majority of our business. And then building on that with the ability to convert the physical into the digital is -- it's a bourgeoning business for us, but it builds over time.

One thing I would highlight is that we're obviously having good growth in complementary revenues. Some of that's supported by the higher paper pricing this year. Some of that is also supported by service expansion, so its the DMS revenues growing. I, at this point, wouldn't highlight that as a change in sort of the economic environment. I think that's more things that we're driving within our control. We're successful in terms of providing services that are very relevant for customers right now. And so I know what your getting at. We expect the same kind of flow that we've talked about in the past, that we'd see the uptick on the margin and the complementary services first, before we'd see flow through in core services and then storage. That's sort of the timing of our business. But I wouldn't indicate that the complementary growth, right now, we see as being driven by improvement in economic conditions. It's more things that we're driving ourselves. Scott Schneeberger - Oppenheimer & Co. Inc.: And if you did see it, what would you think the timing, the lag on the others? Or really tough to say?

On something like storage. Clearly, it's a -- sale cycle takes time, and takes time for the boxes to flow through. So this is -- these are months, many months, and it's not something that's going to turn around quickly in terms of how that's going to flow through to the business. But obviously, it sustains for a long period of time too.

Yes. Maybe some backdrop on this. We -- the improvement that we're seeing from the new sales performance is a direct result of really driving the number of new deals that we have going into the proverbial top of the funnel. The cycle itself is not shortening. So we don't see improvement from that perspective. The cycle remains the same as it's always been. Scott Schneeberger - Oppenheimer & Co. Inc.: You cited Legal being weak. And just could you speak to other end market to -- Bobbie, you highlighted a lot of exciting new wins, it seemed, and you mentioned scalability. I guess just if you could speak to core verticals and how each of those are trending.

Financial services is doing very well and where we have a value proposition that can help drive their efficiencies and their costs. And they have -- I think that they're better positioned to spend in this environment. So we're doing very well with that segment. It's a very important segment for us. Healthcare, I don't seeing any significant change, although our value proposition continues to improve for that. I think that the big thing to remember here, Scott, is that our value proposition, that we continue to refine that by segment. So that we're becoming more vertically oriented in how we approach the market. And we expect that to drive gains over time. But you'll hear me become more vertical in my talk around how we're doing in performing against these segments. Financial Services continues to be our strongest segment though.

[Operator Instructions] Our next question comes from the line of Kevin McVeigh of Macquarie.

Brian, I wonder if you could give us a sense of how much of the CapEx adjustment related to elevated destructions as opposed to general macro activity levels? And then as you think about that longer term. How much longer, given the current client kind of average storage that you have, can those elevated destructions remain as you look out over the next couple of quarters or years, if you will?

So Kevin, just to clarify. Your question is about how it relates to capital spending?

Yes, that's right. So obviously, we took the CapEx down. Part of that was macro, part of it I'm thinking is elevated destructions stirring up some additional capacity. Is there any way to quantify if I'm thinking about that correctly, number one? And then number two. As you think about the average storage, how much longer can those elevated destructions remain?

Well, I think on the -- the way I'd suggest thinking about this is the net effect of higher destructions and economic pressure on just the general business activity is that the -- in the more developed markets, we're seeing limited growth on storage. So it's not as if that's freeing up space. It's just, it is putting less pressure on us needing to add, to the same degree, new capacity. It's not the same everywhere, so you always have investments in some markets that you're -- that are growing and may have more capacity needs. But that's the key dynamic that we've seen. So in terms of how it will play out I think is driven by a number of things. But economic conditions and net-net, right now we're planning for continued kind of modest volume growth. And I think our capital spending will be consistent with that. I do think over time that as volume growth improves, we still have plenty of room to run our business more efficiently in terms of our utilization of our facilities. And we think those kind of initiatives will enable us to maintain a good discipline over capital controls and hit our longer-term goals for capital efficiency. And I'm sorry if there -- I went on, I forgot the second part of your question.

It was -- they were both actually related to the capital efficiency, so that was helpful.

[Operator Instructions] Our next question comes from the line of Ashwin Shirvaikar of Citigroup.

This is Phil Stiller on for Ashwin. I just have a question related your margins. You guys have done a good job thus far in a relatively slow growth environment. As you look forward and contemplate growth improving, are there costs that are going to have to come back into the business? I.e. do you expect this kind of margin improvement in a better growth environment?

I think it goes back to what Brian was saying before, that we spend capital as volume improves. But in the cost of the business, we're -- we continue to drive operational excellence so that we can get productivity gains that are sustainable. We've demonstrated that over a course of -- Brian's last slide spoke to the last four years, two of which we actually had very strong growth. So we believe we can drive increased productivity out of our business regardless of the growth environment, notwithstanding the fact that capital does need to be deployed as growth returns.

Assuming business mix is constant, which is obviously a variable that could change over time, higher growth, I think, will be a positive margin driver in that we will get better leverage out of our business. And that as we drive scale, that creates some opportunities to get margin leverage. So I think in a higher growth environment, we would think that is a -- that would be a net favorable factor for margin improvement.

Yes, and I think that really -- in bringing us to the close of the call. It is -- it reinforces the strength of our business model that we're able to drive these kinds of financial results despite the macro impacts that we're experiencing, and that we're building this capability from a new growth perspective around what we can control. And we're pleased with the early progress that we have on that front. We appreciate your time and look forward to reporting on our results going forward.

At this time, there are no further questions. I would like to turn the call over to Mr. Brennan for closing remarks.

Again, thank you very much. We very much appreciate your time this morning, and want to remind you that our business is performing well and that we're getting after a new growth in a sustainable way around those issue that we can control. And we'll look forward to reporting on our progress in the fall. Thanks.

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