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 Fourth Quarter 2010 Earnings Call webcast. [Operator Instructions] I would now like to turn the call over to Mr. Stephen Golden, Vice President of Investor Relations. Please go ahead, sir.

Thank you, and welcome, everyone, to our 2010 fourth quarter earnings conference call. Joining me this morning are our CFO, Brian McKeon, who will review our financial results; followed by Bob Brennan, 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 2011 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 earnings per share 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. Our Q4 results were in line with our expectations, capping off a solid year of financial performance for the company. Revenue gains were constrained by continued softness in core service activity levels and lower eDiscovery revenues. Despite these impacts, we continue to drive strong financial results, supported by international growth, expansion of hybrid services and continued productivity gains supporting gross margin improvement. For the full year, we achieved 4% revenue growth, 9% growth in adjusted OIBDA and double-digit growth in adjusted earnings per share and free cash flow. Please note that our reported EPS for the fourth quarter of $0.16 per share included a $0.14 per share impact related to the finalization of the digital goodwill impairment charge initially recorded in Q3. Our 2010 results build our strong long-term track record of financial performance. Our focus in recent years has been expanding our leadership position, while optimizing returns in the businesses we’ve built. We continue to advance a disciplined approach to operations management and capital allocation that supported a 440 basis point improvement in adjusted OIBDA margins, and a nearly 1,000 basis point improvement in free cash flow margins over the last four years. These improvements are sustainable and set the foundation for long-term success. Our confidence in our business model and outlook supported our board's decision to increase our dividend by 200% in December. We intend to build on this track record in 2011. We plan to continue to drive solid free cash flow and adjusted EPS gains, supported by disciplined capital spending and lower interest costs. We're targeting moderate revenue growth despite expected constraints from continued soft core service activity trends and lower eDiscovery revenues. We'll be refining our revenue and adjusted OIBDA outlook today to reflect…

Thanks, Brian, and good morning, everyone. 2010 was another solid year of financial performance for Iron Mountain, as we posted our 22nd consecutive year of storage revenue growth. We reached record high levels for adjusted OIBDA and free cash flow. We also continued to strengthen our balance sheet and confidently advanced our first shareholder payout program. Brian has reviewed the details of both the quarter and the year, so I'm going to talk about Iron Mountain from my vantage point and share my thoughts on where we are, how we're doing and how we think about creating value. Let me start by reminding us what a great business we have. Iron Mountain is global leader in information management services. We have operations in more than 35 countries, expanding five continents. We are the global leader in storage and management of paper records, the off-site storage and management of backup data and in secure document shredding, which we call the Box, Tape and Shred businesses. We provide superior security, storage and access through an integrated global service model and a footprint that is unmatched by our competition. These physical services comprise 89% of our total revenues and are all built on a strong foundation of recurring revenues comprised of storage and related services. We call our recurring storage and service revenue streams core revenues. Core revenues form a durable annuity revenue stream that is sustained over time. In 2005, these core revenues were 87% of our total revenues. And five years later in 2010, core revenues remain at 87%. This great business is built on a financial model that has four pillars. The first is that we have a recurring revenue growth stream that flows from existing customers. It's augmented by growth from the continued penetration of the unmended market. The…

[Operator Instructions] Our first question comes from Kevin McVeigh of Macquarie.

I wonder if you could talk just a little bit about the leverage ratios. We're down to 2.9% right now and I know we recently took the range down to 3% to 4%. As you think about that, Brian, going forward, can you help us kind of is 3% to 4% the new normal or do you envision given the strength of the free cash flow that, that's going to continue to trend down? Or how we should think about the dividend versus buy back within the context of the leverage ratio overall?

We have said that 3% to 4% is a leverage range that we're quite comfortable in. As you point out, it's right now at the low end of that range. In terms of how we're managing that, we obviously have increased the dividend pretty substantially. We think we're in a good level there. We're looking to increase that over time as we go free cash flow, but we think that we've established the dividend as an important part of our financial approach and we will continue to buy back shares. I think we have a significant amount available under our existing authorization. We see that as a key point of our financial strategy as well, and that will enable us to have another vehicle to create value and to manage the leverage ratios and acquisitions are part of that equation as well. So net-net, I think we're comfortable operating at or slightly below the low end of the range, and we may spike up over time depending on how we choose to deploy capital given the opportunities that we have. But right now, we're comfortable where we are and we'll continue to evaluate that.

The SG&A, it looks that ticked up a little bit in the fourth quarter and I know that was from some targeted initiatives. Can you just help us understand what they're related to? Was that kind of sales people in hybrid services or just kind of what that related to?

It is principally related to a combination of growth and productivity initiatives, but we had started to accelerate the investments in sales and marketing that we've been highlighting. And maybe Bob can talk a bit more about that.

Kevin, we've been bolstering our product management marketing and selling capabilities. You've heard me refer as the go-to-market effort over the past couple of years and we've made a lot of progress as we came towards the back half of the year. And embedded in my comments is the fact that 2011, we will continue to make significant incremental investments in this capability as we see it generate the right kind of progress. And we're seeing that kind of progress, so we feel pretty good about that.

We were also -- similar to what we did in North America, we do made targeted investments in the SG&A line and currently in our International business that will enable us to drive gross margin improvement over time, the operational excellence initiatives. So there's some of that as well. But net-net, the overall equation continues to work well for us and we're pleased to have delivered good profit growth this year and look to build on that next year.

And Brian, I know you kind of talked about targeted cost savings in North America as a result of those OpEx initiatives. Do you have any type of range for Europe or what we could expect over the next couple of years as a result of that?

We've spoken about the longer-term goal in our international operations to increase our adjusted OIBDA margins by 100 basis points or more annually. And we haven't gotten more specific than that, Kevin. But I can tell you that 2011, we're definitely targeting strong margin improvement in international and that's a key factor that's allowing us to advance incremental sales and marketing investment and address some of the lapping issues that we've highlighted.

Actually, Kevin, Brian and I just got back from visiting the international team and the way that they're getting after this with execution is very encouraging. And it helps that North America paved the way over the last four years, so we have a playbook here.

Our next question comes from Vance Edelson of Morgan Stanley.

For starters, what do you think is driving the modest declines in incoming volumes from existing customers? Seems like the economy picked up a little more pace during the fourth quarter, so I'd be interested in hearing your thoughts on that. Is it just the late cycle nature playing out or is there anything else there?

Vance, we lagged coming in, we lagged coming out. We've been -- that showed in our results, we are seeing stabilization. And we expected any benefits that we, in the economy will benefit our business, although it will be on a lagged basis. We're not planning for those benefits, but we feel pretty good that we're on track as we start the year.

Vance, sort of the key thing is that it's more similar than different. We always have some movement on the margin in different areas, I would say, where net-net, the volume has been within the similar range in Q4. It has been kind of in a similar zone for a couple of quarters. We feel good about the progress that we're making to influence the new sales side, and we think we're on track and look at targeting improved performance as we work through the year.

And as a follow-up on an earlier question, sounds like there are more benefits ahead from productivity initiatives and there will also be more investments to that end as well. Where would you say we are in that overall process? Has most of it run its course or have we barely scratched the surface? If you could just give a feel for where we are in that process.

We tried to break this down a little bit at Investor Day in terms of where we'll drive margin improvement over time. And in North America, we continue their work to get better and we shoot to have our profits grow faster than our revenues. But we have seen substantial benefit from productivity initiatives, and we've recognized that obviously in our financial performance. International, we're in much earlier innings in terms of what we believe we can achieve there. We are going to balance that over time with continued investment towards growth. The International businesses is growing quite well. We continue to have strong storage gains and very optimistic about the potential in that business. And that'll be the -- that earlier innings will be a bigger driver going forward, as Bob highlighted.

You're right, Vance. You do have to invest to get the productivity and you have to invest to get the growth, and we're careful to make those investments. And as they pay off, we continue to invest and if they don't, we adjust our investments accordingly.

We're obviously in a moderate growth zone currently. As we increase our growth rate, improve our growth, which is our intent, we should be able to get more benefit out of overall overhead leverage as well. It's just when we're in a more moderate growth range, it's a little tougher to do that.

How should we think about maintenance CapEx levels in terms of when we might get there, if ever, what those levels might look like? Could you provide some color on that?

Sure. We're enhancing our capital disclosure in our 10-K, which will be available in a couple of days to provide a more granular look at where we invest capital. And the bulk of our capital view is growth oriented. That includes capacity expansion, it includes investments that we make in improving our products, as well as some targeted investment in new products. We invest in things like operational efficiencies. So I think the true maintenance capital required in a business is low, but we continue to grow as a business and improve our product offering. And we're comfortable with our outlook, which we've said over time, we think we can sustain capital spending in the range of 7% to 8% of sales even as we improve -- that's excluding real estate, even after we improve our revenue growth, our outlook for 2011 is roughly 7%. So we think we can sustain the good capital efficiencies that we've driven and drive cash flow higher.

Sustainability is a key theme you'll hear from us, Vance. And fundamentally, if you step back, that's a result of us investing and having a better competitive position in our industry than really anybody and those investments pay off a good bit. Sustainability is about making them and continually increasing your competitive position.

Our next question comes from Gary Bisbee of Barclays Capital.

How are revenues overall from existing customers trending if you combine the higher destructions and the lower incoming volumes? Is it down at a mid-single digits rate or how should we think about that?

We continually try to highlight the overall volume and records management was relatively flat. So we are seeing continued higher levels of outgoing volume, net-net some destruction activity offset by incoming volumes. So that's been the trend for the last few quarters and we came from a place where we're growing mid-single digit before the economic downturn, so we are targeting improvement as we move forward.

Can you break that out between new sales and existing -- it sounds like existing customer volumes must be down quite a bit. But you've got a new sales effort that's offsetting that and getting that to flat?

New sales are a relatively small driver of the volume growth in the short term at the margin, right? It builds as an annuity over time. So the existing customer volume in the quarter was down slightly. But if this is net-net, new sales are not a huge driver of our volume growth at the margin.

Can you tell us how large the eDiscovery business is? Just what’s the scale relative to other businesses in Digital? And if that continues to go lower, I guess I'm curious what cost actions you're taking? You said you're going to be able to maintain margins, I believe, for this year?

Yes. It's just below a $50 million business, Gary. Fundamentally, we have taken cost actions relative to our cost reserve to provide service on a given matter. The other thing that we've done is really integrated under Harry Ebbighausen's leadership into our overall business, as I mentioned in my remarks. So there are things like when we see customers pulling hard copy records being able to isolate them and understand if they're subject to litigation, that we're -- I'm comfortable with the progress that we're seeing in our execution on that front. It was a combination of the pricing in the market plummeted very quickly as a result of secular trends in that space, and we weren't quick enough from an execution perspective to write our cost structure. We are writing that cost structure and I think we're doing a much better job identifying and pursuing new opportunities. So I'm confident that, that would stabilize that business. Although because of the way that we booked the revenue, the effects of the down of 2010 will flow into 2011.

Can you give us a sense what your exposure to energy prices is? I guess I'm thinking gasoline or diesel for the delivery trucks and shredding trucks and electricity. Should we think about the recent spike in prices being a big impact in your gross margins or is it a pretty small percent of revenue?

It won't have much of an effect in that -- first of all, overall energy costs are about 2% to 3% of our revenues and we actually have fuel surcharges as part of our business model. So when the -- at least the energy cost is split pretty evenly between utility cost and transportation cost. And for the transport piece, when the prices rise, we have an offsetting fuel surcharge. It doesn't help profitability, it doesn't hurt. It just helps us to mitigate that.

Our next question comes from Andrew Steinerman of JPMorgan. Andrew Steinerman - JP Morgan Chase & Co: Usually, first quarter is a good sequential quarter from the fourth quarter. I guess people clean up their records, and there's just more activity in the first quarter versus the fourth quarter. And obviously, that was not the case for Iron Mountain in the first quarter 2010 and 2009 because of the recession. But if you can make some qualitative comment about sequential revenues first quarter 2011 versus fourth quarter on storage and service, we'd appreciate it.

Yes, I think we tend to look at these things year-on-year, Andrew. I think we are expecting to have some tougher comparisons in areas like complementary revenues in Q1 and that we're lapping some of the paper prices come down from some of its peak. So we're not going to have the same benefits that we did last year. We've got some special projects that we're lapping there and the kind of extension of the core service trends we've seen recently compared will continue to be a factor in moderating growth. We intend to continue to march forward with expanding our storage revenues and expect kind of similar seasonal effects. So that's how we're looking at them.

The purge effects that you're referring to in Q1 really come later in the quarter, then it's not a January 1 kind of thing. So we wouldn't even have a line of sight to that at this point. Andrew Steinerman - JP Morgan Chase & Co: Right. But you do agree with me that first quarter generally, historically, with the exception of the last two years, has shown good sequential lift from the fourth quarter. And I just was wondering if there's anything that you're seeing aberrational this year given the previous two years?

We're planning for similar seasonal trends.

[Operator Instructions] Our next question comes from Eric Boyer of Wells Fargo.

Can you just go over the expectations for net pricing gains in 2011 versus '10? I think you said 2% in North America Physical for 2011, if I have that right?

It's North American records management. And the net pricing has been turning at about the 2% range, and that's our expectation for this year as well.

And then I understand you have an offsetting fuel surcharge for some of the transportation services. But I was wondering when you look back at prior gas price spikes, did it have any impact on falling incremental services revenue as the cost go up for clients or is that cost increase so small, it really isn't much of a factor?

It did. A couple of years back, it added some at the margin to our core service growth about 220 basis points -- $20 million. And we'll highlight that for you as we work through the year if that becomes a material factor.

And did you say lower incentive comp was a 3% benefit in 2010? Just want to make sure I had that right.

That's correct. Just 3% 2010, and we're claiming for normal levels this year so that's factored into our outlook.

So that would be like a 3% headwind year-over-year then? '11?

That's exactly right.

That question comes from Ashwin Shirvaikar of Citigroup.

This is Phil Stiller, in for Ashwin. Just following up on the first quarter question for -- I know last year you had some impacts from adverse weather. And given the heightened storms this year, just wondering what you're expecting on that front?

It's an impact in parts of the country and we saw it on some service activity volumes. Snow removal costs that -- it spikes, but it's very much on the margin. I'm actually -- I like the way that we're starting the year and we're on track to really build on the performance that we had in 2010 in 2011. So I feel pretty good about the start.

I know you guys just commented on the pricing for the storage, but can you comment on what kind of pricing trend you see in terms of core services?

It's pretty consistent. We take a measured approach to this. In 2009, we really start to get after this with discipline and we're taking a very measured, consistent, sustainable approach to pricing.

And then lastly, I know, Brian, you alluded to some tax rate planning that you're doing. You're kind of expecting the tax rate to be flat this year. Just wondering when we could start to see some benefits from that and what are your kind of longer-term expectations for that?

We think over time, we can reduce structural tax rate 200 to 300 basis points and that will continue to benefit as we expand. We'll see those benefits as we continue to expand our international profits. So there's a number of factors that we build into the one year outlook. But over time, we do think we can drive additional efficiency there.

Well thank you all this morning for allowing us to explain our 2010 performance and the financial progress that we really made building on our strong track record. We look forward to reporting to you again in April and speaking about the progress that we're making here in 2011. Enjoy the rest of your today.

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