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 First Quarter 2011 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. Welcome, everyone, to our 2011 First Quarter Earnings Conference Call. Joining me this morning are Richard Reese, our Chairman and CEO; and Brian McKeon, our CFO. After their prepared remarks, 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 also 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 Richard Reese.

Thank you, Stephen. Good morning, everyone. Welcome to our First Quarter 2011 Quarterly Earnings Call. As you know, I haven't done these calls in a few years so this is my first one back, and I'm happy to tell you that we've got good performance to report, even though I didn't have a heck of a lot to do with it since I've only been back in the job for a couple of weeks. But the team's done a great job, the business is running well. And we're off to a good start to hit the plan that we put forth in great detail last week, the 3-year strategic plan, as we've shifted our business into the third phase of our long-held 3-phase strategy, that of the phase of capitalizing on the hard work we did in the earlier years and the investment cycle of the business, building it up. We're now turning to reap the rewards of that on behalf of our shareholders and the rest of our stakeholders of the company. So today, I'll talk briefly about the results for the quarter, and then turn it over to Brian, who will give you great detail, and then we'll come back and take your questions. And I'm going to review the quarter, frankly, a bit in the context of the plan. So it was a good first quarter; we're off to a good start and it gives us confidence that we'll be able to achieve our goals for the entire fiscal year. Revenue was up 3% to $799 million, and that was on the back of strong storage revenue growth of 5% reported and really 3% internal for us, which is an uptick. We're seeing a continued trend of steady improvements on units for storage, supported by lower destruction…

Thanks, Richard. Good morning, everyone. I'll start today's review on Slide 3, which highlights key messages. First key message is that we delivered solid operating performance in Q1, and it's putting us on track for our full-year goals. We saw solid storage trends, including benefits from new sales initiatives that supported 3% revenue growth in the quarter. Overall storage revenues increased 5% or 3% on an internal growth basis. The International business again posted strong storage results, and both our North American and Digital segments showed improvement. Revenue growth's benefiting from sales and marketing investments, as Richard mentioned. In fact, in Q1, storage volume additions from new sales in North America was the highest it's been in more than 2 years. Profit and cash flow gains remained solid as well, supported by improvements in our International and Digital segments. Adjusted OIBDA was $222 million, that's up 4% on an operating basis, excluding $4 million of advisory fees and other costs that were related to the recent proxy contest. Adjusted EPS was $0.26, which is an increase of 24% compared to last year, and free cash flow increased 7% in the quarter to $58 million. We're off to a good start, and we're making some positive adjustments to our full-year operating forecast to incorporate positive FX changes in our Q1 performance. Given the recent announcement of our comprehensive strategic plan, including the potential sale of the majority of our Digital assets, we'll be taking the following approach with respect to our full-year 2011 outlook. We're going to forecast the business as it exists today, therefore, our current outlook doesn't reflect any impacts from the strategic review of our Digital business, including a potential sale as contemplated in the strategic plan. Our current outlook also doesn't include any impacts from business or…

[Operator Instructions] And our first question comes from Andrew Steinerman of JPMorgan. Andrew Steinerman - JP Morgan Chase & Co: Internal growth guidance for the 2011 is unchanged even though you're up in your revenue guidance? Or why don't you comment on it? Is it zero to two?

It's still zero, two, Andrew. We're feeling good about the storage outlook, and the core services continues to be soft so they're offsetting somewhat. But I think on balance, we're feeling good about the trends, but I think some of the softness in core service activity is leading us to a similar range. Andrew Steinerman - JP Morgan Chase & Co: And I think I heard Richard say that they're kind of part and partial. As we're getting better on revenues on storage, it's because destructions are stabilizing and that's going to hurt service. And so it's almost -- the two are almost related.

There's some of that dynamic, and that's a good news dynamic over the long run. There's also weaknesses in other services and to start our general retrieval refile activity and same thing in the data protection activity. We're still seeing activity lower even though we're seeing storage pick up some. Andrew Steinerman - JP Morgan Chase & Co: Makes sense. And last point, just to make sure we get this right, it sounds like you're still committed to hybrid services even though you're looking for alternatives in Digital. Is that correct?

Oh, yes, absolutely. And I want to stress that we are looking to transition to a different model in Digital, not necessarily exit all of the services. In some, we might do with the same technology on a license back basis. Some, we might perform with different technologies on a license basis. But the Digital business, and this is probably a story for a later date because it's a longer story, is a good business and we've learned a lot in it. But the model we had, just didn't make sense us to maintain it, and we think those assets are more valuable to other people.

Yes, and it sounded like, too. As you know, Andrew, the hybrid services are very close into our core business. I mean, it's helping customers with their transitioning where they're working with physical records, and the business is going really well for us and we feel good about it.

And I think you'll see over time that we will speak less of hybrid and not of Digital, but we will talk to you about physical logistics services and we'll talk to you about technology product lines, not business units and so forth.

Our next question comes from Gary Bisbee of Barclays Capital.

It's Zach Fadem for Gary. You say that you expected 200 basis point increase in International Physical adjusted EBITDA this year? Can you give us some additional color on the expected drivers of this gain?

Yes, big driver this year will be in the U.K. We've been working for some time with the International team of incorporating the North American playbook, and we are targeting meaningful increases in our -- we have good margins in the U.K. They're getting moved -- moving that much closer to North America levels, and we'll see those benefits flow as we work through the year. We're exporting the same playbook to other markets, too. We just have some investment that goes along with that as we kind of gear up the teams and kind of invest in the process redesign that goes along with yielding those benefits and that along with some lapping impacts kind of constrain the gains in Q1. But you'll see the benefits flowing through as we work through the year, and we feel -- our outlook is based on a strong improvement in International margins overall. And it's not just this year; that's the multiyear plan. We'll continue to drive that as we move forward.

Okay. And regarding the expected modest increase in leverage, would you expect to stick with your recent history of largely fixed-rate debt or would you consider floating rate borrowing?

We will consider whatever makes sense in the market at the time. I have always had a bias for a large amount of fixed-rate debt. At this stage of our cycle, we may be over fixed, and I think it's something we will look at in a variety of ways.

Our next question comes from Vance Edelson of Morgan Stanley.

Are there any metrics you can provide now regarding the number of Digital customers, the number of hybrid customers or any metrics regarding the percentage of customers subscribing to multiple services, just Physical, Digital and Shredding?

Well, we have the numbers. We don't have them in front of us. So it may be something we can dig up for future discussion with you. I mean, the trends are that we have more crossover selling, obviously, of between records management and our data protection services, as well as our records management, our Shredding services. And we've had good success cross selling there. And we've -- on a name-the-customer basis, we've got pretty good success across our Digital business, but it's a different buyer for sure between our Physical business and our Digital business. The other thing I would also tell you is that part of what we learn in the Digital business, though, even though it was a Digital buyer that our brand would translate, and that although not all the IT buyers -- I think they all have a perception of who Iron Mountain is and so forth. They didn't have a strong perception of how broad a product or service line we had, so we had to sell it. But having said all that, we proved we could sell it, and, in fact, more than half of the revenue we have in Digital today was internally grown revenue, not purchased revenue. So we know the market will accept these things from us, and we've got other research as well as these data points to say it.

Okay, that makes sense. And you mentioned higher transportation costs in North America. What about internationally? Are you feeling the same pressure abroad? And if so, is that having a meaningful impact at all on the margin expansion story there?

It impacts us. It's a smaller factor in terms of our overall cost structure. Transportation is less than 2% of our revenues. We do have some cushion against that with fuel surcharges. Right now, it tends to lag, how the fuel surcharges kick in based off an index. So what we've seen in Q1 is kind of the cost of, but not yet the benefit of the -- the full benefit of the surcharges flowing through. I think that will improve as we work through the year. So on balance, it should be less of an impact over economics, but it is impacting us in the short term.

Okay, that's helpful. And maybe one last question regarding the aim to buyback a more significant number of shares. I guess for now, you can at least act under the remaining $228 million from the previously authorized buyback. Is there any blackout period or other technical or legal reason that you need to wait to buyback more shares? Or is it more that you could start buying immediately if you wanted to?

Yes, there's a whole bunch of technical or legal reasons, open windows and so forth. We will come in to an open window of our own policy next [Audio Gap] And yes, we do have some in the buyback. We really, though, are focusing -- I mean, if we’ve got shares to authorize, we're focusing on trying to set up the right strategies and the right plans. So it's a little early for me to tell you exactly how we'll do it. As you've probably noticed, it's all kinds of tools and techniques, and we've spent a lot of time analyzing those. And we still kind of coming to decisions on what's the right way to execute it.

Our next question comes from Andrew Wittmann of Baird. Andrew Wittmann - Robert W. Baird & Co. Incorporated: I thought some of the commentary you had on the North American sales initiatives was interesting. I wanted to dig a little bit more into that. Perhaps could you just quantify what the SG&A investment was in that maybe for this year? And then I guess more broadly speaking, give us your sense of where you think the returns are on that investment? You said it was holding you back a little bit in the first quarter, but traction has been good. Is there a long ramp ahead for those presumably salespeople where they're just starting to maybe breakeven and there's a lot of upside from here? Or how would you characterize that from here?

We'll try to take the first part of the question and maybe if Richard can help clarify how we're thinking about it. But the investment we highlighted this year is roughly $20 million in terms of sales and marketing and year-on-year. And we were ramping that and getting that in position as we headed into this year. So that is starting to bear fruit. I think we are feeling good. We know the business well. We understand the returns, and we feel very good about the investments we'll be making. Do you want to talk about the margin?

Yes, any time you up your sales and marketing in an annuity business like this, you'll see the expense early and you see the results. It's a little bit like watching bookings build up. For our case, we watch boxes or storage revenue build, but the real value comes off the compound effect of it. So it's a multiyear present value kind of analysis, because you're building an annuity. Okay, so any time you up your cost, it takes a while for you to get the return back. But the returns are actually quite good in doing that. In terms of is there upside from here, a little early for me to tell. There's a theme here, so I'll just be clear to make sure everybody hears it. We feel good about our numbers. We feel really good -- better about the trends we have in a long time. But we're not jumping up and down and screaming, "Yeah, this things going to the roof." And by the way, it never has. Welcome to the world of our big flywheel annuity. They're hard to speed up and they're hard to slow down, but the good news is they just keep on rolling. And there's some speeding up, just a little bit. It's rolling, but it takes a while for this to show. So there's no inflection points here. No great things are going to take off. Andrew Wittmann - Robert W. Baird & Co. Incorporated: That makes sense. And I guess I just wanted to follow up a little bit on an earlier question on the service level. How much of maybe the slower levels of growth that we're seeing are just based on tough comps from higher destruction levels last year?

A piece of that, but if you take it apart by activity class, we're still seeing the weakness in, like I say, in a lot of the core activity elements. Andrew Wittmann - Robert W. Baird & Co. Incorporated: I see. And then just thoughts -- do you think this is a quarter lumpiness issue or are people really changing the way they utilize documents once they're stored?

I believe it's people -- I believe it's two things. I think there's a pattern of behavior change, and I still believe that until we see employment get back up strong and then a lag behind that. Remember, we tend to deal in records that are at least a year old on average, okay? And so you've got to get people back to work. They've got to generate more records. They've got to build up. They've got to get in the way, and then they've got send them to us before they can ask for them. And the most active records are the newest records. So we've been through a period of people sending us a lot less of -- the average age of our storage portfolio has risen, which will in itself drive down the activity. We're seeing that. If the average age comes down and the storage picks back up as the economy picks back up, we got this great lag effect. I think some of that will come back. They will pick up some activity. Underlying that though, there's also some shift in how people use it. It's hard to parse the difference right now. Andrew Steinerman - JP Morgan Chase & Co: Very helpful.

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

I was just wondering if you could comment on how customers may have reacted or are reacting to the new strategic plan and the direction you're possibly going with the Digital business.

Yes. So far, it's a big customer base. So I haven't had my phone ringing off the hook, screaming at me or anything like that. I posted -- we posted and sent out to customers a kind of an open letter from me to them just recently, explaining what we're doing and so forth. And I think the early reaction is, "Thank you for telling us. We appreciate being in the know." And look, what we're telling them and, in fact, in this case, we are focusing, making sure we focus heavily on our Physical business, that we don't lose sight of the services that you expect of us, and we'll continue to build that business. We're not draining it. And part of what we have to explain, and something we have to explain to the employees is, is we've got enough capital to give our shareholders $2.2 billion. I won't give you a $0.50 an hour raise. And if you don't think that's a hard discussion, you come try it a while, okay? And it's the same sort of thing with customers. You're giving your shareholders $2.2 billion, why do you want to raise my price? And you have to get back to economics and market value and cost structure -- there's a lot that you have to do, and you have to train the organization to understand. And that's the kind of stuff we're working on.

So in that context, have you changed your strategy or thinking about changing the strategy with the pricing program?

No. Look, our pricing program has been and, as far as I'm around, will be designed around: a, being fair; and b, recovering the true increase of cost minus some productivity we've gained. I've always believed -- we've always -- if you go back and feel this industry [indiscernible], we've driven an enormous amount of productivity in our industry, both to the consolidation, creating more of just general economic productivity by consolidating competitors. But we've also brought technology, how you store box, we changed radically the whole technology of how you store the box, what the cost are doing that is and everything. It took a lot of time, money and investment to do it. Net of that is, we drove unit storage prices down for about 15 years straight on average to the customer base. And we've kind of run the productivity out of this business from their perspective, and now it's time to take back gains related to true increase of cost, and we'll continue doing that.

And then Brian, just on the adjusted OIBDA margin, would that be up slightly year-over-year with your new guidance if you backed out that proxy-related costs? I just want to make sure I'm thinking of that right.

It's down slightly because of the -- it's not all that different than what we had talked about heading into the year. We have this significant kind of lap $30 million plus of -- last year, we had very low incentive compensation payments and we had normal payments this year. So that is constraining us. So it's down slightly X the proxy contest cost. But it's all driven by that factor, which is really something that you basically supported last year's margins. The underlying operating performance, we're seeing improved margins.

Okay, great. And then Richard, just on the last call, you talked about other capital structure ideas that you may be thinking of other than a REIT. Could you give us a sense of what some of those could be?

A little early. I'm still collecting a list. I have my list. But since I've put it out there, phones have been ringing, ideas are coming in. So let me sort through them a little bit because some of them are interesting and some of them are harebrained, and I'm speaking to some of mine when I say that, and some might be doable, some may not be doable. But after we get a little more homework done, we'll talk to you about it.

Okay, fair enough.

Our next question comes from Nate Brochmann of William Blair Company. Nathan Brochmann - William Blair & Company L.L.C.: Just kind of wanted to ask a little bit of a question. I know, Richard, you have a lot on your plate in terms of different directions. But one of the things over the past couple of years that you guys have done a great job at is various efficiency programs, and was wondering if -- as you're coming back to business, if you've identified any other things that you kind of wanted to tackle on that efficiency or productivity front in terms of cost reduction.

Look, I didn't identify it, no. The team's been working on this for some time. And I guess you put it in 3 categories. We talk about the North American playbook as if it's a simple little thing that we hand around to each other. But North America has developed over the last 3 to 4 years significant numbers of strategies and implemented them very successful and driving efficiency in the business. And if that, we're exporting, particularly to our bigger businesses in Europe and starting in the U.K., which is where we're looking to get 200 basis points this year. We're also starting a program here we call support excellence. It uses some of the same techniques that we found successful and others targeting to two things: Benchmark all of our support functions against best practices, and then try to figure out how we can get ourselves to a best practice both service level and transactional cost level. And I've stressed this to everybody, it's a combination of making sure we serve ourselves well, serve one another well, as well as a combination of doing it the lowest possible cost. And I happen to believe you can achieve both of those. Better service doesn't always mean higher cost. In fact, doing it right, doing it well usually delivers better tuned service and a lower cost. So we've undertaken those initiatives just to play it [ph] over in the next few years. And all of that is embedded in the plan we put forth last year. So I don't think I'm going to come up with any secret sauce on top of that. In fact, I would tell you, the plans, when I look at them, are awfully aggressive. And some people have asked me, do I worry about them? And the answer is yes. But my worry is that we've really put forth a pretty hard stake in the ground over a fairly short time period. I don't really worry about hitting the number. I worry about hitting the number in the timeframe that we put forth. But you take a shot, you do your best to get there. You've got a better chance of getting there if you take aggressive shots and we've taken aggressive shots. Nathan Brochmann - William Blair & Company L.L.C.: Fair enough. And then also, there's been a lot of focus, obviously, on the underperforming businesses and services, et cetera. But certainly, the core business, showing some sign of life I think is pretty positive kind of going forward and hopefully starting an improving trend. Just wondering if you could elaborate a little bit in terms of what you're seeing there in terms of the various end market demand and what's kind of driving that and if there's any areas that really stand out to you.

Candidly, been here 2 weeks and most of the time, I've been talking and dealing with shareholder issues. I can't tell you I've gotten personally deep enough in to give you a really good answer on the subtleties in the trends. My time has been focused on the things you've heard about and heard me talk a lot about. Come late in the day and start on Monday, I've got a whole series of meetings with different managers of different groups of the business, where I'm going to go get my head back and calibrate my gut again. And after I've done that, I might can answer that question better. Nathan Brochmann - William Blair & Company L.L.C.: Fair enough.

Our next question comes from Scott Schneeberger of Oppenheimer. Scott Schneeberger - Oppenheimer & Co. Inc.: Just one from me. Richard, I heard your response to that last question. So more conceptually, I guess, is the way I'll ask this. Certainly we've thought about the special projects and the services area as kind of a lead, something that we've watched to see things start to come back. Have you had any conversations with your people out on the street as to what they're seeing and hearing; is that picking up? And then the second part of the question is, do you believe that's the way you'll see the recovery of the business?

No. I think we'll see the recovery of the business exactly where I think but do not absolutely know. We are at the brink of, and that is that storage leads, everything else follows. Think about what I said earlier: Newest boxes create the most activity, okay? So you've got to have -- you've got to build up your newest boxes if you want to have the activity come back. With the activity comes transportation; the more you pick, the more you move. All those things lead and come in that direction. In terms of special projects, a lot of the special projects are designed around either events, as in people get sued or they have big internal audits and so forth, or they're driven around other events as in M&A. A reasonable amount of our special project work moves with M&A as customers takes 2 businesses, put them together. They have to clean out the records of the -- and sometimes even have to split the records of buyers or sellers or selling a division or this, that and the other. So their kind of event or any. We don't control those events and so forth. And then they have a third element, which is, "I've got budget money and I want to improve my program," or "I've been dying to do something to clean up a past mess, and I've got to have budget money to do that." And in lean years, that budget money just doesn't show up at our customers. In years, things get better in our customers, they'll reinvest back in their programs. And oftentimes, you'll see that late in the year, by the way, for obvious reasons. So Q1 is not usually a good special project. So that's sort of the trend. That's sort…

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

What percentage of the business is hybrid now? And just more conceptually, do you think some of those services are sapping some of the revenue from the traditional services side of the business, or is it -- they don't cannibalize each other?

Yes. It's about 5%. And in terms of cannibalization, there's two ways to answer that. In terms of cannibalizing storage, no, not in any significant manner. And in fact, I can make the argument that you'll actually get more hard copies storage by doing more of this. And part of the simple argument is every time you go to look at a small vendor in that space, they'll all have a net warehouse full of boxes that they just seem to accumulate, okay? Because customers digitized things for good reason, but for productivity, for process reasons. But for archival reasons, digitizing is a bad idea because the cost of transporting that data multiple times over 15 years costs way more than just keeping the box for 15 years, and that's what they tend to do. So it's not a cannibalization issue. From our perspective, early on, as we got the business going a couple of years ago, it cannibalized our box storage business because we really waved the shiny object of a new service in front of our sales force and made it too easy for them to sell that new service and make their targets and make their compensation, and they didn't have to work as hard on selling for box storage. And to some extent, we did that to ourselves and we have clearly recovered from doing that. And we've clearly gotten better at balancing how we sell so we can sell them both. And that's the results you're seeing there. But we went through the learning curve of that; it was painful.

Super. And then just, obviously, with the way fuel's gone, it seems like you'll benefit from the surcharges. We start to see that on the service line, if I remember, on the service line, if I remember that. Is that right?

Yes, you'll see that. You'll see some benefit points around the core service revenues, Kevin. I just wanted to highlight it, it won't have an impact on profit, right? It will be offsetting higher fuel costs.

And Kevin, we're seeing the costs on that. We'll see the revenue later. But there will also be the costs there later, too.

Super. And just a last question, Brian, you tweaked the CapEx a little bit, or Richard?

Well, about $5 million of that was just an updated real estate estimate and $5 million was just obviously refining just how we're looking at the year. So combined, that was the adjustment.

So it looks like we've hit the end of hour. I appreciate you all coming and your questions today. As I said in the beginning, we've got a great business. It is performing well. That's a great welcome back for me. I'm glad I didn't have to come and explain a tough quarter the first time out. As I told somebody who asked me how I like being back, and I said, "Well, I'm still on a honeymoon period right now, but it won't last forever. But I'll enjoy it while I can." So I appreciate all your support and your cards and letters and your input. It is useful to us. It's helpful to us. We do listen to it, and we try to factor it into our thinking as we have to make trade-offs and decisions as we go forward. I'll also -- I don't know exactly what the schedule is, but we will be out on the road some, in cities near you over the next 6 to 9 months, and I'd love to get a chance to get reacquainted for some I haven't seen in a while and those that I really don't know, I'd also like the chance to talk to you. And the last invitation is you're always welcome to come see us in Boston. So just give us a call. We'll try to find a date and time that works. Again, thank you very much, and I'll look forward to seeing you down the road. Goodbye.

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