Good morning. My name is Lindsay, and I will be your conference operator today. At this time, I would like to welcome everyone to Iron Mountain's Second Quarter 2012 Earnings Conference Call. [Operator Instructions] Mr. Golden, you may begin your conference.

Thank you, and welcome, everyone, to our 2012 Second 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 at the Investor Relations page of our website at www.ironmountain.com. Referring now to Slide 2. Today's earning call and slide presentation will contain a number of forward-looking statements, most notably our outlook for our 2012 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 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 as in today's press release. With that, I'd like to introduce our Chairman and CEO, Richard Reese.

Thank you, Stephen, and good morning, everybody. And welcome to our second quarter investor conference call. We had good operating results for the quarter. I'd characterize them frankly as good results in a slow world. I'll go through and give you some update on the trends and what's going on, and then -- and I'll have a few comments about the REIT process, which I'm sure you're all eager to wait to hear. The headline is you're not going to hear everything you want to hear about their REIT, because it hasn't changed a lot, but we will at least give you some color and some update. And then Brian will go through the detailed numbers and, as usual, we'll take your questions. With a little luck, we will attempt to make this call shorter than average, because I think things are fairly clear and it's summertime. So let's get started. As I've said, I think we're having good execution in the organization, and the businesses are performing well against our plans. We're doing not only on a tactical or an annual operating basis, but you should be comfortable that we're also advancing our long-term strategy to continue building out a very durable storage annuity business. So we're making progress on both fronts and finally trying to balance all those to deliver the short-term results while keeping an eye on the future. And I think the company and the team is doing a good job at that. As I've said, we'll update you on the REIT process, where the only significant news, which we did announce in our press release, is that we have submitted formally our request to the IRS for a private letter ruling. And as you know that we are going to be relatively silent and absolutely…

Thanks, Richard. Turning to our presentation, Slide 3 highlights the key messages from today's review. We delivered solid performance in Q2, in line with our expectations, reflecting consistent business trends. Storage -- strong storage revenue growth and International performance again drove our overall results. We achieved 6% constant dollar storage revenue growth in the quarter, supported by internal growth that routed 4% and benefits from our recently completed acquisitions. Storage gains continue to be solid globally despite soft economic conditions, demonstrating the durability of our business. International storage grew 13% constant dollar, augmenting the solid 3% constant dollar storage growth posted by the North American business. We continue to expand our International business while driving higher returns, consistent with our 3-year strategic plan. Adjusted OIBDA margin in the International segment increased 150 basis points on 8% constant dollar revenue growth. Our International business is performing well, and we remain on track to achieve our International margin targets in 2013. Overall, our operating results remain solid and in line with our expectations. Revenue and adjusted OIBDA grew 2% on a constant dollar basis. As noted in previous calls, sharp declines in recycled paper prices are constraining our operating gains this year. In Q2, lower year-on-year paper prices reduced revenues by $11 million. Excluding these impacts, adjusted OIBDA was up 7% on a comparable basis in Q2, reflecting continued storage gains and benefits from International margin expansion and overhead cost controls. On a reported basis, FX changes also constrained reported results. Excluding these macro factors, underlying business trends were consistent with prior quarters. Storage revenues continue to grow steadily, and hybrid service gains are offsetting soft core service activity levels. We remain on track to achieve our full year financial goals, and we're reiterating our underlying revenue and adjusted OIBDA outlook for…

[Operator Instructions] Your first question comes from the line of Gary Bisbee with Barclays.

I guess the first question, just on Europe, your commentary on the International segment was positive. But how should we think about the impact of what seems like it's been pretty evident deterioration over the last few months in the economic activity across the continent?

Well, as you know, in our business, on the way down, we tend to lag. On the way up, we tend to lag. And I think we probably are seeing that. Storage remains strong and -- even in Europe and International in general. And I think storage will hold up okay, if not do fine through this. Service, we saw softness. Just as we saw it come down in North America, we saw it in this quarter. It'll find a new good [ph] point when their economy settles and sort of stay there. Whether we've hit that yet or not, I don't know. But net-net, as I've said in my comments, we've had some puts and takes. We've had some strengths and other pieces and parts of things, so overall, our services are about flat if you take recycled paper out. So on a global basis, I think we're feeling all right. I mean, we're not projecting it going to rise, don't get me wrong. But I think we're feeling all right.

And -- but just on that lag comment, so could things likely get worse next year? And I guess, is there any risk to the margin target for International? Or do you think you've got a pretty conservative case built into how you're thinking about it?

Well, I don't think we have a conservative case. But I think we can deliver it, yes.

The margin improvement is really driven by things in our control...

Yes, it's mostly stuff we can control.

Okay. And then just any update on how you're thinking about the succession plan for the CEO role?

Yes, I'm trying to get out. No, look, we're -- it's a very methodical process. And we -- and look, the board is working quite hard and being pretty methodical about it. But look, the truth is I'm not putting the feet to the fire. I started down this path to help the company get a line around a strategy, which I think we've done really well, the business has. And part of that strategy was the capital allocation strategy. As I've said, we've done our year of homework, and we've come out the other end with a direction, and now we go about executing. I'm not running from the completion of that. So it's a matter of finding the right person when we find him at the right time, and until we do, I'll stay here and try to help the team get this stuff across the goal line.

Great. And then just one cleanup one. Can you give us a sense how much you spent on all these acquisitions in the quarter? And was the revenue contribution material, or were they all pretty small deals?

It's roughly $90 million in the quarter -- I'm sorry, $98 million. The bulk of that was Brazil and the Swiss buyout. This year, we won't see a lot of profit flow through just because the integration cost in Brazil will offset some of the benefit. But it'll be nicely accretive for us as we head into 2013.

And by the way, the -- not always, but the nature of the kinds of acquisitions we would likely do international will be the kind of things where you buy now and it will take you 12-plus months to really see the synergy, because we're not typically buying new footprint. There will be some rare exceptions to that statement. But we already did the heavy lifting of putting the footprint in place. Now we're really try to buy major fold-in, tuck-in. And the big fold-in, tuck-ins take a little time to do right and continue growing fast and maintain and so forth. So we're taking our time on those.

Your next question comes from the line of Andrew Steinerman with JPMorgan. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: It's Andrew. I want to ask a question about the slide that goes through global volume trends. I would have thought, given the storage growth being at 4%, kind of a nice, accelerated level that we haven't been at for a while, that chart that you have in the slide decks would also show acceleration. Could you go through the differences between what that slide is trying to portray and how it ties back to storage internal growth?

And so the slide actually is a -- it takes quarterly performance and annualizes it, Andrew. And so it's because we're trying to break it out across these key metrics that we found that that's the easiest way to show it. And that compares to when we talk about that growth, we're talking about year-over-year volume. So it's slightly different. I think the key theme here is more consistency than change in terms of the trends. If you look at the storage growth in the quarter, it rounded to 4%. It was a little -- it was 3.5%, actually. And we've been in that 3% range for the last -- since, I think it's 7, 8 quarters now. Some of the benefit was -- improvement was related to customer acquisition activity in International, just in terms of, as you know, kind of the old [indiscernible] terminology that we use when we acquire customers from other businesses, customer relationships we had, some of that flow-through from a timing of...

And, Andrew, I think you sort of said it's just a good, strong quarter, how do we portraying? Look, we're positive about the business in the economy we operate in. It's a crappy world out there, okay? But we're not suggesting -- in fact, I am cautioning, that you don't take a strong storage quarter and try to project it forward that we're going to stay at these levels. I don't believe we will. I think we'll move up and down. We'll see this level again, I'm not saying that, okay? But it might not be next quarter or the quarter after. I think we're going to be hovering around the 3%, 3-ish range, give or take, 3.5%, 2.75%, hovering around there. And they round the different numbers, as you know. We'll be hovering around those ranges. And I think we can do that very well and so forth, but we're not talking about major acceleration here.

Your next question comes from the line of George Tong with Piper Jaffray.

I just want to get some color on your acquisitions in Hungary, Switzerland and Turkey. How did the acquisitions position you from a market share perspective, and when can you expect to achieve market leadership in those countries?

In Hungary, it was a nice bolt-in and we already had market leadership there. It was just good economics. Switzerland, we've got leadership in everything except Geneva. And Turkey, we are a strong #2.

Got it, that's very helpful. And could you give us a sense of how -- just globally, how activity-based core services performed and how much hybrid services contributed to growth?

[indiscernible] while I look [ph].

Yes, I was thinking -- hybrid services were a -- were up solidly on a global basis. It wasn't -- it was probably a point or so of contribution net to our overall service growth. And that helped to moderate the -- basically helped to offset the continued moderate decline we've seen in service levels in places like the U.S. And, as Richard noted, I think the International...

Some acceleration in the International.

International was not -- International had been growing quite well, and we saw that moderate somewhat. So that could be a leading indicator.

And as you know, we fully expect that our hybrid business, as it gets bigger and it's still growing well, will overcome other declines in the physical business. I'm not calling that turn yet, but this quarter, that pretty much happened. But again, I wouldn't say it's for sure it's going to happen next quarter or the one after. Still a little early to tell that we're drawing the lines yet, guys.

And then last question. You touched on this earlier but could you give us a sense of how the volatility in Europe is impacting core and complementary services? I know you're on track to achieving the margin expectations, but do you see any negative impact and deceleration in growth due to that?

We haven't for the last -- in terms of our business overall, I think it's held out very well. And I think the team [ph] feels good about the ability to sustain that. We are highlighting at the margin, we're seeing some deceleration level of growth in the service activity. But I would say the theme is more that we're holding up quite well. And I think we're going to plan the business prudently and make sure we're managing appropriately in an environment that could get softer for us. But I think it's more -- at this stage, more at the margin and something that we're keeping an eye on.

Yes, and look, I'd tell you, sort of the key theme if you look at our total growth and so forth is our Shredding businesses, although they're growing on units and everything else, we see some price compression. So a good part of that. It used to be -- it still is a very aggressive price market. Although, in general, at the Street, that has modified itself a bit as paper prices have come down, which is what you'd expect. We are still rolling off some rather large multi-year agreements that were priced in a different market environment, and as they roll off, they get repriced. We'll -- that will run off, but the tail of that's coming, and it'll run off and so forth. But our -- but the Shredding business between that dynamic and the -- and, of course, the paper prices themselves is as much a drag on total revenue as anything, so forth.

Your next question comes from the line of Thomas Allen with Morgan Stanley.

Following up on your comments on paper prices. We've heard that expectation in the market is that prices should actually gradually improve over the course of the year. Are you hearing the same, and any additional color there?

We've heard conflicting data. Some people say they believe at the demand level, it's strengthening, at the front-line demand level, it's strengthening. That would naturally lead to some increase, and others say not. So we don't have an opinion on that right now. But look, North America may strengthen while Europe doesn't. Some of this will be about where China goes, because a lot of this recycled paper winds up in China. And their economy -- you guys know better than I do the changes going on over there. So I think it's a little early to make a call.

There's a bit of seasonality in the business where the pricing goes down a bit in the back half of the year normally. We've seen sort of modest improvement on the sorted office paper rate. So we'll -- it's gotten relatively better, but this does get tied into the overall demand situation. So right now, we're -- the numbers that we're using basically reflect the debt that [indiscernible] will sustain.

Okay. And then on your global records management slide, it looks like you had the lowest level of destructions in the past 10 quarters. Anything going on there?

We did see -- it's a little different geographically. But actually, in Europe, we've seen a decline in some of the destruction levels. These things tend to move around a fair bit where you have some larger destructions that people may be planning, and you work through them. And so there is some volatility in that, but we've seen some contraction there that's helping...

And by the way, the Europe destruction pattern is behaving the way the business historically always behaved except for the 2007, '08 financial crisis period, which is in slowdowns, people delay destructions because they're protecting their current year budget. So as the storage pickup -- storage charge, rental pickup for destroying the item is not as large as the -- in the current period, as large as the destruction fee, and they try to protect their budget. And I suspect that's what we're seeing there now.

That's helpful. And then if I could fit one more in. You bought the controlling interests in your Turkish and Swiss JVs this quarter. Were the acquisitions related to the REIT conversion at all? I mean, are you going to maybe accelerate kind of converting JVs into company-owned quicker because of the REIT conversion?

No, no. The JVs themselves, by and large, the ones we have right now are in kind of the emerging markets, strong, extreme emerging market front. And -- which means they would be late in our cycle of REIT conversion, as in not this year or next or the year after. Over due course of time, we would want to deal with those sort of things. But we're not going to be pushed into doing that.

We're starting with what makes sense from a strategic point of view, a value-creation point of view, and then we'll factor in how to think about the REIT more as the tail on that kind of consideration. So these are good, strategic investments that we'd be doing regardless of the path we're pursuing as a company.

Your next question comes from the line of Kevin McVeigh with Macquarie.

Brian, can you remind us, on the core services side, just round numbers, what percentage is kind of related to the destruction and other type services just to kind of get a sense of the contributions to that revenue line item?

It's a smaller part, so I'm going to find it. But 5% we're seeing. So it's -- we have a long list of services that we provide there in core services, the bigger items are things like transportation activity. But destruction services contribute to that. Overall, the core services are a little north of 30% of total revenues.

Got it. And then in terms of timing on the distribution of the equity, is that something, Richard, we can talk about now? Or just any sense of -- I know the IRS is in the process of the private letter ruling. But just any sense of timing around when we can expect any update on that?

Well, our view hasn't changed from what we've said in early June. And that view is that we would strongly consider, but we haven't 100% committed to, but strongly consider doing a major E&P purge sometime during this year. I think you would expect it towards the back end of the year. And there's a lot of mechanics to actually making that work since it would be a combination of cash and stock. But we're moving forward on that front as all others. That decision in itself does not depend upon the, necessarily, the private letter ruling, in fact.

Understood, that's helpful. And then are we going to have an Investor Day this year? Is that back on, or...

Yes, we are -- we had hoped to have the precise date. We don't yet. We're nailing down the venue and we -- but we will have an Investor Day in October in New York City. And within a couple of days, we expect to have out the invitation with the exact date and time and so forth.

Your next question comes from the line of Andrew Wittmann with Robert W. Baird. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: First, I wanted to start off with a couple of technical questions. Just Brian, on the $10 million to $20 million of cost that you're experiencing this year, did you say that, that was outside of the $100 million to $150 million that you previously talked about in the June conference call?

Sorry if we confused on that. No, it's a subset of that, so it's within the $100 million, $150 million. We expect to incur $10 million to $20 million of OpEx this year and about $10 million of capital. The $100 million to $150 million is both the OpEx and capital. I think our estimates were -- was like 60% capital, which is largely the systems, and 40% OpEx. But we'll be breaking this out for you as we go, and actually, we'll start adding some tracking relative to the overall estimates for you as well so it's very clear how we're...

And it will -- and that will get spread beyond January 1, 2014, because there's -- it's a strategy to get ourselves to the point where we can legally convert and operate. But it won't be as pretty as it likely -- we'd like it to be by that date, and we will continue working beyond that. So those expenses will flow on beyond that. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: That makes sense. Just in terms of that process, now that the team has been kind of assembled and started off on this path, Richard, just kind of curious. I mean, obviously, very complex. Can you just give us any positive or negative surprises that may have arisen that couldn't -- that could help or hinder your ability to hit that January 2014 date?

No, I don't -- look, I -- we've gone to the detailed planning. I think we have 20-odd work streams all running in parallel. We've got program managers, project managers. We've really gotten it organized as just as a massive kind of project. But look, the tall pole on the tent, so to speak, is in the systems arena. And it's primarily in the arena of -- we actually have to change our charter of accounts for our entire accounting system and, in many ways, update some technology and/or convert technology, particularly some of the global platforms. And some of that, we made two-step because it's too much risk to do one-step. And when you're doing that much technology change, to be candid with you, our goal is to have all those systems operating mid-next year to give us 6 months of working out the kinks and making sure nothing happens. And our head -- our Chief Information Officer is sweating a lot right now. He and his team are doing good work, and they'll get it done. And so, no, we're not -- this is not something that I lay awake at night worrying about. But then again, I don't do this kind of execution. Brian does it, and his team and Jeff and [indiscernible], those guys do it. And they're sweating a bit and complaining to me not go off and do anything else, but that's not my nature either.

To your question, no surprises. We thought it was a lot of work, and that's turning out to be true. And we'll -- we've got a really good team working on it and committed to getting this done. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Okay. And the -- just thinking about the capital base and some of the capital needs that you have this year, Richard, can you kind of just update our thinking? It sounds like you mentioned the $600 million of liquidity that you have today. That would be, I guess, all of your cash and all of your credit facility. Can you talk about kind of what you're seeing out in the market to maybe fund any hole that you might have in the capital base to do the E&P in some of these other investments?

What I -- we have discussed it's likely we're going to go to the market at some point to help fund that, and we'll update you as we move forward on that. But we will likely want to put some more kind of financing in place...

Yes, and our sense is the market environment is quite good right now. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: When you -- you mentioned in your comments here that your guidance does not impact any -- or does not reflect any impact of the E&P distribution. Is that really the financing terms of that E&P distribution? Is there any other impact that it would have to your P&L, or is it the cost?

It would include the -- obviously, there is a cash outflow. But keep in mind, too, if we did a majority of our E&P distribution this year, which is -- which has been our plan that we signal. There would be a number of shares that are issued, right, that go along with it. So we...

Per-share metrics would change, your interest cost would change and so forth.

It effectively works like a stock split. But we haven't plugged any of that into the outlook, and we'll obviously get you more details as we firm up plans there.

Your next question comes from the line of Shlomo Rosenbaum with Stifel Nicolas. Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division: Just to piggyback a little bit on the last line of questioning. Just to be clear, you're thinking of funding -- you're going to fund the gap with debt, not equity, right?

Yes, that would be our current intention, recognizing that we're going to do, likely, 80% of it in issuance of the stock, yes. Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division: The question is in order to get into the REIT structure, the whole that you have in terms of the capital, that's going to require you to raise capital. You're planning to do that with a debt offering or more bank debt, but it is not going back to the markets for an equity offer.

Correct. We don't need equity. We don't need equity. And I'm never going to say we won't go to the markets for equity. You tell me the price, and I'll tell you if we'll go. But as we sit here today, we don't perceive going to the markets. It's not in my -- our thinking at the moment for equity. I would tell you, though, just to be clear, just to close out that subject for you a little bit. As we do M&A, we may use some equity and transactions to the extent that the deals are highly accretive to our shareholders, okay? We might do something like that. But that's not going to be major, it's not going to be big numbers.

Yes. And as we talked in our announcement, over time, we think it will make sense to operate at lower level -- leverage levels. And so equity may be part of our future plans, but it's not a requirement for us to get into the structure. We're well positioned to get to -- to fund that conversion.

Your last question comes from the line of Nate Brochmann with William Blair & Company. Nathan Brochmann - William Blair & Company L.L.C., Research Division: I mean, one of the things, obviously -- I mean, I know the economy hasn't been helpful in this in terms of the service revenues always consistently being a pain in your side every quarter. Is there any light at the end of the tunnel in terms of what turns that around or in terms of just finally reaching such easy comps that it doesn't get any worse?

Well, I think we're seeing that's an area of North America. And the decline rates are slowing, okay? And it'll drift in the right space there. And it's hard to know what -- where Europe is going, I mean, quite candidly. But Europe does not -- we don't have quite the risk profile in Europe. Our business there is much less active in the physical side, because we don't have a big medical business. And still the #1 driver of that decline is a health care trend. It's not the economy. The economy is the second driver of that decline. And which is, primarily in North America, an issue totally. So the fact that we don't have the big driver in healthcare will mean it's not going to impact us that much. It's likely be on the margin kind of stuff. Nathan Brochmann - William Blair & Company L.L.C., Research Division: Okay, that's helpful. And then just one quick question, too, in -- part of the margin improvement in North America, you've mentioned in the press release the lower occupancy cost. Is that because you're already starting to consolidate some facilities there? Or is it just lower lease cost and lower property values, et cetera?

We're always working to optimize the utilization our network. We have improved that a bit. And I think that's reflective of the work that we're doing on that front, as well as utility cost. I think we're down a bit as well in the quarter. But it does reflect the work that we're doing to optimize the real estate.

So thank you very much for giving us this hour. We appreciate your support and so forth. As we did mention earlier, we will be out. There's 1 more -- 1 or 2 more conferences we'll be at. We'll be at the Barclays Conference in a few weeks in New York. Next week, they're telling me. I got to look at my calendar more carefully, I guess. But we are driving towards an Investor Day in October, and we'll be out shortly with a precise date and location, so hopefully you can put it in your calendar. We would expect at that Investor Day to talk quite a bit about what we see forward, finishing out our 3-year plan. I think we've started about 18 months ago making sure you see that we're on track there. We'll expect to be talking a little bit about how we're going to build a more durable business. Hopefully, give you -- likely give you some access to some of the key managers that are doing it. And then, of course, we will be talking not about the REIT process, because we'll be in the middle of it. We won't know anything, and if we did, we wouldn't tell you anyway. We will be talking about, though, what Iron Mountain might look like as a REIT a bit more than we have and so forth. So I think you'll hopefully find that a useful time to come and spend a morning or so with us. Again, thank you, and we hope you will all have a good summer. And we'll see you later.

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