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Iron Mountain Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2010 10:17AM
Iron Mountain Inc. (IRM) filed Quarterly Report for the period ended 2010-03-31.
Highlight of Business Operations:
Prior to January 1, 2010, the financial position and results of operations of the operating subsidiaries of Iron Mountain Europe (Group) Limited (collectively referred to as "IME"), our European business, were consolidated based on IME's fiscal year ended October 31. Effective January 1, 2010, we changed the fiscal year-end (and the reporting period for consolidation purposes) of IME to coincide with Iron Mountain Incorporated's ("IMI") fiscal year-end of December 31. We believe that the change in accounting principle related to the elimination of the two-month reporting lag for IME is preferable because it will result in more contemporaneous reporting of events and results related to IME. In accordance with applicable accounting literature, a change in subsidiary year-end is treated as a change in accounting principle and requires retrospective application. The cumulative effect of the change was an increase in retained earnings of $12.2 million as of January 1, 2008. We also recorded a corresponding decrease in other long-term liabilities for the same amount. The impact of the change was not material to the results of operations for the previously reported annual and interim periods after January 1, 2008, and, thus, those results have not been revised. There is, however, a charge of $4.1 million recorded to other expense, net in the three months ended March 31, 2010 to recognize the immaterial differences arising in 2008 and 2009.
Consolidated service revenues consisting of core service and complementary services increased $27.8 million, or 8.9%, to $341.3 million for the three months ended March 31, 2010, from $313.5 million for the three months ended March 31, 2009. Service revenue internal growth was 5% as complementary service revenue internal growth of 17% was offset by core revenue internal growth of less than 1% in the three months ended March 31, 2010. Complementary service revenues increased on a year-over-year basis primarily due to $12.1 million more revenue from the sale of recycled paper revenues resulting from higher recycled paper pricing in the first quarter of 2010 compared to the first quarter of 2009. Core service revenue growth was constrained by current economic trends and pressures on activity-based service revenues related to the handling and transportation of items in storage and by severe weather in several North American markets. Favorable foreign currency exchange rate fluctuations for the first three months of 2010 compared to the same period in 2009 increased reported service revenues by 4%.
For the reasons stated above, our consolidated revenues increased $53.2 million, or 7.3%, to $776.5 million for the three months ended March 31, 2010, from $723.3 million for the three months ended March 31, 2009. Internal revenue growth was 4% for the three months ended March 31, 2010. We calculate internal revenue growth in local currency for our international operations. For the three months ended March 31, 2010, foreign currency exchange rate fluctuations positively impacted our reported revenues by 3%, primarily due to the strengthening of the British pound sterling, Canadian dollar and Euro against the U.S. dollar, based on an analysis of weighted average rates for the comparable periods.
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