UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x                              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2006

Or

o                                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                      to

Commission file number 1-13045

IRON MOUNTAIN INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

 

745 Atlantic Avenue, Boston, MA 02111

(Address of Principal Executive Offices, Including Zip Code)

(617) 535-4766

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x         Accelerated filer o         Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x

Number of shares of the registrant’s Common Stock at November 1, 2006: 132,402,575

IRON MOUNTAIN INCORPORATED

Index

 

2

Part I.          Financial Information

Item 1.                        Unaudited Consolidated Financial Statements

IRON MOUNTAIN INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except Share and Per Share Data)
(Unaudited)

 

The accompanying notes are an integral part of these consolidated financial statements.

3

IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except Per Share Data)
(Unaudited)

 

The accompanying notes are an integral part of these consolidated financial statements.

4

IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except Per Share Data)
(Unaudited)

 

The accompanying notes are an integral part of these consolidated financial statements.

5

IRON MOUNTAIN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

		Nine Months Ended September 30,
		2005			2006
Cash Flows from Operating Activities:
Net income		$	84,736		$	91,728
Adjustments to reconcile net income to cash flows from operating activities:
Minority interest in earnings of subsidiaries, net		1,102			1,171
Depreciation		122,970			139,512
Amortization (includes deferred financing costs and bond discount of $3,761 and $3,941, respectively)		15,780			18,696
Stock compensation expense		4,011			8,851
Provision for deferred income taxes		49,303			45,658
Loss on early extinguishment of debt		—			2,779
Loss on disposal/writedown of property, plant and equipment, net		606			494
Loss (Gain) on foreign currency and other, net		381			(15,962		)
Changes in Assets and Liabilities (exclusive of acquisitions):
Accounts receivable		(42,054		)	(39,706		)
Prepaid expenses and other current assets		(4,052		)	(7,352		)
Accounts payable		8,196			6,862
Accrued expenses, deferred revenue and other current liabilities		25,748			18,134
Other assets and long-term liabilities		12,134			8,350
Cash Flows from Operating Activities		278,861			279,215
Cash Flows from Investing Activities:
Capital expenditures		(189,711		)	(259,863		)
Cash paid for acquisitions, net of cash acquired		(46,096		)	(74,600		)
Additions to customer relationship and acquisition costs		(9,954		)	(10,345		)
Investment in joint ventures		—			(3,129		)
Other, net		9,574			282
Cash Flows from Investing Activities		(236,187		)	(347,655		)
Cash Flows from Financing Activities:
Repayment of debt and term loans		(441,397		)	(447,561		)
Proceeds from debt and term loans		396,624			408,056
Early retirement of senior subordinated notes		—			(112,397		)
Net proceeds from sales of senior subordinated notes		—			196,608
Debt financing (repayment to) and equity contribution from (distribution to) minority stockholders, net		(2,021		)	(2,025		)
Proceeds from exercise of stock options and employee stock purchase plan		16,645			14,083
Excess tax benefits from stock-based compensation		—			2,820
Payment of debt financing costs and stock issuance costs		(622		)	(343		)
Cash Flows from Financing Activities		(30,771		)	59,241
Effect of exchange rates on cash and cash equivalents		145			1,175
Increase (Decrease) in Cash and Cash Equivalents		12,048			(8,024		)
Cash and Cash Equivalents, Beginning of Period		31,942			53,413
Cash and Cash Equivalents, End of Period		$	43,990		$	45,389
Supplemental Data:
Cash Paid for Interest		$	140,420		$	141,029
Cash Paid for Income Taxes		$	7,712		$	11,944
Non-Cash Investing Activities:
Capital Leases		$	8,106		$	9,484
Capital Expenditures		$	—		$	22,991

 

The accompanying notes are an integral part of these consolidated financial statements.

6

IRON MOUNTAIN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Share and Per Share Data)
  (Unaudited)

(1) General

The interim consolidated financial statements are presented herein without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair presentation. Interim results are not necessarily indicative of results for a full year.

The consolidated balance sheet presented as of December 31, 2005 has been derived from our audited consolidated financial statements. The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to those rules and regulations, but we believe that the disclosures are adequate to make the information presented not misleading. The consolidated financial statements and notes included herein should be read in conjunction with the annual consolidated financial statements and notes included in our Current Report on Form 8-K dated May 22, 2006.

(2) Summary of Significant Accounting Policies

a.                 Principles of Consolidation

The accompanying financial statements reflect our financial position and results of operations on a consolidated basis. Financial position and results of operations of Iron Mountain Europe Limited (“IME”), our European subsidiary, are consolidated for the appropriate periods based on its fiscal year ended October 31. All significant intercompany account balances have been eliminated or presented to reflect the underlying economics of the transactions.

b.                Foreign Currency Translation

Local currencies are considered the functional currencies for our operations outside the United States. All assets and liabilities are translated at period-end exchange rates, and revenues and expenses are translated at average exchange rates for the applicable period, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency Translation.” Resulting translation adjustments are reflected in the accumulated other comprehensive items component of stockholders’ equity. The gain or loss on foreign currency transactions, calculated as the difference between the historical exchange rate and the exchange rate at the applicable measurement date, including those related to (a) our 71¤4 % GBP Senior Subordinated Notes due 2014, (b) the borrowings in certain foreign currencies under our revolving credit agreements, and (c) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, are included in other expense (income), net, on our consolidated statements of operations. Included in other expense (income), net are $5,745 of net gains and $4,009 of net losses associated with foreign currency transactions for the three and nine months ended September 30, 2005, respectively, and $2,131 and $10,646 of net gains associated with foreign currency transactions for the three and nine months ended September 30, 2006, respectively.

7

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

c.                 Goodwill and Other Intangible Assets

We apply the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill and intangible assets with indefinite lives are not amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have indefinite lives are amortized over their useful lives.

We have selected October 1 as our annual goodwill impairment review date. We performed our last annual goodwill impairment review as of October 1, 2005 and noted no impairment of goodwill. In making this assessment, we rely on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, transactions and marketplace data. There are inherent uncertainties related to these factors and our judgment in applying them to the analysis of goodwill impairment. As of September 30, 2006, no factors were identified that would alter this assessment. Impairment adjustments recognized in the future, if any, will be recognized as operating expenses. Our operating segments at which level we performed our goodwill impairment analysis for the year ended December 31, 2005 were as follows:  Business Records Management, Data Protection, Fulfillment, Digital Archiving Services, Europe, South America, Mexico and Asia Pacific. When changes occur in the composition of one or more operating segments, the goodwill is reassigned to the segments affected based on their relative fair value. Beginning January 1, 2006, we changed our reportable segments as a result of certain management and organizational changes within our North American business. Therefore, the presentation of all historical segment reporting has been changed to conform to our new management reporting. See Note 8 for more information regarding our changes in segment reporting.

Goodwill valuations have been calculated using an income approach based on the present value of future cash flows of each operating segment. This approach incorporates many assumptions including future growth rates, discount factors, expected capital expenditures and income tax cash flows. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairments in future periods.

The changes in the carrying value of goodwill attributable to each reportable operating segment for the nine month period ended September 30, 2006 are as follows:

		North   American   Physical   Business			International   Physical   Business					Worldwide   Digital   Business			Total   Consolidated
Balance as of December 31, 2005		$	1,543,037			$	463,742			$	131,862			$	2,138,641
Deductible Goodwill acquired during the period		5,195				1,642				—				6,837
Nondeductible Goodwill acquired during the period		3,504				7,211				—				10,715
Adjustments to purchase reserves		(407		)		(1,967		)		(130		)		(2,504		)
Fair value adjustments		(177		)		(13,677		)		497				(13,357		)
Currency effects and other adjustments		7,924				37,396				7				45,327
Balance as of September 30, 2006		$	1,559,076			$	494,347			$	132,236			$	2,185,659

 

8

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

The components of our amortizable intangible assets at September 30, 2006 are as follows:

		Gross Carrying					Accumulated					Net Carrying
		Amount					Amortization					Amount
Customer Relationships and Acquisition Costs			$	312,424				$	48,216				$	264,208
Core Technology(1)			25,960					5,599					20,361
Non-Compete Agreements(1)			1,318					1,169					149
Deferred Financing Costs			49,359					19,464					29,895
Total			$	389,061				$	74,448				$	314,613

(1)          Included in other assets, net in the accompanying consolidated balance sheet.

d.                Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R is a revision of SFAS No. 123 and supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”). We adopted the measurement provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” in our financial statements beginning January 1, 2003 using the prospective method. The prospective method involves recognizing expense for the fair value for all awards granted or modified in the year of adoption and thereafter with no expense recognition for previous awards. We have applied the fair value recognition provisions to all stock based awards granted, modified or settled on or after January 1, 2003.

Among other items, SFAS No. 123R eliminates the use of APB No. 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. We adopted SFAS No. 123R effective January 1, 2006 using the modified prospective method, as permitted under SFAS No. 123R. We record stock-based compensation expense for the cost of stock options, restricted stock and shares issued under the employee stock purchase plan (together, “Employee Stock-Based Awards”) based on the requirements of SFAS No. 123R beginning January 1, 2006 and based on the requirements of SFAS No. 123 for all unvested awards granted prior to January 1, 2006.

Stock-based compensation expense, included in the accompanying consolidated statements of operations, for Employee Stock-Based Awards, for the three and nine months ended September 30, 2005 was $1,865 ($1,646 after tax, or $0.01 per basic and diluted share) and $4,011 ($3,338 after tax, or $0.03 per basic and diluted share), respectively, and for the three and nine months ended September 30, 2006 was $3,028 ($2,153 after tax, or $0.02 per basic and diluted share) and $8,851 ($6,671 after tax, or $0.05 per basic and diluted share), respectively. For the three and nine months ended September 30, 2006, the incremental stock-based compensation expense due to the adoption of SFAS No. 123R caused income before provision for income taxes and minority interest to decrease by $212 and $766, respectively, and net income to decrease by $122 and $462, respectively, and had no impact on basic and diluted earnings per share.

9

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

SFAS No. 123R also requires that the benefits associated with the tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as required under APB No. 25. This requirement reduces reported operating cash flows and increases reported financing cash flows. As a result, net financing cash flows included $2,820 for the nine months ended September 30, 2006, from the benefits of tax deductions in excess of recognized compensation cost. Under prior accounting rules, this amount would have been included in net operating cash flows.

The following table details the effect on net income and earnings per share had stock-based compensation expense for the Employee Stock-Based Awards been recorded in the three and nine months ended September 30,  2005 based on SFAS No. 123R. The reported and pro forma net income and earnings per share for the three and nine months ended September 30, 2006 in the table below are the same since stock-based compensation expense is calculated under the provisions of SFAS No. 123R. These amounts for the three and nine months ended September 30, 2006 are included in the table below only to provide the detail for a comparative presentation to the same periods of 2005.

 

Stock Options

Under our various stock option plans, options were granted with exercise prices equal to the market price of the stock at the date of grant. The majority of our options become exercisable ratably over a period of five years and generally have a contractual life of 10 years, unless the holder’s employment is terminated. Our Directors are considered employees under the provisions of SFAS No. 123R.

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

The weighted average fair value of options granted for the nine months ended September 30, 2005 and 2006 was $10.85 and $14.77 per share, respectively. The values were estimated on the date of grant using the Black-Scholes option pricing model. The following table summarizes the weighted average assumptions used for grants in the respective period:

 

Expected volatility was calculated utilizing daily historical volatility over a period that equates to the expected life of the option. The risk-free interest rate was based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. Expected dividend yield was not considered in the option pricing model since we do not pay dividends and have no current plans to do so in the future. The expected life (estimated period of time outstanding) of the stock options granted was estimated using the historical exercise behavior of employees.

A summary of option activity for the nine months ended September 30, 2006 is as follows:

 

The aggregate intrinsic value of stock options exercised during the three and nine months ended September 30, 2006 was approximately $4,564 and $12,733, respectively.

Restricted Stock

Under our various stock option plans, we may also issue grants of restricted stock. We granted restricted stock in July 2005 which had a 3-year vesting period. The fair value of restricted stock is the excess of the market price of our common stock at the date of grant over the exercise price, which is zero. Included in our stock-based compensation expense for the nine months ended September 30, 2006 is a portion of the cost related to restricted stock granted in July 2005. We did not grant restricted stock in the first nine months of 2006.

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

A summary of restricted stock activity for the nine months ended September 30, 2006 is as follows:

 

The total fair value of shares vested for the three and nine months ended September 30, 2006 was $0 and $1,003, respectively.

Employee Stock Purchase Plan

We offer an employee stock purchase plan in which participation is available to substantially all U.S. and Canadian employees who meet certain service eligibility requirements (the “ESPP”). The ESPP provides a way for our eligible employees to become stockholders on favorable terms. The ESPP provides for the purchase of our common stock by eligible employees through successive offering periods. We generally have two 6-month offering periods, the first of which begins June 1 and ends November 30 and the second begins December 1 and ends May 31. During each offering period, participating employees accumulate after-tax payroll contributions, up to a maximum of 15% of their compensation, to pay the exercise price of their options. Participating employees may withdraw from an offering period before the purchase date and obtain a refund of the amounts withheld as payroll deductions. At the end of the offering period, outstanding options are exercised, and each employee’s accumulated contributions are used to purchase our common stock. The price for shares purchased under the ESPP is 85% of the fair market price at either the beginning or the end of the offering period, whichever is lower. For the nine months ended September 30, 2005 and 2006, there were 193,890 shares and 193,778 shares, respectively, purchased under the ESPP. Beginning with the December 1, 2006 ESPP offering period, the price for shares purchased under the ESPP will be changed to 95% of the fair market price at the end of the offering period without a look back feature.

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

The fair value of the ESPP offerings is estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table for the respective periods. Expected volatility was calculated utilizing daily historical volatility over a period that equates to the expected life of the option. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant. The expected life equates to the 6-month offering period over which employees accumulate payroll deductions to purchase our common stock. Expected dividend yield was not considered in the option pricing model since we do not pay dividends and have no current plans to do so in the future.

Weighted Average Assumption

December 2004  Offering

May 2005  Offering

December 2005  Offering

May 2006  Offering

Expected volatility

24.0%

27.5%

26.6%

20.1%

Risk-free interest rate

3.41%

3.96%

4.04%

4.75%

Expected dividend yield

None

None

None

None

Expected life of the option

6 months

6 months

6 months

6 months

 

The weighted average fair value for the ESPP options was $6.07, $6.02, $8.70 and $7.20 for the December 2004, May 2005, December 2005 and May 2006 offerings, respectively.

As of September 30, 2006, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $25,682 and is expected to be recognized over a weighted-average period of 4.1 years.

We generally issue shares for the exercises of stock options, issuance of restricted stock and issuance of shares under our ESPP from unissued reserved shares.

e.                 Income Per Share—Basic and Diluted

In accordance with SFAS No. 128, “Earnings per Share,” basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding. The calculation of diluted net income per share is consistent with that of basic net income per share but gives effect to all potential common shares (that is, securities such as options, warrants or convertible securities) that were outstanding during the period, unless the effect is antidilutive. Potential common shares, substantially attributable to stock options, included in the calculation of diluted net income per share totaled 1,421,135 and 1,518,528 shares for the three months ended September 30, 2005 and 2006, respectively, and 1,317,623 shares and 1,555,506 shares for the nine months ended September 30, 2005 and 2006, respectively. Potential common shares of 274,641 and 421,748 for the three and nine months ended September 30, 2005, respectively, and potential common shares of 694,226 and 540,397 for the three and nine months ended September 30, 2006, respectively, have been excluded from the calculation of diluted net income per share, as their effects are antidilutive.

f.                   Revenue

Our revenues consist of storage revenues as well as service and storage material sales revenues. Storage revenues consist of periodic charges related to the storage of materials or data (generally on a per

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

unit or per cubic foot of records basis). Service and storage material sales revenues are comprised of charges for related service activities and courier operations and the sale of software licenses and storage materials. Related core service revenues arise from: (a) the handling of records including the addition of new records, temporary removal of records from storage, refiling of removed records, destruction of records, and permanent withdrawals from storage; (b) courier operations, consisting primarily of the pickup and delivery of records upon customer request; (c) secure shredding of sensitive documents; and (d) other recurring services including maintenance and support contracts. Our complementary services revenues arise from special project work, including data restoration; and providing fulfillment services, consulting services and product sales, including software licenses, specially designed storage containers, magnetic media including computer tapes and related supplies.

We recognize revenue when the following criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured. Storage and service revenues are recognized in the month the respective storage or service is provided and customers are generally billed on a monthly basis on contractually agreed-upon terms. Amounts related to future storage or prepaid service contracts, including maintenance and support contracts, for customers where storage fees or services are billed in advance are accounted for as deferred revenue and recognized ratably over the applicable storage or service period or when the service is performed. Storage material sales are recognized when shipped to the customer and include software license sales. Sales of software licenses to distributors are recognized at the time a distributor reports that the software has been licensed to an end-user and all revenue recognition criteria have been satisfied.

g.                 New Accounting Pronouncements

In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109, “Accounting for Income Taxes” (“SFAS No. 109”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS No. 109. FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The evaluation of a tax position in accordance with FIN 48 is a two-step process. The first step is a recognition process whereby the company determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is a measurement process whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The provisions of FIN 48 are effective January 1, 2007. Earlier application is permitted as long as the company has not yet issued financial statements, including interim financial statements, in the period of adoption. The provisions of FIN 48 are to be applied to all tax positions upon initial adoption of this

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

standard. Only tax positions that meet the more likely than not recognition threshold at the effective date may be recognized or continue to be recognized upon adoption of FIN 48. The cumulative effect of applying the provisions of FIN 48 should be reported as an adjustment to the opening balance of retained earnings for that fiscal year. We are in the process of evaluating the effect of FIN 48 on our consolidated results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.”  SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The adoption of SFAS No. 157 is not expected to have a material impact on our financial position or results of operations.

h.                Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. On an on-going basis, we evaluate the estimates used, including those related to accounting for acquisitions, allowance for doubtful accounts and credit memos, impairments of tangible and intangible assets, income taxes, stock-based compensation and self-insured liabilities. We base our estimates on historical experience, actuarial estimates, current conditions and various other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities and are not readily apparent from other sources. Actual results may differ from these estimates.

(3) Comprehensive Income

SFAS No. 130, “Reporting Comprehensive Income,” requires presentation of the components of comprehensive income, including the changes in equity from non-owner sources such as unrealized gains (losses) on hedging transactions, securities and foreign currency translation adjustments. Our total comprehensive income is as follows:

		Three Months Ended  September 30,						Nine Months Ended  September 30,
		2005			2006			2005			2006
Comprehensive Income:
Net Income		$	36,377		$	26,613		$	84,736		$	91,728
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustments		(8,531		)	5,306			(4,778		)	15,367
Market Value Adjustments for Hedging Contracts, Net of Tax		196			(123		)	2,035			139
Market Value Adjustments for Securities, Net of Tax		163			58			152			71
Comprehensive Income		$	28,205		$	31,854		$	82,145		$	107,305

 

15

IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(4) Derivative Instruments and Hedging Activities

SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” requires that every derivative instrument be recorded in the balance sheet as either an asset or a liability measured at its fair value. Periodically, we acquire derivative instruments that are intended to hedge either cash flows or values which are subject to foreign exchange or other market price risk, and not for trading purposes. We have formally documented our hedging relationships, including identification of the hedging instruments and the hedged items, as well as our risk management objectives and strategies for undertaking each hedge transaction. Given the recurring nature of our revenues and the long term nature of our asset base, we have the ability and the preference to use long term, fixed interest rate debt to finance our business, thereby preserving our long term returns on invested capital. We target a range of 80% to 85% of our debt portfolio to be fixed with respect to interest rates. Occasionally, we will use floating to fixed interest rate swaps as a tool to maintain our targeted level of fixed rate debt. In addition, we will use borrowings in foreign currencies, either obtained in the U.S. or by our foreign subsidiaries, to economically hedge foreign currency risk associated with our international investments. Sometimes we enter into currency swaps to temporarily hedge an overseas investment, such as a major acquisition, while we arrange permanent financing.

We previously entered into two interest rate swap agreements, which were derivatives as defined by SFAS No. 133 and designated as cash flow hedges. These swap agreements hedged interest rate risk on certain amounts of our term loan. Both of these swap agreements expired in the first quarter of 2006. As a result of the foregoing, for the three and nine months ended September 30, 2005, we recorded additional interest expense of $781 and $3,549, respectively, and for the three months ended March 31, 2006, we recorded additional interest expense of $127, resulting from interest rate swap payments.

In connection with certain real estate loans, we swapped $97,000 of floating rate debt to fixed rate debt. Since the time we entered into the swap agreement, interest rates have fallen. We have recorded, in the accompanying consolidated balance sheet, the estimated cost to terminate this swap (fair value of the derivative liability) of $1,063 (which was recorded in accrued expenses) as of September 30, 2006. As a result of the repayment of the real estate term loans in the third quarter of 2004, we began marking to market the fair value of the derivative liability through earnings. The total impact of marking to market the fair market value of the derivative liability and cash payments associated with the interest rate swap agreement resulted in our recording interest income of $974 and $1,367 for the three and nine months ended September 30, 2005, respectively, and interest expense of $441 and interest income of $537 for the three and nine months ended September 30, 2006, respectively.

In April 2004, IME entered into two floating for fixed interest rate swap contracts, each with a notional value of 50,000 British pounds sterling and a duration of two years, which were designated as cash flow hedges. These swap agreements hedged interest rate risk on IME’s 100,000 British pounds multi-currency term loan facility. Both of these swap agreements expired in the second quarter of 2006. For the three and nine months ended September 30, 2005, we recorded additional interest income of $9 and $52, respectively, and for the three and six months ended June 30, 2006, we recorded interest expense of $71 and $184, respectively, resulting from interest rate swap cash payments.

16

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(4) Derivative Instruments and Hedging Activities (Continued)

In June 2006, IME entered into a floating for fixed interest rate swap contract with a notional value of 75,000 British pounds sterling, which will expire on March 2008 and was designated as a cash flow hedge. This swap agreement hedges interest rate risk on IME’s 100,000 British pounds multi-currency term loan facility. The notional value of the swap will decline to 60,000 British pounds sterling in March 2007 to match the remaining term loan amount outstanding as of that date. We have recorded, in the accompanying consolidated balance sheet, the fair value of the derivative liability, a deferred tax asset and a corresponding charge to accumulated other comprehensive items of $115 (which was recorded in accrued expenses), $34 and $81, respectively, as of September 30, 2006. For the three months ended September 30, 2006, we recorded additional interest expense of $65 resulting from interest rate swap.

In September 2006, we entered into a forward contract program to exchange U.S. dollars for 55,000 in Australian dollars (AUD) and 20,200 in New Zealand dollars (NZD) to hedge our intercompany exposure in these countries. These forward contracts settle on a monthly basis, at which time we enter into new forward contracts for the same underlying AUD and NZD amounts, to continue to hedge movements in AUD and NZD against the U.S. dollar. At the time of settlement, we either pay or receive the net settlement amount from the forward contract and recognize this amount in other expense (income), net in the accompanying statement of operations as a realized foreign exchange gain or loss. We recorded a realized loss of $205 for the three months ended September 30, 2006. At the end of each month, we mark the outstanding forward contracts to market and record an unrealized foreign exchange gain or loss for the mark-to-market valuation. For the three months ended September 30, 2006, we recorded an unrealized foreign exchange gain of $273 in other expense (income), net in the accompanying statement of operations.

(5) Acquisitions

We account for acquisitions using the purchase method of accounting, and accordingly, the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates. Cash consideration for the various 2006 acquisitions was provided primarily through borrowings under our credit facilities, the proceeds from the sale of senior subordinated notes, and cash equivalents on-hand.

17

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(5) Acquisitions (Continued)

A summary of the consideration paid and the allocation of the purchase price of all 2006 acquisitions is as follows:

(1)          Included in cash paid for acquisitions in the consolidated statements of cash flows for the nine months ended September 30, 2006 are contingent payments totaling $21,382 related to acquisitions made in prior years.

(2)          Consisted primarily of accounts receivable, prepaid expenses and other, land, buildings, racking and leasehold improvements. Additionally, includes customer relationship assets of $27,701 for the nine months ended September 30, 2006.

(3)          Consisted primarily of accounts payable, accrued expenses and notes payable.

(4)          Consisted primarily of the carrying value of minority interests of European, Latin American and Asia Pacific partners at the date of acquisition.

Allocation of the purchase price for the 2006 acquisitions was based on estimates of the fair value of net assets acquired, and is subject to adjustment. The purchase price allocations of certain 2005 and 2006 transactions are subject to finalization of the assessment of the fair value of property, plant and equipment, intangible assets (primarily customer relationship assets), operating leases, restructuring purchase reserves, deferred revenue and deferred income taxes. We are not aware of any information that would indicate that the final purchase price allocations will differ meaningfully from preliminary estimates.

In connection with each of our acquisitions, we have undertaken certain restructurings of the acquired businesses. The restructuring activities include certain reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. The estimated costs of these restructuring activities were recorded as costs of the acquisitions and were provided in accordance with Emerging Issues Task Force No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” We finalize restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters at September 30, 2006 primarily include completion of planned abandonments of facilities and severance contracts in connection with certain acquisitions.

18

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(5) Acquisitions (Continued)

The following is a summary of reserves related to such restructuring activities:

(1)          Includes adjustments to goodwill as a result of finalizing our restructuring plans.

At September 30, 2006, the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($3,321), severance costs ($317), and move and other exit costs ($3,295). These accruals are expected to be used prior to September 30, 2007 except for lease losses ($2,221), severance contracts ($135), and move and other exit costs ($436), all of which are based on contracts that extend beyond one year.

In connection with our acquisition in India, we entered into a shareholder agreement in May 2006. The agreement contains a put provision that would allow the minority stockholder to sell the remaining 49.9% equity interest to us beginning on the third anniversary of this agreement for the greater of fair market value or approximately 84,835 Rupees (approximately $1,800). In accordance with FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others—An Interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34,”  we recorded a liability in the amount of $368, with the offset to goodwill.

19

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(6) Long-term Debt

Long-term debt consists of the following:

		December 31, 2005						September 30, 2006
		Carrying Amount			Fair Value			Carrying Amount			Fair Value
IMI Revolving Credit Facility(1)		$	216,396		$	216,396		$	168,805		$	168,805
IMI Term Loan Facility(1)		345,500			345,500			342,875			342,875
IME Revolving Credit Facility(1)		84,262			84,262			124,753			124,753
IME Term Loan Facility(1)		177,450			177,450			186,360			186,360
81¤4% Senior Subordinated Notes due 2011(2)		149,760			151,500			71,784			72,061
85¤8% Senior Subordinated Notes due 2013(2)		481,032			502,513			448,006			457,951
71¤4% GBP Senior Subordinated Notes due 2014(2)		258,120			250,376			280,890			276,677
73¤4% Senior Subordinated Notes due 2015(2)		439,506			435,568			438,821			431,255
65¤8% Senior Subordinated Notes due 2016(2)		315,059			299,200			315,429			299,200
83¤4% Senior Subordinated Notes due 2018(2)		—			—			200,000			207,500
Real Estate Mortgages(1)		4,707			4,707			4,254			4,254
Seller Notes(1)		9,398			9,398			8,443			8,443
Other(1)		48,241			48,241			44,409			44,409
Total Long-term Debt		2,529,431						2,634,829
Less Current Portion		(25,905		)				(59,748		)
Long-term Debt, Net of Current Portion		$	2,503,526					$	2,575,081

(1)          The fair value of this long-term debt either approximates the carrying value (as borrowings under these debt instruments are based on current variable market interest rates as of December 31, 2005 and September 30, 2006) or it is impracticable to estimate the fair value due to the nature of such long-term debt.

(2)          The fair value of these debt instruments is based on quoted market prices for these notes on December 31, 2005 and September 30, 2006.

In March 2004, IME and certain of its subsidiaries entered into a credit agreement (the “IME Credit Agreement”) with a syndicate of European lenders. The IME Credit Agreement provides for maximum borrowing availability in the principal amount of 200,000 British pounds sterling, including a 100,000 British pounds sterling revolving credit facility (the “IME revolving credit facility”), which includes the ability to borrow in certain other foreign currencies, and a 100,000 British pounds multi-currency term loan (the “IME term loan facility”). The IME revolving credit facility matures on March 5, 2009. The IME term loan facility is payable in three installments; two installments of 20,000 British pounds sterling on March 5, 2007 and 2008, respectively, and the final payment of the remaining balance on March 5, 2009. The interest rate on borrowings under the IME Credit Agreement varies depending on IME’s choice of currency options and interest rate period, plus an applicable margin. The IME Credit Agreement includes various financial covenants applicable to the results of IME, which may restrict IME’s ability to incur indebtedness under the IME Credit Agreement and from third parties, as well as limit IME’s ability to pay dividends to us. Most of IME’s non-dormant subsidiaries have either guaranteed the obligations or have their shares

20

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(6) Long-term Debt (Continued)

pledged to secure IME’s obligations under the IME Credit Agreement. We have not guaranteed or otherwise provided security for the IME Credit Agreement nor have any of our U.S., Canadian, Asia Pacific, Mexican or South American subsidiaries. Our consolidated balance sheet as of September 30, 2006 included 82,000 British pounds sterling and 124,057 Euro of borrowings (totaling $311,113) under the IME Credit Agreement; we also had various outstanding letters of credit totaling 1,712 British pounds sterling ($3,190). The remaining availability, based on IME’s current level of external debt and the leverage ratio under the IME revolving credit facility on July 31, 2006, was approximately 31,346 British pounds sterling ($58,416). The interest rates in effect under the IME revolving credit facility ranged from 4.3% to 6.2% as of July 31, 2006. For the three and nine months ended September 30, 2005, we recorded commitment fees of $210 and $629, respectively, based on 0.9% of unused balances under the IME revolving credit facility. For the three and nine months ended September 30, 2006, we recorded commitment fees of $114 and $368, respectively, based on 0.6% of unused balances under the IME revolving credit facility.

On April 2, 2004 and subsequently on July 8, 2004, we entered into an amended and restated revolving credit facility and term loan facility (the “IMI Credit Agreement”) to replace our prior credit agreement and to reflect more favorable pricing of our term loans. The IMI Credit Agreement had an aggregate principal amount of $550,000 and was comprised of a $350,000 revolving credit facility (the “IMI revolving credit facility”), which included the ability to borrow in certain foreign currencies, and a $200,000 term loan facility (the “IMI term loan facility”). The IMI revolving credit facility matures on April 2, 2009. With respect to the IMI term loan facility, quarterly loan payments of $500 began in the third quarter of 2004 and will continue through maturity on April 2, 2011, at which time the remaining outstanding principal balance of the IMI term loan facility is due. In November 2004, we entered into an additional $150,000 of term loans as permitted under our IMI Credit Agreement. The new term loans will mature at the same time as our current IMI term loan facility with quarterly loan payments of $375 that began in the first quarter of 2005. On October 31, 2005, we entered into the second amendment to the IMI Credit Agreement, increasing availability under the revolving credit facility from $350,000 to $400,000. As a result, the IMI Credit Agreement had an aggregate maximum principal amount of $750,000 as of December 31, 2005. The interest rate on borrowings under the IMI Credit Agreement varies depending on our choice of interest rate and currency options, plus an applicable margin. All intercompany notes and the capital stock of most of our U.S. subsidiaries are pledged to secure the IMI Credit Agreement. As of September 30, 2006, we had $168,805 of borrowings under our IMI revolving credit facility, all of which was denominated in Canadian dollars (CAD 188,000); we also had various outstanding letters of credit totaling $23,983. The remaining availability, based on Iron Mountain Incorporated’s (“IMI”) current level of external debt and the leverage ratio under the IMI revolving credit facility, on September 30, 2006 was $207,212. The interest rate in effect under the IMI revolving credit facility and IMI term loan facility ranged from 6.0% to 6.3% and 7.0% to 7.3%, respectively, as of September 30, 2006. For the three and nine months ended September 30, 2005, we recorded commitment fees of $217 and $660, respectively, and for the three and nine months ended September 30, 2006, we recorded commitment fees of $147 and $371, respectively, based on 0.4% of unused balances under the IMI revolving credit facility.

In July 2006, we completed an underwritten public offering of $200,000 in aggregate principal amount of our 83¤4% Senior Subordinated Notes due 2018, which were issued at par. Our net proceeds of

21

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(6) Long-term Debt (Continued)

$196,608, after paying the underwriters’ discounts, commissions and transaction fees, were used to (a) fund our offer to purchase and consent solicitation of $78,119 in aggregate principal amount of our outstanding 81¤4% Senior Subordinated Notes due 2011, (b) fund our purchase in the open market of $33,000 in aggregate principal amount of our 85¤8% Senior Subordinated Notes due 2013 and (c) repay borrowings under our revolving credit facility. As a result, we recorded a charge to other expense (income), net of $2,779 in the third quarter of 2006 related to the early extinguishment of the 81¤4% and 85¤8% Senior Subordinated Notes, which consists of tender premiums and transaction costs, deferred financing costs, as well as original issue discounts and premiums related to the 81¤4% and 85¤8% Senior Subordinated Notes.

The IME Credit Agreement, IMI Credit Agreement, our indentures and other agreements governing our indebtedness contain certain restrictive financial and operating covenants, including covenants that restrict our ability to complete acquisitions, pay cash dividends, incur indebtedness, make investments, sell assets and take certain other corporate actions. The covenants do not contain a rating trigger. Therefore, a change in our debt rating would not trigger a default under the IME Credit Agreement, IMI Credit Agreement and our indentures and other agreements governing our indebtedness. We were in compliance with all material debt covenants as of September 30, 2006.

22

IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(7) Selected Financial Information of Parent, Guarantors and Non-Guarantors

The following financial data summarizes the consolidating Company on the equity method of accounting as of December 31, 2005 and September 30, 2006 and for the three and nine months ended September 30, 2005 and 2006. The Guarantors column includes all subsidiaries that guarantee the senior subordinated notes. The subsidiaries that do not guarantee the senior subordinated notes are referred to in the table as the “Non-Guarantors.”

		December 31, 2005
		Parent			Guarantors			Non-   Guarantors			Eliminations			Consolidated
Assets
Current Assets:
Cash and Cash Equivalents		$	—		$	10,658		$	42,755		$	—			$	53,413
Accounts Receivable		—			290,546			118,018			—				408,564
Intercompany Receivable		868,392			—			—			(868,392		)		—
Other Current Assets		48			61,531			31,074			(462		)		92,191
Total Current Assets		868,440			362,735			191,847			(868,854		)		554,168
Property, Plant and Equipment, Net		—			1,225,580			555,686			—				1,781,266
Other Assets, Net:
Long-term Notes Receivable from Affiliates and Intercompany Receivable		2,048,104			11,069			—			(2,059,173		)		—
Investment in Subsidiaries		541,612			252,122			—			(793,734		)		—
Goodwill		—			1,482,537			646,363			9,741				2,138,641
Other		26,780			130,012			135,694			(421		)		292,065
Total Other Assets, Net		2,616,496			1,875,740			782,057			(2,843,587		)		2,430,706
Total Assets		$	3,484,936		$	3,464,055		$	1,529,590		$	(3,712,441	)		$	4,766,140
Liabilities and Stockholders’ Equity
Intercompany Payable		$	—		$	249,173		$	619,219		$	(868,392	)		$	—
Current Portion of Long-term Debt		3,841			7,613			14,451			—				25,905
Total Other Current Liabilities		48,229			389,691			128,633			(462		)		566,091
Long-term Debt, Net of Current Portion		2,057,884			10,816			434,826			—				2,503,526
Long-term Notes Payable to Affiliates and Intercompany Payable		1,000			2,048,104			10,069			(2,059,173		)		—
Other Long-term Liabilities		3,853			233,805			57,385			(421		)		294,622
Commitments and Contingencies
Minority Interests		—			—			2,389			3,478				5,867
Stockholders’ Equity		1,370,129			524,853			262,618			(787,471		)		1,370,129
Total Liabilities and Stockholders’ Equity		$	3,484,936		$	3,464,055		$	1,529,590		$	(3,712,441	)		$	4,766,140

 

23

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(7) Selected Financial Information of Parent, Guarantors and Non-Guarantors (Continued)

		September 30, 2006
		Parent			Guarantors			Non-  Guarantors			Eliminations			Consolidated
Assets
Current Assets:
Cash and Cash Equivalents		$	—		$	10,291		$	35,098		$	—			$	45,389
Accounts Receivable		—			315,347			142,649			—				457,996
Intercompany Receivable		867,936			—			5,448			(873,384		)		—
Other Current Assets		321			65,837			51,596			(1,220		)		116,534
Total Current Assets		868,257			391,475			234,791			(874,604		)		619,919
Property, Plant and Equipment, Net		—			1,299,919			627,863			—				1,927,782
Other Assets, Net:
Long-term Notes Receivable from Affiliates and Intercompany Receivable		2,140,591			11,003			—			(2,151,594		)		—
Investment in Subsidiaries		619,598			327,333			—			(946,931		)		—
Goodwill		—			1,490,580			685,337			9,742				2,185,659
Other		26,139			134,130			166,187			(869		)		325,587
Total Other Assets, Net		2,786,328			1,963,046			851,524			(3,089,652		)		2,511,246
Total Assets		$	3,654,585		$	3,654,440		$	1,714,178		$	(3,964,256	)		$	5,058,947
Liabilities and Stockholders’ Equity
Intercompany Payable		$	—		$	250,054		$	623,330		$	(873,384	)		$	—
Current Portion of Long-term Debt		4,097			5,295			50,356			—				59,748
Total Other Current Liabilities		47,547			359,724			150,387			(1,220		)		556,438
Long-term Debt, Net of Current Portion		2,094,503			14,418			466,160			—				2,575,081
Long-term Notes Payable to Affiliates and Intercompany Payable		1,000			2,140,591			10,003			(2,151,594		)		—
Other Long-term Liabilities		3,853			283,657			72,413			(869		)		359,054
Commitments and Contingencies
Minority Interests		—			—			925			4,116				5,041
Stockholders’ Equity		1,503,585			600,701			340,604			(941,305		)		1,503,585
Total Liabilities and Stockholders’ Equity		$	3,654,585		$	3,654,440		$	1,714,178		$	(3,964,256	)		$	5,058,947

 

24

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IRON MOUNTAIN INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  (In Thousands, Except Share and Per Share Data)
  (Unaudited)

(7) Selected Financial Information of Parent, Guarantors and Non-Guarantors (Continued)

		Three Months Ended September 30, 2005
		Parent			Guarantors					Non- Guarantors					Eliminations					Consolidated
Revenues:
Storage		$	—			$	217,723				$	79,061				$	—				$	296,784
Service and Storage Material Sales		—				169,050					60,638					—					229,688
Total Revenues		—				386,773					139,699					—					526,472
Operating Expenses:
Cost of Sales (Excluding Depreciation)		—				170,882					66,532					—					237,414
Selling, General and Administrative		27				108,498					32,917					—					141,442
Depreciation and Amortization		13				32,780					12,905					—					45,698
Gain on Disposal/Writedown of Property, Plant and Equipment, Net		—				(163		)			(96		)			—					(259		)
Total Operating Expenses		40				311,997					112,258					—					424,295
Operating (Loss) Income		(40		)		74,776					27,441					—					102,177
Interest Expense (Income), Net		38,876				(8,316		)			13,748					—					44,308
Equity in the Earnings of Subsidiaries, Net of Tax		(68,834		)		(10,805		)			—					79,639					—
Other (Income) Expense, Net		(6,459		)		2,691					(2,774		)			—					(6,542		)
Income Before Provision for Income Taxes and Minority Interest		36,377				91,206					16,467					(79,639		)			64,411
Provision for Income Taxes		—				22,181					5,456					—					27,637
Minority Interest in Earnings of Subsidiaries, Net		—				—					397					—					397
Net Income		$	36,377			$	69,025				$	10,614				$	(79,639	)			$	36,377

 

25