IRON MOUNTAIN INC - 10-Q filing on 2015-04-30

Segment Information

3 Months Ended

Mar. 31, 2015

As a result of a realignment in senior management reporting structure during the first quarter of 2015, we modified our internal financial reporting to better align internal reporting with how we manage our business. These modifications resulted in the separation of our former International Business segment into two unique reportable operating segments, which we refer to as (1) Western European Business segment and (2) Other International Business segment. Additionally, during the first quarter of 2015, we reassessed the nature of certain costs which were previously being allocated to the North American Records and Information Management Business and North American Data Management Business segments. As a result of this reassessment, we determined that certain product management functions, which were previously being performed to solely benefit our North American operating segments, are now being performed in a manner that benefits the enterprise as a whole. Accordingly, the costs associated with these product management functions are now included within the Corporate and Other Business segment. Previously reported segment information has been restated to conform to the current period presentation.

Our five reportable operating segments are described as follows:

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North American Records and Information Management Business—storage and information management services throughout the United States and Canada, including the storage of paper documents, as well as other media such as microfilm and microfiche, master audio and videotapes, film, X‑rays and blueprints, including healthcare information services, vital records services, service and courier operations, and the collection, handling and disposal of sensitive documents for corporate customers (“Records Management”); information destruction services (“Destruction”); DMS; Fulfillment Services; and Intellectual Property Management.

•

North American Data Management Business—storage and rotation of backup computer media as part of corporate disaster recovery plans throughout the United States and Canada, including service and courier operations (“Data Protection & Recovery”); server and computer backup services; digital content repository systems to house, distribute, and archive key media assets; and storage, safeguarding and electronic or physical delivery of physical media of all types, primarily for entertainment and media industry clients.


•	Western European Business—Records Management, Data Protection & Recovery and DMS throughout the United Kingdom, Ireland, Norway, Austria, Belgium, France, Germany, Netherlands, Spain and Switzerland. Until December 2014, our Western European Business segment offered Destruction in the United Kingdom and Ireland.

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Other International Business—storage and information management services throughout the remaining European countries in which we operate, Latin America and Asia Pacific, including Records Management, Data Protection & Recovery and DMS. Our European operations included within the Other International Business segment provide Records Management, Data Protection & Recovery and DMS. Our Latin America operations provide Records Management, Data Protection & Recovery, Destruction and DMS throughout Argentina, Brazil, Chile, Colombia, Mexico and Peru. Our Asia Pacific operations provide Records Management, Data Protection & Recovery and DMS throughout Australia, with Records Management and Data Protection & Recovery also provided in certain cities in India, Singapore, Hong Kong‑SAR and China. Until December 2014, our Other International Business segment offered Destruction in Australia.

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Corporate and Other Business—consists of our data center business in the United States, the primary product offering of our Emerging Businesses segment, as well as costs related to executive and staff functions, including finance, human resources and information technology, which benefit the enterprise as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. Our Corporate and Other Business segment also includes stock‑based employee compensation expense associated with all Employee Stock‑Based Awards.

An analysis of our business segment information and reconciliation to the accompanying Consolidated Financial Statements is as follows:



	North American Records and Information Management Business			North American Data Management Business			Western European Business		Other International Business		Corporate and Other Business			Total Consolidated
Three Months Ended March 31, 2014
Total Revenues	$	446,132		$	96,724		$	117,131	$	107,299	$	2,840		$	770,126
Depreciation and Amortization	45,506			5,030			14,340		14,419		7,138			86,433
Depreciation	40,821			4,965			12,014		9,775		7,138			74,713
Amortization	4,685			65			2,326		4,644		—			11,720
Adjusted OIBDA	169,209			54,668			34,563		24,200		(54,116		)	228,524
Total Assets (1)	3,632,489			666,188			1,131,454		994,657		281,829			6,706,617
Expenditures for Segment Assets	49,266			5,507			10,787		54,154		27,081			146,795
Capital Expenditures	42,561			5,507			9,974		22,733		27,081			107,856
Cash Paid for Acquisitions, Net of Cash Acquired	(916		)	—			296		31,401		—			30,781
Additions to Customer Relationship and Acquisition Costs	7,621			—			517		20		—			8,158
Three Months Ended March 31, 2015
Total Revenues	442,687			97,235			100,812		103,991		4,561			749,286
Depreciation and Amortization	45,303			5,344			11,439		14,265		9,600			85,951
Depreciation	40,336			5,284			9,986		9,632		9,553			74,791
Amortization	4,967			60			1,453		4,633		47			11,160
Adjusted OIBDA	181,480			51,288			29,453		20,835		(51,838		)	231,218
Total Assets (1)	3,623,905			648,507			896,380		911,481		291,181			6,371,454
Expenditures for Segment Assets	42,375			4,949			7,588		22,548		12,990			90,450
Capital Expenditures	33,180			4,907			4,410		19,289		12,990			74,776
Cash Paid for Acquisitions, Net of Cash Acquired	600			(21		)	2,819		3,033		—			6,431
Additions to Customer Relationship and Acquisition Costs	8,595			63			359		226		—			9,243

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(1)	Excludes all intercompany receivables or payables and investment in subsidiary balances.

The accounting policies of the reportable segments are the same as those described in Note 2. Adjusted OIBDA for each segment is defined as operating income before depreciation, amortization, intangible impairments, (gain) loss on disposal/write-down of property, plant and equipment, net (excluding real estate) and REIT Costs (defined below) directly attributable to the segment. Internally, we use Adjusted OIBDA as the basis for evaluating the performance of, and allocating resources to, our operating segments.

A reconciliation of Adjusted OIBDA to income (loss) from continuing operations before provision (benefit) for income taxes and (gain) loss on sale of real estate on a consolidated basis is as follows:



	Three Months Ended March 31,
	2014		2015
Adjusted OIBDA	$	228,524	$	231,218
Less: Depreciation and Amortization	86,433		85,951
Loss on Disposal/Write-Down of Property, Plant and Equipment (Excluding Real Estate), Net	1,152		333
REIT Costs(1)	8,323		—
Interest Expense, Net	62,312		64,898
Other Expense, Net	5,317		22,349
Income from Continuing Operations before Provision for Income Taxes and Gain on Sale of Real Estate	$	64,987	$	57,687

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(1)	Includes costs associated with our conversion to a REIT, excluding REIT compliance costs beginning January 1, 2014 which we expect to recur in future periods ("REIT Costs").