The following discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2009 should be read in conjunction with our Consolidated Financial Statements and Notes thereto for the three and nine months ended September 30, 2009, included herein, and for the year ended December 31, 2008, included in our Current Report on Form 8-K dated May 8, 2009.

FORWARD-LOOKING STATEMENTS

We have made statements in this Quarterly Report on Form 10-Q that constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements concern our operations, economic performance, financial condition, goals, beliefs, future growth strategies, investments, objectives, plans and current expectations. The forward-looking statements are subject to various known and unknown risks, uncertainties and other factors. When we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements. Although we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. Important factors that could cause actual results to differ from expectations include, among others: (1) the cost to comply with current and future legislation, regulations and customer demands relating to privacy issues; (2) the impact of litigation that may arise in connection with incidents in which we fail to protect our customer's information; (3) changes in the price for our services relative to the cost of providing such services; (4) changes in customer preferences and demand for our services; (5) in the various digital businesses in which we are engaged, the cost of capital and technical requirements, demand for our services or competition for customers; (6) our ability or inability to complete acquisitions on satisfactory terms and to integrate acquired companies efficiently; (7) the cost or potential liabilities associated with real estate necessary for our business; (8) the performance of business partners upon whom we depend for technical assistance or management and acquisition expertise outside the U.S.;
(9) changes in the political and economic environments in the countries in which our international subsidiaries operate; (10) claims that our technology violates the intellectual property rights of a third party; and (11) other trends in competitive or economic conditions affecting our financial condition or results of operations not presently contemplated. You should not rely upon forward-looking statements except as statements of our present intentions and of our present expectations, which may or may not occur. Other risks may adversely impact us, as described more fully under "Item 1A. Risk Factors" in our Current Report on Form 8-K dated May 8, 2009. You should read these cautionary statements as being applicable to all forward-looking statements wherever they appear. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures we have made in this document, as well as our other periodic reports filed with the Securities and Exchange Commission (the "SEC").

Non-GAAP Measures

Operating Income Before Depreciation and Amortization, or OIBDA

OIBDA is defined as operating income before depreciation and amortization expenses. OIBDA Margin is calculated by dividing OIBDA by total revenues. We use multiples of current or projected OIBDA in conjunction with our discounted cash flow models to determine our overall enterprise valuation and to evaluate acquisition targets. We believe OIBDA and OIBDA Margin provide current

and potential investors with relevant and useful information regarding our ability to generate cash flow to support business investment and our ability to grow revenues faster than operating expenses. These measures are an integral part of the internal reporting system we use to assess and evaluate the operating performance of our business. OIBDA does not include certain items that we believe are not indicative of our core operating results, specifically:
(1) other (income) expense, net and (2) cumulative effect of change in accounting principle.

OIBDA also does not include interest expense, net and the provision for income taxes. These expenses are associated with our capitalization and tax structures, which we do not consider when evaluating the operating profitability of our core operations. Finally, OIBDA does not include depreciation and amortization expenses, in order to eliminate the impact of capital investments, which we evaluate by comparing capital expenditures to incremental revenue generated and as a percentage of total revenues. OIBDA and OIBDA Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the Unites States of America ("GAAP"), such as operating or net income or cash flows from operating activities (as determined in accordance with GAAP).

Reconciliation of OIBDA to Operating Income and Net Income (in thousands):

                                              Three Months Ended       Nine Months Ended
                                                September 30,            September 30,
                                               2008        2009        2008        2009
  OIBDA                                      $ 211,201   $ 224,077   $ 583,854   $ 638,288
  Less: Depreciation and Amortization           74,856      81,428     217,293     236,388

     Operating Income                          136,345     142,649     366,561     401,900
     Less: Interest Expense, Net                59,423      59,469     179,199     170,165
        Other Expense (Income), Net             15,660       1,390      13,157      (9,849 )
        Provision for Income Taxes              50,010      38,613      93,141      83,951

  Net Income                                 $  11,252   $  43,177   $  81,064   $ 157,633

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements 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, impairment 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. Our critical accounting policies include the following, which are listed in no particular order:

º •
º Revenue Recognition

º •
º Accounting for Acquisitions

º •
º Allowance for Doubtful Accounts and Credit Memos

º •
º Impairment of Tangible and Intangible Assets

º •
º Accounting for Internal Use Software

º •
º Income Taxes

º •
º Stock-Based Compensation

º •
º Self-Insured Liabilities

Further detail regarding our critical accounting policies can be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the notes included in our Current Report on Form 8-K, as filed with the SEC on May 8, 2009. Management has determined that no material changes concerning our critical accounting policies have occurred since December 31, 2008.

Recent Accounting Pronouncements

Effective January 1, 2009, GAAP for noncontrolling interests changed. The presentation and disclosure requirements of noncontrolling interests have been applied to all of our financial statements, notes and other financial data retrospectively for all periods presented. The adoption of these accounting changes included a prospective requirement allowing losses in excess of a noncontrolling interest's equity to go below zero, resulting in an increase to net income attributable to Iron Mountain Incorporated of $0.3 million, or $0.00 per diluted share for the three months ended September 30, 2009 and an increase to net income attributable to Iron Mountain Incorporated of $3.1 million, or $0.02 per diluted share for the nine months ended September 30, 2009. Excluding the impacts of allowing losses in excess of a noncontrolling interest's equity to go below zero, net income attributable to Iron Mountain Incorporated and diluted earnings per share attributable to Iron Mountain Incorporated would have been $42.9 million and $0.21 per share, respectively, for the three months ended September 30, 2009 and $156.5 million and $0.77 per share, respectively, for the nine months ended September 30, 2009.

In June 2009, the Financial Accounting Standards Board ("FASB") established the FASB Accounting Standards Codification (the "Codification") to become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification was effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Codification superseded all then-existing non-SEC accounting and reporting standards on July 1, 2009, and all other non-grandfathered non-SEC accounting literature not included in the Codification became nonauthoritative. The adoption of the Codification did not have a material impact on our consolidated financial statements and results of operations.

Effective at the start of a reporting entity's first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar year-end entity, the Codification will require more information about transfers of financial assets, including securitization transactions, and transactions where entities have continuing exposure to the risks related to transferred financial assets. The Codification eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures about an entity's involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity's financial statements. We do not expect the adoption of these Codification updates to have a material impact on our consolidated financial statements and results of operations.

Overview

The following discussions set forth, for the periods indicated, management's discussion and analysis of results. Significant trends and changes are discussed for the three and nine month periods ended September 30, 2009 within each section. Trends and changes that are consistent within the three and nine month periods are not repeated and are discussed on a year-to-date basis.

Our revenues consist of storage revenues as well as service revenues. Storage revenues, both physical and digital, which are considered a key performance indicator for the information protection and storage services industry, consist of largely recurring periodic charges related to the storage of materials or data (generally on a per unit basis), which are typically retained by customers for many years. Service revenues are comprised of charges for related core service activities and a wide array of complementary products and services. Included in core service revenues are: (1) 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; (2) courier operations, consisting primarily of the pickup and delivery of records upon customer request; (3) secure shredding of sensitive documents; and (4) other recurring services including maintenance and support contracts. Our complementary services revenues include special project work, data restoration projects, fulfillment services, consulting services and product sales (including software licenses, specially designed storage containers and related supplies). Our secure shredding business generates the sale of recycled paper (included in complementary services revenues), the price of which can fluctuate from period to period, adding to the volatility and reducing the predictability of that revenue stream.

Due to the declining economic environment in 2008, the current fair market values of vans, trucks and mobile shredding units within our vehicle fleet portfolio, which we lease, have declined. As a result, certain vehicle leases that previously met the requirements to be considered operating leases are classified as capital leases upon renewal, or at lease inception, for new leases. The impact of this change on comparability to the prior period will be to lower vehicle rent expense (a component of transportation costs within cost of sales) by approximately $22.1 million, offset by an increased amount of combined depreciation (by approximately $20.1 million) and interest expense (by approximately $3.2 million) for the year ending December 31, 2009.

Beginning in the third quarter of 2008, we saw a dramatic strengthening of the U.S. dollar in comparison to the major foreign currencies of our most significant international markets, which led to a decrease in reported revenue and expenses in the first nine months of 2009 as compared to the first nine months of 2008. It is difficult to predict how much foreign currency exchange rates will fluctuate in the future and how those fluctuations will impact our consolidated statement of operations. Due to the expansion of our international operations, these fluctuations have become material on individual balances. If exchange rates remain at current levels throughout 2009, we expect a decline in revenues and expenses as reported in U.S. dollars when comparing our 2009 results to our 2008 results. However, because both the revenues and expenses are denominated in the local currency of the country in which they are derived or incurred, the impact of currency fluctuations on our operating income and operating margin is mitigated. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we compare the percentage change in the results from one period to another period in this report using constant currency disclosure. The constant currency growth rates are calculated by translating the 2008 results at the 2009 average exchange rates.

The following table is a comparison of underlying average exchange rates of the foreign currencies that had the most significant impact on our U.S. dollar-reported revenues and expenses:

                                     Average Exchange
                                       Rates for the            Percentage
                                       Three Months          (Strengthening) /
                                    Ended September 30,        Weakening of
                                     2008          2009       the U.S. dollar
        British pound sterling*    $    1.975     $ 1.604                 (18.8 )%
        Canadian dollar            $    0.962     $ 0.910                  (5.4 )%
        Euro*                      $    1.564     $ 1.391                 (11.1 )%

                                     Average Exchange
                                       Rates for the            Percentage
                                        Nine Months          (Strengthening) /
                                    Ended September 30,        Weakening of
                                     2008          2009       the U.S. dollar
        British pound sterling*    $    1.993     $ 1.514                 (24.0 )%
        Canadian dollar            $    0.983     $ 0.858                 (12.7 )%
        Euro*                      $    1.520     $ 1.337                 (12.0 )%


          ----------------------------------------------------------------------
             º *

Results of Operations

    Comparison of Three and Nine Months Ended September 30, 2009 to Three and
Nine Months Ended September 30, 2008 (in thousands):

                                           Three Months Ended
                                             September 30,         Dollar      Percentage
                                            2008        2009       Change        Change
Revenues                                  $ 784,338   $ 764,885   $ (19,453 )         (2.5 )%
Operating Expenses                          647,993     622,236     (25,757 )         (4.0 )%

   Operating Income                         136,345     142,649       6,304            4.6 %
Other Expenses, Net                         125,093      99,472     (25,621 )        (20.5 )%

   Net Income                                11,252      43,177      31,925          283.7 %
Net Loss Attributable to the
Noncontrolling Interests                        (62 )        (9 )        53           85.5 %

   Net Income Attributable to Iron
   Mountain Incorporated                  $  11,314   $  43,186   $  31,872          281.7 %

OIBDA(1)                                  $ 211,201   $ 224,077   $  12,876            6.1 %

OIBDA Margin(1)                                26.9 %      29.3 %

                                         Nine Months Ended
                                           September 30,           Dollar      Percentage
                                        2008          2009         Change        Change
Revenues                             $ 2,302,579   $ 2,234,259   $  (68,320 )         (3.0 )%
Operating Expenses                     1,936,018     1,832,359     (103,659 )         (5.4 )%

   Operating Income                      366,561       401,900       35,339            9.6 %
Other Expenses, Net                      285,497       244,267      (41,230 )        (14.4 )%

   Net Income                             81,064       157,633       76,569           94.5 %
Net Income (Loss) Attributable to
the Noncontrolling Interests                 382        (1,990 )     (2,372 )       (620.9 )%

   Net Income Attributable to Iron
   Mountain Incorporated             $    80,682   $   159,623   $   78,941           97.8 %

OIBDA(1)                             $   583,854   $   638,288   $   54,434            9.3 %

OIBDA Margin(1)                             25.4 %        28.6 %


--------------------------------------------------------------------------------
   º (1)

REVENUES

                                                                 Percentage
                         Three Months Ended                        Change
                           September 30,         Dollar                 Constant      Internal
                          2008        2009       Change     Actual      Currency      Growth(1)
 Storage                $ 421,673   $ 433,066   $  11,393       2.7 %         6.7 %            7 %
 Core Service             255,715     242,163     (13,552 )    (5.3 )%       (0.5 )%           1 %

    Total Core
    Revenue               677,388     675,229      (2,159 )    (0.3 )%        4.0 %            4 %
 Complementary
 Services                 106,950      89,656     (17,294 )   (16.2 )%      (12.8 )%         (15 )%

    Total Revenue       $ 784,338   $ 764,885   $ (19,453 )    (2.5 )%        1.7 %            2 %

                                                                 Percentage
                        Nine Months Ended                          Change
                          September 30,          Dollar                 Constant      Internal
                       20080         2009        Change     Actual      Currency      Growth(1)
 Storage            $ 1,242,185   $ 1,258,733   $  16,548       1.3 %         6.9 %            7 %
 Core Service           726,336       707,000     (19,336 )    (2.7 )%        4.6 %            4 %

    Total Core
    Revenue           1,968,521     1,965,733      (2,788 )    (0.1 )%        6.1 %            6 %
 Complementary
 Services               334,058       268,526     (65,532 )   (19.6 )%      (14.6 )%         (12 )%

    Total Revenue   $ 2,302,579   $ 2,234,259   $ (68,320 )    (3.0 )%        3.1 %            3 %

Our consolidated storage revenues increased $11.4 million, or 2.7%, to $433.1 million and $16.5 million, or 1.3%, to $1,258.7 million for the three and nine months ended September 30, 2009, respectively, from $421.7 million and $1,242.2 million for the three and nine months ended September 30, 2008, respectively. The increase is attributable to internal revenue growth of 7% for the

nine month period, resulting from strength in our North American Physical and International Physical operating segments, offset by foreign currency exchange rate fluctuations of (6)%. Current economic factors have led to a moderation in our storage growth rate, as a result of longer new sales cycles in our digital business and lower new sales and higher destruction rates in our physical business.

Consolidated service revenues decreased $30.8 million, or (8.5)%, to $331.8 million and $84.9 million, or (8.0)%, to $975.5 million for the three and nine months ended September 30, 2009, respectively, from $362.7 million and $1,060.4 million for the three and nine months ended September 30, 2008, respectively. Service revenue internal growth was negative 4% and 1% as a result of complementary revenue internal growth of negative 15% and 12%, in the three and nine months ended September 30, 2009, respectively, partially offset by core revenue internal growth of 1% and 4% in the three and nine months ended September 30, 2009, respectively. As expected, complementary service revenues decreased on a year-to-date basis primarily due to the completion of a large special project in Europe in the third quarter of 2008 and $34.6 million less revenue from the sale of recycled paper revenues resulting from a steep decline in recycled paper pricing. We also experienced softness in the first nine months of 2009 in the more discretionary revenues such as special project revenues, fulfillment services and technology sales. Core service revenue growth was also constrained by current economic trends. Unfavorable foreign currency exchange rate fluctuations reduced reported service revenues by 7% for the first nine months of 2009 compared to the same period in 2008.

For the reasons stated above, our consolidated revenues decreased $19.5 million, or (2.5)%, to $764.9 million and $68.3 million, or (3.0)%, to $2,234.3 million for the three and nine months ended September 30, 2009, respectively, from $784.3 million and $2,302.6 million for the three and nine months ended September 30, 2008, respectively. Internal revenue growth was 2% and 3% for the three and nine months ended September 30, 2009, respectively. We calculate internal revenue growth in local currency for our international operations. For the three and nine months ended September 30, 2009, foreign currency exchange rate fluctuations negatively impacted our reported revenues by 4% and 6%, respectively, primarily due to the weakening 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.

Internal Growth-Eight-Quarter Trend

            2007                          2008                                      2009
           Fourth       First      Second       Third      Fourth       First      Second       Third
           Quarter     Quarter     Quarter     Quarter     Quarter     Quarter     Quarter     Quarter
Storage
Revenue           8 %         8 %         8 %         8 %         8 %         7 %         6 %         7 %
Service
Revenue          12 %        10 %         9 %         9 %         5 %         0 %         1 %        (4 )%
Total

During the past eight quarters our storage internal growth rate has ranged between 6% and 8%. The internal growth rate for service revenue is inherently more volatile than the storage revenue internal growth rate due to the more discretionary nature of certain complementary services we offer, such as large special projects, software licenses, and recycled paper revenues. These revenues are often event driven and impacted to a greater extent by economic downturns as customers defer or cancel the purchase of certain services as a way to reduce their short-term costs, and may be difficult to replicate in future periods. The internal growth rate for service revenues reflects the following: (1) growth in North American storage-related service revenues, increased special project revenues and higher recycled paper revenues through the third quarter of 2008;
(2) a large public sector contract in Europe that was completed in the third quarter of 2008; (3) declines in commodity prices for recycled paper and fuel; . . .