鐵山公司 (IRM) 2011 Q4 法說會逐字稿

Good morning, my name is Anita and I will be your conference operator today.

At this time I would like to welcome everyone to the Iron Mountain Q4 2011 earnings call webcast.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions) I would now like to turn the call over to your host today, Stephen Golden, Vice President of Investor Relations.

You may begin, sir.

Thank you.

And welcome, everyone, to our 2011 fourth quarter earnings conference call.

Joining me this morning are Richard Reese, our Chairman and CEO and Brian McKeon, our CFO.

After their prepared remarks we'll open up the phones for Q&A.

Per our custom we have a user controlled slide presentation at the Investor Relations page of our website at www.ironmountain.com.

Referring now to slide 2, today's earnings call and slide presentation will contain a number of forward-looking statements, most notably our outlook for our 2012 financial performance.

All forward-looking statements are subject to risks and uncertainty.

Please refer to today's press release, the Safe Harbor language on this slide and our most recently filed current report on Form 8-K, filed on September 19, 2011, for a discussion of the major risk factors that could cause our actual results to be materially different from those contemplated in our forward-looking statements.

As you know, we use several non-GAAP measures when presenting our financial results.

Adjusted OIBDA, adjusted EPS and free cash flow before acquisitions and investments, among others, are metrics we speak to frequently and ones we believe to be important in evaluating our overall financial performance.

We provide additional information and the reconciliation of these non-GAAP measures to their appropriate GAAP measures as required by Reg G at the Investor Relations page of our website, as well as in today's press release.

Before turning the call over to Richard, I would like to make a quick housekeeping announcement.

As announced in this morning's press release, we have made the decision to sell our Italian business.

As a result, the financial position, results of operations and cash flows of the Italian business have been reclassified as Discontinued Operations.

For your convenience, we have included the restated statements of operations for the four quarters and full years of both 2010 and 2011 in the appendix to today's presentation.

Additional restated information will be posted to the Investor Relations page of our website.

With that, I'd like to introduce our Chairman and CEO, Richard Reese.

Thank you, Stephen, and good morning everybody and thanks for joining us this morning.

It's always been my prior custom on these Q4 calls -- I'm going to focus today on the full year mostly of 2011 and reflect a bit on all the changes and for that matter the progress we've made since I returned as CEO this last April.

It's been a lot of change in the Company and it's important that our shareholders understand these changes and as I said, the progress we've made against them as we've set forth the new strategy and focusing our business.

So I'll let Brian cover the details on the quarter except to say that Q4 was a good operating performance.

We had consistent storage growth and great cost controls.

I'll also speak a little about our outlook for next year but again, I'll let Brian take care of the details and he'll go through everything thoroughly.

So with that said, let me get started.

Looking at the whole year on a performance basis, it was good performance for Iron Mountain.

The key themes on an operating basis last year were, first and foremost, solid storage growth of 5% reported and 4% on constant currency.

North America storage grew as we expected on a consistent 3% reported, 2% on a constant currency basis, while international was strong at 14% reported or 9% on constant currency.

Sometimes people ask me -- particularly people that haven't been around the Company so long -- is why do we talk about storage so much.

Why is it so important?

First is, it is the major component of our revenue, it is the major driver of margin and it, frankly, is the major consumer of capital as we grow.

It is where we drive almost everything in the business.

But it's also an indication of our relationship with our customers.

Once they store items with us, it opens up the door for us to deliver other services on a routine basis related to those stored items as well as sell them additional services, things we call complementary services and so forth.

So we watch our storage foundation or annuity like a hawk.

It is the flywheel that really drives the business and 2011 was the 23rd consecutive year that we've grown our storage revenues and through good times and bad, storage keeps chugging along in the business and it's continuing to do that.

Now, we are continuing to see the same trends we did throughout the year of headwinds that weakening service revenues, as customers use less of their information, they're becoming less active, in certain cases change the way they use and many cases continue defer buying decisions for projects that are really are designed to improve their records programs.

The trend towards less activity of information was felt broadly across all industries and all media types, not just in paper but our computer tape rotation services, the activity levels are down.

We see it down, as I said, across the board.

A key driver of this that we've talked a lot about is our healthcare, which is not a major factor in the storage side of our business but it's also the most active part.

It's really not an archival business.

It's an active part.

This is a case where the healthcare industry is reengineering their work flow process.

This is a trend that's different than the less activity trend.

This is a trend in which healthcare is changing modalities, the changing of how they operate, so digitizing images, going to MRIs and CAT scan modalities, replacing physical x-rays which is one of our most active media.

Of course, the adoption and broader adoption of electronic patient record systems will cause them to access their physical patient records less often and we're seeing that trend.

They don't destroy those records and they actually do access them for different reasons, mostly around audit, compliance and also a lot around research, where they really want to go back through the history of the record.

But those trends we've been seeing for quite a while now and they've continued and they continue; that was one of the themes of 2011.

Another key theme of 2011 was the move of recycled paper prices.

We experienced very high recycled paper prices.

In fact, hit an all time high during the year.

Those prices have come down sharply, most recently and hit bottom and frankly, we believe just beginning to stabilize.

This trend was helpful to us in 2011 but does present a challenge in 2012 and we'll talk more about that later.

All of this really was topped off by good underlying profit performance, adjusted OIBDA margins were 31% for the year.

International expanded their margins which I'll speak much more about later.

It's part of our 3-year plan, they went up 220 basis points, primarily coming out of the United Kingdom and strong emerging market performance drove those margins.

North America performed as we asked them to and sustained their margins.

We had, as you know, had optimized that business the last four or five years, had increased margins by about 850 basis points.

We are at the stage of that business where the real strategic goal is to maintain margins and maintain growth and they did both last year.

Even after absorbing an investment that we've talked about throughout the year of a $20 million increase in our sales and marketing investment.

And of course, we had very good cost control at our overhead or our cost at our corporate level, so all in all the team did a superb job of operating the business and delivering great financial performance.

These all numbers netted down to 24% growth in free cash flow dollars, starting with good operating performance but also it's our fifth consecutive year of improved capital efficiency, where CapEx for last year was 6.6% of revenue, down 130 basis points from the prior year.

We also did get in that strong cash flow benefits from some cash timing that helped us, which you don't always see, as well as some tax incentives too.

Again, Brian will reflect on these in more details later.

So as I said, last year was a good year operationally.

But as I said in the beginning, last year is hallmarked by changes, so let me talk a lot about that.

First and foremost is my return as CEO.

Most of you probably know me.

It was a job I held for, I don't know, 25, 26 years, something like that.

I'm in my 31st year I think with the Company.

I may be a little off on the math but close, directionally close.

(Inaudible) says I'm getting old.

I had gone to the job of Executive Chairman and replaced myself as the CEO, but for lots of reasons, including the good work done by my predecessor, the Company was on a path to shift strategies but frankly, it made sense for me to come back.

It was a bit prompted by you, our shareholders, as the Company had lost touch with some of you and frankly, had not done an appropriate job communicating these changes in strategy that we were both contemplating and implementing, and for that matter not implementing them fast enough, to have us all aligned.

When I came back, I did a couple things.

We announced a new 3-year strategic plan which I'm going to go through with you in a second and just update you, but also committed to much, much more frequent and very open communication with our shareholder base.

I believe I've lived up to my promise and this is the case, so I have a request of you.

If you disagree with me, I really would appreciate you letting me know.

I think on that call I gave you my phone number.

I'll give it to you again.

617-535-4800.

This is a serious request because I'm attempting to do some things that I think important for the Company, important for our shareholders, and sometimes you need feedback.

So with that, let me also talk to you about our new strategy and our 3-year plan.

As I said when we announced the plan, I said I would give you regular updates.

We've been out on the road doing it.

We've been doing it in our quarterly conference call.

But let me look back in the plan now that it's almost a year old, and just review with you what I think is outstanding progress by the team.

The plan had four main elements.

First was a focus on traditional physical storage and services business.

The things that got us here, as the folks called, got us to the dance.

So as the net of that we sold our digital business in June for $390 million.

It was a good transaction for us and I think it clearly turned out to be a great transaction for Autonomy, the buyer.

I think we were all happy with the results of that.

The second element of this strategy was a focus on returning invested capital, and to do that, we really looked at our business in a couple ways.

First is -- take it apart by segments.

The North American segment, as I said, we had optimized that business so the whole strategy was to sustain the high returns we had already created and that was -- that plan is and remains to sustain the margin levels and continue to grow and they grew at 2% and hit their margin targets for the year, as well as continued to improve and invest in their own business.

The real work was in International and I have to say that the international management team supported by people here at corporate and other parts of the world and for that matter some people in North America, everybody pulled together and we really did some great work last year.

It really has kind of two key themes.

The first theme was to look at our business as a portfolio rather than as a broad footprint strategy.

We built it as a footprint strategy which means we acquired operations in broad geographies and we really want a path to fill out the footprint and we, frankly, just had gotten to the point where it was time to stop and say all right, let's look at that footprint and understand what can be optimized and understand how we can drive returns and understand, in certain, cases whether what we bought makes sense or doesn't make sense.

We went through that portfolio analysis.

That analysis is completed with the announcement today that we are going to place our Italian business on the market for sale and we've started that process already but it will -- I predict will take some time.

But in the International business as I said we've gone through that review.

We also exited our New Zealand business, sold it for $10 million.

As I said, we've announced the plan to sell Italy.

The rest of our businesses, and we divided them as we had talked about in the plan in different categories from where they stand in terms of mature markets, emerging markets, whether we have leadership and non-leadership.

The return profiles of those businesses all look good.

The work we've been doing and the work we have done say that they all can perform very well for us.

So now it's about hard work of blocking and tackling to get this portfolio to continue to move forward and for that matter, continue contributing growth.

International did a great job on growth last year.

We expect, if you look at this business over the next 15 to 20 years, just to give you a broad view, is the last 20, 25 years in this business was driven primarily by North America going through an outsourcing trend where legacy records and information moved from inside of companies to outside, to vendors like Iron Mountain.

Even though there has been a consistent trend of reduction in use and activity of paper and creation; okay?

Over that time period there's been a strong, steady growth in the business because of that conversion cycle, being a very physical business, it takes a long time to make that happen.

By the way, that is not over in North America but the denominator in North America, the size of the business is so large, and you can only sell so many and you can only move so much in a year, we'll continue growing it but it's not going to move the dial on growth rate.

But International and in particular -- you've got to break International in a couple components.

There are more mature markets that look like Internet -- look like North America, UK being a good example.

There are others who are maybe 10 years from looking like North America but they will get there.

There are also markets, emerging markets as we broadly categorize them, and that would be in obviously BRIC, but it would also be in Eastern Europe and Latin America and places like that where the markets have got 20 to 25 years of their pent-up demand of outsourcing and those trends are beginning to happen.

We built the footprint so our strategy looking forward now that we have the portfolio in a position that we think is rationalized, is to continue to drive to capture that conversion over the next 25 years and that will be more and more a contributor to Iron Mountain's growth in the future as we go forward.

Obviously, it doesn't make sense to do that unless you're making money at it.

So the second big element of our strategic review, we said, all right let's step back and look at that portfolio and put in the kind of programs and the kind of work we had done in North America to drive up their margins 850 basis points and drive up our international markets.

We set a target of 700 basis points, challenged the team and said by 2013 we want 700 basis points from you.

They rose to the occasion, made the commitment and last year delivered 220 basis points of that target and are on plan to do 150 to 200, give or take, this year.

And are working on their plans and those plans are in the book, are in the bag.

Not that I've executed but the plans are in the bag and they're working on their plans for 2013.

I'm very pleased by the performance.

I'm very pleased by how fast we were able to take that business and frankly, reveal the real value we created.

It was a case where I personally never had a doubt about the value but it's also a case as what I said in the beginning out here, we had lost touch with you as our shareholders.

We had not done a good job of showing it to you fast enough, nor getting you to understand that it was there.

I personally think we're doing a good job of that right now.

I hope you do too.

Net of all that is international, based upon their strong growth and margin accretion, returns on invested capital, grew up to 8% north of our weighted average cost of capital and we've got significantly more to come.

So, I think it's a great story there.

Now let me move on to the third element of the strategy.

That element was a real strong focus on capital allocation.

It's the right time of the Company's life to do that.

This Company has billed as a capital consumer.

We raised capital for many years in order to build out this global leadership of a great business.

But you do that waiting for the day in which your capital needs are less than your capital generation and the capital capability, so to speak, and we've hit that inflection point.

Then it becomes as you all know, the big argument of what are we going to do with it?

Are we going to give it to you or are we going to throw it away?

And many of you worry that we as Management will be stupid things and throw it away.

Again, we probably didn't do a good enough job explaining to you that we weren't stupid.

But -- and some of our performance I can understand from your perspective, particularly in the digital business, you were worried that we were going to do stupid things and that we were going to go spend billions of dollars buying technology assets.

Regardless of what may have been said from time to time that may have given you that impression, the truth of the matter is we looked hard at all those opportunities and concluded that it did not make financial sense to Iron Mountain and we had more financial discipline to that.

That's also what led us to conclude that getting out of the digital business, which I believe in the long run still would have been a great thing to be in, but getting out of the business was the right thing to do because we could not get big enough fast enough, given the pace at which the business was starting to move around us and nor were we willing to pay the prices that others were willing to pay in those markets.

We couldn't make it make sense in our business.

Having said that, look, we are being transparent about how we think about capital allocation and there will be more to come on that.

But in April, what we announced was basically a plan to distribute $2.2 billion over three years to the term of our 3-year plan back to our shareholders, and one of my first mistakes in that plan is I committed an absolute date for the first $1.2 billion.

Mistake being not giving you the money.

I just wished I hadn't put exactly a hard date on it because as soon as I said it and it came out of my mouth, I realized I was constrained about at what price I had to do certain things.

That took away some of my flexibility which I don't like to have happen to me.

But nevertheless, we did it anyway and so through a combination of increased dividends and share buybacks, through year-end we've distributed $1.2 billion and we will complete that commitment with our next annual -- our next quarterly dividend payment.

Through last year we bought in 38 million shares or about 18% of the total shares outstanding.

We did that through a combination of the proceeds of the sale of the digital business, we took those proceeds and returned them back to shareholders, increasing leverage from an all-time low, down under 3 times, up to about close to 3.5, about 3.4, currently close -- in our range of 3 to 4 times sort of thing.

And we went to the market and raised some more high yield in order to fund that leverage and of course as I've said, out of our free cash flow.

So we're on plan to do that.

The next $1 billion we're on plan.

We've got two more years.

We don't have quite as hard a timetable as I put on the first $1.2 billion.

So we might take a little more flexibility of how we give it back to you, but we're on plan, assuming nothing changes out there in the future.

The fourth element which could create that change, okay, is to look at structural alternatives.

At this stage of the business, as I said, when you've reached that point at which you have excess capital and it's always a question of the right way to allocate it, we wanted to look at are there structural alternatives of ways of allocating capital and distributing capital back to our shareholders including obviously, a conversion to a REIT is one of them that would create more efficient, that is tax efficiency by and large, to distribute this capital back to you as our shareholders.

At the Board level, we created a special committee.

That special committee's been working hard and diligently.

We, again put a target date, I think it's June 9, in which we would come back and communicate to the market the results of that special committee work.

We will meet that target and that's all I'm going to have to say on that subject today.

So those are the four elements of our strategy.

As I said, it's focused on refocusing our business back on our core.

The core is running well.

It's about refocusing, making sure, not that we ever did not have a focus on return of invested capital, by the way, but sharpening that focus and making sure you understand how we think about that focus on returns.

Focusing on capital allocation.

Capital allocation is something we've done but this is the time to think about it in a different way because historically our capital allocation was we needed more capital to grow the business.

That was a pretty easy decision.

Okay?

But now we have choices and we have to make sure we make those choices appropriately.

Then last thing as I said, make sure looking forward, given how we see the business, continuing to grow and the cash generation capabilities, looking forward to how we distribute that capital to you in the most efficient manner.

So that's a summary of our change of business strategy.

We've been pretty busy, as you might imagine, and we're going to stay busy for a long time to come and I think we've made outstanding progress.

By the way, I think I really do want to commend the management team for a couple of things.

First, they welcomed me back, which I appreciate a lot and they put their heads down and they're working really hard.

Second is, we not only did all this work, we're delivering good financial performance across the board.

So it was a good year.

I don't care how you cut it, it was a good year.

A couple last topics.

I do want to talk a little about return on invested capital because as we do all this work, we make changes, we study things, we think hard, we listen to some of you, we've made some internal changes I think we want to share with you a little bit.

Many of you often ask me when on out on the road, so how do we think about returns?

How do we incorporate returns into compensation?

Well, first is, it's always been in my compensation for those that know me, you realize I'm a rather large shareholder and as a rather large shareholder, first and foremost I want return on my capital.

By the way, I invested money to get that capital.

It was not stock option granted.

It was my money, checks written, debt taken on and so forth.

So I take the issue very seriously, I always have, I always will.

But in addition to that, as a management tool, we have and we started in 2011 and we've expanded some in 2012, incorporated return on invested capital into our incentive compensation programs for our senior leaders.

We only deal with it at the very senior level because the way we operate the business is we control capital centrally.

We think about Iron Mountain as a very distributed operating Company and you think about a few people at corporate as a banker and you have to make your case to the banker.

You have to make your return case.

You have to make your business case before the bank will give you any money.

We want to sweep account on your operation so we take all your cash away from you every day.

If you want anything back you have to come ask for it.

With that method of control and so forth, we control the return decisions at the central level.

Some people say, well don't you want all your field managers around the world thinking about return on invested capital?

No, I don't, and I'll tell you why.

I don't want them thinking about it because there's a lot more business out there and I want them to go get it, and they can't spend money the way we're structured without asking and we know how to give them the right answers.

Okay?

Second is, I know when you run a broad geographic business, spread all over the world like ours, if I incentivize somebody on return on invested capital, the easiest way to get return on invested capital is to avoid spending capital and maintaining your business.

Put off until next year or five years out when you don't care if you're in the job, maintaining the business, protecting the customer assets, protecting the brand, yada, yada ya.

I know it.

I know how I could do it.

I know how they could do it.

What I want them to do is I want to see a long list of projects.

I want them asking for everything.

I'm happy to weed through a long list of projects and say no to a lot.

Rather than having them weed through it and never even showing us the stuff that, frankly, could be damn important to the business.

So we think we've got it balanced right.

It is we think an appropriate level to the Company and it's important.

So how do we calculate it?

As we started to broaden that we realized that some traditional methods and some we used even in our plan, didn't work very well because when you try to divisionalize it and localize it, which we do want to do.

We want to know what we're doing in different parts of the world and everything else, it doesn't make very sense.

So we've taken an owner's earnings approach.

I'm sure you can call Stephen later if you don't get this and write it down.

So I won't go too slow.

But the numerator is the NOPAT plus depreciation and amortization, less non-growth CapEx; okay?

Non-growth CapEx, we think is a better indication of cost to sustain the current business than depreciation, which is the product of our prior investments and long-lived assets.

You can see non-growth CapEx broken out in our 10-K reportings, so all the details out.

You can do the same math we're doing, in effect.

The denominator is average invested capital, and it's adjusted to align with the same methodology and calculation of the numerator.

These we believe are the cash returns we generate an investment that we'd have made in the business and to give you a sense of that, in 2011, calculated this way the ROIC of the Company increased from 10.7% in 2010 to 11.4% in 2011.

The other thing we do is everything -- every investment that comes up to our so-called bank to be funded has to be viewed against a WAC plus a premium and that premium is in line with the risk inherent with the project and investment.

Some investments are no-brainers, they're pure math and some investments have got a lot of risk in them and you've got to have a different risk premium based upon where it is and that goes for geographies, it goes for a variety of other elements.

So I think we've got actually a quite robust way of doing that and I share that with you because enough of you ask me questions when I'm on the road.

I'm making sure I'm giving everybody the same answer so that everybody understands it the way we think about it.

So before I -- let me move on to the last subject I've got before I turn it over to Brian.

Let me comment on the outlook and our guidance.

Here is clearly -- we think the operating performance for this year, 2012, will reflect the same business fundamentals as last year.

Growth is expected in line with last year.

And you should see some improved margins coming from International.

The changes to recycled paper prices and even fluctuations with FX, particularly with what's going on in Europe these days, will likely cloud this operating performance on a reported basis.

We forecast both paper and FX off of current rates, current market rates and are transparent when we report to you both on the up and the down.

They go both ways.

But given the deterioration of current market rates most recently and, in particular, since our preliminary guidance late last year, we are updating our guidance based upon current rates.

Any positive change to these rates could provide a positive upgrade.

Of course a negative change will go the other way.

In this case we believe on paper, which is the biggy here, we believe it's stabilized, but I'm not guaranteeing that.

We actually do believe it's asymmetrical from a risk perspective, that is that there's a better chance of it going up throughout the year than going down from it.

If that happens, there will be upside to the outlook and the forecast.

And again, we will not attempt to cover, if there are operating performance shortfalls even on a reported basis, maybe paper could cover it.

We'll make sure you see it.

We'll make sure that it's clear what's coming from where.

So with that said, let me turn it over to Brian who will brief you on all the rest of the details and then we'll come back and take your questions.

Thanks, Richard.

I'll do a review today of the fourth quarter and full-year 2011 performance and provide an update on our outlook for 2012.

Slide 3 highlights the key messages from today's review.

Our business performed well in Q4, delivered consistent results that capped off a year of strong financial performance.

We had results that were again supported by solid storage revenue growth and continued profit improvement in our international business.

Reported revenue for Q4 was 2% with consistent trends compared to recent quarters.

Storage revenues increased 4% on a constant currency basis, supported by consistent 3% internal growth.

Service revenues were flat to last year on a constant currency basis as strong gains in hybrid services and benefits from higher commodity prices were offset by a continued softness in North American core service activity levels.

Profit performance was in line with our expectations after adjusting for Italy.

The results were again supported by strong gains in the International segment.

Adjusted OIBDA margins for the International segment increased more than 200 basis points compared to 2010, both for the quarter and the year.

That's keeping us squarely on track to achieve our margin improvement goal of 700 basis points of improvement by the end of 2013.

Adjusted OIBDA for the quarter of $237 million included an $11 million benefit from the reclassification of our Italian business to Discontinued Operations.

Adjusted EPS was $0.33 in Q4, and $1.31 for the full year.

For the full year we drove 4% revenue growth and continued strong free cash flow.

Free cash flow was $458 million in 2011, supported by higher profits, lower interest costs and record capital spending efficiencies.

Free cash flow also benefited from low cash tax payments reflecting prepayments we made in 2010 and benefits from US tax incentives in 2011.

We also benefited from high year-end capital spending accruals related to the timing of projects in the fourth quarter.

These factors will normalize in 2012, which I'll speak to in more detail when we review our 2012 outlook.

As Richard noted, we achieved key milestones in 2011 as part of our 3-year strategic plan.

We continue to expand our international operations while improving returns, resulting in a 25% increase in International adjusted OIBDA.

We also paid out $1.1 billion against our initial $1.2 billion shareholder payout commitment and expect to complete this phase of our program with the next quarterly dividend payment in April.

We're well positioned to advance our strategic plan and we'll be providing an update on our 2012 guidance today.

Our operating outlook for 2012 hasn't changed from when we spoke to you last October.

We continue to plan for 1% to 3% internal revenue growth, excluding the impact of lower paper prices, supported by sustained storage internal growth of 3%.

We are revising our guidance to reflect current commodity prices.

Since issuing our preliminary 2012 guidance last October, paper prices have declined an additional $50 per ton.

Current paper prices are now more than 30% below average levels seen in 2011.

At these levels, we project that our revenue and adjusted OIBDA will be about $45 million lower in 2012.

Let's now turn to slide 4 and begin the review of our financial results.

Slide 4 compares our results for this quarter to the fourth quarter of 2010.

Overall Q4 was a good quarter with results as expected after adjusting for Italy.

Enterprise revenue growth was 2% on a constant currency basis supported by 1% internal growth and benefits from acquisitions.

Enterprise revenue gains reflect sustained storage revenue internal growth of 3% and global expansion of hybrid and services.

Records management storage volume increased 2% on a global basis compared to 2010 with consistent pricing trends.

Year-on-year gains in recycled paper revenues and higher fuel surcharges also supported overall revenue growth.

These gains offset continued pressure in North American core service activities and lower revenues from shredding and other services such as fulfillment, film and sound and consultant.

From a segment perspective, North America posted (inaudible - technical difficulty) storage internal growth.

Service revenues were down 4% in Q4 in North America.

Service growth continues to be constrained by reduced retrieval and refile, transportation and data protection handling activity.

These impacts more than offset strong gains in hybrid revenues and benefits from higher recycled paper revenues and fuel surcharges.

Our International segment posted 9% revenue growth on a constant currency basis supported by 6% internal growth and 3 points of growth from the Polish acquisition completed in early 2011.

Storage internal growth remains strong at 6%, supported by solid growth in Europe and sustained double-digit gains in Latin America and Asia-Pacific.

These gains were augmented by expansion in hybrid service revenues.

Gross profit was $427 million in Q4 yielding a gross margin of 57.5%, down 190 basis points from Q4 of last year.

Included in gross profit in Q4 of 2011 is a $12 million reclassification from SG&A expenses to cost of sales to align certain costs, primarily related to our scanning operations, across the enterprise.

Excluding this reclassification, our gross profit margin for the quarter was in line with prior year levels.

Storage gross margins were consistent year-over-year.

Service gross margins excluding the $12 million reclassification were down slightly, primarily due to higher incentive compensation expense and a shift in business mix towards the lower margin, less capital intensive, hybrid business.

Adjusted OIBDA was $237 million or 32% of revenues.

Strong performance in our International business more than offset planned increases in North America sales and marketing expense and higher incentive compensation expense compared to low levels in 2010.

The reclassification of Italy to Discontinued Operations was also a positive factor.

Below the adjusted OIBDA line, depreciation was $76 million, and amortization was $8 million.

Adjusted EPS for the quarter was $0.33 per share.

Reported earnings per share of $0.26 includes additional impairment charges in the Western European reporting unit, $3 million of other expense, and the net impact of discrete tax items.

Our structural tax rate for the quarter was 38%, slightly lower than expected, due to the reclassification of Italy.

Our effective tax rate for the quarter was 47% and included the impacts of the International impairment charges, foreign currency losses and adjustments to deferred taxes.

Let's now take a closer look at our revenue growth on slide 5.

Slide 5 breaks down our overall revenue growth.

It shows internal growth by major service line as well as the impact of acquisitions, divestitures and foreign exchange for Q4 and the full-year.

Our internal growth finished the year within our expected full-year ranges, highlighted by solid storage internal growth of 3%.

The strengthening of the US dollar in the fourth quarter resulted in a decrease in reported revenues of approximately 1%, and reduced the positive impact of foreign currency on our full-year growth rates.

In terms of our Q4 results, overall reported revenue growth was 2%.

Storage internal growth remained solid at 3% reflecting consistent underlying trends.

North America reported 2% internal storage growth and International storage internal growth remained strong at 6%.

Net global records management volume was 2%, again on a year-on-year basis in Q4, reflecting continued strong gains in International and modest year-on-year growth in North America.

Service internal growth was minus 1%.

Core service internal growth was flat in the quarter.

We saw benefits from higher fuel surcharges and strong growth in hybrid services.

As noted, we did see, however, continued pressure on core service activity, particularly in North America which offset these gains.

We also saw lower revenues from other core services such as shredding and recurring projects in Q4.

We expect that overall core service growth will remain constrained in the coming quarters.

Complementary service revenues, which represent about 12% of total revenues, decreased 5% internally in the quarter.

Results reflected reduced benefits from recycled paper revenues due to lower paper prices, and lower revenues from other complementary services such as fulfillment, film and sound and consulting.

Let's now turn to slide 6 to review our full-year results.

As noted 2011 was a year of strong financial performance in which we achieved our financial objectives.

For the full year, revenue increased 4% to $3 billion, gross profit also increased 4% to $1.8 billion or 58.7% of revenues.

Excluding the reclass from SG&A I discussed earlier, 2011 gross margins were up modestly over 2010.

Adjusted OIBDA grew 2% year-over-year, excluding the $15 million of costs associated with the proxy contest.

As expected, adjusted OIBDA growth has been constrained by planned investments in North America sales and marketing in 2011 and higher levels of incentive compensation compared to low 2010 levels.

Adjusted EPS was $1.31 per share including a $0.05 impact from the $15 million of costs related to the proxy contest.

Excluding these impacts, adjusted EPS was up about 6% for the year, reflecting lower interest expense and the benefit of fewer shares outstanding.

2011 capital spending was $198 million, excluding $20 million for real estate.

As a percent of revenues, CapEx excluding real estate was 6.6%, down 130 basis points from 2010 levels.

2011 was the fifth consecutive year in which we reduced CapEx as a percentage of revenues.

Free cash flow from Continuing Operations for 2011 was $458 million, up 24% from last year's levels.

As noted, solid profit performance including lower interest expense and improved capital efficiency were fundamental drivers of the increase.

Our cash tax payments were also low at $96 million in 2011.

We benefited from prepayments made in 2010 as well as temporary US tax incentives.

Finally, we benefited from the timing of some of our Q4 capital expenditures resulting in an unusually high year-end accrual.

This accrual will reverse in Q1 and is expected to reduce free cash flow by about $20 million in 2012.

Let's now turn to slide 7 to review our results by segment.

Slide 7 shows full-year key metrics for each of our three segments compared to 2010.

Consistent with our 3-year strategic plan, we're sustaining high returns in our North American segment as we build momentum in our International segment as a significant driver of profit and cash flow gains.

North America continues to deliver high profits and strong cash flows.

In 2011, our North American business segment posted 2% reported revenue growth and achieved its planned adjusted OIBDA margin goals, while absorbing approximately $20 million of the incremental sales and marketing investment to sustain the revenue annuity.

Adjusted OIBDA margins were effectively flat at 43% as the return of incentive compensation to more normal levels in 2011 reduced reported margins by approximately 100 basis points.

Our International segment continues to post solid revenue growth and strong adjusted OIBDA and cash flow gains.

Our International business reported strong 7% constant dollar revenue growth in 2011, driven by 9% constant dollar storage revenue gains.

Adjusted OIBDA increased 25% or 19% excluding FX impacts, keeping us on track to achieve our adjusted OIBDA margin expansion goal of 700 basis points by the end of 2013.

These gains were driven primarily by realized benefits of operational excellence initiatives in our UK business.

We're targeting continued strong improvement of 150 to 200 basis points in international margins in 2012, supported by operational improvements in markets outside of the UK and profit gains in expansion markets.

The increase in corporate expenses primarily reflects $15 million of one-time costs associated with the proxy contest.

Overall we continue to deliver strong operating performance across our business which is driving sustained strong cash flow.

This performance is supporting large shareholder payouts.

Let's now turn to slide 8 to review our stockholder payout program.

Slide 8 shows the substantial progress we've made in returning funds to stockholders over the past two years.

Since first announcing our plans to return cash to shareholders in February of 2010, we've returned nearly $1.4 billion to stockholders, comprised of $250 million of dividend payments and the repurchase of 38 million shares for more than $1.1 billion.

As Richard noted, the 38 million shares represents more than 18% of the shares we had outstanding at the end of 2009.

As part of our 3-year strategic plan presented in April 2011, we committed to $2.2 billion of payouts through 2013, including $1.2 billion by May 2012.

As part of this commitment, we increased our quarterly dividend again to $0.25 per share last June.

As of year-end we returned more than $1.1 billion of our initial $1.2 billion commitment and we expect to complete this phase of our program with our next quarterly dividend payout in April of this year.

In Q4 we acquired 14.7 million shares for $440 million.

Between January 1 and February 17 we acquired an additional 1.1 million shares for $35 million.

As of February 17, we had $66 million remaining on our existing $1.2 billion share repurchase authorization.

Our strong cash flow and financing capacity have us well positioned to deliver our payout commitments.

Let's now turn to slide [5] to review how we're managing our balance sheet to fund our business and support our payout strategy.

Substantial gains in cash flow generation have enabled us to maintain a strong balance sheet.

As planned, we increased our leverage by approximately 0.5 a turn in support of our stockholder payout program.

In September of 2011 we issued $400 million of 7.75% senior subordinated notes due in 2019.

Currently, our consolidated leverage ratio is 3.4 times, near the midpoint of our target 3 to 4 times leverage range for our Company.

Our debt portfolio at December 31, 2011 remains long and fixed.

Our weighted average interest rate was 6.9%, and we were 83% fixed at year end.

Maturity is more than six years with no meaningful repayment obligations until 2014.

We're well positioned in terms of cash and financing capacity.

At year end, liquidity was more than $800 million with $180 million in cash and $623 million in additional borrowing capacity.

That concludes our review of the Q4 and full-year 2011 results.

Overall, our business continues to perform well.

Our financial performance was solid as expected.

And we're well positioned for 2012.

Let's now turn to slide 10 to begin a review of our 2012 outlook.

Slide 10 highlights key factors supporting our current outlook for 2012 financial performance.

As context, we reviewed our preliminary guidance for 2012 in October.

At the time, we noted that paper pricing was quite dynamic and we would update our outlook on the year-end call to reflect any changes.

Today we are updating our preliminary 2012 outlook to reflect current paper pricing levels.

Paper prices continued to fall through the end of 2011 and at current market levels, paper pricing is now 32% below average levels seen last year.

At these levels, this will reduce 2012 revenue and OIBDA growth by $45 million, or 2% and 5%, respectively.

Paper pricing can fluctuate and we've seen some improvement in market pricing early this year.

We've incorporated current lower pricing levels into our full-year outlook.

If paper prices continue to improve we would expect positive flow-through to our projected 2012 revenue and profits.

Excluding paper price impacts, our guidance is consistent with our preliminary outlook, reflecting expectations for consistent revenue growth trends in our business.

We're targeting 1% to 3% internal revenue growth ex paper in 2012.

We've included a schedule that breaks down our growth projections by revenue type in the appendix to this presentation.

We expect a sustained storage growth of about 3% supported by strong International gains of 5% to 6% and continued moderate growth in North America.

Overall, service internal growth is expected to be relatively flat.

We're planning for a continued soft trends in North American core service activity which will offset strong target growth in hybrid services.

We're also targeting solid underlying gains in adjusted OIBDA supported by continued International margin improvement and sustained high returns in North America.

Let's turn to slide 11 to summarize our 2012 outlook.

Excluding the impact of paper prices, we're expecting revenue growth of 1% to 3%, and adjusted OIBDA growth of 1% to 5% on a constant currency basis.

Our outlook for 2012 does not include the impact of any potential future acquisitions.

Acquisitions added about 1% to our growth in 2011.

On a reported basis, this outlook supports revenue guidance of between $2.965 billion and $3.045 billion, and adjusted OIBDA of $890 million to $930 million.

Included in our adjusted OIBDA outlook is about $3 million of estimated costs we expect to incur in the first half of this year related to the special committee finishing their work.

Adjusted EPS is expected to be in the range of $1.20 to $1.36.

Our calculation of adjusted EPS assumes a structural tax rate of 39%, and 172 million shares outstanding.

We're planning for relatively flat capital spending of $215 million including about $25 million for spending for real estate.

At midpoint revenue estimates, this will result in a further reduction of capital spending as a percentage of sales, consistent with our strategic plan goals.

Our outlook is for solid free cash flow performance in the range of $320 million to $360 million.

This outlook includes an estimated $20 million negative impact from the flow-over of high year-end capital accruals in 2011, as well as the estimated $45 million impact from current low recycled paper price levels.

Normalizing for these factors, annual free cash flow would be in the $400 million range.

Our cash forecast incorporates about $30 million of higher interest costs related to our increase in leverage to support the $1.1 billion of shareholder payouts in 2011, as well as expectations for higher cash tax payments compared to low 2011 levels.

Based on our outlook for 2012, we expect our return on invested capital to be in the range of 11%.

In summary, 2011 was a year of solid financial performance.

We achieved several key milestones in our 3-year strategic plan.

Our business is performing well and we're well positioned for 2012.

Thank you.

We would now be happy to take your questions.

(Operator Instructions) Andrew Steinerman, JPMorgan.

I wanted to ask about the 2012 OIBDA growth.

I understand from your comments that you're expecting 1% to 5% constant currency growth without the effect of paper.

Looking back to October, I believe you were looking for 1% to 5% constant currency growth in OIBDA for 2012 with the paper effect.

Could you help bridge that for us?

Just normal end of year refinements, Andrew.

I don't see that as a material change.

We're just firming up the plan and basically on a year-over-year basis we're seeing the benefits from the international margin improvement and some of the one-time lapping benefits being offset by the paper declines.

So it's relatively consistent with where we were.

Yes, Brian if you could say it a different way, we're now expecting paper prices to be a 5% drag to OIBDA.

Back in October, at the paper prices back in October, what would have the drag been for 2012?

It would have been about 0.5 that.

Kevin McVeigh, Macquarie.

I wonder if you could give a sense, Brian, if I have it right looks like the EBITDA impact from paper is about $45 million but the overall EBITDAs only coming down $25 million.

I wonder where the offset is there, number one.

Then number two, the free cash flow looks like it's declining $40 million versus overall EBITDA of $25 million.

Could you just help us reconcile that?

Yes.

No, on the paper question, we had some of the impact baked into the preliminary guidance.

So it's basically the same question Andrew just asked.

We had about 0.5 of it baked in when we talked to you in October and it came down another $50 a ton.

On free cash flow, I know there's a lot of movement there.

The way -- one way to think about this is if you look at 2011, we had $458 million.

Normalizing that, we were really about $400 million.

We had a $20 million of benefit in 2011 from year-end capital accruals, basically the timing in Q4 where the cash didn't go out the door until just after year-end.

And we also had some benefits from higher pre-cash tax prepayments we made in 2010 which benefited this year.

If you reduce the $450 million, you're closer to the $400 million range.

When you move forward to 2012, our mid-point is $340 million.

That's dampened by that $20 million capital carryover which is more one-time and it's also dampened by the paper impact of $45 million.

So when you normalize for that it gets up more into the $400 million range.

The one thing we did try to highlight is in 2012, keep in mind, we are going to have some impacts from the higher interest levels, we borrowed money to fund the shareholder payouts.

That's about a $30 million year-on-year pre-tax impact.

That pulls the number down a bit.

That's super helpful.

Then can you just give us the actual assumptions for shredded office paper pricing you used in 2012 and what the average was in 2011?

Yes.

The market pricing average in 2011 was in the $230 million range, and we're using the current paper price which is $155 a ton.

It was a little below that starting the year.

It was $138.

So we had a month there of -- our actual realized pricing tends to lag a bit.

We contract off of indexes with suppliers so we're not out dealing with the spot market and we didn't really see the negative impact of the decline at the very end of the year.

We're starting to see that flow through in the early part of the year.

You use that kind of drop of $75 a ton plus some of the carryover impact, that's how we get to the $45 million estimate.

Super helpful.

Then if I could just a third quick one.

In terms of the REIT, I know we'll get a decision by June 9, I just want to get a sense of what the main factors are going to drive whether we pursue that or not, number one.

And then number two, how does that impact the leverage of the Company overall on a go forward basis as you think about if you were to pursue it and you're thinking about the capital structure as a result of that.

Kevin, I'll try to take that.

Look, I think your question is how would we think about -- I think your question is how do we think about the REIT?

Is that correct?

Yes.

All right.

Look, we could spend all day on that.

I'll just say a few things about it.

We are at a point where we're getting close to the June 9.

I want to make sure people are not reading anything I say either way.

First thing I'm going to tell you, it's about the most complicated Rubik's Cube I've ever seen.

It's one of the most intellectually interesting problems I've ever seen by the way too.

Having said that, we're working very hard at it and with a positive hypothesis, to see if it can be made to work or not.

But you also have to understand, the REIT itself is only valuable if it can be done in a way that doesn't -- as I've used in a colloquial fashion, the phrase is don't kill the goose that lays the golden egg.

This is a goose with a long duration and the value of our Company is maintaining the duration.

And to maintain the duration you have to have a certain level of flexibility of how you operate and some ability to reinvest capital to grow the business and so forth.

So it's a trade of going for tax savings against balancing that and as so is related with a lot of technical complexities, IRS complexities, operational and so forth and so on.

It's not like you go from A to B, make your decision and walk away.

It's just not that easy.

I wish it were because we'd be done by now and to be frank with you, it's consumed a lot our time and energy and a lot of focus of a lot of senior people in the business.

In terms of what the REIT would do to leverage, there's all kinds of scenarios.

The next question you have to ask yourself if you operated as a REIT what does it do to your strategy?

Do you change your strategy?

How does that change?

And so forth.

It's again, too early to make a comment on that.

We would expect that before June 9 or maybe I even say before our own June 9 because I don't exactly know when we will actually get it finished.

Or said another way, when we do come forth with a decision we will try to predict and answer as many of the questions that you guys have now either if we say we're going to pursue being a REIT, we'll try to be very clear and precise.

If we say we're not, we'll try to do the same thing.

That's helpful.

Thanks Richard.

At the June 9, how long after if you try to pursue it would you ultimately get a decision from the IRS?

Is it a one year or two to four quarter?

It could take up to a year.

Okay.

Easily.

Gary Bisbee, Barclays Capital.

I guess Richard, how should we think about the lower activity levels?

Is this something that is cyclically driven at this point or do you see more secular pressure on that than you've seen in the past and is there any prospects for that getting better or should we just think about these much lower activity levels being the norm as we go through the next couple of years?

I think by and large -- and this a little bit varies by geography.

You go to certain parts of the world, we're having very high activity levels.

I think some of it is secular.

Clearly in the healthcare space which is a key component that's driving it, as I said, that is a modality shift and a real shift that's pretty unusual and that will take some years for that to roll through.

In the data protection, tape rotation side, again, as customers install more technology to mirror themselves, they continue to use tape as a fail safe against their infrastructure and so forth as well as archival.

But it's less active kind of pattern and so forth.

I think we're going through over quite a bit of time, have been for quite a few years, as some of this does resize itself.

I do think our service from relationship to storage is going to resize itself.

You notice the storage is chugging along really quite well.

Customers continue to generate information and they continue to need to keep it and maintain it, regardless of how they access it.

But yes, we are planning and assuming we're going to see those service headwinds for quite some time.

Okay.

And then I was intrigued by the quick commentary on the last 20 years, the move of legacy records off-site in North America, the next 15 or 20, you said same thing happening in some of these more growthy markets.

Is there any evidence or are you at all fearful that how this trend happens in some of the growth of your emerging markets will be different, meaning that they'll maybe use more technology and less physical documents, given that technology's available today, as those economies and industry in those economies grows or do you think the road map's going to look pretty darn similar to what you've seen in the last 20 years in North America?

I think it's going to look pretty darn similar for a couple reasons.

One is, a lot of the records that you generate and you bring off are legacy, they've already been created.

They've just got to get assembled and moved and organized and so forth and so on.

Places like Latin America, just growing like a weed both on storage and activity.

They're very technology savvy.

We do more technology service in Latin America, more complex things for our customers than we do anywhere else too.

There's a higher adoption rate of everything and I think, look, what really happens is when you've got great growing economies you get it all happening.

It's pretty simplistic stuff to think about, go where the world is going to be growing.

There's going to be a lot of information created, thrown out and need to be managed, need to be secured.

And just like in North America, the real trend that you've got to keep in mind is information was junk, 25 or 30 years ago that people kept just like you probably have an attic full or basement full, at least I do of stuff that you keep because you won't throw it away, information when I joined the business was that's the way it was looked at by everybody except pretty much financial services.

People didn't know why they kept it.

They just kept it.

And it has shifted to being a scenario where information is an asset.

That means the way you think about security, its chain of custody, it's processing, who sees it, yadda, yadda, yadda, go up, it has to be managed.

It has to be maintained.

That's going to happen in the rest of the world.

That trend I know is absolutely happening already.

And yes, there will be plenty more technology moving around.

The net of that, the issue of planning more technology moving around is some of our hybrid businesses in some of these emerging markets are booming faster than they are in our mature markets.

As I said, we do more complex work, we're more part of the chain of process of their business and everything else.

In a lot of respects, it makes it stickier too.

Okay, then just one follow-up.

Brian, I think you made a comment that average OIBDA had an $11 million benefit from moving Italy to Discontinued.

Can you just run through the math of that or maybe correct me if I heard that wrong.

No you didn't.

In 2011 it was a few pieces.

We have small operating losses in Italy.

We had restructuring charges that were related to the overall international improvement plan.

And we also had some costs related to the fire that we disclosed and talked about.

So the combination of those three in terms of the profit results in 2011 moving them to Discontinued Operations was about $11 million of losses.

That's not the run rate of the business.

Going forward we were targeting basically flattish kind of profit in 2012 and so there wasn't a benefit going forward.

But there was a fair bit of losses that we were incurring this year.

All right, so that's a full-year.

What was the number for the fourth quarter?

I don't have that right in front of me.

But a fair amount of those costs were in the fourth quarter.

We can follow up on that for you.

Operator, we're going to take one more call.

I have historically tried to promise to keep this to one hour.

I'm already five minutes over.

It's my fault because I talked 30 minutes of it.

So I will apologize now.

Plus, we look at the queue of who's calling and we're going to be on the phone with every one of you throughout the rest of day.

So we'll make sure we catch your calls.

But we'll take one more call for the group.

Thank you.

Andrew Wittman, Robert W Baird.

I wanted to dig a little bit more into the previous question and just look at the service trends.

I guess outside of healthcare we're already seeing some of the structural changes in that industry.

What are maybe the next couple of industries that make up a bigger portion of the service revenue and are you seeing secular challenges there as well?

Financial services is a big player.

I think in financial services, to be candid with you, it's a different trend.

Financial service is an early adopter of technology.

They adopted technology years and years ago of all types.

But they're also major creators of information including paper.

The big trend in financial services is, they over the last five -- at least five to seven years have really gone about organizing their physical programs, making sure they know what they have and getting rid of what they can get rid of and as you know they've gone through various cycles of litigation cycle, some of which they're still in.

And when they get in these litigation cycles they basically continue to accumulate documents but don't throw much away.

Then if they get a little breathing point between lawsuits and so forth and if their program is organized correctly and you have to be in both cases, they'll do some catch up destructions.

So financial services, what you've seen over the last few years is a dampening of growth in the storage side related to that trend of it will build up and then they'll do a lot of let's get rid of it, big destruction process.

You also by the way see that after they -- we talk about they right-size their program.

They get themselves caught up.

Then they grow along very nicely off of a lower base and so forth.

And so when you deal with as much of them as we do, every year or two you get a big activity like that.

So that's the big trend in financial services.

They have been relatively inactive for a long time.

Because they as I said are the extreme early adopters of technology on this front.

The healthcare is just a -- in a lot of respects it's just very unique.

You know maybe more than I do about healthcare.

A lot of money, the Obama healthcare plan, the headline was $44 billion.

I've been told it's going to be $80 billion, give or take.

They're going to try to get every health organization to be computerized.

There's carrots and sticks.

It's going to be interesting to watch happen.

But that's a lot of money to spend and that's not even -- that's not being spent to reduce a storage or an activity bill.

I wish we did have a percentage of that in the business.

But we will see the fallout as they totally change their work flow.

Not to zero but it's going to right-size, there's no doubt in my mind.

And by the way, we are in a case where the come down will be faster than the rise-up.

There's good opportunity for us in healthcare and the best thing to give you an example is the record type in healthcare that's dropped the fastest and continues and will drop the fastest as I said is physical x-rays because that's the case of real technology switch out.

Where they don't make them anymore, by and large.

They do it on CAT scans, MRIs and other things.

That's why we, a few years ago, started a digital business, digital record center for medical images.

We sold our digital business, we did not sell that product line.

We announced a partnership not too long ago with NetApp where we are their Cloud back end in that space.

Like all annuity businesses that you do from scratch, that will start very slowly.

But if you roll out over quite a bit of time, that's a patience level that I understand that many of you don't have but I've seen this movie many times, that will be a very nice business and that's just going -- it will be bigger than the x-ray business we have today.

It will be more profitable than the x-ray business we have today.

But we're going to go through a trough when one comes down and the other one rises, the come down rate is a lot faster than the rise rate.

It's just -- that's a fact of life.

Just to put some context around this.

I think Richard in the past and please correct me if I'm wrong but I think you said that healthcare represents something like 10% of your total revenues but it's disproportionately service based to your prior comments.

The total healthcare is bigger, a bit bigger but the highly active piece is smaller, in the 5% or less (inaudible) of the storage kind of business.

As a percentage of service though, what percentage does healthcare represent in 2011?

In all services for records management, it's probably more than 20% rate, it's a higher percentage because of the more active nature of some of it and as part of the overall business, it's somewhat smaller because we don't have the same kind of development in areas like data protection or also outside of the US.

That's a US kind of reference.

The other thing I would stress to you, look, anything can change but we've dug pretty deep and looked at individual customer behavior and what we do tend to see is an adoption curve, where a customer will adopt and their pattern will rapidly decline and then it will settle to a new level and then goes on.

All right?

And then of course what's happening is every month or whatever, new customers are hitting that adoption cycle.

And we probably could do a better job.

We just haven't slowed down to think about it and try to precisely guess how many years out this will run but it will run quite a few years.

It's a little bit every year.

There's a low probability this will just -- we'll wake up one day and it will drop like a rock.

I think it will just keep doing this for a while unfortunately or fortunately, whichever way you look at it.

I'm happy to keep it for a long time, we make money on it, on the other hand we'll be whining about it for some years.

That's helpful.

If you could, I just want to get a little bit better sense of the international growth rates, clearly a big driver of the business here and Richard you kind of talked about the denominator effect in North America.

I'm trying to understand a little bit better the denominator effect of your international markets.

Clearly, there's some very mature and some very growthy markets today.

If you could separate how much of your international business would be in that mature or slower growth rate versus the faster growth markets, just so we could get a sense of where you are on this long trend line.

Yes.

We're scrambling for a document which will tell us that.

You actually can find that on our website.

If you look at our [8-fold] strategy, we broke all that out and somebody's going to point to me.

All right Stephen, interpret these numbers for me quickly.

It's about 0.5.

It's about 0.5 in what we call mature leadership markets, which have a little better growth rate than North America and about 0.5 in emerging markets.

It's a little bit higher if you throw in --

(inaudible)

-- take basically UK and Western Europe, it's probably 60% or more.

Yes, maybe 64% --

Which looks a lot like the US in terms of the growth profile.

So as I said, we've run over which we try not to do but it's my long-windedness which I apologize for.

It was a good year financial performance as I said and a good year of change and I think the organization has adapted to change very well which we appreciate a lot.

We've got a lot of work ahead of us.

This REIT, no REIT capital allocation work that's ongoing, be candid with you, we've set a date.

It's such a complex Rubik's Cube, it is a difficult issue.

You turn over a rocks, you find more worms.

You turn over more rocks, you find more worms.

But we're working it really hard.

We're going to make the deadline one way or the other but we are focused hard on it and we appreciate your support and we look forward to seeing you as we're out on the road and many of you we'll talk to the rest of the day.

Thank you very much.

Thank you for your participation.

This does conclude today's conference call.

You may now disconnect.