UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q - ------------------------------------------------------------------------------- (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended MARCH 31, 2000 -------------- or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from _______ to _______ Commission file number 1-13045 ------- IRON MOUNTAIN INCORPORATED (Exact Name of Registrant as Specified in its Charter) Pennsylvania 23-2588479 ------------ ---------- (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 745 Atlantic Avenue, Boston, MA 02111 ------------------------------------- (Address of Principal Executive Offices, Including Zip Code) (617) 535-4766 -------------- (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Number of shares of the registrant's Common Stock outstanding as of May 5, 2000: 54,586,813
IRON MOUNTAIN INCORPORATED INDEX <TABLE> <CAPTION> <S> <C> Page ---- PART I - FINANCIAL INFORMATION Item 1 - Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets at March 31, 2000 and December 31, 1999 (Unaudited) 3 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2000 and 1999 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6-18 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 19-21 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 22 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K 22 Signature 24 </TABLE>
IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) <TABLE> <CAPTION> March 31, December 31, 2000 1999 -------------- -------------- <S> <C> <C> ASSETS Current Assets: Cash and cash equivalents $ 10,104 $ 3,830 Accounts receivable (less allowances of $10,801 and $5,740 respectively) 160,860 104,074 Deferred income taxes 13,695 12,475 Prepaid expenses and other 30,173 23,285 ------------ ------------- Total Current Assets 214,832 143,664 Property, Plant and Equipment: Property, plant and equipment 804,849 497,369 Less: Accumulated depreciation (107,076) (93,630) ------------ ------------- Property, Plant and Equipment, net 697,773 403,739 Other Assets: Goodwill, net 1,505,066 729,213 Customer acquisition costs, net 19,445 16,742 Deferred financing costs, net 18,662 16,549 Other 13,841 7,305 ------------ ------------- Total Other Assets 1,557,014 769,809 ------------ ------------- Total Assets $ 2,469,619 $ 1,317,212 ------------ ------------- ------------ ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 34,657 $ 9,890 Accounts payable 29,904 25,770 Accrued expenses 110,281 68,519 Deferred income 49,116 32,981 Other current liabilities 20,768 13,188 ------------ ------------- Total Current Liabilities 244,726 150,348 Long-term Debt, net of current portion 1,183,536 603,057 Other Long-term Liabilities 5,915 5,749 Deferred Rent 11,300 10,819 Deferred Income Taxes 27,615 16,207 Minority Interest 42,367 42,278 Shareholders' Equity: Common stock 544 369 Additional paid-in capital 991,629 560,620 Accumulated deficit (36,941) (31,558) Accumulated other comprehensive items (1,072) (1,193) Treasury stock -- (39,484) ------------ ------------- Total Shareholders' Equity 954,160 488,754 ------------ ------------- Total Liabilities and Shareholders' Equity $ 2,469,619 $ 1,317,212 ------------ ------------- ------------ ------------- </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3
IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, except Per Share Data) (Unaudited) <TABLE> <CAPTION> Three Months Ended March 31, --------------------------------- 2000 1999 -------------- -------------- <S> <C> <C> Revenues: Storage $ 124,939 $ 67,722 Service and storage material sales 87,198 41,649 ----------- --------- Total Revenues 212,137 109,371 Operating Expenses: Cost of sales (excluding depreciation) 104,458 54,435 Selling, general and administrative 53,457 27,875 Depreciation and amortization 26,303 13,595 Merger-related expenses 516 -- ----------- --------- Total Operating Expenses 184,734 95,905 ----------- --------- Operating Income 27,403 13,466 Interest Expense 23,783 11,944 Other Expense, net 781 -- ----------- --------- Income from Continuing Operations Before Provision for Income Taxes Minority Interest 2,839 1,522 Provision for Income Taxes 8,529 1,623 Minority Interests in (Losses) Earnings of Subsidiaries (307) 147 ----------- --------- Loss from Continuing Operations (5,383) (248) Income from Discontinued Operations -- 99 ----------- --------- Net Loss Applicable to Common Shareholders $ (5,383) $ (149) =========== ========= Net Loss Per Common Share - Basic and Diluted: Loss from Continuing Operations $ (0.11) $ (0.01) Income from Discontinued Operations -- -- ----------- --------- Net Loss Per Common Share - Basic and Diluted $ (0.11) $ (0.01) =========== ========= Weighted Average Common Shares Outstanding - Basic and Diluted 47,943 29,500 =========== ========= </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 4
IRON MOUNTAIN INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) <TABLE> <CAPTION> THREE MONTHS ENDED MARCH 31, ------------------------------------- 2000 1999 --------------- --------------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (5,383) $ (149) Adjustments to Reconcile Net Loss to Loss from Continuing Operations: Income from Discontinued Operations -- 99 ---------- ---------- Loss from Continuing Operations (5,383) (248) Adjustments to Reconcile Loss from Continuing Operations to Net Cash Provided by Operating Activities of Continuing Operations: Minority Interests in (Losses) Earnings of Subsidiaries (307) 147 Depreciation and Amortization 26,303 13,595 Amortization of Deferred Financing Costs 656 454 Provision for Doubtful Accounts 1,196 350 Foreign Currency Loss 781 55 Other, Net 747 -- Changes in Assets and Liabilities (Exclusive of Acquisitions): Accounts Receivable 1,068 (2,204) Prepaid Expenses and Other Current Assets 2,025 1,522 Deferred Income Taxes 10,447 1,566 Other Assets 298 (72) Accounts Payable (12,092) (8,545) Accrued Expenses (10,261) 2,611 Deferred Income (1,016) 614 Other Current Liabilities 50 -- Deferred Rent 481 340 Other Long-term Liabilities 2,725 (49) ---------- ---------- Cash Flows Provided by Continuing Operations 17,718 10,136 Cash Flows Used in Discontinued Operations -- (752) ---------- ---------- Cash Flows Provided by Operating Activities 17,718 9,384 CASH FLOWS FROM INVESTING ACTIVITIES: Cash Paid for Acquisitions, net of cash acquired (5,636) (54,489) Capital Expenditures (27,646) (18,293) Additions to Customer Acquisition Costs (3,356) (1,643) Other, Net (435) -- ---------- ---------- Cash Flows Used in Continuing Operations (37,073) (74,425) Cash Flows Used in Discontinued Operations -- (61) ---------- ---------- Cash Flows Used in Investing Activities (37,073) (74,486) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of Debt (203,267) (8,171) Proceeds from Borrowings 223,558 76,100 Debt Financing from Minority Shareholder 7,036 -- Debt Financing Costs (2,769) (238) Proceeds from Exercise of Stock Options 885 620 Stock Issuance Costs -- (4) ---------- ---------- Cash Flows Provided by Continuing Operations 25,443 68,307 Cash Flows Provided by Discontinued Operations -- -- ---------- ---------- Cash Flows Provided by Financing Activities 25,443 68,307 Effect of Exchange Rates on Cash and Cash Equivalents 186 (21) Increase in Cash and Cash Equivalents 6,274 3,184 Cash and Cash Equivalents, Beginning of Period 3,830 1,715 ---------- ---------- Cash and Cash Equivalents, End of Period $ 10,104 $ 4,899 ---------- ---------- ---------- ---------- </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 5
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (1) GENERAL The interim condensed consolidated financial statements presented herein have been prepared by Iron Mountain Incorporated ("Iron Mountain" or the "Company") without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair presentation. Interim results are not necessarily indicative of results for a full year. The condensed consolidated balance sheet presented as of December 31, 1999 has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to those rules and regulations, but the Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. (2) COMPREHENSIVE INCOME (LOSS) Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," requires presentation of the components of comprehensive income (loss), including the changes in equity from non-owner sources such as unrealized gains (losses) on securities and foreign currency translation adjustments. The Company's total comprehensive income (loss) is as follows: <TABLE> <CAPTION> Three Months Ended March 31, --------------------------------- 2000 1999 ---------------- -------------- <S> <C> <C> Comprehensive Loss: Net Loss $ (5,383) $ (149) Other Comprehensive Loss: Foreign Currency Translation Adjustment 121 (576) -------- ---------- Comprehensive Loss $ (5,262) $ (725) -------- ---------- -------- ---------- </TABLE> 6
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (3) ACQUISITIONS On February 1, 2000, the Company completed its acquisition of Pierce Leahy Corp. ("Pierce Leahy") in a stock-for-stock merger valued at approximately $1.1 billion. The total consideration for this transaction was comprised of: (i) approximately 18.8 million shares of the Company's common stock with a fair value of $444 million; (ii) approximately 1.6 million options to acquire the Company's common stock with a fair value of $25 million; (iii) assumed debt with a fair value of $585 million; and (iv) approximately $4 million of capitalized transaction costs. In addition, during the three months ended March 31, 2000, the Company purchased substantially all of the assets, and assumed certain liabilities, of two other records and information management businesses (including the acquisition of Pierce Leahy, collectively, the "2000 Acquisitions"). Each of the 2000 Acquisitions and all 17 of the records and information management businesses acquired during 1999 (the "1999 Acquisitions") were accounted for using the purchase method of accounting and, accordingly, the results of operations for each acquisition have been included in the consolidated results of the Company from their respective acquisition dates. In connection with certain 1999 and 2000 acquisitions, related real estate was also purchased. The aggregate purchase price for the 2000 Acquisitions was comprised of cash, the Company's common stock and stock options and the assumption of debt, and exceeded the underlying fair value of the net assets acquired by $787,902, which has been assigned to goodwill and is being amortized over 25 to 30 years. A summary of the total consideration and the preliminary allocation of the aggregate purchase price of the 2000 Acquisitions, as of their acquisition dates, is as follows: <TABLE> <CAPTION> <S> <C> Purchase Price: Cash Paid $ 10,212 Fair Value of Common Stock Issued 443,950 Fair Value of Stock Options 24,967 Fair Value of Debt Assumed 584,906 ------------ Total Purchase Price $ 1,064,035 ------------ ------------ Allocation of Purchase Price: Current Assets $ 68,331 Property, Plant & Equipment 281,476 Other Assets 16,612 Goodwill 787,902 Liabilities Assumed (88,765) Minority Interest (1,521) ------------ Total Allocation of Purchase Price $ 1,064,035 ------------ ------------ </TABLE> Allocation of the purchase price for these acquisitions was based on estimates of the fair value of net assets acquired and, for acquisitions completed in 2000, is subject to adjustment upon finalization of the purchase price allocation. The purchase price allocation of the Pierce Leahy transaction is subject to finalization of the 7
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (3) ACQUISITIONS (CONTINUED) assessment of the fair value of property, plant and equipment, operating leases, restricted common stock and deferred income taxes. Except for the Pierce Leahy acquisition, the Company is not aware of any information that would indicate that the final purchase price allocations will differ significantly from preliminary estimates. The following unaudited pro forma information shows the results of the Company's operations for the three months ended March 31, 2000 and the year ended December 31, 1999 as though each of the significant 1999 and 2000 acquisitions had occurred as of January 1, 1999: <TABLE> <CAPTION> Three Months Year Ended Ended March 31, December 31, 2000 1999 -------------- -------------- <S> <C> <C> Revenues $ 242,314 $ 887,927 Loss from Continuing Operations (7,560) (5,197) Net Loss (7,560) (18,356) Loss Per Share from Continuing Operations - Basic and Diluted (0.14) (0.10) Net Loss Per Share - Basic and Diluted (0.14) (0.34) </TABLE> The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisitions taken place as of January 1, 1999, or the results that may occur in the future. Furthermore, the pro forma results do not give effect to all cost savings or incremental costs which may occur as a result of the integration and consolidation of the businesses. Certain 1999 and 2000 acquisitions are not included in the pro forma results as their effect was immaterial. In connection with the 1999 and 2000 acquisitions, the Company has undertaken certain restructurings of the acquired businesses. The restructuring activities include certain reductions in staffing levels, elimination of duplicate facilities and other costs associated with exiting certain activities of the acquired businesses. These restructuring activities were recorded as costs of the acquisitions and were provided in accordance with Emerging Issues Task Force Issue No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." The Company finalizes its restructuring plans for each business no later than one year from the date of acquisition. Unresolved matters primarily include completion of planned abandonments of facilities and severances for certain 1999 and 2000 acquisitions. 8
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (3) ACQUISITIONS (CONTINUED) The following is a summary of reserves related to such restructuring activities: <TABLE> <CAPTION> March 31, December 31, 2000 1999 ------------- ----------- <S> <C> <C> Reserves, Beginning Balance................ $ 9,340 $ 10,482 Reserves Established....................... 7,094 4,234 Expenditures............................... (964) (4,843) Adjustments to Goodwill.................... (86) (533) --------- --------- Reserves, Ending Balance................... $ 15,384 $ 9,340 --------- --------- --------- --------- </TABLE> At March 31, 2000 the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($6.3 million), severance costs for approximately 59 people ($3.8 million) and other exit costs ($5.3 million). These accruals are expected to be used within one year of the finalization of the restructuring plans except for lease losses of $4.3 million, which are based on contracts that extend through the expected lease term date, and long-term severance contracts of approximately $3.6 million that extend through 2013. At December 31, 1999 the restructuring reserves related to acquisitions consisted of lease losses on abandoned facilities ($4.8 million), severance costs for approximately 12 people ($1.5 million) and other exit costs ($3.0 million). These accruals are expected to be used within one year of the finalization of the restructuring plans except for lease losses of $4.6 million, which are based on contracts that extend through the expected lease term date, and long-term severance contracts of approximately $1.1 million that extend through 2013. 9
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (4) LONG-TERM DEBT Long-term debt consists of the following: <TABLE> <CAPTION> MARCH 31, 2000 DECEMBER 31, 1999 -------------------------------- --------------------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE --------------- ------------- -------------- -------------- <S> <C> <C> <C> <C> Revolving Credit Facility $ 206,899 $ 206,899 $ 5,000 $ 5,000 10-1/8% Senior Subordinated Notes due 2006 (the "1996 Notes") 165,000 160,100 165,000 167,900 8-3/4% Senior Subordinated Notes due 2009 (the "1997 Notes") 249,616 220,600 249,606 237,500 8-1/4% Senior Subordinated Notes due 2011 (the "1999 Notes") 149,501 126,000 149,490 136,100 11-1/8% Senior Subordinated Notes due 2006 (the "1996A Notes") 133,467 135,803 -- -- 9-1/8% Senior Subordinated Notes due 2007 (the "1997A Notes") 113,548 104,180 -- -- 8-1/8% Senior Subordinated Notes due 2008 (the "1998A Notes") 119,578 101,043 -- -- Real Estate Mortgages 16,040 16,040 2,048 2,048 Seller Notes 17,093 17,093 -- -- Other 47,451 47,451 41,803 41,803 ---------- -------- Total Long-term Debt 1,218,193 612,947 Less: Current Portion (34,657) (9,890) ---------- -------- Long-term Debt, Net of Current Portion $1,183,536 $603,057 ---------- -------- ---------- -------- </TABLE> The estimated fair values for the long-term debt are based on the borrowing rates available to the Company at March 31, 2000 and December 31, 1999 for loans with similar terms and average maturities. The fair values of the 1996 Notes, 1997 Notes, 1999 Notes, 1996A Notes, 1997A Notes and 1998A Notes are based on the quoted market prices for those notes on March 31, 2000 and December 31, 1999. 10
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (5) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORS As of March 31, 2000, the 1996 Notes, the 1997 Notes, the 1999 Notes, the 1996A Notes and the 1997A Notes (the "Parent Notes") were fully and unconditionally guaranteed, on a senior subordinated basis, by all of the Company's direct and indirect wholly owned domestic subsidiaries (the "Subsidiary Guarantors"). These guarantees are joint and several obligations of the Subsidiary Guarantors. In addition, the 1996A Notes and the 1997A Notes are secured by a second lien on 65% of the stock of Iron Mountain Canada Corporation, the Company's principal Canadian operating subsidiary ("Canada Company"). The remainder of the Company's subsidiaries (the "Non-Guarantors") do not guarantee the Parent Notes. The Non-Guarantors consist of (i) the Company's foreign subsidiaries, including without limitation, Canada Company, Iron Mountain Europe Limited and their respective subsidiaries, (ii) a majority-owned subsidiary that owns and leases real property to the Company, and (iii) Iron Mountain Records Management (Puerto Rico), Inc. The 1998A Notes are general unsecured obligations of Canada Company, ranking PARI PASSU in right of payment to all of Canada Company's existing and future senior unsecured indebtedness. As of March 31, 2000, the 1998A Notes were fully and unconditionally guaranteed, on a senior subordinated basis, by the Company, the Subsidiary Guarantors and three of the Non-Guarantors that are organized under the laws of Canadian provinces. As with the Parent Notes, these guarantees are joint and several. Summarized financial information for the Company's Canadian subsidiary is as follows: <TABLE> <CAPTION> Two Months Ended March 31, 2000 ------------------- <S> <C> Revenues $ 9,716 EBITDA 2,649 Operating income 742 Net loss applicable to common shareholders (1,362) March 31, 2000 ------------------- <S> <C> Current assets $ 10,742 Total assets 145,192 Current liabilities 9,146 Long-term liabilities 126,937 </TABLE> 11
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (5) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON- GUARANTORS (CONTINUED) The following financial data summarizes the consolidating Company on the equity method of accounting as of and for the first quarter of 2000 and 1999: <TABLE> <CAPTION> MARCH 31, 2000 ---------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------ ---------- ---------- ------------ ------------ <S> <C> <C> <C> <C> <C> ASSETS Current Assets: Cash and Cash Equivalents $ 427 $ 3,611 $ 6,066 $ -- $ 10,104 Accounts Receivable 5,564 128,348 26,948 -- 160,860 Intercompany Receivable 169,413 (127,579) 30,025 (71,859) -- Other Current Assets 463 49,206 13,769 (19,570) 43,868 ---------- ---------- --------- ------------ ------------ Total Current Assets 175,867 53,586 76,808 (91,429) 214,832 Property, Plant and Equipment, net 84,907 500,906 111,960 -- 697,773 Other Assets: Due From Affiliates 415,728 -- -- (415,728) -- Long-term Notes Receivable from Affiliates 557,123 124,100 -- (681,223) -- Investment in Subsidiaries 388,160 53,469 72,372 (514,001) -- Goodwill, net 352,560 936,406 205,501 10,599 1,505,066 Other 18,103 27,721 6,124 -- 51,948 ---------- ---------- --------- ------------ ------------ Total Other Assets 1,731,674 1,141,696 283,997 (1,600,353) 1,557,014 ---------- ---------- --------- ------------ ------------ Total Assets $1,992,448 $1,696,188 $ 472,765 $(1,691,782) $ 2,469,619 ---------- ---------- --------- ------------ ------------ ---------- ---------- --------- ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Total Current Liabilities $ 17,254 $ 181,965 $ 136,936 $ (91,429) $ 244,726 Long-term Debt, Net of Current Portion 1,020,575 3,077 159,884 -- 1,183,536 Due to Affiliates -- 415,681 47 (415,728) -- Long-term Notes Payable to Affiliates -- 681,223 -- (681,223) -- Other Long-term Liabilities 459 47,170 (2,799) -- 44,830 Minority Interest -- -- (307) 42,674 42,367 Shareholders' Equity 954,160 367,072 179,004 (546,076) 954,160 ---------- ---------- --------- ------------ ------------ Total Liabilities and Shareholders' Equity $1,992,448 $1,696,188 $472,765 $ (1,691,782) $ 2,469,619 ---------- ---------- --------- ------------ ------------ ---------- ---------- --------- ------------ ------------ </TABLE> 12
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (5) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON- GUARANTORS (CONTINUED) <TABLE> <CAPTION> DECEMBER 31, 1999 ---------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------ ---------- ---------- ------------ ------------- <S> <C> <C> <C> <C> <C> ASSETS Current Assets: Cash and Cash Equivalents $ -- $ 2,260 $ 1,570 $ -- $ 3,830 Accounts Receivable -- 93,076 10,998 -- 104,074 Other Current Assets -- 42,312 6,718 (13,270) 35,760 ---------- ---------- --------- ------------ ------------- Total Current Assets -- 137,648 19,286 (13,270) 143,664 Property, Plant and Equipment, net -- 352,784 50,955 -- 403,739 Other Assets: Due From Affiliates 224,826 -- -- (224,826) -- Long-term Notes Receivable from Affiliates 557,123 -- -- (557,123) -- Investment in Subsidiaries 276,291 52,971 -- (329,262) -- Goodwill, net -- 623,285 105,928 -- 729,213 Other 15,908 24,036 652 -- 40,596 ---------- ---------- --------- ------------ ------------- Total Other Assets 1,074,148 700,292 106,580 (1,111,211) 769,809 ---------- ---------- --------- ----------- ------------ ---------- ---------- --------- ------------ ------------- Total Assets $1,074,148 $1,190,724 $ 176,821 $(1,124,481) $ 1,317,212 ---------- ---------- --------- ------------ ------------- ---------- ---------- --------- ------------ ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Total Current Liabilities $ 15,398 $ 100,630 $ 47,590 $ (13,270) $ 150,348 Long-term Debt, Net of Current Portion 569,996 2,942 30,119 -- 603,057 Due to Affiliates -- 224,793 33 (224,826) -- Long-term Notes Payable to Affiliates -- 557,123 -- (557,123) -- Other Long-term Liabilities -- 31,497 1,278 -- 32,775 Minority Interest -- -- 42,278 -- 42,278 Shareholders' Equity 488,754 273,739 55,523 (329,262) 488,754 ---------- ---------- --------- ------------ ------------- Total Liabilities and Shareholders' Equity $1,074,148 $1,190,724 $ 176,821 $(1,124,481) $ 1,317,212 ---------- ---------- --------- ------------ ------------- ---------- ---------- --------- ------------ ------------- </TABLE> 13
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (5) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON- GUARANTORS (CONTINUED) <TABLE> <CAPTION> THREE MONTHS ENDED MARCH 31, 2000 ---------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------ ---------- ---------- ------------ ------------- <S> <C> <C> <C> <C> <C> Revenues: Storage $ 574 $ 111,076 $ 13,289 $ -- $ 124,939 Service and Storage Material Sales 3,249 72,504 11,948 (503) 87,198 --------- --------- -------- --------- ---------- Total Revenues 3,823 183,580 25,237 (503) 212,137 Operating Expenses: Cost of Sales (Excluding Depreciation) 2,236 89,884 14,206 (1,868) 104,458 Selling, General and Administrative 660 45,922 5,510 1,365 53,457 Depreciation and Amortization 341 22,801 3,161 -- 26,303 Merger-Related Expenses -- 516 -- -- 516 --------- --------- -------- --------- ---------- Total Operating Expenses 3,237 159,123 22,877 (503) 184,734 --------- --------- -------- --------- ---------- Operating Income 586 24,457 2,360 -- 27,403 Interest Income (13,674) -- -- 13,674 -- Interest Expense 20,492 13,510 3,455 (13,674) 23,783 Equity in the (Earnings) Losses of Subsidiaries 352 (102) -- (250) -- Other Expense (Income) -- (66) 847 -- 781 --------- --------- -------- --------- ---------- Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes and Minority Interest Expense (6,584) 11,115 (1,942) 250 2,839 Provision (Benefit) for Income Taxes (1,201) 9,970 (240) -- 8,529 Minority Interests in (Losses) Earnings of Subsidiaries -- -- (307) -- (307) --------- --------- -------- --------- ---------- Net Income (Loss) $ (5,383) $ 1,145 $(1,395) $ 250 $ (5,383) --------- --------- -------- --------- ---------- --------- --------- -------- --------- ---------- </TABLE> 14
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (5) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON- GUARANTORS (CONTINUED) <TABLE> <CAPTION> THREE MONTHS ENDED MARCH 31, 1999 ---------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------ ---------- ---------- ------------ ------------- <S> <C> <C> <C> <C> <C> Revenues: Storage $ -- $ 66,113 $ 1,609 $ -- $ 67,722 Service and Storage Material Sales -- 40,352 1,297 -- 41,649 --------- --------- -------- --------- ---------- Total Revenues -- 106,465 2,906 -- 109,371 Operating Expenses: Cost of Sales (Excluding Depreciation) -- 52,778 1,657 -- 54,435 Selling, General and Administrative 124 27,313 438 -- 27,875 Depreciation and Amortization -- 13,242 353 -- 13,595 --------- --------- -------- --------- ----------- Total Operating Expenses 124 93,333 2,448 -- 95,905 --------- --------- -------- --------- ----------- Operating Income (Loss) (124) 13,132 458 -- 13,466 Interest Income (10,360) -- -- 10,360 -- Interest Expense 11,719 10,501 84 (10,360) 11,944 Equity in the Earnings of Subsidiaries (1,334) (20) -- 1,354 -- --------- --------- -------- --------- ----------- Income (Loss) from Continuing Operations Before Provision for Income Taxes and Minority Interest Expense (149) 2,651 374 (1,354) 1,522 Provision for Income Taxes -- 1,416 207 -- 1,623 Minority Interests in (Losses) Earnings of Subsidiaries -- -- 147 -- 147 --------- --------- -------- --------- ----------- Income (Losses) from Continuing Operations (149) 1,235 20 (1,354) (248) Income from Discontinued Operations -- 99 -- -- 99 --------- --------- -------- --------- ----------- Net Income (Loss) $ (149) $ 1,334 $ 20 $ (1,354) $ (149) --------- --------- -------- --------- ----------- --------- --------- -------- --------- ----------- </TABLE> 15
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (5) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON- GUARANTORS (CONTINUED) <TABLE> <CAPTION> MARCH 31, 2000 ---------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------ ---------- ---------- ------------ ------------- <S> <C> <C> <C> <C> <C> Cash Flows from Operating Activities: Cash Flows Provided by (Used in) Operating Activities $ (7,077) $ 27,535 $ (2,740) $ -- $ 17,718 Cash Flows from Investing Activities: Investment in Subsidiaries -- (1,591) -- 1,591 -- Intercompany Loans to Subsidiaries (185,715) (10,527) -- 196,242 -- Cash Paid for Acquisitions, net of Cash Acquired (3,895) (565) (1,176) -- (5,636) Capital Expenditures (2,471) (19,909) (5,266) -- (27,646) Additions to Customer Acquisition Costs -- (2,696) (660) -- (3,356) Other, Net -- 91 (526) -- (435) --------- --------- -------- --------- ----------- Cash Flows Used in Investing Activities (192,081) (35,197) (7,628) 197,833 (37,073) Cash Flows from Financing Activities: Repayment of Debt (28,550) (172,192) (2,525) -- (203,267) Net Proceeds from Borrowings 220,500 1,885 1,173 -- 223,558 Debt Financing from Minority Shareholder -- -- 7,036 -- 7,036 Intercompany Loans from Parent 9,519 179,320 7,403 (196,242) -- Equity Contribution from Parent -- -- 1,591 (1,591) -- Proceeds from Exercise of Stock Options 885 -- -- -- 885 Debt Financing and Stock Issuance Costs (2,769) -- -- -- (2,769) --------- --------- -------- --------- ----------- Cash Flows Provided by Financing Activities 199,585 9,013 14,678 (197,833) 25,443 Effect of Exchange Rates on Cash and Cash Equivalents -- -- 186 -- 186 Increase in Cash and Cash Equivalents 427 1,351 4,496 -- 6,274 Cash and Cash Equivalents, Beginning of Period -- 2,260 1,570 -- 3,830 --------- --------- -------- --------- ----------- Cash and Cash Equivalents, End of Period $ 427 $ 3,611 $ 6,066 $ -- $ 10,104 --------- --------- -------- --------- ----------- --------- --------- -------- --------- ----------- </TABLE> 16
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (5) SELECTED CONSOLIDATED FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON- GUARANTORS (CONTINUED) <TABLE> <CAPTION> MARCH 31, 1999 ---------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------ ---------- ---------- ------------ ------------- <S> <C> <C> <C> <C> <C> Cash Flows from Operating Activities: Cash Flows Provided by (Used in) Continuing Operations $ (21,975) $ 31,618 $ 493 $ -- $ 10,136 Cash Flows Used in Discontinued Operations -- (752) -- -- (752) --------- -------- --------- --------- --------- Cash Flows Provided by (Used in) Operating Activities (21,975) 30,866 493 -- 9,384 Cash Flows from Investing Activities: Investment in Subsidiaries (46,613) (46,643) -- 93,256 -- Cash Paid for Acquisitions, net of Cash Acquired -- (10,656) (43,833) -- (54,489) Capital Expenditures -- (18,166) (127) -- (18,293) Additions to Customer Acquisition Costs -- (1,643) -- -- (1,643) --------- -------- --------- --------- --------- Cash Flows Used in Continuing Operations (46,613) (77,108) (43,960) 93,256 (74,425) Cash Flows Used in Discontinued Operations -- (61) -- -- (61) --------- -------- --------- --------- --------- Cash Flows Used in Investing Activities (46,613) (77,169) (43,960) 93,256 (74,486) Cash Flows from Financing Activities: Repayment of Debt (7,900) (203) (68) -- (8,171) Net Proceeds from Borrowings 76,100 -- -- -- 76,100 Equity Contribution from Parent -- 46,613 46,643 (93,256) -- Proceeds from Exercise of Stock Options 620 -- -- -- 620 Debt Financing and Stock Issuance Costs (242) -- -- -- (242) --------- -------- --------- --------- --------- Cash Flows Provided by Continuing Operations 68,578 46,410 46,575 (93,256) 68,307 Cash Flows Provided by Discontinued Operations -- -- -- -- -- --------- -------- --------- --------- --------- Cash Flows Provided by Financing Activities 68,578 46,410 46,575 (93,256) 68,307 Effect of Exchange Rates on Cash and Cash Equivalents -- -- (21) -- (21) Increase (Decrease) in Cash and Cash Equivalents (10) 107 3,087 -- 3,184 Cash and Cash Equivalents, Beginning of Period 12 1,703 -- -- 1,715 --------- -------- --------- --------- --------- Cash and Cash Equivalents, End of Period $ 2 $ 1,810 $ 3,087 $ $ 4,899 --------- -------- --------- --------- --------- --------- -------- --------- --------- --------- </TABLE> 17
IRON MOUNTAIN INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except Per Share Data) (Unaudited) (Continued) (6) EARNINGS PER SHARE In accordance with Statement of Financial Accounting Standards No. 128, basic net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding. The calculation of diluted net loss per share is consistent with that of basic net loss per share but gives effect to all potential common shares (that is, securities such as options, warrants or convertible securities) that were outstanding during the period, unless the effect is antidilutive. For the quarters ended March 31, 2000 and 1999, 1,239 and 875 potential common shares, respectively, have been excluded from the calculation of diluted net loss per share, as their effects are antidilutive. (7) SUBSEQUENT EVENTS Effective May 1, 2000, the Company acquired all of the assets of Data Storage Centers, Inc. ("DSC") of Jacksonville, Florida for $54 million in cash. DSC operates in 14 markets located primarily in the southeastern United States. In April and through May 12, 2000, the Company acquired two additional businesses for aggregate purchase price of $5.8 million. The acquisitions will be accounted for using the purchase method of accounting. 18
IRON MOUNTAIN INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the Company's financial condition and results of operations for the three months ended March 31, 2000 and 1999 should be read in conjunction with the condensed consolidated financial statements and footnotes for the three months ended March 31, 2000 included herein, and the year ended December 31, 1999, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2000. Overview The Company's consolidated revenues increased $102.7 million, or 94.0%, to $212.1 million for the first quarter of 2000 from $109.4 million for the first quarter of 1999. Internal revenue growth, calculated as if Pierce Leahy had merged with Iron Mountain on January 1, 1999, was 14.4%. On February 1, 2000, the Company completed its acquisition of Pierce Leahy in a stock-for-stock merger valued at approximately $1.1 billion. The acquisition was structured as a reverse merger with Pierce Leahy being the surviving legal entity and immediately changing its name to Iron Mountain Incorporated. Based on the number of shares of Iron Mountain and Pierce Leahy common stock outstanding immediately prior to the completion of the merger, immediately after the merger former stockholders of Iron Mountain owned approximately 65% of the Company's common stock. Because of this share ownership, Iron Mountain is considered the acquiring entity for accounting purposes. The total consideration for this transaction was comprised of: (i) approximately 18.8 million shares of the Company's common stock with a fair value of $444 million; (ii) approximately 1.6 million options to acquire the Company's common stock with a fair value of $25 million; (iii) assumed debt with a fair value of $585 million; and (iv) approximately $4 million of capitalized transaction costs. Consolidated revenues were $342.3 million for the year ended December 31, 1999. During the first quarter of 2000, the Company acquired two additional records and information management services businesses for total consideration of $5.3 million. These two acquisitions reported $2.0 million in revenues for the year ended December 31, 1999. Results of Operations Consolidated storage revenues increased $57.2 million, or 84.5%, to $124.9 million for the first quarter of 2000, from $67.7 million for the first quarter of 1999. Consolidated storage revenues increased primarily due to acquisitions, particularly the Pierce Leahy acquisition. Internal storage revenue growth, calculated as if Pierce Leahy had merged with Iron Mountain on January 1, 1999, was 11.9%. The internal storage revenue growth resulted primarily from net increases in records and other media stored by existing customers and from sales to new customers. Consolidated service and storage material sales revenues increased $45.6 million, or 109.4%, to $87.2 for the first quarter of 2000 from $41.6 million for the first quarter of 1999. Consolidated service and storage material sales revenues increased primarily due to acquisitions, particularly the Pierce Leahy acquisition. Internal service and storage material sales revenue growth, calculated as if Pierce Leahy had merged with Iron Mountain on January 1, 1999, was 18.0%. The internal revenue growth resulted from increases in service and storage material sales to existing customers and the addition of new customer accounts. For the reasons discussed above, total consolidated revenues increased $102.7 million, or 94.0%, to $212.1 million for the first quarter of 2000 from $109.4 million for the first quarter of 1999. 19
IRON MOUNTAIN INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Consolidated cost of sales (excluding depreciation) increased $50.1 million, or 91.9%, to $104.5 million (49.2% of consolidated revenues) for the first quarter of 2000 from $54.4 million (49.8% of consolidated revenues) for the first quarter of 1999. The dollar increase was primarily attributable to the acquisition of Pierce Leahy, while the decrease as a percentage of revenues was primarily attributable to operating efficiencies gained as a result of an increase in scale. Consolidated selling, general and administrative expenses increased $25.6 million, or 91.8%, to $53.5 million (25.2% of consolidated revenues) for the first quarter of 2000 from $27.9 million (25.5% of consolidated revenues) for the first quarter of 1999. The dollar increase was primarily attributable to the Pierce Leahy acquisition, while the decrease as a percentage of revenues was primarily attributable to operating efficiencies gained as a result of an increase in scale partially offset by the increased spending in information technology related to the following: (i) the conversion of new systems for the Company's data security business, (ii) increased staffing in preparation for systems conversions related to the integration of Pierce Leahy with the Company and (iii) the Company's efforts to explore new technology-related service opportunities. Consolidated depreciation and amortization expense increased $12.7 million, or 93.5%, to $26.3 million (12.4% of consolidated revenues) for the first quarter of 2000 from $13.6 million (12.4% of consolidated revenues) for the first quarter of 1999. The dollar increase was primarily attributable to the additional depreciation and amortization expense related to the 1999 and 2000 Acquisitions, and capital expenditures including racking systems, information systems and expansion of storage capacity in existing facilities. Merger-related expenses are certain expenses directly related to the Company's merger with Pierce Leahy that cannot be capitalized and include costs of exiting certain facilities, severance and pay-to-stay payments, system conversion costs and other transaction-related costs. Merger-related expenses were $0.5 million, 0.2% of consolidated revenues, for the first quarter of 2000. As a result of the foregoing factors, consolidated operating income increased $13.9 million, or 103.5%, to $27.4 million (12.9% of consolidated revenues) for the first quarter of 2000 from $13.5 million (12.3% of consolidated revenues) for the first quarter of 1999. Consolidated interest expense increased $11.9 million, or 99.1%, to $23.8 million for the first quarter of 2000 from $11.9 million for the first quarter of 1999. The increase was primarily attributable to increased indebtedness related to the financing of acquisitions and capital expenditures as well as debt assumed as a result of the Pierce Leahy acquisition. Consolidated other income (expense) for the first quarter of 2000 is comprised of a $0.8 million net foreign currency exchange loss primarily due to a change in the value of the Canadian dollar as compared to U.S. dollar, as it relates to the 1998A Notes. As a result of the foregoing factors, consolidated income from continuing operations before provision for income taxes and minority interests in (losses) earnings of subsidiaries increased $1.3 million to $2.8 million (1.3% of consolidated revenues) for the first quarter of 2000 from $1.5 million (1.4% of consolidated revenues) for the first quarter of 1999. The provision for income taxes was $8.5 million for the first quarter of 2000 compared to $1.6 million for the first quarter of 1999. The Company's effective tax rate is higher than statutory rates primarily due to the amortization of the nondeductible portion of goodwill associated with certain acquisitions (the tax laws generally permit deduction of such expenses for asset purchases, but 20
IRON MOUNTAIN INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) not for acquisitions of stock). In connection with the 2000 Acquisitions, the Company recorded approximately $509 million in nondeductible goodwill. Consolidated loss from continuing operations increased $5.2 million to $5.4 million (2.5% of consolidated revenues) for the first quarter of 2000 from $0.2 million (0.2% of consolidated revenues) for the first quarter of 1999. As a result of the foregoing factors, consolidated earnings before interest, taxes, depreciation, amortization, extraordinary items, other income and merger-related expenses ("EBITDA") increased $27.1 million, or 100.4%, to $54.2 million (25.6% of consolidated revenues) for the first quarter of 2000 from $27.1 million (24.7% of consolidated revenues) for the first quarter of 1999. Liquidity and Capital Resources As the Company has sought to increase its EBITDA, it has made significant capital investments, consisting primarily of: (i) acquisitions; (ii) capital expenditures, primarily related to growth (including investments in real estate, racking systems, information systems and expansion of storage capacity in existing facilities); and (iii) customer acquisition costs. Cash paid for these investments during the first three months of 2000 amounted to $5.6 million, $27.6 million and $3.4 million, respectively. These investments have been primarily funded through cash flows from operations and borrowings under the Company's revolving credit facility. Net cash provided by operations was $17.7 million for the first three months of 2000 compared to $9.4 million for the same period in 1999. The increase resulted from an increase in EBITDA, which was partially offset by a decrease in trade accounts payable and accrued expenses accounts. Net cash provided by financing activities was $25.4 million for the three months ended March 31, 2000, consisting primarily of the proceeds from borrowings under the Company's revolving credit facility of $223.6 million, which were partially offset by repayments of debt of $203.3 million. Effective February 1, 2000, the Company's revolving credit facility was amended and restated (the "Amended Credit Agreement") to increase the aggregate principal amount available to $400.0 million and to include the ability to borrow in certain foreign currencies. The facility matures on January 31, 2005. Interest on borrowings under the Amended Credit Agreement will be paid at the Company's choice of five different variable interest rates. The Amended Credit Agreement contains certain restrictive covenants. 21
IRON MOUNTAIN INCORPORATED ITEM 3. Quantitative and Qualitative Disclosures About Market Risk The Company does not hold any derivative financial instruments or derivative commodity instruments. Iron Mountain's investment in Iron Mountain Europe Limited and other international investments may be subject to risks and uncertainties relating to fluctuations in currency valuation. In addition, one of the Company's Canadian subsidiaries, Iron Mountain Canada Corporation, has U.S. dollar denominated debt. Gains and losses due to exchange rate fluctuations related to this debt are recognized in the Company's consolidated statements of operations. The Company engages neither in speculative nor derivative trading activities. As of March 31, 2000, the Company had $0.2 billion of debt outstanding with a weighted average variable interest rate of 7.95% and $1.0 billion of fixed rate debt outstanding. If the weighted average variable interest rate had increased by 1% to 8.95%, such increase would have had a negative impact on the Company's net income for the quarter ended March 31, 2000 of approximately $434,000. See Note 4 to Notes to Condensed Consolidated Financial Statements for a discussion of the Company's long-term indebtedness, including the fair values of such indebtedness as of March 31, 2000 and December 31, 1999. PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K (a) EXHIBITS Listed below are the exhibits which are filed as part of this Form 10-Q (according to the number assigned to them in Item 601 of Regulation S-K). <TABLE> <CAPTION> Exhibit No. Description of Document Exhibit File No. - ------- ----------------------- ---------------- <S> <C> <C> 2.1 Amendment No. 1 to Asset Purchase and Sale Agreement, dated May 1, 2000, by and among Iron Mountain Records Management, Inc., Data Storage Center, Inc., DSC of Florida, Inc., DSC of Massachusetts, Inc., Suddath Van Lines, Inc. and Suddath Family Trust U/A 11/8/79 ...................................... Filed herewith as Exhibit 2.1 2.2 Asset Purchase and Sale Agreement, dated February 18, 2000, by and among Iron Mountain Records Management, Inc., Data Storage Center, Inc., DSC of Florida, Inc., DSC of Massachusetts, Inc., and Suddath Van Lines, Inc. ......................................... Incorporated by reference to Exhibit 2.1 from the Company's Annual Report on Form 10-K, filed on March 30, 2000 10.1 Employment Agreement, dated as of February 1, 2000, by and between Pierce Leahy and J. Peter Pierce .............................. Incorporated by reference to Exhibit 10.5 from the Company's Annual Report on Form 10-K, filed on March 30, 2000. 10.2 Third Amended and Restated Credit Agreement, dated as of January 27, 2000, among the Company and certain lenders party thereto and the Chase Manhattan Bank, as Administrative Agent ........................................ Incorporated by reference to Exhibit 10.1 from the Company's Current Report on Form 8-K, filed on February 1, 2000. 10.3 Registration Rights Agreement Joinder, dated as of February 1, 2000, by and among the Company and certain shareholders of the Company ...................................... Incorporated by reference to Exhibit 10.21 from the Company's Annual Report on Form 10-K, filed on March 30, 2000. 27 Financial Data Schedule ...................... Filed herewith as Exhibit 27 </TABLE> (b) REPORTS ON FORM 8-K. 1. Form 8-K (Items 2 and 7) filed on February 1, 2000. 22
IRON MOUNTAIN INCORPORATED CERTAIN IMPORTANT FACTORS We have made statements in this Quarterly Report on Form 10-Q that constitute "forward-looking statements" as that term is defined in the federal securities laws. These forward-looking statements concern the operations, economic performance and financial condition of Iron Mountain. 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, the following: - unanticipated costs as a result of Iron Mountain's acquisition of Pierce Leahy; - difficulties related to the integration of acquisitions generally and, more specifically, the integration of the operations of Iron Mountain and Pierce Leahy; - our significant indebtedness and the cost and availability of financing for contemplated growth; - the cost and availability of appropriate storage facilities; - changes in customer preferences and demand for our services; - rapid and significant changes in technology; - intense competition in the industry; and - other general economic and business conditions. These cautionary statements should not be construed by you to be exhaustive, and they are made only as of the date of this report. You should read these cautionary statements as being applicable to all forward-looking statements wherever they appear. We assume no obligation to update or revise the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. 23
IRON MOUNTAIN INCORPORATED Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IRON MOUNTAIN INCORPORATED May 15, 2000 - ------------ By: /s/ Jean A. Bua (date) ------------------------------------ Jean A. Bua Vice President and Corporate Controller (Principal Accounting Officer) 24