424(b)(3)
Registration No. 333-67765
PROSPECTUS
2,500,000 Shares
Iron Mountain Incorporated
Common Stock
----------------------
This Prospectus relates to the issuance from time to time of shares of
common stock of Iron Mountain Incorporated in an aggregate amount of up to
2,500,000 shares. The terms of each issuance are to be determined at the time of
each offering.
We will offer the common stock directly in connection with the
acquisition of the assets of, or ownership interests in, certain entities
involved in the same or similar lines of business as ours or any of our
subsidiaries. We will negotiate the terms of an acquisition with the owners or
controlling persons of the assets or ownership interests we seek to acquire.
We expect that the common stock issued in any such acquisition will be
valued at a price reasonably related to the market value of our common stock,
either at the time the terms of the acquisitions are tentatively agreed upon, at
or about the time of the closing of the acquisitions, or during a set period or
periods prior to the closing of the acquisitions.
Our common stock is traded on the Nasdaq National Market System under
the symbol "IMTN." Our principal executive offices are located at 745 Atlantic
Avenue, Boston, Massachusetts 02111. Our telephone number is (617) 535-4766.
We do not expect to pay underwriting discounts or commissions in
connection with each offering.
----------------------
See "RISK FACTORS" at page 5 for certain information that should be
considered by prospective investors.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
----------------------
The date of this Prospectus is December 1, 1998.
<PAGE>
You should rely only on the information incorporated by reference or
provided in this Prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any jurisdiction where it is unlawful. You should not assume that the
information in this Prospectus is accurate as of any date other than the date on
the front of this document.
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TABLE OF CONTENTS
Page
About This Prospectus 3
Where You Can Find Additional Information 3
Incorporation of Certain Documents by Reference 3
The Company 4
The Acquisitions 4
Risk Factors 5
Selected Consolidated Financial and Operating Information 11
Description of Capital Stock 13
Delaware General Corporation Law and Certain Provisions
of the Restated Certificate of Incorporation and the By-laws 15
Legal Matters 17
Experts 17
-----------------------
This Prospectus incorporates important business and financial
information about Iron Mountain that is not included in or delivered with this
document. You may obtain this information at no cost by writing or telephoning
us at the following address:
John F. Kenny, Jr.
Executive Vice President and
Chief Financial Officer
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, Massachusetts 02111
(617) 535-4766
To obtain timely delivery, you must request the information by no later
than five business days before you must make your investment decision.
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ABOUT THIS PROSPECTUS
This Prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process with respect to the common stock. Under
this shelf process we may sell, in one or more offerings, shares of our common
stock up to a total of 2,500,000 shares. This Prospectus does not contain all of
the information contained in the Registration Statement. Accordingly, for
further information concerning Iron Mountain and the common stock, reference is
also made to the Registration Statement. Statements in this Prospectus regarding
the contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of the contract or other document
filed as an exhibit to the Registration Statement.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and, accordingly, file annual, quarterly, and current
reports, proxy statements and other information with the SEC. You can inspect
and obtain copies of the Registration Statement, the exhibits and schedules
which form a part of the Registration Statement, and the reports, proxy
statements and other information filed by us with the SEC, at prescribed rates,
at the public reference facilities maintained by the SEC at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference room. The SEC
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants, including Iron Mountain,
that file electronically with the SEC. The address of the site is
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC (File No.
0-27584) under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934
until our offering is completed.
o Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
o Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
o Current Reports on Form 8-K dated January 6, 1998, February 18,
1998 (amended April 7, 1998), March 9, 1998, March 30, 1998,
April 21, 1998, July 10, 1998 (amended August 7, 1998), September
18, 1998 and November 23, 1998;
o The description of the common stock contained in our Registration
Statement on Form 8-A dated January 18, 1996;
o The financial statements for Safesite Records Management
Corporation included in File No. 333-24635, filed with the
Commission on April 4, 1997, as amended on May 7, 1997 and May
13, 1997, as made effective by the SEC on May 14, 1997, and the
unaudited financial statements of Safesite Records Management
Corporation as of March 31, 1997 and for the three months ended
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March 31, 1996 and 1997 contained in the Current Report on Form
8- K/A dated August 26, 1997;
o The financial information for Security Archives of Minnesota,
Wellington Financial Services, Inc., Concorde Group, Inc. and
Neil Tucker Trust, and Data Securities International, Inc.
contained in the Current Report on Form 8-K dated October 30,
1997; and
o The financial information for Records Retention/FileSafe, LP,
Allegiance Business Archives, Ltd., and HIMSCORP, Inc. and
Subsidiaries contained in the Current Report on Form 8-K dated
November 25, 1997.
THE COMPANY
Iron Mountain is America's largest records management company, as measured
by its revenues. We are a national, full-service provider of records management
and related services, enabling customers to outsource records management
functions. We have a diversified customer base, which includes more than half of
the Fortune 500 and numerous commercial, legal, banking, healthcare, accounting,
insurance, entertainment and government organizations. We provide storage and
related services for all major media, including paper (the dominant form of
record storage), computer disk and tapes, microfilm and microfiche, master audio
and video tapes, film and optical disks, X-rays and blueprints. The principal
services provided to our storage customers include courier pick-up and delivery,
filing, retrieval and destruction of records, database management, customized
reporting and disaster recovery support. We also sell storage materials and
provide consulting, facilities management, information technology staffing and
other outsourcing services.
Iron Mountain was incorporated in Delaware in 1990 but its predecessor
operations date from 1951. Our principal executive offices are located at 745
Atlantic Avenue, Boston, Massachusetts 02111. Our telephone number is (617)
535-4766.
THE ACQUISITIONS
We will offer the common stock registered hereby in connection with our
acquisitions of records management companies and companies that offer related
services. The consideration for acquisitions will consist of shares of common
stock, cash, notes or other evidences of indebtedness, guarantees, assumption of
liabilities, tangible or intangible property, or a combination thereof, as
determined from time to time by negotiations between us and the owners or
controlling persons of the assets or ownership interests to be acquired. In
addition, we may lease property from and enter into management or consulting
agreements and non-competition agreements with the former owners and key
executive personnel of the businesses to be acquired.
We will consider the following factors, among others, when we decide
whether to acquire a business: (1) the quality and reputation of the business,
(2) the assets, liabilities, results of operations and cash flows for the
business, (3) the quality of its management and employees, (4) its earnings
potential, (5) the geographic locations of the business and (6) the market value
of our common stock when pertinent.
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RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors together with all of the other information included in or
incorporated into this Prospectus before you decide to purchase shares of our
common stock.
Some of the information contained in or incorporated into this Prospectus
may include forward-looking statements. Such statements can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "believe" or other similar words. These statements discuss our
current expectations, goals, beliefs and plans regarding the financial condition
or results of operations of Iron Mountain or other non-historical facts.
By their nature, such forward-looking statements include risks and
uncertainties. When considering such forward-looking statements, you should keep
in mind the risk factors set forth below and the cautionary statements included
elsewhere in this Prospectus or in documents that are incorporated into this
Prospectus. Such risk factors and other factors identified in this Prospectus or
in the documents that are incorporated into this Prospectus could cause our
actual results to differ materially from those expressed in or implied by such
forward-looking statements. If we revise any of our forward-looking statements
to reflect future events or circumstances, we will not always publicly release
our revised statements.
Risks Associated with Acquisition Strategy
As part of our growth strategy, we have acquired, and expect to acquire in
the future, records management businesses and businesses that provide services
related to records management. This growth strategy involves certain risks, and
we may be unable to pursue such a strategy in the future. For example, we may be
unable to:
o identify suitable companies to acquire;
o arrange suitable financing to provide us with the funds to
acquire such companies; or
o incur additional debt necessary to acquire such companies, if we
are unable to pay the purchase price out of working capital or to
pay all or part of the purchase price with our common stock or
other equity securities.
The success of any completed acquisition depends in part on our ability to
integrate effectively the acquired company into Iron Mountain. The process of
integrating such acquired businesses may involve unforeseen difficulties and may
require a disproportionate amount of our management's attention and our
financial and other resources. We may be unable to successfully integrate our
recent acquisitions or possible future acquisitions.
The lenders under our credit agreement must pre-approve certain
acquisitions. If we propose to acquire one company for a purchase price over $65
million or if we propose to acquire multiple companies in a given year and the
aggregate purchase price exceeds $150 million in cash and other consideration or
$100 million in cash, then lenders holding 51% or more of the commitments under
our credit agreement must approve such acquisition or acquisitions. The lenders
could withhold their consent on acquisitions that Iron Mountain proposes to make
in excess of such limits.
Our operating results may fluctuate substantially from quarter to quarter
due to the size, timing and integration of possible future
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acquisitions. As a result, operating results for any quarter may not indicate
the results that may be achieved for any subsequent fiscal quarter or for a full
fiscal year.
Competition
We compete with one or more records management service providers in all
geographic areas where we operate. We believe that competition for customers is
based on price, reputation for reliability, quality of service and scope and
scale of technology and that we generally compete effectively based on these
factors. As a result of this competition, the records management industry has
for the past several years experienced downward pricing pressures. While we
believe that this pricing climate is stabilizing, prices could decline further,
as competitors seek to gain or preserve market share. A further downward trend
in pricing, if it continues for an extended period of time, could materially and
adversely affect our results of operations.
Iron Mountain also competes for companies to acquire. Some of our
competitors may possess greater financial and other resources than us. If any
such competitor were to devote additional resources to the records management
business and such acquisition candidates or focused its strategy on Iron
Mountain's markets, our results of operations could be adversely affected.
In addition, we compete with the internal records management capability of
our current and potential customers. We can provide no assurances that these
organizations will use an outside company such as Iron Mountain for their future
records management. In addition, such organizations could bring in-house some or
all of the functions they currently outsource to Iron Mountain.
Alternative Technologies
We derive most of our revenues from the storage of paper documents and
related services. Such storage requires significant physical space. Alternative
technologies for generating, capturing, managing, transmitting and storing
information exist, many of which require significantly less space than paper.
Such technologies include computer media, microforms, CD-ROM and optical disk.
To date, none of these technologies has replaced paper as the principal means
for storing information. However, we can provide no assurances that our
customers will continue to store most of their records in paper format. A
significant shift by our customers to storage of data through non-paper based
technologies (whether now existing or developed in the future) could adversely
affect our business.
Financial Leverage; Debt Service Requirements
We have a significant level of debt due to the substantial indebtedness we
have incurred primarily to finance acquisitions and expand our operations. We
expect to continue to borrow under our credit agreement and possible future
credit arrangements in order to finance possible future acquisitions and for
general corporate purposes.
Our ability to make principal and interest payments on our indebtedness
depends upon our future operating results, which we cannot entirely control
because they are tied to both internal and external forces. Our high debt level
could have important consequences, including the following:
o we may not be able to obtain additional financing for future
working capital needs or for possible future acquisitions or
other purposes;
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o the required payments of principal and interest on our
indebtedness may reduce funds available for other purposes;
o we may be vulnerable to a downturn in our operating performance;
o we may be more sensitive to adverse economic conditions than some
of our competitors; and
o we may be limited in our ability to withstand competitive
pressures.
Our debt service absorbs a substantial portion of our cash flow from
operations. We believe, but can provide no assurances, that cash flow from
operations in conjunction with borrowings from existing and possible future
credit facilities will be sufficient for the foreseeable future to meet debt
service requirements and to make possible future acquisitions and capital
expenditures. Moreover, borrowings under the credit agreement bear interest at
rates that fluctuate. Any increases in interest rates on borrowings under the
credit agreement increases our debt service payments. If our cash flow were not
sufficient to meet our debt service requirements or payments of principal, we
could be required to sell additional equity securities, refinance our
obligations or dispose of assets in order to make scheduled payments. Iron
Mountain may not be able to effect any of such transactions or do so on
favorable terms.
Casualty
We maintain comprehensive liability, fire, flood, earthquake (where
appropriate) and extended coverage insurance with respect to the properties that
we own or lease, to the extent such insurance is available on commercially
reasonable terms, with customary limits and deductibles. We will continue to
maintain such insurance. We may be unable to obtain full coverage on a
cost-effective basis for some casualties, such as earthquakes, or we may be
unable to obtain any insurance for certain losses, such as losses from riots. In
the past we have suffered damages and losses from an earthquake and a riot in
California, which were substantially covered by insurance.
In March 1997, three fires extensively damaged one and destroyed another of
our records management facilities in South Brunswick Township, New Jersey. Some
of our customers or their insurance carriers have asserted claims or filed
lawsuits against us as a consequence of the destruction of or damage to their
records due to the fires. We cannot predict the outcome of these claims and
proceedings. Based on our present assessment of the situation, after
consultation with legal counsel, we do not believe that the outcome of these
claims and lawsuits will have a material adverse effect on Iron Mountain's
financial condition or results of operations, although we can provide no
assurances in this regard.
In the future, should uninsured losses or damages occur, we could lose both
our investment in and anticipated profits and cash flow from the affected
property and may continue to be obligated on any leasehold obligations, mortgage
indebtedness or other obligations related to such property. Any such loss could
materially adversely affect our financial condition or results of operations.
History of Losses; EBITDA Objective
In the past, our results of operations have resulted in net losses
applicable to common stockholders. We attribute such losses in part to
significant non-cash charges against income for depreciation and amortization
expenses associated with expansion of our storage capacity and goodwill
amortization associated with acquisitions accounted for under the purchase
method. We incur these non-cash charges because of our growth strategy. In
addition, in the past, two extraordinary
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expenses negatively impacted net income applicable to common stockholders: a
charge for accretion of a redeemable put warrant and a charge related to the
early retirement of debt in 1996. We redeemed the put warrant in February 1996,
upon completion of our initial public offering. In the future, our growth
strategy could result in further net losses due to increased interest expense
associated with borrowings under our credit agreement and possible future credit
arrangements and increased depreciation and amortization expenses.
Iron Mountain's primary financial objective is to increase its earnings
before interest, taxes, depreciation, amortization and extraordinary items
("EBITDA"), which is a source of funds to service indebtedness and for
investment in continued internal growth and growth through acquisitions.
Increasing net income and net income applicable to common stockholders is not
our focus. In the past, we have experienced a growth in EBITDA, while net losses
applicable to common stockholders have increased. Based on our experience in the
records management industry, we believe that EBITDA is an important tool for
measuring the performance of records management companies (including potential
acquisition targets) in several areas, such as liquidity, operating performance
and leverage.
In addition, lenders use EBITDA as a criterion in evaluating records
management companies. Our financing agreements contain covenants in which EBITDA
is the measure of financial performance. Other measures of financial
performance, such as net income and net income applicable to common
stockholders, have been negatively affected by our pursuit of increased EBITDA
and may be negatively affected in the future.
Anti-Takeover Effect of Certain Provisions of Iron Mountain's Restated
Certificate of Incorporation, By-Laws and the Notes Indentures
Certain provisions of our Restated Certificate of Incorporation and By-Laws
could have the effect of discouraging or precluding acquisition of control of us
by a third party and could render the consummation of certain types of
transactions involving an actual or potential change in control of Iron
Mountain, such as a merger, tender offer or proxy contest, more difficult.
Staggered Board. The Board of Directors is divided into three classes of
Directors, elected on a staggered basis (one class per year). A third party
would have to successfully elect its directors at two consecutive stockholders
meetings at which directors were elected in order to replace a majority of the
members of the Board. This means that existing management would control Iron
Mountain during such period.
Preferred Stock. The Board may issue up to 2,000,000 shares of preferred
stock without stockholder approval. The Board may determine the terms and
conditions of any issuance of preferred stock and the rights, privileges and
preferences (including the right to vote and the right to convert into common
stock) of the preferred stock.
Restrictions on Transfer. The By-Laws prohibit the transfer by the holders
of approximately 2,200,000 shares of common stock that were issued by Iron
Mountain in one acquisition. The restrictions on transfer expire in January
1999. A significant portion of such shares are held by an affiliate.
Mandatory Redemption of Notes. Iron Mountain currently has outstanding
$165,000,000 in aggregate principal amount of 10 1/8% Senior Subordinated Notes
due 2006 issued in October 1996 and $250,000,000 in
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aggregate principal amount of 8 3/4% Senior Subordinated Notes due 2009 issued
in October 1997. If a change of control of Iron Mountain (as defined in the
indentures for the Notes) occurs, we must offer to purchase all of the
outstanding Notes at a purchase price, in cash, equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase. We can provide no assurances that we would be able to obtain the funds
for such a redemption through a refinancing of the Notes to be purchased or
otherwise, or that the purchase would be permitted under our credit agreement.
Also, the requirement that we make an offer to purchase all of the Notes then
outstanding in the event of a change of control may deter a third party from
effecting a transaction that would constitute a change of control.
Control by Principal Stockholders
The voting power held by certain of our large stockholders may discourage
certain types of transactions involving an actual or potential change of control
of Iron Mountain, including transactions in which the holders of common stock
might otherwise receive a premium for their shares over then-current market
prices. In addition, such stockholders' voting power gives them the ability to
significantly affect the election of Directors of Iron Mountain who, in turn,
control the management and affairs of Iron Mountain.
Environmental Matters
Various federal, state and local environmental laws impose liability on an
owner of real estate for the costs of investigation and cleanup of soil and
groundwater contaminated by certain hazardous substances or wastes or petroleum
products. These laws also impose liability on lessees conducting operations on
contaminated real estate. Some of these environmental laws impose cleanup
liability without regard to whether the owner or operator of the real estate or
operations knew of or was responsible for the contamination. Moreover, some of
these laws impose liability whether or not operations at the property have been
discontinued or title to the property has been transferred. In addition, the
presence of contamination, or the failure to properly cleanup such property, may
adversely affect the current property owner's or operator's ability to sell or
rent such property or to borrow using such property as collateral. Third parties
may make claims against the owner or operator of contaminated real estate based
on damages and costs resulting from off-site migration of the contamination.
Certain environmental laws govern the removal, encapsulation or disturbance
of asbestos-containing materials. Such laws may impose liability for release of
asbestos-containing materials and may enable third parties to sue owners or
operators of real estate for personal injury associated with exposure to such
substances. Certain of our facilities contain or may contain asbestos-containing
materials, but we believe that such materials are in acceptable condition at
this time. We believe that future costs related to any removal or encapsulation
of asbestos-containing materials at our facilities will not be material.
In addition, certain of our current and former properties that we now or
formerly owned or operated were previously used for industrial or other purposes
that involved the use or storage of hazardous substances or petroleum products
or the generation and disposal of hazardous wastes. In some instances these
properties included the operation of underground storage tanks. Iron Mountain
may be potentially liable for environmental costs such as those discussed above.
We have from time to time conducted limited environmental investigations
and remedial activities at certain of our former and
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current facilities, but we have not undertaken an in-depth environmental review
of all of our properties.
We believe that we are in substantial compliance with all applicable
material environmental laws. Moreover, we are not aware of any material
liability relating to contamination at any of our current or former properties.
We cannot, however, rule out the possibility that environmental conditions for
which Iron Mountain might be liable exist at such properties or at properties
which we may acquire in future acquisitions. In addition, future regulatory
action and environmental laws may impose costs for environmental compliance that
do not exist today. These future events could have a material adverse effect on
our financial condition and results of operations.
No Intention to Pay Dividends
We have never declared or paid cash dividends on our capital stock. We
intend to retain future earnings for use in our business and do not anticipate
declaring or paying any cash dividends on shares of common stock in the
foreseeable future. In addition, we are currently restricted under the terms of
our credit agreement and the indentures for the Notes from declaring or paying
cash dividends on our common stock.
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SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
(In thousands, except per share amounts)
We derived the following selected consolidated statements of operations
and balance sheet data of Iron Mountain as of and for each of the years ended
December 31, 1993, 1994, 1995, 1996 and 1997 from our audited consolidated
financial statements. We have restated this selected consolidated financial and
operating information to reflect a three-for-two stock split effected in the
form of a stock dividend on our common stock, which was approved by the Board on
June 30, 1998. Shares of common stock were issued on July 31, 1998 to all
stockholders of record as of the close of business on July 17, 1998. We derived
the selected consolidated statements of operations and balance sheet data of
Iron Mountain as of and for the nine months ended September 30, 1997 and 1998
from our unaudited condensed consolidated financial statements. Our unaudited
condensed consolidated financial statements include all adjustments, consisting
of normal recurring accruals, that we consider necessary for a fair presentation
of the financial position and the results of operations for those periods.
Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of the results for the entire year ending December 31,
1998. You should read the selected consolidated financial and operating
information set forth below in conjunction with our Consolidated Financial
Statements and the Notes thereto incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
---------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Revenues:
Storage ...................................... $48,892 $54,098 $ 64,165 $ 85,826 $125,968 $ 86,199 $168,046
Service and Storage Material Sales ........... 32,781 33,520 40,271 52,892 82,797 57,195 142,461
------- ------- -------- -------- -------- -------- --------
Total Revenues ............................. 81,673 87,618 104,436 138,718 208,765 143,394 310,507
Operating Expenses:
Cost of Sales (Excluding Depreciation) ....... 43,054 45,880 52,277 70,747 106,879 73,742 162,609
Selling, General and Administrative .......... 19,971 20,853 26,035 34,342 51,668 35,682 76,666
Depreciation and Amortization ................ 6,789 8,690 12,341 16,936 27,107 18,495 36,225
------- ------- -------- -------- -------- -------- --------
Total Operating Expenses ................... 69,814 75,423 90,653 122,025 185,654 127,919 275,500
------- ------- -------- -------- -------- -------- --------
Operating Income ................................ 11,859 12,195 13,783 16,693 23,111 15,475 35,007
Interest Expense ................................ 8,203 8,954 11,838 14,901 27,712 17,631 34,228
Other Income(5) ................................. -- -- -- -- -- -- 1,700
------- ------- -------- -------- -------- -------- --------
Income (Loss) Before Provision (Credit)
for Income Taxes ............................. 3,656 3,241 1,945 1,792 (4,601) (2,156) 2,479
Provision (Credit) for Income Taxes ............. 2,088 1,957 1,697 1,435 (80) (346) 4,123
------- ------- -------- -------- -------- -------- --------
Income (Loss) Before Extraordinary Charge ....... 1,568 1,284 248 357 (4,521) (1,810) (1,644)
Extraordinary Charge, Net of Tax Benefit(1)...... -- -- -- 2,126 -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) ............................... 1,568 1,284 248 (1,769) (4,521) (1,810) (1,644)
Accretion of Redeemable Put Warrant ............. 940 1,412 2,107 280 -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) Applicable to Common
Stockholders ................................. $ 628 $ (128) $ (1,859) $ (2,049) $ (4,521) $ (1,810) $ (1,644)
======= ======= ======== ======== ======== ======== ========
Income (Loss) per Common Share:
Basic:
Income (Loss) Before Extraordinary Charge...... $ 9.10 $ (0.40) $ (32.61) $ 0.00 $ (0.26) $ (0.11) $ (0.06)
Extraordinary Charge, Net of Tax Benefit (1)... -- -- -- (0.15) -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) Applicable to Common
Stockholders ............................... $ 9.10 $ (0.40) $ (32.61) $ (0.15) $ (0.26) $ (0.11) $ (0.06)
======= ======= ======== ======== ======== ======== ========
Weighted Average Common Shares Outstanding .... 69 321 57 13,911 17,172 16,359 26,848
======= ======= ======== ======== ======== ======== ========
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<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
----------------------------------------------------- ----------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Diluted:
Income (Loss) Before Extraordinary Charge...... $ 0.05 $ (0.40) $ (32.61) $ 0.00 $ (0.26) $ (0.11) $ (0.06)
Extraordinary Charge, Net of Tax Benefit(1).... -- -- -- (0.15) -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) Applicable to Common
Stockholders ............................... $ 0.05 $ (0.40) $ (32.61) $ (0.15) $ (0.26) $ (0.11) $ (0.06)
======= ======= ======== ======== ======== ======== ========
Weighted Average Common Shares Outstanding..... 12,101 321 57 13,911 17,172 16,359 26,848
======= ======= ======== ======== ======== ======== ========
Pro Forma(6):
Net Income (Loss) Applicable to Common
Stockholders................................ $ 0.08 $ (0.01) $ (0.16) $ (0.13) $ (0.26) $ (0.11) $ (0.06)
======= ======= ======== ======== ======== ======== ========
Weighted Average Common Shares Outstanding..... 12,101 11,976 11,676 15,206 17,172 16,359 26,848
======= ======= ======== ======== ======== ======== ========
Other Data:
EBITDA(2) ....................................... $18,648 $20,885 $ 26,124 $ 33,629 $ 50,218 $ 33,970 $ 71,232
EBITDA as a Percentage of Total Revenues ........ 22.8% 23.8% 25.0% 24.2% 24.1% 23.7% 22.9%
Capital Expenditures:
Growth (3)(4) ................................ $13,605 $15,829 $ 14,395 $ 23,334 $ 37,082 $ 20,074 $ 36,259
Maintenance .................................. 1,846 1,151 858 1,112 1,238 544 960
------- ------- -------- -------- -------- -------- --------
Total Capital Expenditures(4) ................... $15,451 $16,980 $ 15,253 $ 24,446 $ 38,320 $ 20,618 $ 37,219
======= ======= ======== ======== ======== ======== ========
Additions to Customer Acquisition Costs.......... $ 922 $ 1,366 $ 1,379 $ 1,642 $ 1,635 $ 688 $ 2,326
<CAPTION>
As of December 31, As of
---------------------------------------------------- September 30,
1993 1994 1995 1996 1997 1998
--------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and Cash Equivalents ...... $ 591 $ 1,303 $ 1,585 $ 3,453 $ 24,510 $ 522
Total Assets ................... 125,288 136,859 186,881 281,799 636,786 894,706
Total Debt ..................... 78,460 86,258 121,874 184,733 428,018 443,189
Stockholders' Equity ........... 24,047 22,869 21,011 52,384 137,733 340,460
<FN>
- ---------------
(first and fifth footnotes from the preceding page)
(1) The extraordinary charge for 1996 relates to the early retirement of certain debt and consists of a prepayment penalty, the
write-off of deferred financing costs, original issue discount and loss on termination of interest rate protection agreements.
(2) Based on our experience in the records management industry, we believe that EBITDA is an important tool for measuring the
performance of records management companies (including potential acquisition targets) in several areas, such as liquidity,
operating performance and leverage. In addition, lenders use EBITDA as a criterion in evaluating records management companies,
and substantially all of our financing agreements contain covenants in which EBITDA is used as a measure of financial
performance. However, EBITDA should not be considered an alternative to operating or net income (as determined in accordance
with GAAP) as an indicator of our performance or to cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity.
(3) Growth capital expenditures consist primarily of investments in racking systems, management information systems, new buildings
and improvements to existing facilities.
(4) Includes $2,901 in 1994 related to the cost of constructing a records management facility which was sold in a sale-leaseback
transaction in the fourth quarter of 1994.
(5) Other income for the nine month period ended September 30, 1998 is comprised of a $1.7 million gain resulting from the
settlement of several insurance claims related to the March 1997 fires at our South Brunswick Township, New Jersey facilities.
(6) Represents pro forma earnings per share as if the preferred stock that was converted into common stock in connection with our
initial public offering had been converted for all periods presented.
</FN>
</TABLE>
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DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock and certain provisions of
our Restated Certificate of Incorporation and our By-Laws is only a summary and
is qualified in its entirety by reference to the Restated Certificate of
Incorporation and the By-Laws.
Our authorized capital stock consists of 100,000,000 shares of common
stock, 1,000,000 shares of nonvoting common stock, par value $.01 per share, and
2,000,000 shares of preferred stock, $.01 par value per share. No shares of
preferred stock have been issued. There were 29,291,033 shares of common stock
held by 343 holders of record and no shares of nonvoting common stock issued and
outstanding as of November 20, 1998.
Common Stock
The rights of holders of the common stock and the nonvoting common stock
are identical in all respects except voting and convertibility.
Dividends. Holders of record of shares of common stock and nonvoting common
stock on the record date fixed by the Board of Directors are entitled to receive
such dividends as may be declared by the Board out of funds legally available
for such purpose. No dividends may be declared or paid in cash or property on
any share of either class, however, unless simultaneously the same dividend is
declared or paid on each share of the other class. In the case of any stock
dividend, holders of each class are entitled to receive the same percentage
dividend (payable in shares of that class).
We are currently restricted under the terms of our credit agreement and the
indenture for our outstanding senior subordinated notes from paying cash
dividends on the common stock and nonvoting common stock. Even if funds were to
be available, we do not intend to pay dividends in the foreseeable future.
Voting Rights. Except as otherwise required by law, on each matter
submitted for a vote of stockholders, holders of shares of common stock are
entitled to one vote per share and holders of nonvoting common stock are not
entitled to vote.
Under the Restated Certificate of Incorporation, the vote of holders of at
least 66 2/3% of the voting power of all outstanding shares of capital stock
entitled to vote generally in the election of Directors, voting together as a
single class, is required to amend or repeal the provisions of the Restated
Certificate of Incorporation authorizing the preferred stock, common stock and
nonvoting common stock or specifying the terms of the common stock and the
nonvoting common stock (including any amendment to increase any shares of
authorized capital stock). Certain other provisions also require such a 66 2/3%
vote. See "Delaware General Corporation Law and Certain Provisions of the
Restated Certificate of Incorporation and the By-Laws." There are no cumulative
voting rights in the election of the Board of Directors.
Conversion Provisions. Shares of nonvoting common stock may be converted
into shares of common stock at any time at the option of the holder on a
share-for-share basis without the payment of any additional consideration.
However, the conversion of any shares of nonvoting common stock by a "bank
holding company" under the Bank Holding Company Act of 1956, as amended, or an
affiliate of a "bank holding company" is prohibited if the conversion of the
total number of shares of nonvoting common stock held by such holder would cause
it to be in violation of the Bank Holding Company Act.
Liquidation Rights. Upon liquidation, dissolution or winding-up of Iron
Mountain,
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<PAGE>
the holders of common stock and nonvoting common stock are entitled to share
ratably (based on the number of shares held) in all assets available for
distribution after payment in full of creditors and payment in full to any
holders of preferred stock then outstanding of any amount required to be paid
under the terms of the preferred stock.
Other Provisions. The outstanding shares of common stock and nonvoting
common stock are validly issued, fully paid and nonassessable. In any merger,
consolidation or business combination, holders of each class will receive
identical consideration, except that in any such transaction in which shares of
stock are distributed, such shares may differ as to voting rights to the extent
that voting rights now differ between the two classes. Neither class may be
subdivided, consolidated, reclassified or otherwise changed unless,
concurrently, the other class is subdivided, consolidated, reclassified or
otherwise changed in the same proportion and in the same manner.
The Transfer Agent and Registrar for the common stock is Boston Equiserve
Limited Partnership, 150 Royall Street, Canton, Massachusetts 02021 (telephone
number (781) 575-2000).
The Board of Directors has the power to issue shares of authorized but
unissued common stock and nonvoting common stock without further stockholder
action. The holders of common stock and nonvoting common stock are not entitled
to preemptive or subscription rights. The issuance of any currently unissued
shares could have the effect of diluting the earnings per share and book value
per share of currently outstanding shares of common stock.
Preferred Stock
The authorized and unissued shares of preferred stock may be issued with
such designations, preferences, limitations and relative rights as the Board of
Directors may authorize including, but not limited to:
o the distinctive designation of each series and the number of
shares that will constitute such series;
o the voting rights, if any, of shares of such series;
o the dividend rate on the shares of such series, any restriction,
limitation or condition upon the payment of such dividends,
whether dividends shall be cumulative, and the dates on which
dividends are payable;
o the prices at which, and the terms and conditions on which, the
shares of such series may be redeemed, if such shares are
redeemable;
o the purchase or sinking fund provisions, if any, for the purchase
or redemption of shares of such series;
o any preferential amount payable upon shares of such series in the
event of the liquidation, dissolution or winding-up of Iron
Mountain or the distribution of its assets; and
o the price or rates of conversion at which, and the terms and
conditions on which the shares of such series may be converted
into other securities, if such shares are convertible.
We currently have no intention to issue shares of preferred stock. However,
the issuance of preferred stock, or the issuance of rights to purchase preferred
stock, could discourage an unsolicited acquisition proposal. If we issue shares
of preferred stock in the future, the rights of holders of common stock
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<PAGE>
will be subject to, and may be adversely affected by, the rights of holders of
any preferred stock.
DELAWARE GENERAL CORPORATION LAW AND CERTAIN PROVISIONS OF THE RESTATED
CERTIFICATE OF INCORPORATION AND THE BY-LAWS
The Restated Certificate of Incorporation and the By-Laws contain certain
provisions that could delay or make more difficult the acquisition of Iron
Mountain by means of a tender offer, a proxy contest or otherwise. These
provisions, as described below, are expected to discourage certain types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of Iron Mountain first to negotiate with Iron
Mountain. We believe that the benefits of increased protection of our ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure Iron Mountain outweigh the disadvantages of discouraging such
proposals because, among other things, negotiations with respect to such
proposals could result in an improvement of their terms.
Classified Board of Directors
The Restated Certificate of Incorporation and the By-Laws provide for a
Board of Directors that is divided into three classes of Directors, as nearly
equal in number as possible, with the term of each class expiring in a different
year. The By-Laws provide that the number of Directors will be fixed from time
to time exclusively by the Board of Directors, but shall consist of not more
than fifteen nor less than three Directors. The classified Board of Directors is
intended to promote continuity and stability of our management and policies
since a majority of the Directors at any given time will have prior experience
as Directors of Iron Mountain. Such continuity and stability facilitates
long-range planning of our business and ensures the quality of our business
operations. The classification of Directors has the effect of making it more
difficult to change the composition of the Board of Directors. At least two
annual stockholder meetings, instead of one, would be required to effect a
change in the majority control of the Board of Directors, except in the event of
vacancies resulting from removal (in which case the remaining Directors will
fill the vacancies created by the removal). See "--Removal of Directors; Filling
Vacancies on the Iron Mountain Board."
Removal of Directors; Filling Vacancies on the Iron Mountain Board
Our Restated Certificate of Incorporation and By-Laws provide that a
Director may be removed by the stockholders only for cause at any time during
such Director's term of office by affirmative vote of the holders of at least
80% of the voting power.
The By-Laws and the Restated Certificate of Incorporation both provide that
a vacancy on the Board of Directors, including a vacancy created by an increase
in the size of the Board of Directors by the Directors, may be filled by a
majority of the remaining Directors or by a sole remaining Director, or if no
Directors remain, then by the stockholders. The Restated Certificate of
Incorporation also provides that any Director elected by the Board of Directors
to replace another Director of a given class of Directors will hold office until
the next election of that Director's class. These provisions are to ensure that
a third party would be precluded from removing incumbent Directors and
simultaneously gaining control of the Board of Directors by filling the
vacancies created by such removal with its own nominees. Moreover, even if the
holders of the outstanding common stock were to vote to remove Directors for
cause, only the remaining Directors would have the power to fill the vacancies
created by such removal, unless such vote provided for the removal of the entire
Board of Directors for cause.
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<PAGE>
Amendment of Certain Provisions of the Restated Certificate of Incorporation and
the By-Laws
The Restated Certificate of Incorporation and the By-Laws contain
provisions requiring the affirmative vote of the holders of at least 66 2/3% of
the voting power to amend certain provisions of the Restated Certificate of
Incorporation and the By-Laws. This supermajority voting provision applies to
(1) the provisions of the Restated Certificate of Incorporation setting forth
the capitalization of Iron Mountain, (2) the provisions authorizing Iron
Mountain to release its Directors from any liability for monetary damages as a
result of any breach of their fiduciary duties, with certain exceptions mandated
by the Delaware General Corporation Law (the "DGCL"), (3) the provisions
allowing for the indemnification of officers and Directors of Iron Mountain and
(4) the supermajority voting provision.
In addition, the Restated Certificate of Incorporation provides that the
By-Laws may be amended only by a majority of the full Board of Directors or by
the stockholders holding at least 66 2/3% of the voting power. The DGCL provides
that by-laws may not be amended by a corporation's board of directors unless the
corporation's certificate of incorporation expressly authorizes such amendments
by the board of directors. Our Restated Certificate of Incorporation includes
such a provision. Under the Restated Certificate of Incorporation, at least 80%
of the voting power is required to approve amendments to those provisions of the
By-Laws (1) establishing a classified Board, (2) specifying notice requirements
for stockholder nominations of Directors, (3) limiting the rights of
stockholders to remove or nominate Directors or to bring business before annual
meetings of stockholders, (4) filling vacancies on the Board of Directors and
(5) providing for limitations on calling special meetings of the stockholders.
Stockholder Actions and Meetings
Our Restated Certificate of Incorporation provides that stockholder action
may be taken only at an annual or special meeting of stockholders and prohibits
stockholder action by written consent in lieu of a meeting. The Restated
Certificate of Incorporation and ByLaws provide that special meetings of
stockholders can be called by the Chairman of the Board of Directors, if any, or
the Board of Directors pursuant to a resolution approved by a majority of the
members of the Board of Directors. The business permitted to be conducted at any
special meeting of stockholders is limited to the business brought before the
meeting by the Board of Directors. The By-Laws set forth an advance notice
procedure with regard to the nomination, other than by or at the direction of
the Board of Directors, of candidates for election as Directors and with regard
to business brought before an annual meeting of our stockholders.
Delaware Anti-Takeover Statute
Subject to certain exceptions set forth therein, Section 203 of the DGCL
provides that a corporation shall not engage in any business combination with
any "interested stockholder" for a three-year period following the date that
such stockholder becomes an interested stockholder unless (1) prior to such
date, the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder, (2) upon consummation of the transaction that resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares) or
(3) on or subsequent to such date, the business combination is approved by the
board of directors of the corporation and by the affirmative vote of at least 66
2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
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<PAGE>
Except as specified therein, an interested stockholder is defined to mean
any person that (a) is the owner of 15% or more of the outstanding voting stock
of the corporation or (b) is an affiliate or associate of the corporation and
was the owner of 15% or more of the outstanding voting stock of the corporation
at any time within three years immediately prior to the relevant date, or any
affiliate or associate of such person referred to in (a) or (b) of this
sentence.
Under certain circumstances, Section 203 of the DGCL makes it more
difficult for an interested stockholder to effect various business combinations
with a corporation for a three-year period. However, stockholders may, by
adopting an amendment to the corporation's certificate of incorporation or
by-laws, elect not to be governed by this section, effective twelve months after
adoption. The Restated Certificate of Incorporation and the By-Laws do not
exclude us from the restrictions imposed under Section 203 of the DGCL. It is
anticipated that the provisions of Section 203 of the DGCL may encourage
companies interested in acquiring Iron Mountain to negotiate in advance with the
Board of Directors.
LEGAL MATTERS
The validity of the shares of common stock offered by this Prospectus have
been passed upon for us by Sullivan & Worcester LLP, Boston, Massachusetts. Jas.
Murray Howe, Secretary of Iron Mountain, is of counsel to Sullivan & Worcester
LLP and beneficially owns 15,000 shares of common stock.
EXPERTS
The consolidated financial statements and schedule of Iron Mountain
Incorporated and its subsidiaries for the three years ended December 31, 1997,
included in Iron Mountain's Annual Report on Form 10-K, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
The financial statements of Security Archives of Minnesota for the year
ended December 31, 1996, included in Iron Mountain's Current Report on Form 8-K
dated October 30, 1997, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Wellington Financial Services, Inc. for the
year ended December 31, 1996, included in Iron Mountain's Current Report on Form
8-K dated October 30, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
The financial statements and schedule of Safesite Records Management
Corporation for the three years ended December 31, 1996, included in Iron
Mountain's Registration Statement on Form S-4 (file no. 333-24635, effective
date May 14, 1997), have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
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<PAGE>
The financial statements of Concorde Group, Inc. and Neil Tucker Trust for
the year ended December 31, 1996, included in Iron Mountain's Current Report on
Form 8-K dated October 30, 1997, have been audited by Fisher, Schacht & Oliver
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
The financial statements of Data Securities International, Inc. for the
year ended December 31, 1996, included in Iron Mountain's Current Report on Form
8-K dated October 30, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
The financial statements of Records Retention/FileSafe, LP for the two
years ended December 31, 1996, included in Iron Mountain's Current Report on
Form 8-K dated November 25, 1997, have been audited by Abbott Stringham & Lynch,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
The financial statements of Allegiance Business Archives, Ltd. for the year
ended December 31, 1996, included in Iron Mountain's Current Report on Form 8-K
dated November 25, 1997, have been audited by Stout, Causey & Horning, P.A.,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
The consolidated financial statements of HIMSCORP, Inc. and Subsidiaries
for the period February 1, 1995 to December 31, 1995 and for the year ended
December 31, 1996, appearing in Iron Mountain's Current Report on Form 8-K dated
November 25, 1997, have been audited by Ernst & Young LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The consolidated financial statements of Arcus Technology Services, Inc.
for the years ended December 31, 1997 and 1996 and the five months ended
December 31, 1995 and the consolidated financial statements of Arcus, Inc.
(Predecessor Company) for the seven months ended July 31, 1995, appearing in
Iron Mountain's Current Report on Form 8-K dated March 9, 1998, have been
audited by Ernst & Young LLP, independent public accountants, as indicated in
their report with respect thereto, and incorporated by reference herein in
reliance upon the authority of such firm as experts in giving said report.
The financial statements of National Underground Storage, Inc. for the two
years ended December 31, 1997, included in Iron Mountain's Current Report on
Form 8-K dated July 10, 1998 (as amended August 7, 1998), have been audited by
Carbis Walker & Associates, LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
The financial statements of Midwest Records Management for the year ended
December 31, 1997, included in Iron Mountain's Current Report on Form 8-K dated
September 18, 1998, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
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<PAGE>
The financial statements of Sloan Vaults, Inc. and Affiliate for the year
ended December 31, 1997, included in Iron Mountain's Current Report on Form 8-K
dated September 18, 1998, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of InterMation, Inc. for the year ended December
31, 1997, included in Iron Mountain's Current Report on Form 8-K dated September
18, 1998, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
19
