<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 JUNE 30, 1999
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 0-27584
IRON MOUNTAIN INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 04-3107342
-------- ----------
(State or Other Jurisdiction of (IRS 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
--- ---
As of August 6, 1999, there were 35,327,872 shares of the Registrant's Common
Stock, par value $0.01 per share, and no shares of the Registrant's Nonvoting
Common Stock, par value $0.01 per share, outstanding.
<PAGE>
IRON MOUNTAIN INCORPORATED
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1999 and
December 31, 1998 (Unaudited) 3
Condensed Consolidated Statements of Operations for the Three Months Ended
June 30, 1999 and 1998 (Unaudited) 4
Condensed Consolidated Statements of Operations for the Six Months Ended
June 30, 1999 and 1998 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 1998 (Unaudited) 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7-14
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of
Operations 15-21
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 22
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security-Holders 23
Item 6 - Exhibits and Reports on Form 8-K 23-24
Signatures 25
</TABLE>
2
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------------------- -------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 26,569 $ 1,715
Accounts Receivable (less allowances of $4,496
and $3,316 respectively) 100,010 75,565
Foreign Currency Transaction Receivable -- 45,885
Deferred Income Taxes 9,526 10,474
Prepaid Expenses and Other 10,545 10,298
------------ ---------------
Total Current Assets 146,650 143,937
PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment 445,005 354,101
Less: Accumulated Depreciation (90,911) (87,358)
------------ ---------------
Property, Plant and Equipment, net 354,094 266,743
OTHER ASSETS:
Goodwill, net 718,125 527,235
Customer Acquisition Costs, net 13,081 9,574
Deferred Financing Costs, net 16,610 13,392
Investment in Subsidiary 4,800 --
Other 6,737 6,504
------------ ---------------
Total Other Assets 759,353 556,705
------------ ---------------
Total Assets $ 1,260,097 $ 967,385
------------ ---------------
------------ ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-term Debt $ 4,216 $ 1,731
Accounts Payable 16,365 20,620
Accrued Expenses and Other 62,788 48,878
Foreign Currency Transaction Payable -- 46,200
Deferred Income 31,115 26,043
------------ ---------------
Total Current Liabilities 114,484 143,472
LONG-TERM DEBT, NET OF CURRENT PORTION 581,574 454,447
OTHER LONG-TERM LIABILITIES 8,925 8,925
DEFERRED RENT 10,243 9,616
DEFERRED INCOME TAXES 18,329 12,043
MINORITY INTEREST 39,788 --
STOCKHOLDERS' EQUITY:
Common Stock 368 294
Additional Paid-in Capital 556,298 355,927
Accumulated Deficit (28,141) (17,339)
Accumulated Other Comprehensive Income (2,287) --
Treasury Stock (39,484) --
------------ ---------------
Total Stockholders' Equity 486,754 338,882
------------ ---------------
Total Liabilities and Stockholders' Equity $ 1,260,097 $ 967,385
------------ ---------------
------------ ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
3
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------------------
1999 1998
------------------ ------------------
<S> <C> <C>
REVENUES:
Storage $ 79,928 $ 55,592
Service and Storage Material Sales 51,837 37,872
----------- -----------
Total Revenues 131,765 93,464
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation) 66,167 46,756
Selling, General and Administrative 32,938 23,638
Depreciation and Amortization 16,281 11,903
----------- -----------
Total Operating Expenses 115,386 82,297
----------- -----------
OPERATING INCOME 16,379 11,167
INTEREST EXPENSE 14,227 10,875
OTHER INCOME -- 1,700
----------- -----------
Income from Continuing Operations Before Provision for
Income Taxes and Minority Interest 2,152 1,992
PROVISION FOR INCOME TAXES 3,229 2,387
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED SUBSIDIARIES 318 --
----------- -----------
Loss from Continuing Operations (1,395) (395)
INCOME FROM DISCONTINUED OPERATIONS (NET OF APPLICABLE TAXES) 142 134
LOSS ON SALE OF DISCONTINUED OPERATIONS 9,400 --
----------- -----------
Net Loss $ (10,653) $ (261)
----------- -----------
----------- -----------
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from Continuing Operations $ (0.04) $ (0.01)
Income from Discontinued Operations (Net of Applicable Taxes) -- --
Loss on Sale of Discontinued Operations (0.28) --
----------- -----------
Net Loss Per Common Share - Basic and Diluted $ (0.32) $ (0.01)
----------- -----------
----------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 33,028 28,989
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
4
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------------------
1999 1998
------------------ -----------------
<S> <C> <C>
REVENUES:
Storage $ 147,650 $ 108,540
Service and Storage Material Sales 93,486 73,980
----------- ----------
Total Revenues 241,136 182,520
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation) 120,602 91,673
Selling, General and Administrative 60,813 45,998
Depreciation and Amortization 29,876 22,961
----------- ----------
Total Operating Expenses 211,291 160,632
----------- ----------
OPERATING INCOME 29,845 21,888
INTEREST EXPENSE 26,171 23,187
OTHER INCOME -- 1,700
----------- ----------
Income from Continuing Operations Before Provision for
Income Taxes and Minority Interest 3,674 401
PROVISION FOR INCOME TAXES 4,852 1,342
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED SUBSIDIARIES 465 --
----------- ----------
Loss from Continuing Operations (1,643) (941)
INCOME FROM DISCONTINUED OPERATIONS (NET OF APPLICABLE TAXES) 241 366
LOSS ON SALE OF DISCONTINUED OPERATIONS 9,400 --
----------- ----------
Net Loss $ (10,802) $ (575)
----------- ----------
----------- ----------
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from Continuing Operations $ (0.05) $ (0.04)
Income from Discontinued Operations (Net of Applicable Taxes) -- 0.02
Loss on Sale of Discontinued Operations (0.30) --
----------- -----------
Net Loss Per Common Share - Basic and Diluted $ (0.35) $ (0.02)
----------- ----------
----------- ----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 31,274 25,648
----------- ----------
----------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
5
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------------
1999 1998
------------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (10,802) $ (575)
Adjustments to reconcile net loss to loss from continuing operations:
Income from Discontinued Operations (241) (366)
Loss on sale of Discontinued Operations 9,400 --
--------------- --------------
Loss from Continuing Operations (1,643) (941)
Adjustments to Reconcile Loss from Continuing Operations to Cash Flows
Provided by Operating Activities of Continuing Operations:
Minority Interest 465 --
Depreciation and Amortization 29,876 22,961
Amortization of Financing Costs 911 902
Provision for Doubtful Accounts 904 672
Other, net 137 --
Changes in Assets and Liabilities (Exclusive of Acquisitions):
Accounts Receivable (12,229) (3,648)
Prepaid Expenses and Other Current Assets 1,364 (337)
Deferred Income Taxes 4,358 479
Other Assets (237) 1,026
Accounts Payable (7,319) (4,291)
Accrued Expenses and Other Current Liabilities 5,002 1,639
Deferred Income 954 (115)
Deferred Rent 627 672
Other Long-term Liabilities -- 139
--------------- --------------
Cash Flows Provided by Continuing Operations 23,170 19,158
Cash Flows Provided by (Used in) Discontinued Operations (357) 1,201
--------------- --------------
Cash Flows Provided by Operating Activities 22,813 20,359
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Paid for Acquisitions (171,629) (137,525)
Capital Expenditures (40,338) (22,004)
Investment in Subsidiary (4,800) --
Additions to Customer Acquisition Costs (3,933) (1,174)
--------------- --------------
Cash Flows Used in Continuing Operations (220,700) (160,703)
Cash Flows Used in Discontinued Operations (345) (189)
--------------- --------------
Cash Flows Used in Investing Activities (221,045) (160,892)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Debt (237,370) (112,359)
Proceeds from Borrowings 200,600 108,800
Net Proceeds from Sale of Senior Subordinated Notes 149,460 --
Financing Costs (4,182) (344)
Net Proceeds from Equity Offering 153,755 132,906
Repurchase of Common Stock (39,484) --
Proceeds from Exercise of Stock Options 901 2,482
Stock Issuance Costs (512) (873)
--------------- --------------
Cash Flows Provided by Continuing Operations 223,168 130,612
Cash Flows Provided by Discontinued Operations -- --
--------------- --------------
Cash Flows Provided by Financing Activities 223,168 130,612
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (82) --
--------------- --------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 24,854 (9,921)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,715 24,510
--------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 26,569 $ 14,589
--------------- --------------
--------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
6
<PAGE>
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, 1998
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 related notes for the year
ended December 31, 1998 included in the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on July 9, 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 JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------- ------------------------------
1999 1998 1999 1998
--------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
Comprehensive Loss:
Net Loss $(10,653) $ (261) $ (10,802) $ (575)
Other Comprehensive Loss:
Foreign Currency Translation Adjustment (1,711) -- (2,287) --
---------- --------- ---------- ---------
Comprehensive Loss $(12,364) $ (261) $ (13,089) $ (575)
---------- --------- ---------- ---------
---------- --------- ---------- ---------
</TABLE>
(3) ACQUISITIONS
During the six months ended June 30, 1999, the Company purchased
substantially all of the assets, and assumed certain liabilities, of ten
records and information management services businesses and purchased a
controlling 50.1% interest in Britannia Data Management Limited ("BDM"), a
provider of records and information management services in the United Kingdom
(collectively, the "1999 Acquisitions"). Each of the 1999 Acquisitions and
all 15 of the records and information management services businesses acquired
by the Company during 1998 (the "1998 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 1998 acquisitions, related real estate was also
purchased. The aggregate purchase price for the 1999 Acquisitions was
comprised of cash, the Company's common stock and the capital stock of Arcus
Data
7
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands except Per Share Data)
(Unaudited)
(Continued)
(3) ACQUISITIONS (CONTINUED)
Security Limited ("ADS"), the Company's existing data security business in
London, and exceeded the underlying fair value of the net assets acquired by
$147,232, which has been assigned to goodwill and is being amortized over 25
to 30 years. The $63,586 of goodwill recorded by BDM relates to the 1996
acquisition of BDM by Mentmore Abbey plc. The purchase price allocations are
preliminary and subject to adjustment.
A summary of the total consideration and the preliminary allocation of the
aggregate purchase price of the 1999 Acquisitions, as of the acquisition
dates, is as follows:
<TABLE>
<S> <C>
Purchase Price:
Cash Paid $ 171,629
Fair Value of Common Stock Issued 46,000
Fair Value of ADS Capital Stock 2,489
---------
Total Purchase Price $ 220,118
---------
---------
Allocation of Purchase Price:
Current Assets $ 14,577
Property, Plant & Equipment 64,472
Other Assets 7,739
Fair Value of ADS Net Assets 2,489
Goodwill Recorded by BDM 63,586
Goodwill Recorded by Iron Mountain 147,232
Liabilities Assumed (40,654)
Minority Interest (39,323)
---------
Total Allocation of Purchase Price $ 220,118
---------
---------
</TABLE>
In May 1999, the Company repurchased, for $39,484, all 1,476,577 shares of
its common stock issued in connection with a certain 1999 Acquisition. These
shares had a fair value of $46,000 when issued.
In June 1999, BDM purchased all of the outstanding capital stock of Memogarde
S.A. ("Memogarde") and related companies for approximately $17 million in
cash and assumed debt. Memogarde, headquartered in Paris, France, is a
leading provider of data security services in France. Due to the differences
in fiscal year ends between the Company and BDM, BDM's acquisition of
Memogarde is not reflected in the accompanying condensed consolidated
financial statements and notes thereto.
8
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands except Per Share Data)
(Unaudited)
(Continued)
(3) ACQUISITIONS (CONTINUED)
The following unaudited pro forma combined information shows the results of
the Company's continuing operations for the six months ended June 30, 1999
and the year ended December 31, 1998 as though each of the 1999 Acquisitions
and 1998 Acquisitions, except Memogarde, had occurred as of the beginning of
the respective period:
<TABLE>
<CAPTION>
YEAR
SIX MONTHS ENDED ENDED
JUNE 30, DECEMBER 31,
1999 1998
------------------ ------------------
<S> <C> <C>
Revenues $ 258,643 $ 475,776
Loss from Continuing Operations (11,603) (9,753)
Loss from Continuing Operations Per Share - Basic and Diluted (0.36) (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 the beginning of each period 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.
(4) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
------------------------------------ ---------------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
8-1/4% Senior Subordinated Notes
(the"1999 Notes") $ 149,468 $ 142,500 $ -- $ --
8-3/4% Senior Subordinated Notes
(the"1997 Notes") 249,586 245,000 249,566 257,500
10-1/8% Senior Subordinated Notes
(the"1996 Notes") 165,000 171,600 165,000 178,200
Revolving Credit Facility -- -- 35,300 35,300
Real Estate Mortgages 2,199 2,199 2,349 2,349
Other 19,537 19,537 3,963 3,963
------------- -----------
Total Long-term Debt 585,790 456,178
Less: Current Portion (4,216) (1,731)
------------- -----------
Long-term Debt, Net of Current Portion $ 581,574 $ 454,447
------------- -----------
------------- -----------
</TABLE>
The estimated fair values for the long-term debt are based on the borrowing
rates available to the Company at June 30, 1999 and December 31, 1998 for
loans with similar terms and average maturities.
9
<PAGE>
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
The 1996 Notes, the 1997 Notes and the 1999 Notes are fully and
unconditionally guaranteed, on a joint and several senior subordinated basis,
by most, but not all, of the Company's direct and indirect subsidiaries (the
"Guarantors"). As of June 30, 1999, BDM and its subsidiaries, Iron Mountain
(Puerto Rico), Inc. and certain parent holding companies (the
"Non-Guarantors") were the only subsidiaries that did not guarantee the 1996
Notes, the 1997 Notes or the 1999 Notes.
Prior to the acquisition of BDM in January 1999, substantially all of the
Company's operations were conducted by its direct and indirect wholly owned
subsidiaries, all of which, other than ADS, were guarantors of the 1996 Notes
and 1997 Notes. ADS represented less than 1% of the Company's consolidated
revenues and was not material to its results of operations. The Company's
management does not believe that separate financial statements of, and other
disclosures with respect to, the Guarantors for periods prior to 1999 are
meaningful or material to investors. Accordingly, no such financial
statements were provided.
The following financial data summarizes the consolidating Company on the
equity method of accounting as of and for the three and six month periods
ended June 30, 1999:
<TABLE>
<CAPTION>
JUNE 30, 1999
----------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 21,255 $ 2,431 $ 2,883 $ -- $ 26,569
Accounts Receivable -- 93,338 6,672 -- 100,010
Other Current Assets -- 19,557 1,236 (722) 20,071
---------- ---------- ---------- ----------- ------------
Total Current Assets 21,255 115,326 10,791 (722) 146,650
PROPERTY, PLANT AND EQUIPMENT, NET -- 322,113 31,981 -- 354,094
OTHER ASSETS:
Due From Affiliates 227,893 -- -- (227,893) --
Long-term Notes Receivable from Affiliates 549,867 -- -- (549,867) --
Investment in Subsidiaries 247,738 52,266 4,800 (300,004) 4,800
Goodwill, net -- 644,937 73,188 -- 718,125
Other 15,882 20,546 -- -- 36,428
---------- ---------- ---------- ----------- ------------
Total Other Assets 1,041,380 717,749 77,988 (1,077,764) 759,353
---------- ---------- ---------- ----------- ------------
Total Assets $1,062,635 $1,155,188 $ 120,760 $(1,078,486) $ 1,260,097
---------- ---------- ---------- ----------- ------------
---------- ---------- ---------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 11,828 $ 91,212 $ 12,166 $ (722) $ 114,484
LONG-TERM DEBT, NET OF CURRENT PORTION 564,053 4,270 13,251 -- 581,574
DUE TO AFFILIATES -- 227,893 -- (227,893) --
LONG-TERM NOTES PAYABLE TO AFFILIATES -- 549,867 -- (549,867) --
OTHER LONG-TERM LIABILITIES -- 36,633 864 -- 37,497
MINORITY INTEREST -- -- 39,788 -- 39,788
STOCKHOLDERS' EQUITY 486,754 245,313 54,691 (300,004) 486,754
---------- ---------- ---------- ----------- -----------
Total Liabilities and Stockholders' Equity $1,062,635 $1,155,188 $ 120,760 $(1,078,486) $ 1,260,097
---------- ---------- ---------- ----------- ------------
---------- ---------- ---------- ----------- ------------
</TABLE>
10
<PAGE>
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 JUNE 30, 1999
----------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Storage $ -- $ 74,921 $ 5,007 $ -- $ 79,928
Service and Storage Material Sales -- 48,018 3,819 -- 51,837
--------- ---------- ---------- ---------- ----------
Total Revenues -- 122,939 8,826 -- 131,765
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation) -- 61,039 5,128 -- 66,167
Selling, General and Administrative 61 31,514 1,363 -- 32,938
Depreciation and Amortization -- 15,230 1,051 -- 16,281
--------- ---------- ---------- ---------- ----------
Total Operating Expenses 61 107,783 7,542 -- 115,386
--------- ---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) (61) 15,156 1,284 -- 16,379
INTEREST INCOME (13,752) -- -- 13,752 --
INTEREST EXPENSE 13,870 13,876 233 (13,752) 14,227
EQUITY IN THE (EARNINGS) LOSS OF SUBSIDIARIES 10,474 (366) -- (10,108) --
--------- ---------- ---------- ---------- ----------
Income (Loss) from Continuing Operations
Before Provision for Income Taxes and
Minority Interest (10,653) 1,646 1,051 10,108 2,152
PROVISION FOR INCOME TAXES -- 2,862 367 -- 3,229
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES -- -- 318 -- 318
--------- ---------- ---------- ---------- ----------
Income (Loss) from Continuing Operations (10,653) (1,216) 366 10,108 (1,395)
INCOME FROM DISCONTINUED OPERATIONS (NET OF
APPLICABLE TAXES) -- 142 -- -- 142
LOSS ON SALE OF DISCONTINUED OPERATIONS -- 9,400 -- -- 9,400
--------- ---------- ---------- ---------- ----------
Net Income (Loss) $ (10,653) $ (10,474) $ 366 $ 10,108 $ (10,653)
--------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ----------
</TABLE>
11
<PAGE>
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>
SIX MONTHS ENDED JUNE 30, 1999
----------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Storage $ -- $ 141,034 $ 6,616 $ -- $ 147,650
Service and Storage Material Sales -- 88,370 5,116 -- 93,486
--------- ---------- ---------- ---------- ----------
Total Revenues -- 229,404 11,732 -- 241,136
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation) -- 113,817 6,785 -- 120,602
Selling, General and Administrative 185 58,827 1,801 -- 60,813
Depreciation and Amortization -- 28,473 1,403 -- 29,876
--------- ---------- ---------- ---------- ----------
Total Operating Expenses 185 201,117 9,989 -- 211,291
--------- ---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) (185) 28,287 1,743 -- 29,485
INTEREST INCOME (24,112) -- -- 24,112 --
INTEREST EXPENSE 25,589 24,377 317 (24,112) 26,171
EQUITY IN THE (EARNINGS) LOSS OF SUBSIDIARIES 9,140 (387) -- (8,753) --
--------- ---------- ---------- ---------- ----------
Income (Loss) from Continuing Operations
Before Provision for Income Taxes and
Minority Interest (10,802) 4,297 1,426 8,753 3,674
PROVISION FOR INCOME TAXES -- 4,278 574 -- 4,852
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED
SUBSIDIARIES -- -- 465 -- 465
--------- ---------- -------- ---------- ----------
Income (Loss) from Continuing Operations (10,802) 19 387 8,753 (1,643)
INCOME FROM DISCONTINUED OPERATIONS (NET OF
APPLICABLE TAXES) -- 241 -- -- 241
LOSS ON SALE OF DISCONTINUED OPERATIONS -- 9,400 -- -- 9,400
--------- ---------- ---------- ---------- ----------
Net Income (Loss) $ (10,802) $ (9,140) $ 387 $ 8,753 $ (10,802)
--------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ----------
</TABLE>
12
<PAGE>
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>
SIX MONTHS ENDED JUNE 30, 1999
------------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Flows Provided by Continuing Operations $ (10,258) $ 31,216 $ 2,212 $ -- $ 23,170
Cash Flows Used in Discontinued Operations -- (357) -- -- (357)
---------- ------------ ---------- ---------- ----------
Cash Flows (Used in) Provided by Operating
Activities (10,258) 30,859 2,212 -- 22,813
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Paid for Acquisitions (2,398) (125,200) (44,031) -- (171,629)
Capital Expenditures -- (39,395) (943) -- (40,338)
Intercompany Loans to Subsidiaries (139,129) -- -- 139,129 --
Investment in Subsidiaries (51,610) (46,810) -- 93,620 (4,800)
Additions to Customer Acquisition Costs -- (3,933) -- -- (3,933)
---------- ------------ ---------- ---------- ----------
Cash Flows Used in Continuing Operations (193,137) (215,338) (44,974) 232,749 (220,700)
Cash Flows Used in Discontinued Operations -- (345) -- -- (345)
---------- ------------ ---------- ---------- ----------
Cash Flows Used in Investing Activities (193,137) (215,683) (44,974) 232,749 (221,045)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Debt (235,900) (360) (1,110) -- (237,370)
Net Proceeds from Borrowings 200,600 -- -- -- 200,600
Net Proceeds from Sale of Senior Subordinated Notes 149,460 -- -- -- 149,460
Net Proceeds from Equity Offering 153,755 -- -- -- 153,755
Repurchase of Common Stock (39,484) -- -- -- (39,484)
Intercompany Loans from Parent -- 139,129 -- (139,129) --
Equity Contribution from Parent -- 46,810 46,810 (93,620) --
Proceeds from Exercise of Stock Options 901 -- -- -- 901
Debt Financing and Stock Issuance Costs (4,694) -- -- -- (4,694)
---------- ------------ ---------- ---------- ----------
Cash Flows Provided by Continuing Operations 224,638 185,579 45,700 (232,749) 223,168
Cash Flows Provided by Discontinued Operations -- -- -- -- --
---------- ------------ ---------- ---------- ----------
Cash Flows Provided by Financing Activities 224,638 185,579 45,700 (232,749) 223,168
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS -- -- (82) -- (82)
---------- ------------ ---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 21,243 755 2,856 -- 24,584
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12 1,703 -- -- 1,715
---------- ------------ ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,255 $ 2,458 $ 2,856 $ -- $ 26,569
---------- ------------ ---------- ---------- ----------
---------- ------------ ---------- ---------- ----------
</TABLE>
13
<PAGE>
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 dilutive 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 three and six months ended
June 30, 1999 and 1998, 2,065 and 2,242 potential common shares,
respectively, have been excluded from the calculation of diluted net loss per
share, as their effects are antidilutive.
(7) DISCONTINUED OPERATIONS
In June 1999, the Company decided to sell its information technology staffing
business, Arcus Staffing Resources, Inc. ("Arcus Staffing"). Arcus Staffing
was acquired in January 1998 as part of the Company's acquisition of Arcus
Group, Inc. In accordance with the provisions of Accounting Principles Board
Opinion No. 30 concerning reporting the effect of the disposal of a business,
the results of operations of Arcus Staffing have been classified as
discontinued in the accompanying statements of operations for the three and
six month periods ended June 30, 1999 and 1998. The following table sets
forth the revenue and net income for Arcus Staffing for all of the periods
presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------- ------------------------------
1999 1998 1999 1998
--------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 11,260 $ 9,599 $21,992 $20,027
Net Income 142 134 241 366
</TABLE>
In addition, the Company has recorded an estimated loss on the sale of Arcus
Staffing of $9,400. The estimated loss is comprised of a write-off of
nondeductible goodwill, a deferred tax provision and estimated expenses
directly related to the transaction partially offset by the estimated income
from operations of Arcus Staffing through the expected date of disposition.
14
<PAGE>
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 and six month periods ended June 30,
1999 and 1998 should be read in conjunction with the consolidated financial
statements and footnotes for the three and six month periods ended June 30,
1999 included herein, and the year ended December 31, 1998, included in the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on July 9, 1999.
OVERVIEW
The Company's consolidated revenues increased $38.3 million, or 41.0%, to
$131.8 million for the second quarter of 1999 from $93.4 million for the
second quarter of 1998. Internal revenue growth was 13.1%. For the six months
ended June 30, 1999, the Company's consolidated revenues were $241.1 million
compared to $182.5 million for the same period last year, an increase of
32.1%. Internal revenue growth was 11.5%.
On April 1, 1999, the Company acquired First American Records Management,
Inc. for total consideration of $41.7 million in cash. On April 8, 1999, the
Company acquired Data Base, Inc. ("Data Base") and related real estate for
$114.8 million. As part of the total consideration, the Company issued
1,476,577 shares of common stock with a fair value of $46.0 million.
On April 26, 1999, the Company completed the sale, in a private placement to
qualified institutional buyers, of $150.0 million in aggregate principal
amount of its 1999 Notes. The 1999 Notes were issued at a price to investors
of 99.64% of par. On May 17, 1999, the Company completed an underwritten
public offering of 5,750,000 shares of its common stock (the "Equity
Offering") at a price to the public of $28.00 per share (including 750,000
shares as a result of the underwriters' exercise of their overallotment
option). The net proceeds from these financing transactions were used to
repurchase all of the 1,476,577 shares of the common stock issued in the
acquisition of Data Base at a price of $26.74 per share, to repay outstanding
indebtedness under the Company's revolving credit facility and for general
corporate purposes, that may include future acquisitions.
In June 1999, in order to focus on its records and information management
services business, the Company decided to sell its information technology
staffing business, Arcus Staffing. Arcus Staffing was acquired in January
1998 as part of the Company's acquisition of Arcus Group, Inc. The Company
expects to complete the transaction by the end of 1999. The sale of Arcus
Staffing is being accounted for as a discontinued operation. Accordingly, the
Arcus Staffing operations have been segregated from the Company's continuing
operations and reported as a separate line item on the Company's statement of
operations. In June 1999, the Company recorded an estimated loss on the sale
of Arcus Staffing of $9.4 million comprised primarily of the write-off of
nondeductible goodwill and a deferred tax provision.
15
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
Consolidated storage revenues increased $24.3 million, or 43.8%, to $79.9
million for the second quarter of 1999 from $55.6 million for the second
quarter of 1998. Internal storage revenue growth was 9.6%. 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 $13.9
million, or 36.9%, to $51.8 million for the second quarter of 1999 from $37.9
million for the second quarter of 1998. Internal service and storage material
sales revenue growth was 18.4%. 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 $38.3
million, or 41.0%, to $131.8 million for the second quarter of 1999 from
$93.5 million for the second quarter of 1998.
Consolidated cost of sales (excluding depreciation) increased $19.4 million,
or 41.5%, to $66.2 million (50.2% of consolidated revenues) for the second
quarter of 1999 from $46.8 million (50.0% of consolidated revenues) for the
second quarter of 1998. The dollar increase was primarily attributable to the
increase in records and other media stored and expenses related to certain
facility moves.
Consolidated selling, general and administrative expenses increased $9.3
million, or 39.3%, to $32.9 million (25.0% of consolidated revenues) for the
second quarter of 1999 from $23.6 million (25.3% of consolidated revenues)
for the second quarter of 1998. The dollar increase was primarily
attributable to: (i) the adoption, effective January 1, 1999, of Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" which requires certain computer software costs
associated with internal use software to be expensed as incurred; (ii)
increased personnel, office and overhead costs to support the Company's
growth; and (iii) the addition of personnel and other overhead costs related
primarily to the First American Records Management and Data Base acquisitions.
Consolidated depreciation and amortization expense increased $4.4 million, or
36.8%, to $16.3 million (12.4% of consolidated revenues) for the second
quarter of 1999 from $11.9 million (12.7% of consolidated revenues) for the
second quarter of 1998. The dollar increase was primarily attributable to the
additional depreciation and amortization expense related to the 1998
Acquisitions and 1999 Acquisitions, and capital expenditures including
racking systems, information systems and expansion of storage capacity in
existing facilities.
As a result of the foregoing factors, consolidated operating income increased
$5.2 million, or 46.7%, to $16.4 million (12.4% of consolidated revenues) for
the second quarter of 1999 from $11.2 million (11.9% of consolidated
revenues) for the second quarter of 1998.
Consolidated interest expense increased $3.3 million, or 30.8%, to $14.2
million for the second quarter of 1999 from $10.9 million for the second
quarter of 1998. The increase was primarily attributable to increased
indebtedness related to the financing of acquisitions and capital
expenditures. The increase was partially offset by lower effective interest
rates for the second quarter of 1999 compared to the same period
16
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
in 1998. Consolidated other income for the second quarter of 1998 is
comprised of a $1.7 million gain resulting from the settlement of several
insurance claims, including a significant claim under its business
interruption insurance policy, related to the March 1997 fires at the
Company's South Brunswick Township, New Jersey facilities.
As a result of the foregoing factors, consolidated income from continuing
operations before provision for income taxes and minority interest increased
$0.2 million, or 8.0%, to $2.2 million (1.6% of consolidated revenues) for
the second quarter of 1999 from $2.0 million (2.1% of consolidated revenues)
for the second quarter of 1998. The provision for income taxes was $3.2
million for the second quarter of 1999 compared to $2.4 million for the
second quarter of 1998. 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 not for
acquisitions of stock). In connection with the acquisitions closed in the
second quarter of 1999, the Company recorded approximately $40 million in
nondeductible goodwill.
Consolidated loss from continuing operations increased $1.0 million to a loss
of $1.4 million (1.1% of consolidated revenues) for the second quarter of
1999 from a loss of $0.4 million (0.4% of consolidated revenues) for the
second quarter of 1998. The loss on the sale of discontinued operations is
comprised of a write-off of nondeductible goodwill, a deferred tax provision
and estimated expenses directly related to the sale of Arcus Staffing
partially offset by the estimated income from discontinued operations through
the expected date of disposition.
As a result of the foregoing factors, consolidated earnings before interest,
taxes, depreciation, amortization, extraordinary items and other income
("EBITDA") from continuing operations increased $9.6 million, or 41.6%, to
$32.7 million (24.8% of consolidated revenues) for the second quarter of 1999
from $23.1 million (24.7% of consolidated revenues) for the second quarter of
1998.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
Consolidated storage revenues increased $39.2 million, or 36.0%, to $147.7
million for the first six months of 1999 from $108.5 million for the first
six months of 1998. Internal storage revenue growth was 9.7%. 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 $19.5
million, or 26.4%, to $93.5 million for the first six months of 1999 from
$74.0 million for the first six months of 1998. Internal service and storage
material sales revenue growth was 14.2%. 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 $58.6
million, or 32.1%, to $241.1 million for the first six months of 1999 from
$182.5 million for the first six months of 1998.
Consolidated cost of sales (excluding depreciation) increased $28.9 million,
or 31.6%, to $120.6 million (50.0% of consolidated revenues) for the first
six months of 1999 from $91.7 million (50.2% of consolidated revenues) for
the first six months of 1998. The dollar increase was primarily attributable
to the increase in records and other media stored and expenses related to
certain facility moves.
17
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Consolidated selling, general and administrative expenses increased $14.8
million, or 32.2%, to $60.8 million (25.2% of consolidated revenues) for the
first six months of 1999 from $46.0 million (25.2% of consolidated revenues)
for the first six months of 1998. The dollar increase was primarily
attributable to: (i) the Company's national sales and marketing meeting
occurring in January 1999; (ii) the adoption, effective January 1, 1999, of
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" which requires certain computer
software costs associated with internal use software to be expensed as
incurred; (iii) increased personnel, office and overhead costs to support the
Company's growth; and (iv) the addition of personnel and other overhead costs
related primarily to the First American Records Management and Data Base
acquisitions.
Consolidated depreciation and amortization expense increased $6.9 million, or
30.1%, to $29.9 million (12.4% of consolidated revenues) for the first six
months of 1999 from $23.0 million (12.6% of consolidated revenues) for the
first six months of 1998. The dollar increase was primarily attributable to
the additional depreciation and amortization expense related to the 1998
Acquisitions and 1999 Acquisitions, and capital expenditures including
racking systems, information systems and expansion of storage capacity in
existing facilities.
As a result of the foregoing factors, consolidated operating income increased
$7.9 million, or 36.4%, to $29.8 million (12.4% of consolidated revenues) for
the first six months of 1999 from $21.9 million (12.0% of consolidated
revenues) for the first six months of 1998.
Consolidated interest expense increased $3.0 million, or 12.9%, to $26.2
million for the first six months of 1999 from $23.2 million for the first six
months of 1998. The increase was primarily attributable to increased
indebtedness related to the financing of acquisitions and capital
expenditures. The increase was partially offset by lower effective interest
rates for the first six months of 1999 compared to the same period in 1998.
Consolidated other income for the first six months of 1998 is comprised of a
$1.7 million gain resulting from the settlement of several insurance claims,
including a significant claim under its business interruption insurance
policy, related to the March 1997 fires at the Company's South Brunswick
Township, New Jersey facilities.
As a result of the foregoing factors, consolidated income from continuing
operations before provision for income taxes and minority interest increased
$3.3 million to $3.7 million (1.5% of consolidated revenues) for the first
six months of 1999 from $0.4 million (0.2% of consolidated revenues) for the
first six months of 1998. The provision for income taxes was $4.9 million for
the first six months of 1999 compared to $1.3 million for the first six
months of 1998. 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 not for acquisitions of
stock). In connection with the 1999 Acquisitions, the Company recorded
approximately $115 million in nondeductible goodwill.
Consolidated loss from continuing operations increased $0.7 million to a loss
of $1.6 million (0.7% of consolidated revenues) for the first six months of
1999 from a loss of $0.9 million (0.5% of consolidated revenues) for the
first six months of 1998. The loss on the sale of discontinued operations is
comprised of a write-off of nondeductible goodwill, a deferred tax provision
and estimated expenses directly related to the sale of Arcus Staffing,
partially offset by the estimated income from discontinued operations through
the expected date of disposition.
18
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
As a result of the foregoing factors, consolidated EBITDA from continuing
operations increased $14.9 million, or 33.2%, to $59.7 million (24.8% of
consolidated revenues) for the first six months of 1999 from $44.8 million
(24.6% of consolidated revenues) for the first six months of 1998.
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 racking
systems, management information systems, new buildings and expansion of
storage capacity in existing facilities); and (iii) customer acquisition
costs. Cash paid for these investments during the first six months of 1999
amounted to $171.6 million, $40.3 million and $3.9 million, respectively. In
addition, the Company invested $4.8 million in BDM. BDM used the cash to fund
a portion of the purchase price of its acquisition of Memogarde. These
investments have been primarily funded through cash flows from operations,
borrowings under the Company's revolving credit facility, a portion of the
net proceeds from the sale of the 1999 Notes and a portion of the net
proceeds from the Equity Offering.
Net cash provided by operations was $22.8 million for the first six months of
1999 compared to $20.4 million for the same period in 1998. The increase
resulted primarily from an increase in EBITDA, that was partially offset by
an increase in accounts receivable.
Net cash provided by financing activities was $223.2 million for the six
months ended June 30, 1999, consisting primarily of the $303.2 million of net
proceeds from the sale of the 1999 Notes and the Equity Offering, offset by
the repurchase of the 1,476,577 shares of common stock issued in the Data
Base acquisition for $39.5 million and $36.8 million net repayment of debt.
On April 26, 1999, the Company completed the sale, in a private placement to
qualified institutional buyers, of $150.0 million in aggregate principal
amount of its 1999 Notes. The 1999 Notes were issued at a price to investors
of 99.64% of par. The net proceeds from the sale of the 1999 Notes were used
to repay outstanding indebtedness under the Company's revolving credit
facility.
On May 17, 1999, the Company issued and sold an aggregate of 5.8 million
shares (including approximately 0.8 million shares to cover over-allotments)
of its common stock in an underwritten public offering at a price to the
public of $28.00 per share. Net proceeds to the Company after deducting
underwriting discounts and commissions were $153.8 million and were used: (i)
to repurchase all of the 1,476,577 shares of the Company's common stock
issued in connection with the acquisition of Data Base at a purchase price of
$26.74 per share; (ii) to repay outstanding indebtedness under the Company's
revolving credit facility; and (iii) for general corporate purposes, that may
include future acquisitions.
19
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
YEAR 2000 READINESS
GENERAL
The Year 2000 ("Y2K") problem refers to the inability of systems, primarily
software systems, to properly recognize and process date sensitive
information relating to the year 2000 and beyond. In order to respond to this
problem, the Company has established a Y2K Project Plan (the "Plan"). The
Plan is comprised of five major phases: awareness, assessment, renovation,
validation and implementation. These phases are applied to three general
categories: operational systems (consisting primarily of inventory and
billing systems), financial accounting systems and other products and
services obtained from third parties.
OPERATIONAL SYSTEMS
The Company's primary operational systems for its records and information
management services business are SAFEKEEPER-TM-, an internally developed
software application used mainly in its business records operations, and
MEDIALINK-TM-, a software application obtained from a third party used mainly
in the Company's data security operations. Additionally, as an active
acquirer of businesses, the Company currently uses, and will continue to use,
several different legacy operational systems that have been, and will be,
inherited through its ongoing acquisition program. Both SAFEKEEPER and
MEDIALINK are Y2K compliant. Based on the Company's assessment, management
believes that more than 90% of its business units are currently
operating with an operational system that is Y2K compliant or upgradable to a
currently available Y2K compliant version of the existing software.
Conversion of the remaining business units to a Y2K compliant operational
system is currently underway.
The Company's Arcus Staffing business uses commercially available,
off-the-shelf software packages from nationally recognized vendors for its
primary software applications, which include its financial accounting, time
and billing and resume retrieval database systems. Based on publicly
available certifications from the vendors, the Company believes that these
software packages are Y2K compliant.
FINANCIAL ACCOUNTING SYSTEMS
As part of its normal course of business, the Company has several system
improvement initiatives underway. One such initiative involves the
installation of new financial accounting software from Oracle Corporation
("Oracle"). Oracle has certified that its accounting software is Y2K
compliant. The installation of the Oracle software is substantially complete
and is expected to be concluded by the end of the third quarter of 1999.
The Company currently uses, and will continue to use, several different
legacy accounting systems that have been, and will be, inherited through its
ongoing acquisition program. Accordingly, the Company continues to assess
these newly acquired legacy systems and, based on vendor certifications,
believes that substantially all of these systems are Y2K compliant. The
Company is in the process of remediating the remaining systems and expects to
complete such remediation before the end of the third quarter of 1999.
PRODUCTS AND SERVICES OBTAINED FROM THIRD PARTIES
Products and services obtained from third parties are comprised mainly of (i)
facility systems, including telecommunications, climate control systems,
security systems and fire and safety systems ("Facility Systems"), and (ii)
products and services purchased from vendors, including third party payroll
20
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
processing and products for resale such as cartons and operating supplies.
The Company expects to substantially complete its remediation phase of its
current Facility Systems by the end of the third quarter of 1999. As an
active acquirer of businesses, the Company may utilize Facility Systems that
at the time of acquisition may not be compliant. Such systems are generally
remediated as soon as practicable after the completion of the acquisition.
CUSTOMERS
The Company's customer base is diversified in terms of revenue and industry
concentration. Only two customers account for more than 1% of total revenues
and no customer accounts for more than 2% of total revenues. Given the nature
of the services the Company provides to its customers, as well as the
diversification of its customer base, the Company does not believe that Y2K
issues associated with its customers will have a material adverse effect on
its financial condition or results of operations.
COSTS
Based on the Company's current assessment of its Y2K issues, the total cost
associated with required modifications to become Y2K compliant is not
expected to be material to the Company's financial position. Certain costs
associated with the Company's pre-existing system improvement initiatives and
the purchase of equipment (including the financial accounting software
developed by Oracle, SAFEKEEPER and MEDIALINK) will be capitalized and
amortized over their useful lives. Certain payroll and related costs
represent the redeployment of existing staff resources rather than
incremental costs to the Company. All other costs associated with the Plan
will be expensed as incurred. Costs associated with the Plan to be incurred
in 1999 are estimated to be under $3 million and are included in the
Company's operating and capital budgets for 1999.
CONTINGENCY PLANS
As part of its Y2K project, the Company has analyzed its points of major risk
and is developing contingency plans as a backup to its remediation effort.
YEAR 2000 RISKS
The failure on the part of the Company or one of its suppliers to correct a
material Y2K problem could result in an interruption in, or a failure of,
certain normal business activities or operations, although the extent of such
a business disruption is not known at this time. The implementation of the
Plan is expected to significantly reduce the Company's level of uncertainty
about the Y2K problem. The Company believes that, with the completion of its
existing system improvement initiatives and the successful execution of the
Plan, the likelihood of significant interruptions of normal operations will
be substantially reduced. However, the Company cannot assure that it will be
able to address the Y2K issues for all of its software applications and major
operating systems in a timely manner or that it will not encounter unexpected
difficulties or significant expenses. If the Company or its major third party
suppliers of products and services fail to adequately address their Y2K
issues, or the Company fails to successfully integrate or convert its
computer systems generally, the Company's business, financial condition or
results of operations could be materially adversely affected.
21
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold any derivative financial instruments, derivative
commodity instruments or other financial instruments. The acquisitions of BDM
and Memogarde, as described in Note 3 to the Condensed Consolidated Financial
Statements, and any other international investments, if completed, may be
subject to risks and uncertainties relating to fluctuations in currency
valuation.
The Company engages neither in speculative nor derivative trading activities.
As of June 30, 1999, the Company had $14.5 million of variable rate debt
outstanding with a weighted average interest rate of 6.69% and $567.1 million
of fixed rate debt. If the weighted average variable interest rate had
increased by 1% to 7.69%, such increase would have had a negative impact on
the Company's net income for the three and six month periods ended June 30,
1999 of approximately $36,000 and $48,000, respectively. See Note 4 to the
Condensed Consolidated Financial Statements for a discussion of the Company's
long-term indebtedness, including the fair values of such indebtedness as of
June 30, 1999 and December 31, 1998.
22
<PAGE>
IRON MOUNTAIN INCORPORATED
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The following matters were voted on by the Company's stockholders at its
Annual Meeting of Stockholders held on May 27, 1999 (the "1999 Annual Meeting").
Item 1: ELECTION OF CLASS A Directors - Election of three (3) Class A directors
to serve until the Company's Year 2002 Annual Meeting of Stockholders,
or until their successors are elected and qualified.
<TABLE>
<CAPTION>
Total Vote For Total Vote Withheld
Each Director From Each Director
--------------- -------------------
<S> <C> <C>
B. Thomas Golisano 26,493,301 170,128
Vincent J. Ryan 26,493,301 170,128
David S. Wendell 26,493,301 170,128
</TABLE>
The following directors' terms continued after the 1999 Annual Meeting: C.
Richard Reese, Arthur D. Little, Kent P. Dauten, Eugene B. Doggett,
Constantin R. Boden, and Clarke H. Bailey.
Item 2: RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS -
Ratification of the selection by the Board of Directors of the firm of
Arthur Andersen LLP as the Company's independent public accountants
for the current year.
<TABLE>
<CAPTION>
For Against Abstain
------------------- ------------------- -------------------
<S> <C> <C> <C>
26,658,822 2,173 2,404
</TABLE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) EXHIBIT DESCRIPTION
------- -----------
<S> <C> <C>
10.1 Amendment and Consent to Unconditional Guaranty, dated as of July 1, 1999,
between Iron Mountain and Iron Mountain Statutory Trust-1998, and consented
to by the lenders listed therein and The Bank of Nova Scotia, as Agent Bank
for such lenders
27.1 Financial Data Schedule for the Six Months Ended June 30, 1999
27.2 Financial Data Schedule for the Six Months Ended June 30, 1998 (Restated)
</TABLE>
(b) Reports on Form 8-K
On April 16, 1999, the Company filed a Current Report on Form 8-K
pertaining to the consummation of its acquisition of Data Base and
related real estate and to announce its Equity Offering. The report
included the required financial statements for Data Base.
23
<PAGE>
On April 22, 1999, the Company filed a Current Report on Form 8-K to
announce the Company's pricing of its private placement of the 1999
Notes.
On May 7, 1999, the Company filed a Current Report on Form 8-K to
announce the Company's operating results for the quarter ended
March 31, 1999.
On May 11, 1999, the Company filed a Current Report on Form 8-K to
announce the Company's entrance into an Indenture for the 1999 Notes
and a related Exchange and Registration Right Agreement with the
initial purchasers of the 1999 Notes.
CERTAIN IMPORTANT FACTORS
This Quarterly Report on Form 10-Q contains statements which
constitute forward looking statements within the meaning of the
Securities Exchange Act of 1934, as amended. These statements appear
in a number of places in this Form 10-Q and include statements
regarding the strategies, beliefs or current expectations of the
Company and its management. Readers are cautioned that any such
forward looking statements are not guarantees of future performance
and involve risks and uncertainties, which could cause actual results
to differ materially from those in the forward looking statements.
Such factors include but are not limited to: (i) the Company's ability
or inability to complete acquisitions on satisfactory terms and to
integrate acquired companies efficiently, (ii) the cost and
availability of financing for contemplated growth, (iii) the Company's
ability or inability to complete the sale of Arcus Staffing on
satisfactory terms, (iv) the cost and availability of appropriate
storage facilities, (v) the possibility of a natural disaster or other
casualty disrupting operations to an extent greater than the Company
is insured for, (vi) the demand and price for the Company's services,
relative to the cost of providing such services, (vii) certain risks
and uncertainties associated with the Company's readiness for the year
2000, including but not limited to, the Company's inability to recruit
and/or retain key staff necessary for addressing year 2000 issues;
failure of major third party suppliers of products and services to
adequately address their year 2000 issues despite assurances to the
contrary; delays in the conversion or upgrade of acquired and to be
acquired businesses' software systems to appropriate year 2000
compliant software systems; and actual future costs associated with
the Company's year 2000 plan being greater than currently expected, or
(viii) other trends in competitive or economic conditions affecting
the Company's financial condition or results of operations not
presently contemplated. The information contained in this Form 10-Q
and the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, including under the headings "Business" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," identifies other important factors that could
cause such differences.
24
<PAGE>
IRON MOUNTAIN INCORPORATED
SIGNATURE
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
AUGUST 13, 1999 By: /s/ JEAN A. BUA
- --------------- ------------------------
(date) Jean A. Bua
Vice President and Corporate Controller
(Principal Accounting Officer)
25
<PAGE>
Exhibit 10.1
AMENDMENT AND CONSENT TO GUARANTY
AMENDMENT AND CONSENT TO UNCONDITIONAL GUARANTY dated as of July 1,
1999 between IRON MOUNTAIN INCORPORATED, a Delaware corporation (Guarantor) and
IRON MOUNTAIN STATUTORY TRUST - 1998, a Connecticut statutory trust
(Owner), and consented to by each of the Lenders and Agent Bank listed on the
signature pages hereto.
Guarantor and Owner are parties to a certain Unconditional Guaranty
dated as of October 1, 1998 (the Original Guaranty) pursuant to which the
Guarantor guarantees to Owner and the Indemnified Parties the Guaranteed
Obligations, including, without limitation, certain obligations of Iron Mountain
Records Management, Inc. (Lessee/Agent) under (i) a Lease Agreement from Owner
to Lessee/Agent dated as of October 1, 1998 (the Lease), and (ii) an Agency
Agreement between Lessee/Agent and Owner dated as of October 1, 1998 (the Agency
Agreement). Each of the Lease the Agency Agreement have been assigned to the
Agent Bank pursuant to an Assignment of Lease and Agency Agreement from Owner to
Agent Bank and consented to by Lessee/Agent dated as of October 1, 1998.
Guarantor has requested that Owner amend the Original Guaranty with respect to
certain financial covenants and related definitions; and Guarantor has requested
that the Lenders and Agent Bank consent to such changes.
Accordingly, the parties hereto agree as follows:
Section 1. DEFINITIONS. Except as otherwise defined in this Agreement,
terms defined in the Original Guaranty are used herein as defined therein.
Section 2. AMENDMENTS. Subject to the terms and conditions contained
herein, the Original Guaranty is hereby amended as follows:
A. GENERAL. The phrase "default or Event of Default" wherever used in
the Original Guaranty is hereby deleted and replaced with the following:
"Default or Event of Default".
B. SECTION 2. The phrase "the Lease, the Agency Agreement or this
Guaranty" wherever used in Section 2, clauses (a), (c) through (e) and (h) of
the Original Guaranty is hereby deleted and replaced with the following: "the
Lease, the Agency Agreement, this Guaranty or any other Operative Document".
C. LEVERAGE RATIO. The Leverage Ratio "grid" in Section 10(a)(i) of the
Original Guaranty is hereby amended to read as follows:
<PAGE>
<TABLE>
<CAPTION>
PERIOD LEVERAGE RATIO
- ------ --------------
<S> <C>
From July 1, 1999 5.75 to 1
through December 31, 2000
From January 1, 2001 5.50 to 1
through December 31, 2001
From January 1, 2002 5.25 to 1
through June 30, 2002
From July 1, 2002 5.00 to 1
and at all times thereafter
</TABLE>
D. INTEREST COVERAGE RATIO. The Interest Coverage Ratio "grid" in
Section 10(a)(ii) of the Original Guaranty is hereby amended to read as follows:
<TABLE>
<CAPTION>
PERIOD LEVERAGE RATIO
- ------ --------------
<S> <C>
From January 1, 1999 1.85 to 1
through December 31, 1999
From January 1, 2000 2.00 to 1
through December 31, 2001
From January 1, 2002 2.25 to 1
and at all times thereafter
</TABLE>
E. FIXED CHARGES COVERAGE RATIO. The second paragraph of Section
10(a)(iii) of the Original Guaranty is hereby deleted in its entirety and
replaced as follows:
"For purposes of calculating any ratio set forth in this
clause (iii), if Guarantor elects pursuant to the penultimate
sentence of the definition of EBITDA to include in EBITDA for
the period to which such ratio relates the PRO FORMA amounts
referred to in such sentence, there shall be included in Fixed
Charges for such period, on a PRO FORMA basis, principal
payable and interest accruing during such period on
Indebtedness (and the interest portion of payments under
Capitalized Lease Obligations) assumed or incurred by
Guarantor and its Subsidiaries (on a consolidated basis) in
connection with any Permitted Acquisition having Acquisition
Consideration of more than $500,000 during such period."
F. LIENS.
-2-
<PAGE>
a. Clause (iii) of Section 10(a)(iv) of the Original Guaranty
is hereby deleted in its entirety and replaced as follows:
"(iii)(A) Liens otherwise permitted by the Operative Documents
contemplated by or securing Indebtedness described in clauses
(ii), (iv), (v) and (vii) of the definition of Permitted
Indebtedness set forth in the Credit Agreement; and (B) Liens
securing Acquired Debt, provided that such Liens cover only
those assets that were covered by such Liens prior to the
relevant acquisition;"
b. Clause (viii) of Section 10(a)(iv) of the Original Guaranty
is hereby deleted in its entirety and replaced as follows:
"(viii) Liens arising under or created pursuant to the Lease
or the Lease Agreement between Iron Mountain Statutory Trust -
1999 and Lessee/Agent dated as of July 1, 1999."
G. DEFINITIONS.
a. Section 10(c) of the Original Guaranty is hereby amended by
inserting the following definitions (or, in the case of any definition for a
term that is defined in the Original Guaranty before giving effect to this
Agreement, by amending and restating such definition to read as set forth
below):
"ACQUIRED DEBT" shall have the meaning set forth in
the Credit Agreement.
"EXCLUDED SUBSIDIARY" shall mean any Subsidiary of
the Guarantor principally engaged in the records management
business organized outside the United States.
"FUNDED INDEBTEDNESS" shall mean, without
duplication, (a) Indebtedness (other than in respect of
Synthetic Lease Obligations) that matures or otherwise becomes
due more than one year after the incurrence thereof or is
extendible, renewable or refundable, at the option of the
obligor, to a date more than one year after the incurrence
thereof (including the current portion thereof), (b)
Indebtedness outstanding under the Credit Agreement and (c)
Synthetic Lease Obligations of Lessee and any Guarantees by
the Guarantor thereof.
"INTEREST EXPENSE" shall mean, for any period, the
sum (determined without duplication) of the aggregate amount
of interest accruing during such period on Indebtedness of the
Guarantor and its Subsidiaries (on a consolidated basis),
including the interest portion of rental or similar payments
under Capital
-3-
<PAGE>
Lease Obligations and Synthetic Leases and any capitalized
interest, and excluding amortization of debt discount and
expense and interest paid in kind.
"PERSON" shall mean an individual, a corporation, a
company, a voluntary association, a partnership, a limited
liability company, a trust, an unincorporated organization or
a government agency or any agency, instrumentality or
political subdivision thereof.
"SYNTHETIC LEASE" shall mean a lease of property or
assets designed to permit the lessee (i) to claim depreciation
on such property or assets under U.S. tax law and (ii) to
treat such lease as an operating lease or not to reflect the
leased property or assets on the lessee's balance sheet under
GAAP.
"SYNTHETIC LEASE OBLIGATIONS" shall mean, with
respect to any Synthetic Lease, at any time, an amount equal
to the higher of (x) the aggregate termination value or
purchase price or similar payments in the nature of principal
payable thereunder and (y) the then aggregate outstanding
principal amount of the notes or other instruments issued by,
and the amount of the equity investment, if any, in, the
lessor under such Synthetic Lease.
b. The definition of "EBITDA" in Section 10(c) of the
Original Guaranty is hereby amended by restating clause (b)(iii) thereof as
follows: "(iii) Interest Expense for such period,".
c. The definition of "Indebtedness" in Section 10(c) of the
Original Guaranty is hereby amended by restating clause (iii) thereof as
follows: "(iii) Capital Lease Obligations and Synthetic Lease Obligations of
such Person;".
H. SECTION 13. The phrase "Event of Default" as used in Section 13 of
the Original Guaranty is hereby deleted and replaced with the following:
"Default or Event of Default".
Section 3. CONDITIONS OF EFFECTIVENESS. This Agreement shall become
effective as of the date hereof when, and only when, the Owner, the Lenders and
the Agent Bank shall have received a counterpart of this Agreement duly executed
by the parties hereto and payment of an amendment fee pursuant to a letter sent
by Guarantor to the Agent Bank dated as of July 1999.
Section 4. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents
and warrants to Owner, Agent Bank, the Lenders and their respective counsel
that:
-4-
<PAGE>
A. the representations and warranties made by Guarantor in
each Operative Document to which it is a party are correct on and as of
the date hereof, as though made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date); and
B. no event has occurred and is continuing under any Operative
Document that constitutes a Default or an Event of Default.
Section 5. MISCELLANEOUS. Except as herein provided, the Original
Guaranty and each of the other Operative Documents shall remain unchanged and in
full force and effect. Upon the effectiveness of this Agreement, on and after
the date hereof, each reference in any Operative Document to the Original
Guaranty shall mean and be a reference to the Original Guaranty as amended
hereby. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be governed by, and construed in accordance with, the law of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereunto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
GUARANTOR:
IRON MOUNTAIN INCORPORATED
By: /s/ J.P. Lawrence
-------------------------------------
Name: J.P. Lawrence
Title: Vice President and Treasurer
<PAGE>
AGREED AND CONSENTED TO:
AGENT BANK:
THE BANK OF NOVA SCOTIA,
as Agent Bank
By: /s/ T.M. Pitcher
------------------------------
Name: T.M. Pitcher
Title: Authorized Signatory
-6-
<PAGE>
LENDERS:
BANKBOSTON, N.A. FLEET NATIONAL BANK
By: /s/ James F. Law By: /s/ Michael A. Palmer
------------------------------- ------------------------
Name: James F. Law Name: Michael A. Palmer
Title: Vice President Title: Vice President
UNION BANK OF CALIFORNIA, N.A. USTRUST
By: /s/ Nancy A. Perkins By: /s/ Daniel G. Eastman
------------------------------- ------------------------
Name: Nancy A. Perkins Name: Eastman D.G.
Title: Vice President Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ T.M. Pitcher
---------------------------
Name: T.M. Pitcher
Title: Authorized Signatory
-7-
<PAGE>
OWNER:
IRON MOUNTAIN STATUTORY TRUST - 1998
By: First Union National Bank, not in its individual
capacity except as expressly set forth herein, but
solely as trustee under the Amended and Restated
Trust Agreement dated as of October 1, 1998
By: /s/ Jeffrey Kramer
---------------------------------------------
Name: Jeffrey Kramer
Title: Vice President
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1999, AND THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTH
PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001004317
<NAME> IRON MOUNTAIN INCORPORATED
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1.000
<CASH> 26,569
<SECURITIES> 0
<RECEIVABLES> 104,506
<ALLOWANCES> (4,496)
<INVENTORY> 0
<CURRENT-ASSETS> 146,650
<PP&E> 445,005
<DEPRECIATION> (90,911)
<TOTAL-ASSETS> 1,260,097
<CURRENT-LIABILITIES> 114,484
<BONDS> 585,790
0
0
<COMMON> 368
<OTHER-SE> 486,386
<TOTAL-LIABILITY-AND-EQUITY> 1,260,097
<SALES> 241,136
<TOTAL-REVENUES> 241,136
<CGS> 120,602
<TOTAL-COSTS> 211,291
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,171
<INCOME-PRETAX> 3,674
<INCOME-TAX> 4,852
<INCOME-CONTINUING> (1,643)
<DISCONTINUED> (9,159)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,802)
<EPS-BASIC> (0.35)
<EPS-DILUTED> (0.35)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998, AND THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTH
PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0001004317
<NAME> IRON MOUNTAIN INCORPORATED
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1.000
<CASH> 14,589
<SECURITIES> 0
<RECEIVABLES> 71,119
<ALLOWANCES> (2,823)
<INVENTORY> 0
<CURRENT-ASSETS> 108,033
<PP&E> 293,956
<DEPRECIATION> (73,788)
<TOTAL-ASSETS> 867,032
<CURRENT-LIABILITIES> 76,674
<BONDS> 429,119
0
0
<COMMON> 292
<OTHER-SE> 340,241
<TOTAL-LIABILITY-AND-EQUITY> 867,032
<SALES> 182,520
<TOTAL-REVENUES> 182,520
<CGS> 91,673
<TOTAL-COSTS> 160,632
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,187
<INCOME-PRETAX> 401
<INCOME-TAX> 1,342
<INCOME-CONTINUING> (941)
<DISCONTINUED> 366
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (575)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
