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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(MARK ONE)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO _________________
1-14937
(COMMISSION FILE NUMBER)
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
IRON MOUNTAIN INCORPORATED 1998 EMPLOYEE STOCK PURCHASE PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
IRON MOUNTAIN INCORPORATED
745 ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02111
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IRON MOUNTAIN INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN
INDEX
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
Statement of Financial Position as of September 30, 1999 2
Statement of Operations and Changes in Plan Equity for the
Year Ended September 30, 1999 3
NOTES TO FINANCIAL STATEMENTS 4
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrators of the
Iron Mountain Incorporated 1998 Employee Stock Purchase Plan:
We have audited the accompanying statement of financial position of the Iron
Mountain Incorporated 1998 Employee Stock Purchase Plan (the Plan) as of
September 30, 1999, and the related statement of operations and changes in plan
equity for the year then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Iron Mountain Incorporated
1998 Employee Stock Purchase Plan as of September 30, 1999, and the results of
its operations and its changes in plan equity for the year then ended, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 29, 1999
1
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IRON MOUNTAIN INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 1999
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ASSETS:
Receivable from Iron Mountain Incorporated for
participant contributions $ 1,213,513
---------------
Total assets $ 1,213,513
===============
LIABILITIES AND PLAN EQUITY:
Payable for stock purchases $ 1,191,303
Participant contributions payable 17,286
PLAN EQUITY 4,924
---------------
Total liabilities and plan equity $ 1,213,513
===============
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
2
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IRON MOUNTAIN INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF OPERATIONS AND CHANGES IN PLAN EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1999
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ADDITIONS:
Increase in receivable from Iron Mountain Incorporated for
participant contributions $ 1,213,513
DEDUCTIONS:
Increase in payable for stock purchases (1,191,303)
Change in participant contributions payable (17,286)
---------------
Net increase in plan equity 4,924
PLAN EQUITY, BEGINNING OF YEAR -
---------------
PLAN EQUITY, END OF YEAR $ 4,924
===============
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS.
3
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IRON MOUNTAIN INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(1) DESCRIPTION OF THE PLAN
GENERAL
The following description of the Iron Mountain Incorporated 1998 Employee
Stock Purchase Plan (the Plan) is provided for general information
purposes only. More complete information regarding the Plan's provisions
may be found in the plan document.
The Plan was adopted by the Board of Directors (the Board) of Iron
Mountain Incorporated and its subsidiaries (the Company) on March 23,
1998. The Plan was approved by the shareholders of the Company on May 28,
1998 and commenced operations on October 1, 1998. The Plan provides a way
for eligible employees of the Company to become shareholders of the
Company on favorable terms. The Plan provides for the purchase of up to
375,000 shares of the Company's common stock by eligible employees
through successive offering periods. At the start of each offering
period, participating employees are granted options to acquire the
Company's common stock. During each offering period, participating
employees accumulate after-tax payroll contributions, up to a maximum of
15% of their compensation, to pay the exercise price of their options. At
the end of the offering period, outstanding options are exercised, and
each employee's accumulated contributions are used to purchase common
stock of the Company. The price for shares purchased under the Plan is
85% of their market price at either the beginning or the end of the
offering period, whichever is lower (the Option Price).
The first offering period commenced on October 1, 1998, and expired on
September 30, 1999. The second offering period of the Plan commenced on
October 1, 1999 and will expire on March 31, 2000. With respect to the
first offering period, participants are not permitted to sell or assign
any common stock acquired under the Plan until October 2, 2000. Effective
as of the second offering period, restrictions on the transfer of common
stock acquired under the Plan have been eliminated.
For the first offering period, the Option Price was $23.40, which
represents 85% of the market price of $27.53 as of October 1, 1998. Under
the Plan, the market price is defined as the average of the high and low
reported sale prices using the date determined for the Option Price. Plan
participants' accumulated payroll deductions for the offering period
ended September 30, 1999 amounted to $1,213,513 and have been recorded as
a receivable from the Company at September 30, 1999. Effective September
30, 1999, $1,191,303 of these accumulated contributions were used to
purchase 50,907 shares of common stock, which have been recorded as a
liability, payable for stock purchases, at September 30, 1999, leaving
324,093 shares of common stock available for future purchases by plan
participants. The 50,907 shares of common stock issued as of September
30, 1999 had a market value of $1,724,475, using the closing price of the
shares on September 30, 1999.
4
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IRON MOUNTAIN INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
PLAN ADMINISTRATION
The Plan is administered by the Stock Incentive Plan Subcommittee (the
Committee) of the Compensation Committee of the Company's Board. The
Committee has the authority to adopt, amend and rescind rules and
regulations governing the administration of the Plan. AST StockPlan,
Inc. is the record keeper of the Plan.
ELIGIBILITY
An employee is eligible to participate in the Plan if he or she meets all
of the following requirements at the beginning of an offering period: he
or she works more than 20 hours a week and more than five months a year
for the Company; he or she is not a director, consultant or independent
contractor of the Company; and he or she does not own 5% or more of the
Company's common stock. As of October 1, 1998, approximately 5,000
employees were eligible to participate in the Plan and, as of September
30, 1999, approximately 440 employees participated in the Plan.
PARTICIPANT CONTRIBUTIONS
Eligible employees can contribute, through payroll deductions on an
after-tax basis, an amount up to 15% of their compensation, as defined by
the Plan, subject to certain limitations under the Internal Revenue Code
(IRC). The Plan limits a participant's ability to make changes in the
amount withheld after the start of an offering period. Amounts withheld
are accumulated and used at the end of an offering period to purchase
shares under the Plan. Currently, federal income tax laws prohibit plan
participants from purchasing more than $25,000 worth of common stock in a
calendar year or any amount of common stock that would bring total
ownership to 5% or more of the Company. Only whole shares of common stock
may be purchased under the Plan. Any amount remaining after the purchase
of whole shares is either carried forward to the subsequent offering
period or refunded to the participant, if he or she does not participate
in the subsequent offering period. In the event that there are
insufficient shares available under the Plan to satisfy purchase
requests, the Committee will make a pro rata allocation of available
shares among participants.
The Company may use the payroll deductions for any corporate purpose, and
the Company has no obligation to segregate employees' payroll deductions
from any other funds of the Company pending the purchase of shares at the
end of each offering period. No interest accrues or is paid on
participants' accumulated payroll deductions.
COMPANY CONTRIBUTIONS
The accompanying financial statements do not reflect the Company's
non-cash contribution which represents the aggregate difference between
the market price and the Option Price (which is 85% of the market price)
of the Company's common stock on the same date. The non-cash contribution
amounted to $210,230 for the year ended September 30, 1999.
5
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IRON MOUNTAIN INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
PAYMENT OF BENEFITS
On the last day of the offering period, options granted under the Plan
are exercised and participant contributions are used to satisfy the
participant's obligations to the Company to pay the Option Price. If a
participant's employment terminates due to death, the amount of payroll
deductions accumulated will be paid to his or her estate, unless the
representative of the estate elects to have the contributions applied as
of the end of the offering period to purchase the largest possible number
of whole shares. Any remaining payroll deductions will be paid to the
estate. If a participant's employment terminates for any reason other
than death, or if a participant is no longer eligible to participate in
the Plan, his or her payroll deductions will be refunded. An authorized
leave of absence will not be treated as a termination of employment for
purposes of the Plan if the leave period is less than 90 days, or if the
participant's right to return to his or her job at the end of the leave
period is guaranteed by written contract or by statute. If a participant
is found to be engaged in fraud, embezzlement, theft, commission of a
felony or proven dishonesty that damages the Company, or has disclosed
trade secrets or other proprietary information, he or she will forfeit
all outstanding options under the Plan. The Company will also have the
right to purchase the common stock that the participant purchased under
the Plan for the amount originally paid, plus interest.
EXCESS CONTRIBUTIONS PAYABLE
An excess contribution is either an amount withheld in excess of the 15%
of compensation limit in the Plan or an amount withheld that would permit
a participant to acquire more than $25,000 worth of common stock in a
single calendar year. Compliance with the $25,000 limit can be achieved
by limiting payroll deductions to 85% of $25,000, or $21,250. For the
year ended September 30, 1999, excess contributions totaled $17,107,
which will be distributed as refunds to the related participants.
ADMINISTRATIVE EXPENSES
All administrative expenses are paid by the Company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements are prepared on the accrual basis of accounting.
Assets and liabilities of the Plan are stated at fair value.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the Plan's management to use
estimates and assumptions that affect the accompanying financial
statements and disclosures. Actual results could differ from those
estimates.
6
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IRON MOUNTAIN INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Continued)
SECURITY TRANSACTIONS
Securities are issued directly by the Company to the participants of the
Plan from either unissued shares or Treasury shares designated for the
Plan.
(3) TAX STATUS
The Plan is intended to constitute an "employee stock purchase plan", as
described in Section 423 of the IRC. The Plan is a not a qualified
pension, profit sharing or stock bonus plan under Section 401(a) of the
IRC, and it is not subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). An employee will not recognize any
income at the time an option is granted under the Plan or upon the
exercise of an option. Upon sale of the stock acquired, ordinary income
equal to the lesser of 15% of the value of the stock at the start of the
offering period or the excess of the selling price over the Option Price
is recognized. The Company is not entitled to a deduction for this
amount. Any additional gain is taxed as capital gain.
(4) AMENDMENT OR TERMINATION OF THE PLAN
The Board may modify, revise or terminate the Plan at any time, although
shareholder approval is necessary for certain changes. Unless terminated
earlier, the Plan will terminate on August 29, 2003, and no options may
be granted after that date. In the event of plan termination, the
offering period in effect will close as scheduled, participant
contributions will be used to exercise outstanding options and any
remaining cash will be refunded to the participants.
(5) SUBSEQUENT EVENT
On October 21, 1999, Iron Mountain Incorporated announced that it had
entered into an agreement to merge with Pierce Leahy Corp. (Pierce
Leahy). The acquisition of Pierce Leahy by Iron Mountain Incorporated
will be effected by merging Iron Mountain Incorporated into Pierce Leahy,
with Pierce Leahy being the surviving legal entity. Immediately after the
merger, Pierce Leahy will change its name to Iron Mountain Incorporated.
The companies expect the merger to be completed in early 2000. Upon
completion of the merger, Pierce Leahy will assume the Company's
obligations under the Plan. The terms of the Plan will not change as a
result of the merger, except that options will be exercisable for the
surviving corporation's common stock.
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned, hereunto duly authorized.
IRON MOUNTAIN INCORPORATED 1998 EMPLOYEE STOCK PURCHASE PLAN
December 29, 1999
By /s/ Arthur D. Little
----------------------------
Plan Administrator
By /s/ Constantin R. Boden
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Plan Administrator
8
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EXHIBIT INDEX
Exhibit No. DESCRIPTION
23 Consent of Independent Public Accountants
9
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, included in this Form 11-K, into Iron Mountain Incorporated's previously
filed Registration Statements on Forms S-3 (File No. 333-44185), S-4 (File Nos.
333-44187 and 333-67765) and S-8 (File Nos. 333-24803, 333-33191, 333-43901,
333-60919, 333-60921 and 333-67499).
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 29, 1999
10
