PIERCE LEAHY CORP
S-1/A, 1997-06-24
PUBLIC WAREHOUSING & STORAGE
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<PAGE>
 
     
  AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1997     
 
                                                     REGISTRATION NO. 333-23121
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                 ------------
                                
                             AMENDMENT NO. 3     
                                      TO
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                                 ------------
 
                              PIERCE LEAHY CORP.
            (exact name of registrant as specified in its charter)
 
      PENNSYLVANIA                   4226                    23-2588479
     (State or other     (Primary Standard Industrial     (I.R.S. Employer
     jurisdiction of      Classification Code Number)    Identification No.)
    incorporation or
      organization)
                                631 PARK AVENUE
                      KING OF PRUSSIA, PENNSYLVANIA 19406
                                (610) 992-8200
  (Address, including zip code, and telephone number, including area code, of
                 the registrant's principal executive offices)
 
                              DOUGLAS B. HUNTLEY
                            CHIEF FINANCIAL OFFICER
                                631 PARK AVENUE
                      KING OF PRUSSIA, PENNSYLVANIA 19406
                                (610) 992-8200
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
 
                                  COPIES TO:
      RICHARD J. BUSIS, ESQUIRE                  JOSEPH A. COCO, ESQUIRE
         COZEN AND O'CONNOR           SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
         1900 MARKET STREET                        919 THIRD AVENUE        
  PHILADELPHIA, PENNSYLVANIA 19103             NEW YORK, NEW YORK 10022     
                                                
 
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
 
  If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
 
  If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
 
  If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                   
                SUBJECT TO COMPLETION, DATED JUNE 24, 1997     

PROSPECTUS
                               5,312,614 SHARES

[LOGO OF PIERCE LEAHY         PIERCE LEAHY CORP.
APPEARS HERE]
                                 COMMON STOCK
 
                                   --------
 
  Of the 5,312,614 shares of Common Stock of Pierce Leahy Corp. (the "Company")
offered hereby, 5,100,000 shares are being sold by the Company and 212,614
shares are being sold by certain shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling
Shareholders.
 
  Of the 5,312,614 shares of Common Stock offered hereby, 4,250,091 shares are
being offered for sale in the United States and Canada (the "U.S. Equity
Offering") by the U.S. Underwriters (as defined herein) and 1,062,523 shares
are being offered in a concurrent international offering (the "International
Equity Offering" and, together with the U.S. Equity Offering, the "Equity
Offerings") outside the United States and Canada by the Managers (as defined
herein).
 
  Prior to the Equity Offerings, there has not been a public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $15.00 and $18.00 per share. See "Underwriting"
for information relating to the factors considered in determining the initial
public offering price.
   
  Concurrently with the Equity Offerings, the Company is offering $100,000,000
aggregate principal amount of  % Senior Subordinated Notes due 2007 by a
separate prospectus (the "Notes Offering" and together with the Equity
Offerings, the "Offerings"). The consummation of the Equity Offerings is not
conditioned upon the consummation of the Notes Offering.     
 
  The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "PLH," subject to official notice of issuance.
 
   SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
                                    HEREBY.
 
                                   --------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
================================================================================
<TABLE>
<CAPTION>
                                     UNDERWRITING                  PROCEEDS TO
                         PRICE TO   DISCOUNTS AND    PROCEEDS TO     SELLING
                          PUBLIC    COMMISSIONS(1)   COMPANY(2)    SHAREHOLDERS
- --------------------------------------------------------------------------------
<S>                      <C>        <C>              <C>           <C>
Per Share                  $             $              $              $
- --------------------------------------------------------------------------------
Total(3)                  $             $               $             $
================================================================================
</TABLE>

(1) For information regarding indemnification of the U.S. Underwriters and the
    Managers, see "Underwriting."
(2) Before deducting expenses estimated at $725,000, all of which are payable
    by the Company.
(3) The Company and certain of the Selling Shareholders have granted the U.S.
    Underwriters a 30-day option to purchase up to an aggregate of 796,892
    additional shares of Common Stock solely to cover over-allotments, if any.
    See "Underwriting." If such option is exercised in full, the total Price to
    Public, Underwriting Discounts and Commissions, Proceeds to Company and
    Proceeds to Selling Shareholders will be $   , $   , $    and $   ,
    respectively.
 
                                   --------
 
    The shares of Common Stock are being offered by the several U.S.
Underwriters named herein, subject to prior sale, when, as and if accepted by
them and subject to certain conditions. It is expected that certificates for the
shares of Common Stock offered hereby will be available for delivery on or about
     , 1997 at the office of Smith Barney Inc., 333 West 34th Street, New York,
New York 10001.
                                  --------
 
SMITH BARNEY INC.
                          MERRILL LYNCH & CO.
                                                        PAINEWEBBER INCORPORATED
 
     , 1997
<PAGE>
 
    
[OUTSIDE GATEFOLD ARTWORK]      
 
     [Four color map of the United States and Canada with 45 plots indicating
North American Coverage]


CERTAIN PERSONS PARTICIPATING IN THE EQUITY OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, 
INCLUDING OVER-ALLOTTING, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH 
SECURITIES, AND THE IMPOSITION OF A PENALTY BID.  FOR A DESCRIPTION OF THESE 
ACTIVITIES, SEE "UNDERWRITING."

<PAGE>
 
                               
                           [INSIDE GATEFOLD ARTWORK]      
 
        [Four color collage of 12 photographs, together with an illustrated flow
plan depicting the storage and retrieval process for a box]

<PAGE>
 
                               PROSPECTUS SUMMARY
   
  The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise
indicated by the context, references to the "Company" include Pierce Leahy
Corp. and its consolidated subsidiaries. Management is not aware of any
definitive information about the size or nature of the North American records
management market (vended and unvended, active and inactive). Estimates of such
numbers and percentages contained in this Prospectus have been developed by the
Company from internal sources and reflect the Company's current estimates;
however, no assurance can be given regarding the accuracy of such estimates.
Unless otherwise indicated, the information in this Prospectus assumes (i) no
exercise of the U.S. Underwriters' over-allotment option and (ii) gives effect
to the Stock Recapitalization (as hereinafter defined) and the Offerings. In
addition, unless otherwise indicated, the pro forma financial information
regarding the Company in this Prospectus does not include the acquisition of
Advanced File Storage Systems described under "Business--The 1997 Acquisitions"
or the Recent Acquisitions described under "Business--Recent Acquisitions."
    
                                  THE COMPANY
 
  The Company is the largest archive records management company in North
America, as measured by its 50 million cubic feet of records currently under
management. The Company operates a total of 161 records management facilities
of which 148 are in the United States, serving 58 markets, including the 16
largest U.S. markets. In addition, the Company operates 13 records management
facilities in five of Canada's six largest markets.
 
  The Company is a full-service provider of records management and related
services, enabling customers to outsource their data and records management
functions. The Company offers storage for all major media, including paper
(which has typically accounted for approximately 95% of the Company's storage
revenues), computer tapes, optical discs, microfilm, video tapes and X-rays. In
addition, the Company provides next day or same day records retrieval and
delivery, allowing customers prompt access to all stored material. The Company
also offers other data management services, including customer records
management programs, imaging services and records management consulting
services.
 
  The Company believes it is the most technologically advanced records
management company in the industry by virtue of its Pierce Leahy User
Solution(R) (PLUS(R)) computer system. The PLUS(R) system fully integrates the
Company's records management, data retrieval and billing functions on a
centralized basis through the use of proprietary, real-time software. The
PLUS(R) system assists the Company in efficiently managing records in multiple
locations for national and local customers, rapidly integrating acquisitions of
records management companies and maintaining a low-cost operating structure.
The Company serves a diversified group of over 22,000 customer accounts in a
variety of industries such as financial services, manufacturing,
transportation, healthcare and law. The Company's storage and related services
are typically provided pursuant to contracts that include recurring monthly
storage fees, which continue until such records are permanently removed (for
which the Company charges a fee), and additional charges for services such as
retrieval on a per unit basis.
 
  The Company's revenues and operating income before non-recurring charges (on
a pro forma basis as defined herein) for the year ended December 31, 1996 were
$167.8 million and $23.4 million, respectively. From 1992 to 1996, the
Company's revenues and operating income before non-recurring charges grew at
compound annual growth rates of 19.9% and 28.7%, respectively. The Company
attributes this growth to the expansion of its business with new and existing
customers, which has been primarily driven by the trend towards outsourcing of
records management functions by companies and the ongoing consolidation of the
fragmented records management industry. The Company has successfully acquired
and integrated 26 companies from 1992 to 1996.
 
                                       3
<PAGE>
 
 
  The Company's growth strategy is to expand its business in new and existing
markets through (i) targeting new customers, (ii) growing with existing
customers and (iii) continuing its acquisition program. The Company has adopted
the following approaches to pursue its growth objectives:
 
  . Targeting New Customers. The Company has a dual sales strategy focused on
    both larger, typically multi-location accounts and smaller accounts, with
    a dedicated sales force for each. The Company's sales and marketing force
    has increased from 41 persons at the end of 1995 to 73 persons currently.
    For large regional and national accounts, the Company believes its
    national presence, sophisticated systems and low-cost operating structure
    provide a competitive advantage. These organizations are increasingly
    outsourcing such noncore activities, which enables their management to
    focus on their core business and to reduce space requirements and records
    management costs. For smaller accounts, the Company combines the cost
    benefits of its centralized systems with quality local service. From 1992
    to 1996, the average annual growth rate of cubic feet of storage from new
    customers was approximately 8%.
 
  . Growing with Existing Customers. The Company services its existing
    customers through both a centralized customer service organization and
    local client service representatives. Existing customers typically
    generate additional records annually which are stored with the Company.
    From 1992 to 1996, the average annual growth rate of cubic feet of
    storage from existing customers was approximately 6%.
     
  . Continuing Acquisition Program. The Company believes that the records
    management industry is highly fragmented and offers substantial
    opportunity for consolidation. The Company targets potential acquisitions
    both in the markets it already services and in new markets which it is
    not yet servicing. From 1992 to 1996, the Company successfully completed
    and integrated 26 acquisitions, totalling approximately 12.4 million
    cubic feet of records at the time of acquisition. Since January 1, 1997,
    the Company has completed eight acquisitions, totalling approximately 7.2
    million cubic feet of records at the time of acquisition. As a result of
    its centralized organizational structure and the PLUS(R) system, the
    Company has been able to rapidly achieve significant economies of scale
    in its acquisitions. From 1992 to 1996, the average annual growth rate of
    cubic feet of storage from acquisitions was approximately 10%. See
    "Business--Acquisition and Growth Strategy."     
 
  The Company's growth strategy is supported by an operating strategy which
emphasizes providing premium standardized services while maintaining a low-cost
operating structure. As a result, the Company's operating income before non-
recurring charges as a percentage of total revenues increased from 13.3% in
1992 to 17.7% in 1996. The Company expects to continue its growth and enhance
its position by implementing its strategy based on the following elements:
 
  . Using Sophisticated Centralized Systems to Provide High Quality
    Service. In tandem with the Company's centralized customer service
    organization and local field support personnel, the Company utilizes its
    PLUS(R) system to provide a high and consistent level of service (24
    hours a day, seven days a week) to its customers on a national and local
    basis, including providing its customers with real-time access to the
    database. Although PLUS(R) is centralized, the system permits local
    management flexibility through a variety of pre-programmed options to
    customize the system and enhance its utility to different types of
    customers.
 
  . Maintaining its Position as a Low-Cost Provider through Economies of
    Scale. The Company strives to remain a low-cost operator through
    achieving economies of scale in labor, real estate, transportation,
    computer systems and administrative expenses. The PLUS(R) system allows
    the Company to enhance the efficiency of its facilities while reducing
    fixed and operating costs. This system eliminates the need to designate
    permanent locations for an individual customer's records within a
    facility by using sophisticated bar-coding technology which enables
    records to be stored wherever space is available and to be positioned
    within the Company's facilities based on retrieval frequency, thereby
    reducing labor costs. PLUS(R) is similarly valuable in helping to achieve
    cost savings in acquisitions.
 
                                       4
<PAGE>
 
 
                        THE RECORDS MANAGEMENT INDUSTRY
 
  According to a 1994 study by the Association of Commercial Record Centers
(the "ACRC"), an industry trade group with over 500 members, approximately
2,800 companies offer records storage and related services in North America.
The Company believes that only 25% of the potential market outsources its
records management functions and that approximately 75% is still "unvended," or
internally managed. The Company estimates that the North American vended
records management industry generates annual revenues in excess of $1.0
billion. Management believes that the industry is highly fragmented, with most
industry participants operating on a regional or local basis.
 
  Saved documents, or records, generally fall into two categories: active and
inactive. Active records refer to information that is frequently referenced and
usually stored on-site by the originator. Inactive records are not needed for
frequent access, but must be retained for future reference, legal requirements
or regulatory compliance. Inactive records, which the Company estimates
comprise approximately 80% of all records, are the principal focus of the
records management industry.
 
  The Company believes that the records management industry is characterized by
the following trends:
 
  . Industry Consolidation. The records management industry is undergoing a
    period of consolidation as larger, better capitalized industry
    participants acquire smaller regional or local participants. Management
    believes that consolidation is primarily driven by the needs of large
    customers for fully integrated coverage and the ability to realize
    economies of scale, especially with respect to labor, real estate,
    transportation, computer systems and administrative expenses. Industry
    consolidation also provides private owners of smaller records management
    companies the ability to obtain liquidity.
 
  . Movement Towards Outsourcing. Outsourcing of internal records management
    functions represents the largest single source of new business for
    records management companies. The Company believes that as more
    organizations become aware of the advantages of professional records
    management, such as net cost reductions and enhanced levels of service,
    the records management industry will continue to gain a growing portion
    of the unvended segment. The Company also believes that the establishment
    of national providers with well-known brand names will help to accelerate
    this trend.
 
  . Increasing Production of Paper. Increasingly widespread technologies such
    as facsimiles, copiers, personal computers, laser printers and advanced
    software packages have enabled organizations to create, copy and
    distribute documents more easily and broadly. In spite of new "paperless"
    technologies (including the Internet and "e-mail"), information remains
    predominantly paper based. Additionally, the cost of storing records on
    paper is currently less expensive than the cost of converting paper
    records to, and storing on, other media (e.g., computer media, imaging,
    microfilm, CD-Rom and optical disc).
 
  . Expanded Record Keeping Needs. While technology has augmented the growth
    of paper generation, several external forces and concerns have played an
    important role in organizations' decisions to store and retain access to
    records. For example, the continued growth of regulatory requirements and
    the proliferation of litigation has resulted in increased volumes and
    lengthened holding periods of documents. Retained records are also
    remaining in storage for extended periods of time because the process of
    determining which records to destroy is time consuming and often more
    costly in the short-term than continued storage.
                                  
                               ACQUISITIONS     
   
  Since January 1997, the Company has acquired eight records management
companies, adding an aggregate of 7.2 million cubic feet of records (an
increase of approximately 18% from December 31, 1996) at the time of
acquisition, including the acquisition of Records Management Services, Inc.
("RMS") on April 2, 1997 and two acquisitions since May 1997 (collectively,
excluding the two most recent acquisitions, the "1997 Acquisitions").     
 
                                       5
<PAGE>
 
   
The acquisition of RMS added 5.2 million cubic feet of records in eight cities,
of which three were in new markets for the Company and five were in existing
markets. The two acquisitions completed since May 1997 are sometimes referred
to herein as the "Recent Acquisitions."     
 
  During 1996, the Company acquired 12 records management companies, adding an
aggregate of 6.9 million cubic feet of records at the time of acquisition, the
majority of which were completed during the second half of 1996.
 
                              CONCURRENT OFFERING
 
  Concurrent with the Equity Offerings, the Company is offering, by separate
prospectus, $100,000,000 aggregate principal amount of  % Senior Subordinated
Notes due 2007 (the "1997 Notes"). The Equity Offerings are not conditioned
upon the consummation of the offering of the 1997 Notes.
 
                                  RISK FACTORS
 
  Prospective purchasers should consider carefully the information set forth
under the caption "Risk Factors," and all other information set forth in this
Prospectus, in evaluating the shares offered hereby and the Company.
 
                              THE EQUITY OFFERINGS
 
<TABLE>   
<S>                                     <C>
Total number of shares of Common Stock  
 offered............................... 5,312,614 shares 
By the Company(1)
  U.S. Equity Offering................. 4,080,000 shares
  International Equity Offering........ 1,020,000 shares
    Total.............................. 5,100,000 shares
By the Selling Shareholders(1)
  U.S. Equity Offering.................   170,091 shares
  International Equity Offering........    42,523 shares
    Total..............................   212,614 shares
Common Stock to be outstanding after
 the Equity Offerings(1)(2)............ 15,585,090 shares
Use of proceeds........................ The net proceeds of the Equity
                                        Offerings will be primarily used to
                                        redeem a portion of the Company's 11
                                        1/8% Senior Subordinated Notes due
                                        2006 (the "1996 Notes"). The net
                                        proceeds of the Notes Offering will be
                                        primarily used to repay outstanding
                                        borrowings under the Company's credit
                                        facility. Any remaining proceeds of
                                        the Offerings will be used for general
                                        corporate purposes, including possible
                                        acquisitions. See "Use of Proceeds."
New York Stock Exchange Symbol......... PLH
</TABLE>    
- --------
(1) Does not include shares that are subject to the U.S. Underwriters' over-
    allotment option.
(2) Does not include 1,114,174 shares of Common Stock issuable upon exercise of
    outstanding options. See "Management--Stock Incentive Plan."
 
                                       6
<PAGE>
 
                SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
   
  The following summary historical and pro forma financial data, insofar as it
relates to each of the five years in the period ended December 31, 1996, has
been derived from the audited Consolidated Financial Statements, including the
consolidated balance sheets at December 31, 1995 and 1996 and the related
consolidated statements of operations for each of the three years in the period
ended December 31, 1996 and the notes thereto appearing elsewhere in this
Prospectus. The summary historical and pro forma consolidated statements of
operations and balance sheet data as of and for the three months ended March
31, 1997 and the summary historical statements of operations data for the three
months ended March 31, 1996 have been derived from unaudited consolidated
financial statements which, in the opinion of management, include all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the results of the unaudited interim period. Results for the
three months ended March 31, 1997 are not necessarily indicative of results
that may be expected for the entire year.     
   
  The following summary pro forma statements of operations, other data and
balance sheet give effect to, among other things, acquisitions completed in
1996, the 1997 Acquisitions (other than Advanced File Storage Systems ("AFSS"))
(all such 1996 and 1997 acquisitions (other than AFSS), the "1996 and 1997
Acquisitions"), the termination of the Company's status as a Subchapter S
corporation for income tax purposes and the impact of the Offerings, as if each
of these items had occurred on January 1, 1996 or as of March 31, 1997 in the
case of the balance sheet. The summary pro forma statements of operations and
balance sheet do not reflect the acquisition of AFSS or the Recent
Acquisitions, which are not significant.     
 
  The pro forma items and certain management assumptions and adjustments are
described in the accompanying notes hereto. This pro forma information is not
necessarily indicative of the results that would have occurred had the 1996 and
1997 Acquisitions, the Subchapter S corporation termination and the Offerings
been completed on the dates indicated or of the Company's actual or future
results or financial position. The summary historical and pro forma
consolidated statements of operations, other data and balance sheets should be
read in conjunction with the information contained in the Company's
Consolidated Financial Statements and the notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Selected Historical and Pro Forma Consolidated Statements of Operations, Other
Data and Balance Sheets" and "Pro Forma Financial Data" included elsewhere in
this Prospectus.
 
 
                                       7
<PAGE>
 
                SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
 
<TABLE>   
<CAPTION>
                                                                                               THREE MONTHS
                                       YEAR ENDED DECEMBER 31,                                ENDED MARCH 31,
                          ----------------------------------------------------------     ------------------------------
                                                                           PRO FORMA                          PRO FORMA
                           1992     1993     1994     1995      1996        1996(A)       1996     1997        1997(A)
                          -------  -------  -------  -------  --------     ---------     -------  -------     ---------
                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                       <C>      <C>      <C>      <C>      <C>          <C>           <C>      <C>         <C>
STATEMENT OF OPERATIONS
 DATA:
Revenues
 Storage................  $37,633  $42,122  $47,123  $55,501  $ 75,900     $ 98,885      $16,969  $23,322      $26,112
 Service and storage
  material sales........   25,202   31,266   35,513   39,895    53,848       68,953       12,730   16,910       18,519
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Total revenues.........   62,835   73,388   82,636   95,396   129,748      167,838       29,699   40,232       44,631
Cost of sales, excluding
 depreciation and
 amortization...........   39,702   45,391   49,402   55,616    73,870       93,299       17,406   22,298       24,948
Selling, general and
 administrative.........    9,012   11,977   15,882   16,148    20,007       33,018        4,856    6,762        8,052
Depreciation and
 amortization...........    5,734    6,888    8,436    8,163    12,869       18,169        2,572    4,214        4,808
Consulting payments to
 related parties(b).....      --       --       500      500       --           --           125      --           --
Non-recurring
 charges(c).............      --       --       --       --      3,254        3,254          --       --           --
Foreign currency
 translation............      --       --       --       --        --           --           --       182          182
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Operating income.......    8,387    9,132    8,416   14,969    19,748       20,098        4,740    6,776        6,641
Interest expense........    6,388    6,160    7,216    9,622    17,225       25,250        2,846    6,712        6,728
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Income before income
  taxes and
  extraordinary charge..    1,999    2,972    1,200    5,347     2,523       (5,152)       1,894       64          (87)
Income taxes............      --       --       --       --        --          (350)(d)      --       --           372 (d)
Extraordinary
 charge(e)..............      --     9,174    5,991    3,279     2,015          --           --       --           --
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
Net income (loss).......    1,999   (6,202)  (4,791)   2,068       508       (4,802)       1,894       64         (459)
Accretion (cancellation)
 of redeemable
 warrants...............      --      (746)      16      889     1,561          --         1,561      --           --
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
Net income (loss)
 applicable to Common
 shareholders...........  $ 1,999  $(5,456) $(4,807) $ 1,179  $ (1,053)    $ (4,802)     $   333  $    64      $  (459)
                          =======  =======  =======  =======  ========     ========      =======  =======      =======
Pro forma data
 (unaudited):
 Pro forma adjustment
  for income taxes
  excluding
  extraordinary charge..                                      $  1,659 (d)                        $   291 (d)
 Historical income
  (loss) before
  extraordinary charge,
  as adjusted for pro
  forma income taxes....                                      $    864                            $  (227)
 Historical income
  (loss) before
  extraordinary charge
  per Common share, as
  adjusted for pro forma
  income taxes..........                                      $    .08 (f)                        $  (.02)(f)
 Historical net loss
  applicable to Common
  shareholders, as
  adjusted for pro forma
  income taxes..........                                      $ (1,958)                           $  (227)
 Historical net loss
  applicable to Common
  shareholders per
  Common share, as
  adjusted for pro forma
  income taxes..........                                      $  (.18)(f)                         $  (.02)(f)
 Shares used in
  computing per share
  amounts...............                                        10,612                             10,550
 Pro forma net loss
  applicable to Common
  shareholders per
  Common share..........                                                   $   (.45)(g)                        $  (.04)(g)
 Pro forma shares used
  in computing per share
  amount................                                                     10,612                             10,550
OTHER DATA:
Total revenue growth
 rate...................     12.9%    16.8%    12.6%    15.4%     36.0%        75.9%        33.6%    35.5%        50.3%
Operating income (before
 non-recurring charges)
 margin.................     13.3%    12.4%    10.2%    15.7%     17.7%        13.9%        16.0%    16.8%        14.9%
EBITDA(h)...............  $14,121  $16,020  $17,352  $23,632  $ 35,871     $ 41,521      $ 7,437  $11,172      $11,631
EBITDA, as adjusted(i)..      --       --       --       --        --      $ 52,342          --       --       $13,642
EBITDA margin...........     22.5%    21.8%    21.0%    24.8%     27.6%        24.7%        25.0%    27.8%        26.1%
EBITDA, as adjusted
 margin.................      --       --       --       --        --          31.2%         --       --          30.6%
Capital
 expenditures(j)........  $ 5,565  $ 5,827  $ 6,352  $16,288  $ 23,493          --       $ 3,553  $10,794          --
Cubic feet of storage
 under management at end
 of period (000s).......   16,248   19,025   22,160   29,523    40,410       47,091 (k)   31,088   43,354       48,526 (k)
</TABLE>    
 
<TABLE>   
<CAPTION>
                                                 MARCH 31, 1997
                                   --------------------------------------------
                                                 PRO FORMA FOR
                                    ACTUAL   ACQUISITION OF RMS(L) PRO FORMA(M)
                                   --------  --------------------- ------------
                                             (DOLLARS IN THOUSANDS)
<S>                                <C>       <C>                   <C>
BALANCE SHEET DATA:
Working capital deficit........... $ (6,778)       $ (6,363)         $   (463)
Total assets......................  266,462         330,921           337,306
Total long-term debt..............  254,170         316,170           249,095
Shareholders' equity (deficit)....  (25,394)        (25,394)           39,466
</TABLE>    
 
                                       8
<PAGE>
 
            NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
   
(a) Gives effect to the (i) 1996 and 1997 Acquisitions, (ii) termination of the
    Company's status as a Subchapter S corporation and (iii) impact of the
    Offerings, as if each of these items had occurred on January 1, 1996. See
    "Pro Forma Financial Data" and Note 2 of the Notes to Consolidated
    Financial Statements. The pro forma statements of operations and balance
    sheets do not reflect the acquisition of AFSS or the Recent Acquisitions,
    which are not significant. Upon termination of the Company's status as a
    Subchapter S corporation, the Company will record a deferred income tax
    provision of approximately $6,600 for the tax effect of differences in the
    basis of assets and liabilities for financial reporting and income tax
    purposes. This deferred income tax provision has not been reflected in the
    Pro Forma Condensed Consolidated Statement of Operations. Also not
    reflected in the Pro Forma Condensed Consolidated Statement of Operations
    is the extraordinary charge for the early extinguishment of a portion of
    the 1996 Notes that will occur in the quarter in which the redemption
    occurs (see (e) below) and an unusual charge of approximately $1,752
    (pretax), or $.07 per share, for the write-off of the estimated unamortized
    compensation expense associated with options granted on January 1, 1997,
    due to the acceleration of vesting upon the completion of the Offerings.
        
(b) Represents aggregate payments made to eight Pierce family members.
 
(c) Represents non-recurring charges in 1996 of $2,764 paid to a related party
    partnership to assume the partnership's position in certain leases with
    third parties and of $490 for the establishment of an annual pension for
    Leo W. Pierce, Sr. and his spouse.
 
(d) The Company has historically been taxed as a Subchapter S corporation. Such
    status will be terminated in connection with the completion of the Equity
    Offerings. See "Management's Discussion and Analysis of Financial Condition
    and Results of Operations" and Note 2 of Notes to Consolidated Financial
    Statements.
 
(e) Represents loss on early extinguishment of debt due to refinancings in
    1993, 1994, 1995 and 1996. Amounts include write-off of unamortized
    deferred financing costs and discount, along with prepayment penalties and
    other costs. A similar charge for the early extinguishment of a portion of
    the 1996 Notes of approximately $9,975 (pretax), or $.39 per share, will
    occur in the quarter in which the redemption occurs. Such charge has not
    been reflected in the Pro Forma Condensed Consolidated Statement of
    Operations. See "Use of Proceeds" and "Management's Discussion and Analysis
    of Financial Condition and Results of Operations."
 
(f) See Note 2 of Notes to Consolidated Financial Statements for information
    concerning the computation of historical net loss per share as adjusted for
    pro forma income taxes. Excluding the non-recurring charges incurred in
    1996, pro forma net income and net income per share as adjusted for income
    taxes would have been $27 and $0, respectively.
   
(g) Excluding $10,821 and $2,011 of operating expenses included in the pro
    forma statements of operations for 1996 and for the three months ended
    March 31, 1997, respectively, specifically identified by management that
    would not have been incurred had the 1996 and 1997 Acquisitions occurred as
    of January 1, 1996 and had such cost savings been fully implemented as of
    such date, and excluding the non-recurring charges incurred in 1996, pro
    forma net income and net income per share would have been $3,765 and $.34,
    respectively, in 1996 and $768 and $.07 for the three months ended March
    31, 1997.     
 
(h) "EBITDA" is defined as net income (loss) before interest expense, taxes,
    depreciation and amortization, consulting payments to related parties, non-
    recurring charges, foreign currency translation, and extraordinary charge.
    EBITDA is not a measure of performance under GAAP. While EBITDA should not
    be considered in isolation or as a substitute for net income, cash flows
    from operating activities and other income or cash flow statement data
    prepared in accordance GAAP, or as a measure of profitability or liquidity,
    management understands that EBITDA is customarily used as a criteria in
    evaluating records management companies. Moreover, substantially all of the
    Company's financing agreements, including the Notes (as hereinafter
    defined), contain covenants in which EBITDA is used as a measure of
    financial performance. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations" for a discussion of other
    measures of performance determined in accordance with GAAP and the
    Company's sources and applications of cash flows.
 
(i) EBITDA, as adjusted is defined as EBITDA plus $10,821 and $2,011 of
    operating expenses included in the pro forma statements of operations in
    1996 and for the three months ended March 31, 1997, respectively,
    specifically identified by management that would not have been incurred had
    the 1996 and 1997 Acquisitions occurred as of January 1, 1996 and such cost
    savings been fully implemented as of such date. See Note (b) of Notes to
    Pro Forma Condensed Consolidated Statement of Operations. Management
    expects to realize additional cost savings beyond the $10,821 and $2,011
    specifically identified.
   
(j) Capital expenditures for 1996 are comprised of $11.0 million for new
    shelving, $4.0 million for leasehold and building improvements, $3.8
    million for new facility purchases and related improvements, $2.9 million
    for data processing and $1.8 million for the purchase of transportation,
    warehouse and office equipment. Of the total 1996 capital expenditures,
    management estimates that approximately $2.5 million was for upgrading and
    restructuring of existing facilities to accommodate growth or for
    maintenance capital expenditures. The 1996 capital expenditures do not
    include $11.0 million paid for real estate and other assets acquired from
    related parties (see Note 10 of Notes to Consolidated Financial
    Statements).     
   
(k) The pro forma cubic feet of storage as of December 31, 1996 and March 31,
    1997 includes cubic feet of storage from the 1997 Acquisitions completed
    since such date (excluding AFSS).     
 
(l) Gives effect to the acquisition of RMS as if it had occurred on March 31,
    1997. See "Pro Forma Financial Data," and "Use of Proceeds."
 
(m) Gives effect to the (i) acquisition of RMS, (ii) termination of the
    Company's Subchapter S corporation status and (iii) impact of the
    Offerings, as if each of these items had occurred on March 31, 1997. See
    "Pro Forma Financial Data," "Use of Proceeds," and Note 2 to Notes to
    Consolidated Financial Statements.
 
                                       9
<PAGE>
 
                                 RISK FACTORS
 
  Prospective purchasers of the Common Stock should consider carefully the
following risk factors, in addition to the other information set forth in this
Prospectus, before making an investment.
 
HIGH LEVEL OF INDEBTEDNESS AND LEVERAGE; ABILITY TO SERVICE DEBT
   
  As of March 31, 1997, on a pro forma basis after giving effect to the 1997
Acquisitions completed after such date, the Recent Acquisitions, the Offerings
and the estimated use of the net proceeds therefrom, the Company's
consolidated indebtedness would have been approximately $257.2 million and its
shareholders' equity would have been $39.5 million. This level of indebtedness
will have important consequences to holders of the Common Stock, including:
(i) a substantial part of the Company's anticipated cash flow from operations
will be required for the payment of principal and interest; (ii) the Company's
ability to obtain additional financing in the future may be limited; (iii) the
Company's leveraged position and covenants contained in the 1996 Notes, the
1997 Notes (together with the 1996 Notes, the "Notes") and the Credit Facility
(as defined herein) (or any replacement thereof) could limit its ability to
expand and make capital improvements and acquisitions; and (iv) the Company's
level of indebtedness could make it more vulnerable to economic downturns,
limit its ability to withstand competitive pressures, and limit its
flexibility in reacting to changes in its industry and economic conditions
generally. See "Description of Certain Indebtedness."     
 
  The Company's ability to meet its debt service obligations will be dependent
upon its future operating performance (including the performance of any
acquired businesses), debt levels and financial results which, in turn, will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. Although management believes that the Company's cash flow from
operations and available borrowings under the Credit Facility will be
sufficient to meet its anticipated requirements for capital expenditures,
working capital and future debt service requirements, there can be no
assurance that the Company will generate cash flows at levels sufficient to
meet these requirements. To the extent that the Company's existing resources
and future earnings are insufficient to fund the Company's activities or to
repay indebtedness, the Company may need to raise additional funds through
public or private financings. If additional funds are raised through the
issuance of equity securities, the percentage ownership of the Company's
shareholders at that time would be diluted. Further, such equity securities
may have rights, preferences or privileges senior to those of the Common
Stock. See "Description of Capital Stock."
 
RISKS ASSOCIATED WITH ACQUISITIONS
 
  One of the Company's strategies is to acquire records management businesses
that will complement its existing operations or provide it with an entree into
areas it does not presently serve. There can be no assurance that the Company
will be able to acquire or profitably manage additional acquisitions or
successfully integrate them into the Company. Furthermore, certain risks are
inherent in the Company's acquisition strategy, such as increasing leverage
and debt service requirements, diversion of management time and attention, and
combining disparate company cultures and facilities, which could adversely
affect the Company's operating results. The success of any acquisition will
depend in part on the Company's ability to integrate effectively the acquired
records management business into the Company. See "Business--Acquisition and
Growth Strategy."
 
  The size, timing and integration of possible future acquisitions may cause
substantial fluctuations in operating results from quarter to quarter. As a
result, operating results for any quarter may not be indicative of results
that may be achieved for any subsequent quarter or for a full fiscal year.
Further, there can be no assurance that acquisitions will not have an adverse
effect on the Company's operating results, particularly in quarters
immediately following the consummation of such transactions, while the
operations of the acquired businesses are being integrated into the Company's
operations. Once integrated, acquisitions may not achieve levels of net sales
or profitability comparable to those achieved by the Company's existing
operations, or otherwise perform
 
                                      10
<PAGE>
 
as expected. In addition, earnings may be adversely affected by transaction-
related expenses in the quarter in which an acquisition is consummated. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company may, in the future, utilize equity as all or a
portion of the consideration for future acquisitions. Any such issuances will
dilute the percentage ownership of the Company's shareholders at such time.
Further, such equity securities may have rights, preferences or privileges
senior to those of the Common Stock. See "Description of Capital Stock."
 
COMPETITION
 
  The Company faces competition from numerous competitors in all geographic
areas where it operates. The Company believes that competition for customers
is based on price, reputation for reliability, and quality and scope of
service and technology. As a result of this competition, the records
management industry has for the past several years experienced downward
pricing pressures. Should a further downward trend in pricing occur or
continue for an extended period of time, it could have a material adverse
effect on the Company's results of operations. The Company also competes for
acquisition candidates. Some of the Company's competitors possess greater
financial and other resources than the Company. If any such competitor were to
devote additional resources to the records storage business and/or such
acquisition candidates or to focus its strategy on the Company's areas of
operation, the Company's results of operations could be adversely affected.
 
  The Company also faces competition from the internal document handling
capability of its current and potential customers. There can be no assurance
that these organizations will outsource more of their document management
needs or that they will not bring in-house some or all of the functions they
currently outsource. See "Business--The Records Management Industry" and
"Business--Competition."
 
ALTERNATIVE TECHNOLOGIES
 
  The substantial majority of the Company's revenues have been derived from
the storage of paper documents and from related services. Such storage
requires significant physical space. Alternative technologies for generating,
capturing, managing, transmitting and storing information have been developed,
many of which require significantly less space than paper. Such technologies
currently include computer media, imaging, microfilming, audio/video tape,
film, CD-Rom and optical disc. None of these technologies has replaced paper
as the principal means for storing information. However, there can be no
assurance that one or more non-paper-based technologies (whether now existing
or developed in the future) may not in the future reduce or supplant the use
of paper as a preferred medium, which could in turn adversely affect the
Company's business.
 
DEPENDENCE ON KEY PERSONNEL
 
  The Company's success depends, in part, upon the efforts, abilities and
expertise of its executive officers and other key employees, including in
particular, J. Peter Pierce, the Company's President and Chief Executive
Officer. The Company has no employment contracts with any of its executive
officers. There can be no assurance that the Company will be able to retain
such officers, the loss of any of whom could have a material adverse effect
upon the Company. See "Management."
 
CASUALTY
 
  The Company currently maintains and intends to continue to maintain, to the
extent such insurance is available on commercially reasonable terms,
comprehensive liability, fire, flood and earthquake (where appropriate) and
extended coverage insurance with respect to the properties that it now owns or
leases or that it may in the future own or lease, with customary limits and
deductibles. Certain types of loss, however, may not be fully insurable on a
cost-effective basis. In the future, should uninsured losses or damages occur,
the Company could lose both its investment in and anticipated profits from the
affected property and may continue to be obligated on any leasehold
obligations, mortgage indebtedness or other obligations related to such
property. As a result, any such material loss could materially adversely
affect the Company. See "Business--Insurance."
 
                                      11
<PAGE>
 
ENVIRONMENTAL MATTERS
   
  As of June 1, 1997, the Company owned or leased approximately 10 million
square feet of facilities. Under various federal, state, local and foreign
environmental laws, regulations and ordinances ("environmental laws"), the
Company's properties and operations may subject it to liability for the costs
of investigation, removal or remediation of soil and groundwater, on or off-
site, contaminated by hazardous substances and other contaminants or hazardous
materials such as petroleum products ("hazardous materials"), as well as
damages to natural resources. Certain such laws impose cleanup responsibility
and liability without regard to whether the owner or operator of the real
estate or business thereon knew of or was responsible for the contamination,
and whether or not operations at the property have been discontinued or title
to the property has been transferred. In addition, the presence of such
materials, or the failure to properly remediate such property, may adversely
affect the current property owner's or operator's ability to sell, rent or use
such property or to borrow using such property as collateral. The owner or
operator of contaminated property also may be subject to statutory and common
law claims by third parties based on any damages and costs resulting from off-
site migration of the contamination.     
 
  Certain environmental laws govern the removal, encapsulation or disturbance
of asbestos-containing materials ("ACMs") in buildings. Such laws may impose
liability for improper handling and release of ACMs and third parties may seek
to recover from owners or operators of real estate for personal injury
associated with exposure to such materials. Certain facilities operated by the
Company contain ACMs.
 
  Certain of the properties formerly or currently owned or operated by the
Company were previously used for industrial or other purposes that involved
the use or storage of hazardous materials or the generation and disposal of
hazardous wastes, and the use of underground storage tanks ("USTs") for
hazardous materials. The Company has from time to time conducted certain
environmental investigations, and remedial activities have been performed, at
certain of its former and current properties, but an in-depth environmental
review of each of the properties and related operations has not been conducted
by or on behalf of the Company. In connection with its former and current
ownership or operation of certain properties and businesses, the Company may
be subject to environmental liability as discussed above and as more
specifically described under "Business--Environmental Matters."
 
  The Company has not received any written notice from any governmental
authority or third party asserting, and is not otherwise aware of, any
material environmental non-compliance, liability or claim relating to
hazardous materials or otherwise under any environmental laws applicable to
the Company in connection with any of its present or former properties or
operations other than as described under "Business--Environmental Matters."
However, no assurance can be given that there are no environmental conditions
for which the Company might be liable in the future or that future regulatory
action, or compliance with future environmental laws, will not require the
Company to incur costs with respect to its properties or operations that could
have a material adverse effect on the Company's financial condition or results
of operations.
 
CONTROL BY EXISTING SHAREHOLDERS
 
  Prior to the Equity Offerings, all of the outstanding stock of the Company
was owned by members of the Pierce family. Substantially all of the members of
the Pierce family, who are expected to own approximately 66% of the shares of
Common Stock outstanding after the Equity Offerings, have indicated their
intention to enter into a ten-year voting trust agreement (the "Voting Trust
Agreement") pursuant to which all of the shares subject to the Voting Trust
Agreement will be voted at the direction of Leo W. Pierce, Sr. and J. Peter
Pierce (the "Voting Trustees"). Consequently, the Voting Trustees will be able
to elect the Company's directors, to determine the outcome of corporate
actions requiring shareholder approval and otherwise to control the business
affairs of the Company. See "Principal and Selling Shareholders--Voting Trust
Agreement."
 
SHARES ELIGIBLE FOR FUTURE SALE
 
  The Company can make no prediction as to the effect, if any, that sales of
additional shares of Common Stock or the availability of shares for future
sale will have on the market price of the Common Stock. Sales in
 
                                      12
<PAGE>
 
the public market of substantial amounts of Common Stock after the Equity
Offerings (including shares issued upon the exercise of outstanding options)
or the perception that such sales could occur may adversely affect the market
price of the Common Stock and may make it more difficult for the Company to
sell equity securities or equity related securities in the future at a time
and price it deems appropriate. After giving effect to the sale of the shares
of Common Stock offered hereby, the Company will have outstanding 15,585,090
shares of Common Stock. Of these shares, 5,312,614 shares of Common Stock sold
in the Equity Offerings will be freely tradeable without restriction under the
Securities Act of 1933, as amended (the "Securities Act"), except for any
shares purchased by "affiliates," as that term is defined under the Securities
Act, of the Company. The remaining 10,272,476 shares are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities
Act and will be eligible for sale pursuant to Rule 144 immediately after the
closing of the Equity Offerings subject, in the case of affiliates, to
applicable volume and other restrictions contained therein.
 
  The Company, its executive officers and directors, the Selling Shareholders
and certain other shareholders of the Company have agreed that, for a period
of 180 days after the date of this Prospectus (the "lock-up period"), they
will not, without the prior consent of Smith Barney Inc., offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock subject to
certain limited exceptions, including the issuance of shares by the Company in
connection with possible future acquisitions. Such consent permitting shares
to be sold before the expiration of the lock-up period may be granted without
prior notice to the other shareholders of the Company or to any public market
in which the Common Stock trades. See "Shares Eligible for Future Sale."
 
ABSENCE OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; POSSIBLE VOLATILITY
OF STOCK PRICE
 
  Prior to the Equity Offerings, there has been no public market for the
Common Stock and there can be no assurance an active trading market will
develop or be sustained. The initial offering price for the Common Stock was
determined by negotiations among the Company, the Representatives (as
hereinafter defined) and the Managers, and may not be indicative of the market
price of the Common Stock after the Equity Offerings. See "Underwriting" for a
discussion of the factors considered in determining the initial public
offering price. From time to time after the Equity Offerings, there may be
significant volatility in the market price of the Common Stock. Quarterly
operating results of the Company, deviations in results of operations from
estimates of securities analysts, changes in general conditions in the economy
or the records management industry or other developments affecting the Company
or its competitors could cause the market price of the Common Stock to
fluctuate substantially. The equity markets have, on occasion, experienced
significant price and volume fluctuations that have affected the market prices
for many companies' securities and that have been unrelated to the operating
performance of such companies. Any such fluctuations that occur following
completion of the Equity Offerings may adversely affect the market price of
the Common Stock.
 
DILUTION
 
  The purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value of their
shares of Common Stock in the amount of $24.58 per share (after giving effect
to the underwriting discounts and commissions and estimated offering expenses,
at an assumed initial public offering price of $16.50 per share). See
"Dilution." In the event the Company issues additional shares of Common Stock
in the future, including shares that may be issued in connection with future
acquisitions, purchasers of Common Stock in the Equity Offerings may
experience further dilution in the net tangible book value per of Common
Stock.
 
FORWARD-LOOKING STATEMENTS
 
  This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, and is subject to the safe-harbor created by
such sections. Such forward-looking statements concern the Company's
operations, economic performance and financial condition, including in
particular the 1997 Acquisitions and their integration into the
 
                                      13
<PAGE>
 
Company's existing operations. Such statements involve known and unknown
risks, uncertainties and other factors, including those identified under this
"Risk Factors" section and elsewhere in this Prospectus that may cause the
actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions; changes in customer preferences; competition; changes in
technology; the integration of any acquisitions; changes in business strategy;
the indebtedness of the Company; quality of management, business abilities and
judgment of the Company's personnel; the availability, terms and deployment of
capital; and various other factors referenced in this Prospectus. See
"Summary," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business." The forward-looking statements are made
as of the date of this Prospectus, and the Company assumes no obligation to
update the forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking statements.
 
ANTI-TAKEOVER PROVISIONS
 
  The Company's Articles of Incorporation and Bylaws contain certain
provisions that may have the effect of discouraging certain transactions
involving an actual or threatened change of control of the Company. Such
provisions could limit the price that certain investors might be willing to
pay in the future for shares of Common Stock. In addition, shares of preferred
stock may be issued by the Board of Directors without shareholder approval on
such terms and conditions, and having such rights, privileges and preferences,
as the Board of Directors may determine. The rights of the holders of the
Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any preferred stock that may be issued in the future. The
Company has no current plans to issue any shares of preferred stock. See
"Description of Capital Stock."
 
NO DIVIDENDS
 
  The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future and intends to retain any future earnings for
use in its business. Additionally, the Company's ability to pay cash dividends
is limited by the terms of the Notes and the Credit Facility.
 
                                      14
<PAGE>
 
                                  THE COMPANY
 
  The Company was incorporated in Pennsylvania in March 1997 and is the
successor by merger immediately preceding the Offerings to Pierce Leahy Corp.
which was incorporated in New York in 1990 ("PLC"). From inception, PLC had an
authorized capitalization consisting of two classes of Common Stock: Class A
Common Stock which was voting and Class B Common Stock which was nonvoting.
Immediately preceding the merger, PLC effected a stock split and
recapitalization pursuant to which each outstanding share of Class A and Class
B Common Stock was converted into shares of voting Common Stock. Immediately
thereafter, PLC was redomesticated into Pennsylvania pursuant to the merger.
Such transactions are collectively referred to herein as the "Stock
Recapitalization."
 
  The Company's operations date to 1957 when its predecessor company, L.W.
Pierce Co., Inc., was founded to provide filing systems and related equipment
to companies in the Philadelphia area. L.W. Pierce Co., Inc. expanded
primarily through internal growth until 1990 when it acquired Britannia
Security Group, Inc. (doing business as Leahy Business Archives), which
approximately doubled the size of the Company. PLC was formed at that time
from the consolidation of the predecessor company with Leahy Business
Archives.
 
  From its incorporation in 1990, PLC had elected to be taxed as a corporation
under Subchapter S (a "Subchapter S corporation") of the Internal Revenue Code
of 1986, as amended (the "Code"). As a result of the Equity Offerings, PLC's
status as a Subchapter S corporation will terminate. In connection with tax
liabilities of the Company's former Subchapter S shareholders for the portion
of 1997 during which the Company was a Subchapter S corporation, the Company
is obligated to make distributions to such shareholders to cover their tax
liabilities related to the Company. See "Management--Compensation Committee
Interlocks and Insider Participation."
 
  The Company's Canadian business is operated by Pierce Leahy Command Company
("PLC Command"), a Nova Scotia unlimited liability company. As a result of
PLC's status as a Subchapter S corporation prior to the Equity Offerings, all
of the capital stock of PLC Command is owned by two limited partnerships. Two
separate corporations owned by J. Peter Pierce are the general partner of each
partnership, respectively, and the Company has a 99% limited partnership
interest in each partnership. Accordingly, the Company has an indirect 99%
equity interest in PLC Command.
 
  The principal executive offices of the Company are located at 631 Park
Avenue, King of Prussia, Pennsylvania 19406, and its telephone number is (610)
992-8200.
 
                              CONCURRENT OFFERING
   
  Concurrent with the Equity Offerings, the Company is offering, by separate
prospectus, $100,000,000 aggregate principal amount of  % Senior Subordinated
Notes due 2007 (the "1997 Notes"). The 1997 Notes are redeemable, at the
option of the Company, at any time on or after      , 2002, at specified
prices plus accrued interest. The Equity Offerings are not conditioned upon
the consummation of the offering of the 1997 Notes (the "Notes Offering").
    
                                      15
<PAGE>
 
                                USE OF PROCEEDS
 
  The net proceeds to the Company from the sale of 5,100,000 shares of Common
Stock by the Company in the Equity Offerings, after deducting underwriting
discounts and commissions and estimated offering expenses, are estimated to be
approximately $77.5 million ($86.2 million if the U.S. Underwriters' over-
allotment option is exercised in full), assuming an initial public offering
price of $16.50 per share. The Company will not receive any proceeds from the
sale of Common Stock by the Selling Shareholders. The Company expects to use
approximately $77.0 million of the net proceeds of the Equity Offerings to
repurchase a portion of the 1996 Notes (as defined below). Under the Indenture
for the 1996 Notes, up to an aggregate of $70.0 million principal amount of
the $200.0 million principal amount of 1996 Notes outstanding may be redeemed
by the Company with the net proceeds of the Equity Offerings at 110% of the
principal amount plus any accrued but unpaid interest to the date of
redemption. The 1996 Notes bear interest at 11 1/8% per annum and are due July
15, 2006. See "Description of Certain Indebtedness--The 1996 Notes." The Notes
were issued primarily to retire certain existing indebtedness of the Company
under its previous credit facility.
   
  The net proceeds from the sale of the 1997 Notes, after deducting
underwriting discounts and commissions and estimated offering expenses, are
estimated to be approximately $96.5 million. The Company expects to use
substantially all of the net proceeds of the Notes Offering to repay
outstanding borrowings under the U.S. dollar portion of its Credit Facility.
As of June 1, 1997, the effective interest rate on the U.S. dollar portion of
the Credit Facility was approximately 7.7%. The borrowings under the Credit
Facility which will be repaid by the net proceeds of the sale of the Notes
were primarily used to fund the Company's acquisitions in 1996 and the 1997
Acquisitions, including the acquisition of RMS. See "Business--Acquisition
History and Growth Strategy" and "Business--The 1997 Acquisitions."     
 
  The balance of any net proceeds from the Offerings will be used for general
corporate purposes, including possible acquisitions.
 
                                DIVIDEND POLICY
 
  The Company does not anticipate paying any cash dividends in the foreseeable
future. The current policy of the Company's Board of Directors is to retain
any earnings to support operations and to finance the expansion of the
Company's business. In addition, the Credit Facility and the indentures
governing the Notes contain provisions limiting the Company's ability to pay
cash dividends on the Common Stock. See "Description of Certain Indebtedness."
 
  Prior to the Offerings, the Company has been taxed as a Subchapter S
corporation and has made distributions to its former Subchapter S shareholders
with respect to taxes related to the Company. After the Equity Offerings, the
Company will no longer be taxed as a Subchapter S corporation. The Company
will, however, make distributions to its former Subchapter S shareholders with
respect to any taxes related to the Company during the period it was taxed as
a Subchapter S corporation.
 
                                      16
<PAGE>
 
                                   DILUTION
 
  The deficit in net tangible book value of the Company as of March 31, 1997
(after giving effect to the Stock Recapitalization) was $(139.3) million or
$(13.28) per share. Deficit in net tangible book value per share represents
the amount by which the Company's liabilities exceeds its tangible assets,
divided by the number of shares of Common Stock then outstanding.
 
  Net tangible book value dilution per share represents the difference between
the amount per share paid by purchasers of the 5,100,000 shares of Common
Stock offered by the Company in the Equity Offerings and the deficit in net
tangible book value per share of Common Stock immediately after completion of
the Equity Offerings. After giving effect to the sale of the shares of Common
Stock offered by the Company and the Notes Offering (assuming an initial
public offering price of $16.50 per share in the Equity Offerings and after
deducting the estimated underwriting discounts and commissions and estimated
offering expenses and after giving effect to the 1996 and 1997 Acquisitions),
the pro forma deficit in net tangible book value of the Company as of March
31, 1997 would have been $(126.0) million or $(8.08) per share. This
represents an immediate increase in pro forma net tangible book value of $5.20
per share to existing shareholders and an immediate dilution in net tangible
book value of $24.58 per share to purchasers of Common Stock in the Equity
Offerings as illustrated in the following table:
 
<TABLE>
   <S>                                                        <C>      <C>
   Assumed initial public offering price per share...........          $16.50
     Deficit in net tangible book value per share at March
      31, 1997............................................... $(13.28)
     Increase per share attributable to new investors........    5.20
                                                              -------
   Pro forma net tangible book value per share after the
    Equity Offerings.........................................           (8.08)
                                                                       ------
   Dilution per share to new investors.......................          $24.58
                                                                       ======
</TABLE>
 
  The following table sets forth, as of March 31, 1997, the difference between
the existing shareholders and new investors (assuming an initial public
offering price of $16.50 per share) with respect to the number of shares
owned, the total consideration paid and the average price per share paid to
the Company. The table does not give effect to the sale of Common Stock by the
Selling Shareholders.
 
<TABLE>
<CAPTION>
                             SHARES PURCHASED  TOTAL CONSIDERATION
                            ------------------ ------------------- AVERAGE PRICE
                              NUMBER   PERCENT   AMOUNT    PERCENT   PER SHARE
                            ---------- ------- ----------- ------- -------------
<S>                         <C>        <C>     <C>         <C>     <C>
Existing shareholders...... 10,485,090   67.3% $    24,000    -- %     $ --
New investors(1)(2)........  5,100,000   32.7   84,150,000  100.0      16.50
                            ----------  -----  -----------  -----
  Total.................... 15,585,090  100.0% $84,174,000  100.0%
                            ==========  =====  ===========  =====
</TABLE>
- --------
(1) Excludes as of March 31, 1997, stock options to purchase a total of
    1,114,174 shares of Common Stock. To the extent such options are
    exercised, there may be further dilution to new investors.
(2) Sales by Selling Shareholders in the Equity Offerings will reduce the
    number of shares held by existing shareholders to 10,272,476 or 65.9% of
    the total number of shares of Common Stock to be outstanding after the
    Equity Offerings (10,039,601 or 62.2% if the over-allotment option is
    exercised in full), and will increase the number of shares held by new
    investors to 5,312,614 or 34.1% of the total number of shares of Common
    Stock outstanding after the Equity Offerings (6,109,506 or 37.8% if the
    over-allotment option is exercised in full).
 
                                      17
<PAGE>
 
                                CAPITALIZATION
 
  The following table sets forth the capitalization of the Company as of March
31, 1997 (i) on an actual basis, (ii) on a pro forma basis to give effect to
the acquisition of RMS as if it had occurred as of March 31, 1997 and (iii) as
further adjusted to give effect to the sale by the Company of 5,100,000 shares
of Common Stock in the Equity Offerings at an assumed initial public offering
price of $16.50 per share, the sale of the 1997 Notes in the Notes Offering
and the application of the estimated net proceeds from the Offerings as
described under "Use of Proceeds." This table should be read in conjunction
with the Company's Pro Forma Financial Data and Consolidated Financial
Statements and notes thereto and the other information included elsewhere in
this Prospectus (amounts in thousands):
 
<TABLE>   
<CAPTION>
                                                    AS OF MARCH 31, 1997
                                               -------------------------------
                                                          PRO FORMA
                                                          FOR THE
                                                         ACQUISITION
                                                ACTUAL     OF RMS    PRO FORMA
                                               --------  ----------- ---------
<S>                                            <C>       <C>         <C>
Cash.......................................... $  1,064   $  1,240   $  1,240
                                               ========   ========   ========
Credit Facility (a)........................... $ 49,900   $111,900   $ 14,825
11 1/8% Senior subordinated notes due 2006....  200,000    200,000    130,000
  % Senior subordinated notes due 2007........      --         --     100,000
Seller notes..................................      500        500        500
Other indebtedness............................    4,362      4,362      4,362
Less--Current portion.........................     (592)      (592)      (592)
                                               --------   --------   --------
  Total long-term debt (b)....................  254,170    316,170    249,095
                                               --------   --------   --------
Preferred stock (c)...........................      --         --         --
Common stock (d)..............................      --         --         156
Additional paid-in capital....................       24         24     77,379
Accumulated deficit (e).......................  (25,418)   (25,418)   (38,069)
                                               --------   --------   --------
  Total shareholders' equity (deficit)........  (25,394)   (25,394)    39,466
                                               --------   --------   --------
    Total capitalization...................... $228,776   $290,776   $288,561
                                               ========   ========   ========
</TABLE>    
- --------
   
(a) Does not include $7,500 of additional borrowings under the Credit Facility
    for the acquisitions of AFSS and the Recent Acquisitions.     
(b) See Note 6 of the Notes to Financial Statements for information concerning
    the Company's debt obligations.
(c) In connection with the Recapitalization, the Company authorized 10,000,000
    shares of undesignated Preferred Stock.
(d) Actual outstanding Common Stock consisted of Class A and Class B Common
    Stock.
(e) Does not include an unusual charge that will occur in the quarter in which
    the Offerings are completed of approximately $1,752 (pretax) for the
    write-off of the estimated unamortized compensation expense associated
    with options granted on January 1, 1997, due to the acceleration of
    vesting upon the completion of the Offerings.
 
                                      18
<PAGE>
 
                           PRO FORMA FINANCIAL DATA
   
  The unaudited pro forma condensed consolidated balance sheet as of March 31,
1997 gives effect to, among other things, the Offerings, the acquisition of
RMS and termination of the Company's status as a Subchapter S corporation as
if they occurred on March 31, 1997. The unaudited pro forma condensed
consolidated statements of operations for the year ended December 31, 1996 and
for the three months ended March 31, 1997 give effect to, among other things,
the Offerings and the 1996 and 1997 Acquisitions for periods prior to their
acquisition by the Company, as if they occurred on January 1, 1996. The pro
forma condensed consolidated balance sheet and statements of operations do not
reflect the acquisition of AFSS or the Recent Acquisitions, which are not
significant.     
 
  The Offerings, the 1996 and 1997 Acquisitions, the Subchapter S termination
and certain management assumptions and adjustments are described in the
accompanying notes hereto. This pro forma information is not necessarily
indicative of the results that would have occurred had the 1996 and 1997
Acquisitions, the Subchapter S termination and the Offerings been completed on
the dates indicated or of the Company's actual or future results or financial
position. The unaudited pro forma condensed consolidated balance sheet and
statements of operations should be read in conjunction with the Company's
Consolidated Financial Statements and notes thereto, as of December 31, 1996
and for each of the three years in the period ended December 31, 1996,
appearing elsewhere in this Prospectus.
 
  The unaudited pro forma condensed consolidated balance sheet at March 31,
1997 and the unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1996 and for the three months ended
March 31, 1997 assume the completion of the Notes Offering and the application
of the net proceeds therefrom. The consummation of the Equity Offerings is not
conditioned upon consummation of the Notes Offering.
 
                                      19
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
 
                                 MARCH 31, 1997
                             (DOLLARS IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                                         
                                       PRO FORMA FOR     
                                   ACQUISITION OF RMS(A) 
                                   ----------------------   PRO FORMA  ADJUSTMENTS
                                      RMS      PRO FORMA      FOR       FROM THE
                          ACTUAL   HISTORICAL ADJUSTMENTS      RMS      OFFERINGS     PRO FORMA
                         --------  ---------- -----------   ---------  -----------    ---------
<S>                      <C>       <C>        <C>           <C>        <C>            <C>
         ASSETS
CURRENT ASSETS:
 Cash................... $  1,064   $   176     $   --      $  1,240    $ 174,075 (f) $  1,240
                                                                         (167,075)(f)
                                                                           (7,000)(g)
 Accounts receivable....   21,473     2,370         --        23,843          --        23,843
 Inventories............      687       133         --           820          --           820
 Prepaid expenses and
  other.................    1,171       195         --         1,366          --         1,366
 Deferred income taxes..      --         21         (21)(c)      --         3,900 (g)    5,900
                                                                            2,000 (h)
                         --------   -------     -------     --------    ---------     --------
  Total current assets..   24,395     2,895         (21)      27,269        5,900       33,169
PROPERTY AND EQUIPMENT,
 net....................  124,420     6,120       4,380 (b)  134,920          --       134,920
OTHER ASSETS, primarily
 intangibles............  117,647     1,103      49,982 (c)  168,732        3,460 (f)  169,217
                                                                           (2,975)(g)
                         --------   -------     -------     --------    ---------     --------
                         $266,462   $10,118     $54,341     $330,921    $   6,385     $337,306
                         ========   =======     =======     ========    =========     ========
          LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
 Current portion of
  long-term debt and
  noncompete
  obligations........... $    592   $   630        (630)(d) $    592    $     --      $    592
 Accounts payable.......    3,558     1,258         --         4,816          --         4,816
 Accrued expenses.......   16,586     1,201         --        17,787          --        17,787
 Deferred revenues......   10,437       --          --        10,437          --        10,437
                         --------   -------     -------     --------    ---------     --------
  Total current
   liabilities..........   31,173     3,089        (630)      33,632          --        33,632
LONG-TERM DEBT AND
 NONCOMPETE                                                                                   
 OBLIGATIONS............  254,170     3,702      58,298 (d)  316,170      100,000 (f)  249,095
                                                                         (167,075)(f)         
DEFERRED RENT...........    3,070       --          --         3,070          --         3,070
DEFERRED INCOME TAXES...    3,443       --          --         3,443        8,600 (h)   12,043
SHAREHOLDERS' EQUITY                                                                          
 (DEFICIT)..............  (25,394)    3,327      (3,327)(e)  (25,394)      77,535 (f)   39,466
                                                                           (9,975)(g)         
                                                                            3,900 (g)         
                                                                           (6,600)(h)         
                         --------   -------     -------     --------    ---------     --------
                         $266,462   $10,118     $54,341     $330,921    $   6,385     $337,306
                         ========   =======     =======     ========    =========     ========
</TABLE>    
 
         The accompanying notes are an integral part of this statement.
 
                                       20
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
 
                                MARCH 31, 1997
                   (DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
          
(a) The Company acquired RMS after March 31, 1997 (see "Business--Acquisition
    History and Growth Strategy") for $62,000, including transaction costs.
    The pro forma adjustments reflect the application of the purchase method
    of accounting to the historical balance sheet of RMS.     
   
(b) Reflects the step-up to the estimated fair value of land ($400), warehouse
    equipment ($7,000), and buildings ($3,100).     
   
(c) Intangible assets of goodwill ($48,425), noncompete agreement ($2,000),
    and other intangibles ($510) result from the preliminary allocation of the
    purchase price. These intangibles are subject to adjustment based on the
    final allocation of the purchase price to the net assets acquired. Also,
    RMS's pre-existing intangibles ($635) and deferred income tax benefits
    ($339) were not allocated value in purchase accounting. Management
    believes that the final allocation of the purchase price will not differ
    materially from the preliminary estimated amounts.     
   
(d) Reflects the Company's borrowing of $62,000 under the Credit Facility to
    fund the acquisition of RMS and the repayment of $4,332 of debt of RMS.
           
(e) Elimination of the historical equity accounts of RMS.     
   
(f) Reflects the sale of 5,100,000 shares of Common Stock resulting in
    estimated net proceeds to the Company of $77,535 (at an assumed public
    offering price of $16.50 per share and after deducting discounts and
    commissions and estimated offering expenses of $6,615) and net proceeds of
    $96,540 from the Notes Offering (after deducting underwriting discounts
    and commissions and estimated offering expenses of $3,460). A substantial
    portion of the Equity Offerings will be used to redeem $70,000 of the 1996
    Notes. The proceeds from the Notes Offering will be used to repay existing
    Senior Indebtedness of $49,900 at March 31, 1997 and a portion ($47,175)
    of the Senior Indebtedness of $62,000 incurred in connection with the
    acquisition of RMS.     
   
(g) Represents the payment of the $7,000 (pretax) prepayment penalty to be
    incurred in connection with the redemption of a portion of the 1996 Notes
    and the related write-off of $2,975 (pretax) in related unamortized
    deferred financing costs. This extraordinary charge of $9,975 (pretax)
    relating to the early extinguishment of debt will be recorded in the
    quarter in which the redemption occurs. A tax benefit of approximately
    $3,900 will be recorded for these charges.     
   
(h) The Company operates as a Subchapter S corporation and will terminate such
    status in connection with the Equity Offerings. Upon the termination of
    the Company's status as a Subchapter S corporation, the Company will
    record a deferred income tax provision of approximately $6,600 for the tax
    effect of the differences in the basis of assets and liabilities for
    financial reporting and income tax purposes. This deferred tax provision
    will be recorded in the quarter in which the Subchapter S status
    terminates.     
 
                                      21
<PAGE>
 
                               PIERCE LEAHY CORP.
 
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                                     ADJUSTMENTS     PRO FORMA
                                                        FOR             FOR       ADJUSTMENTS   PRO FORMA
                           ACTUAL  ACQUISITIONS(A) ACQUISITIONS(B)  ACQUISITIONS FROM OFFERINGS    (B)
                          -------- --------------- ---------------  ------------ -------------- ---------
<S>                       <C>      <C>             <C>              <C>          <C>            <C>
REVENUES................  $129,748     $38,090        $    --         $167,838       $  --      $167,838
                          --------     -------        --------        --------       ------     --------
OPERATING EXPENSES
Cost of sales, excluding
 depreciation and
 amortization...........    73,870      19,429             --           93,299          --        93,299
Selling, general and
 administrative.........    20,007      13,011             --           33,018          --        33,018
Depreciation and
 amortization...........    12,869       2,085           3,215 (c)      18,169          --        18,169
Non-recurring charges...     3,254         --              --            3,254          --         3,254
                          --------     -------        --------        --------       ------     --------
  Total operating
   expenses.............   110,000      34,525           3,215         147,740          --       147,740
                          --------     -------        --------        --------       ------     --------
  Operating income......    19,748       3,565          (3,215)         20,098          --        20,098
INTEREST EXPENSE........    17,225       1,341           8,764 (d)      27,330       (2,080)      25,250 (e)
                          --------     -------        --------        --------       ------     --------
  Income (loss) before
   income taxes and
   extraordinary
   charge...............     2,523       2,224         (11,979)         (7,232)       2,080       (5,152)
INCOME TAXES............       --          --              --              --          (350)(f)     (350)(f)
                          --------     -------        --------        --------       ------     --------
INCOME (LOSS) BEFORE
 EXTRAORDINARY CHARGE...  $  2,523     $ 2,224        $(11,979)       $ (7,232)      $2,430     $ (4,802)
                          ========     =======        ========        ========       ======     ========
</TABLE>    
 
         The accompanying notes are an integral part of this statement.
 
                                       22
<PAGE>
 
                               PIERCE LEAHY CORP.
 
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 
                   FOR THE THREE MONTHS ENDED MARCH 31, 1997
                             (DOLLARS IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                                  ADJUSTMENTS     PRO FORMA  ADJUSTMENTS
                                       RMS          FOR RMS        FOR RMS      FROM     PRO FORMA
                          ACTUAL  ACQUISITION(A) ACQUISITION(B)  ACQUISITION  OFFERINGS     (B)
                          ------- -------------- --------------  ----------- ----------- ---------
<S>                       <C>     <C>            <C>             <C>         <C>         <C>
REVENUES................  $40,232     $4,399        $   --         $44,631     $   --     $44,631
                          -------     ------        -------        -------     -------    -------
OPERATING EXPENSES
Cost of sales, excluding
 depreciation and
 amortization...........   22,298      2,650            --          24,948         --      24,948
Selling, general and
 administrative.........    6,762      1,290            --           8,052         --       8,052
Depreciation and
 amortization...........    4,214        238            356 (c)      4,808         --       4,808
Non-recurring charges...      --         --             --             --          --         --
Foreign currency
 translation............      182        --             --             182         --         182
                          -------     ------        -------        -------     -------    -------
  Total operating
   expenses.............   33,456      4,178            356         37,990         --      37,990
                          -------     ------        -------        -------     -------    -------
  Operating income......    6,776        221           (356)         6,641         --       6,641
INTEREST EXPENSE........    6,712        104         (1,369)(d)      8,185      (1,457)     6,728 (e)
                          -------     ------        -------        -------     -------    -------
  Income (loss) before
   income taxes and
   extraordinary
   charge...............       64        117         (1,725)        (1,544)      1,457        (87)
INCOME TAXES............      --          41            (41)           --          372        372 (f)
                          -------     ------        -------        -------     -------    -------
INCOME (LOSS) BEFORE
 EXTRAORDINARY CHARGE...  $    64     $   76        $(1,684)       $(1,544)    $ 1,085    $  (459)
                          =======     ======        =======        =======     =======    =======
</TABLE>    
 
         The accompanying notes are an integral part of this statement.
 
                                       23
<PAGE>
 
                              PIERCE LEAHY CORP.
 
                   NOTES TO PRO FORMA CONDENSED CONSOLIDATED
                           STATEMENTS OF OPERATIONS
 
                            (DOLLARS IN THOUSANDS)
 
(a) Represents the historical results of operations of the 1996 and 1997
    Acquisitions for the periods from January 1, 1996 to their dates of
    acquisition by the Company. See "Business--Acquisition and Growth
    Strategy."
 
(b) Management expects to achieve cost savings from the 1996 and 1997
    Acquisitions as a result of the factors described below. The Pro Forma
    Condensed Consolidated Statements of Operations for the year ended
    December 31, 1996 and three months ended March 31, 1997 reflect only the
    cost savings actually achieved in 1996 and to date in 1997 from the
    acquisitions and none of the additional expected savings. Because most of
    the 1996 acquisitions occurred in the second half of 1996, and there is
    typically a lag after an acquisition to fully realize such savings, the
    Company expects to achieve additional savings from the 1996 and 1997
    Acquisitions.
      
   The integration of an acquired company entails, among other things,
   converting the database of stored records to the PLUS(R) system,
   reorganizing archive operating activities and eliminating certain back
   office activities which can be handled through the PLUS(R) system or the
   Company's centralized corporate organization. Cost savings start to be
   realized a short time after an acquisition. Management has specifically
   identified approximately $10,821 and $2,011 of estimated operating expenses
   included in the pro forma 1996 and three months ended March 31, 1997
   statements of operations, respectively, that would not have been incurred
   had the acquisitions occurred as of January 1, 1996 and had such cost
   savings been fully implemented as of such date. These savings relate to (i)
   the termination of certain employees due to the efficiency of the PLUS(R)
   system and integration and consolidation of facilities, (ii) a reduction in
   warehouse rent expense related to facilities the Company has vacated or
   will vacate or has negotiated changes in lease terms and (iii) a reduction
   of other operating costs due to the Company's economies of scale.
   Management expects to realize additional cost savings beyond the $10,821
   and $2,011 specifically identified.     
   
(c) A pro forma adjustment has been made to reflect additional depreciation
    and amortization expense based on the fair market value of the assets
    acquired, as if the 1996 and 1997 Acquisitions had occurred as of January
    1, 1996. Such depreciation and amortization has been recorded in
    accordance with the Company's accounting policies as stated in Notes 3 and
    4 of Notes to Consolidated Financial Statements. The purchase price
    allocation may change upon the final appraisal of the fair market value of
    the net assets acquired. However, management believes that any change in
    value will not materially impact the amount of depreciation and
    amortization recorded.     
 
(d) Represents interest expense of $8,764 and $1,369 in 1996 and for the three
    months ended March 31, 1997, respectively, on debt incurred to finance the
    1996 and 1997 Acquisitions, using an effective annual interest rate of
    8.3% and 9.5%, respectively.
   
(e) Reflects interest expense on $200,000 of 1996 Notes at 11 1/8%, $100,000
    of 1997 Notes at an assumed rate, net interest expense of $149 and $393 on
    other pro forma indebtedness, commitment fees on existing Senior
    Indebtedness of $471 and $113 and amortization of deferred financing costs
    of $1,238 and $311, offset by the elimination of interest expense on
    $70,000 of the 1996 Notes that will be redeemed from the proceeds of the
    Equity Offerings and elimination of $322 and $79 of related amortization
    of the deferred financing costs in 1996 and for the three months ended
    March 31, 1997, respectively. The redemption of the 1996 Notes will
    require a prepayment penalty equal to 10% of the portion of the 1996 Notes
    redeemed and the write-off of deferred financing costs of approximately
    $2,975, which will be recorded in the quarter in which the redemption
    occurs and has not been reflected in the Pro Forma Condensed Consolidated
    Statements of Operations.     
 
(f) The Company operates as a Subchapter S corporation for income tax purposes
    and will terminate such status in connection with the Equity Offerings.
    The pro forma income taxes represent taxes on the pro forma loss before
    income taxes and extraordinary charge after addback of all pro forma non-
    deductible expenses of approximately $4,000 in 1996 and $1,000 for the
    three months ended March 31, 1997.
 
                                      24
<PAGE>
 
         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF
                   OPERATIONS, OTHER DATA AND BALANCE SHEETS
 
  The following selected consolidated statements of operations and balance
sheets, insofar as it relates to each of the five years in the period ended
December 31, 1996, have been derived from the Consolidated Financial
Statements of the Company which have been audited by Arthur Andersen LLP,
independent public accountants. The report of Arthur Andersen LLP with respect
to the Company's Consolidated Financial Statements for the years ended
December 31, 1994, 1995 and 1996 appears elsewhere in this Prospectus. The
selected historical and pro forma consolidated statements of operations and
balance sheet data as of and for the three months ended March 31, 1997 and the
summary historical statement of operations data for the three months ended
March 31, 1996 have been derived from unaudited consolidated financial
statements which, in the opinion of management, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of the results of the unaudited interim period. Results for the three months
ended March 31, 1997 are not necessarily indicative of results that may be
expected for the entire year.
   
  The following selected pro forma statements of operations, other data and
balance sheet give effect to, among other things, the 1996 and 1997
Acquisitions, the termination of the Company's status as a Subchapter S
corporation for income tax purposes and the impact of the Offerings, as if
each of these items had occurred on January 1, 1996 or as of March 31, 1997 in
the case of the balance sheet. The selected pro forma statements of operations
and balance sheet do not reflect the acquisition of AFSS or the Recent
Acquisitions, which are not significant.     
 
  The pro forma items are described in the accompanying notes hereto. The pro
forma information should be read in conjunction with the Company's
Consolidated Financial Statements and notes thereto as of December 31, 1996
and for the three years in the period then ended, appearing elsewhere in this
Prospectus. This pro forma information is not necessarily indicative of the
results that would have occurred had the 1996 and 1997 Acquisitions, the
Subchapter S corporation termination and the Offerings been completed on the
dates indicated or the Company's actual or future results or financial
position.
 
  The information set forth below should be read in conjunction with the Pro
Forma Condensed Consolidated Financial Statements, the Company's Consolidated
Financial Statements and the related notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.
 
                                      25
<PAGE>
 
          SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF
                   OPERATIONS, OTHER DATA AND BALANCE SHEETS
 
 
<TABLE>   
<CAPTION>
                                                                                               THREE MONTHS
                                       YEAR ENDED DECEMBER 31,                                ENDED MARCH 31,
                          ----------------------------------------------------------     ------------------------------
                                                                           PRO FORMA                          PRO FORMA
                           1992     1993     1994     1995      1996        1996(A)       1996     1997        1997(A)
                          -------  -------  -------  -------  --------     ---------     -------  -------     ---------
                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                       <C>      <C>      <C>      <C>      <C>          <C>           <C>      <C>         <C>
STATEMENT OF OPERATIONS
 DATA:
Revenues
 Storage................  $37,633  $42,122  $47,123  $55,501  $ 75,900     $ 98,885      $16,969  $23,322      $26,112
 Service and storage
  material sales........   25,202   31,266   35,513   39,895    53,848       68,953       12,730   16,910       18,519
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Total revenues.........   62,835   73,388   82,636   95,396   129,748      167,838       29,699   40,232       44,631
Cost of sales, excluding
 depreciation and
 amortization...........   39,702   45,391   49,402   55,616    73,870       93,299       17,406   22,298       24,948
Selling, general and
 administrative.........    9,012   11,977   15,882   16,148    20,007       33,018        4,856    6,762        8,052
Depreciation and
 amortization...........    5,734    6,888    8,436    8,163    12,869       18,169        2,572    4,214        4,808
Consulting payments to
 related parties(b).....      --       --       500      500       --           --           125      --           --
Non-recurring
 charges(c).............      --       --       --       --      3,254        3,254          --       --           --
Foreign currency
 translation............      --       --       --       --        --           --           --       182          182
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Operating income.......    8,387    9,132    8,416   14,969    19,748       20,098        4,740    6,776        6,641
Interest expense........    6,388    6,160    7,216    9,622    17,225       25,250        2,846    6,712        6,728
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Income before income
  taxes and
  extraordinary charge..    1,999    2,972    1,200    5,347     2,523       (5,152)       1,894       64          (87)
Income taxes............      --       --       --       --        --          (350)(d)      --       --           372 (d)
Extraordinary
 charge(e)..............      --     9,174    5,991    3,279     2,015          --           --       --           --
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
Net income (loss).......    1,999   (6,202)  (4,791)   2,068       508       (4,802)       1,894       64         (459)
Accretion (cancellation)
 of redeemable
 warrants...............      --      (746)      16      889     1,561          --         1,561      --           --
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
Net income (loss)
 applicable to Common
 shareholders...........  $ 1,999  $(5,456) $(4,807) $ 1,179  $ (1,053)    $ (4,802)     $   333  $    64      $  (459)
                          =======  =======  =======  =======  ========     ========      =======  =======      =======
Pro forma data
 (unaudited):
 Pro forma adjustment
  for income taxes
  excluding
  extraordinary charge..                                      $  1,659 (d)                        $   291 (d)
 Historical income
  (loss) before
  extraordinary charge,
  as adjusted for pro
  forma income taxes....                                      $    864                            $  (227)
 Historical income
  (loss) before
  extraordinary charge
  per Common share, as
  adjusted for pro forma
  income taxes..........                                      $    .08 (f)                        $  (.02)(f)
 Historical net loss
  applicable to Common
  shareholders, as
  adjusted for pro forma
  income taxes..........                                      $ (1,958)                           $  (227)
 Historical net loss
  applicable to Common
  shareholders per
  Common share, as
  adjusted for pro forma
  income taxes..........                                      $   (.18)(f)                        $  (.02)(f)
 Shares used in
  computing per share
  amounts...............                                        10,612                             10,550
 Pro forma net loss
  applicable to Common
  shareholders per
  Common share..........                                                   $   (.45)(g)                          $(.04)(g)
 Pro forma shares used
  in computing per share
  amount................                                                     10,612                             10,550
OTHER DATA:
Total revenue growth
 rate...................     12.9%    16.8%    12.6%    15.4%     36.0%        75.9%        33.6%    35.5%        50.3%
Operating income (before
 non-recurring charges)
 margin.................     13.3%    12.4%    10.2%    15.7%     17.7%        13.9%        16.0%    16.8%        14.9%
EBITDA(h)...............  $14,121  $16,020  $17,352  $23,632  $ 35,871     $ 41,521      $ 7,437  $11,172      $11,631
EBITDA, as adjusted
 (i)....................      --       --       --       --        --      $ 52,342          --       --       $13,642
EBITDA margin...........     22.5%    21.8%    21.0%    24.8%     27.6%        24.7%        25.0%    27.8%        26.1%
EBITDA, as adjusted
 margin.................      --       --       --       --        --          31.2%         --       --          30.6%
Capital
 expenditures(j)........  $ 5,565  $ 5,827  $ 6,352  $16,288  $ 23,493          --       $ 3,553  $10,794          --
Cubic feet of storage
 under management at end
 of period (000s).......   16,248   19,025   22,160   29,523    40,410       47,091 (k)   31,088   43,354       48,526 (k)
</TABLE>    
 
<TABLE>   
<CAPTION>
                                      AS OF DECEMBER 31,                      AS OF MARCH 31,
                         ------------------------------------------------  ----------------------
                                                                                     PRO FORMA(L)
                           1992      1993      1994      1995      1996      1997        1997
                         --------  --------  --------  --------  --------  --------  ------------
                                               (DOLLARS IN THOUSANDS)
<S>                      <C>       <C>       <C>       <C>       <C>       <C>       <C>
BALANCE SHEET DATA:
Working capital
 deficit................ $(11,656) $ (9,143) $ (5,202) $ (8,139) $(23,933) $ (6,778)   $   (463)
Total assets............   65,869    74,621    79,746   131,328   234,820   266,462     337,306
Total debt (including
 redeemable warrants)...   55,027    69,736    77,683   120,071   217,423   254,762     249,687
Shareholders' equity
 (deficit)..............   (9,028)  (14,508)  (19,341)  (18,201)  (25,438)  (25,394)     39,466
</TABLE>    
 
                                       26
<PAGE>
 
            NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED
            STATEMENTS OF OPERATIONS, OTHER DATA AND BALANCE SHEETS
   
(a) Gives effect to the (i) 1996 and 1997 Acquisitions, (ii) termination of
    the Company's status as a Subchapter S corporation and (iii) impact of the
    Offerings, as if each of these items had occurred on January 1, 1996. See
    "Pro Forma Financial Data" and Note 2 of the Notes to Consolidated
    Financial Statements. The pro forma statements of operations and balance
    sheet do not reflect the acquisition of AFSS and the Recent Acquisitions,
    which are not significant. Upon the termination of the Company's status as
    a Subchapter S corporation, the Company will record a deferred income tax
    provision of approximately $6,600 for the tax effect of differences in the
    basis of assets and liabilities for financial reporting and income tax
    purposes. This deferred income tax provision has not been reflected in the
    Pro Forma Condensed Consolidated Statement of Operations. Also not
    reflected in the Pro Forma Condensed Consolidated Statement of Operations
    is the extraordinary charge for the early extinguishment of a portion of
    the 1996 Notes that will occur in the quarter in which the redemption
    occurs (see (e) below) and an unusual charge of approximately $1,752
    (pretax), or $.07 per share, for the write-off of the estimated
    unamortized compensation expense associated with options granted on
    January 1, 1997, due to the acceleration of vesting upon the completion of
    the Offerings.     
 
(b) Represents aggregate payments made to eight Pierce family members.
 
(c) Represents non-recurring charges in 1996 of $2,764 paid to a related party
    partnership to assume the partnership's position in certain leases with
    third parties and of $490 for the establishment of an annual pension for
    Leo W. Pierce, Sr. and his spouse.
 
(d) The Company has historically been taxed as a Subchapter S corporation.
    Such status will be terminated in connection with the completion of the
    Equity Offerings. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations" and Note 2 of Notes to Consolidated
    Financial Statements.
 
(e) Represents loss on early extinguishment of debt due to refinancings in
    1993, 1994, 1995 and 1996. Amounts include write-off of unamortized
    deferred financing costs and discount, along with prepayment penalties and
    other costs. A similar charge for the early extinguishment of a portion of
    the 1996 Notes of approximately $9,975 (pretax), or $.39 per share, will
    occur in the quarter in which the redemption occurs. Such charge has not
    been reflected in the Pro Forma Condensed Consolidated Statement of
    Operations. See "Use of Proceeds" and "Management's Discussion and
    Analysis of Financial Condition and Results of Operations."
 
(f) See Note 2 of Notes to Consolidated Financial Statements for information
    concerning the computation of historical net loss per share as adjusted
    for pro forma income taxes. Excluding the non-recurring charges incurred
    in 1996, pro forma net income and net income per share as adjusted for
    income taxes would have been $27 and $0, respectively.
   
(g) Excluding $10,821 and $2,011 of operating expenses included in the pro
    forma statements of operations for 1996 and for the three months ended
    March 31, 1997, respectively, specifically identified by management that
    would not have been incurred had the 1996 and 1997 Acquisitions occurred
    as of January 1, 1996 and had such cost savings been fully implemented as
    of such date, and excluding the non-recurring charges incurred in 1996,
    pro forma net income and net income per share would have been $3,765 and
    $.34, respectively, in 1996 and $768 and $.07 for the three months ended
    March 31, 1997.     
 
(h) "EBITDA" is defined as net income (loss) before interest expense, taxes,
    depreciation and amortization, consulting payments to related parties,
    non-recurring charges, foreign currency translation, and extraordinary
    charge. EBITDA is not a measure of performance under GAAP. While EBITDA
    should not be considered in isolation or as a substitute for net income,
    cash flows from operating activities and other income or cash flow
    statement data prepared in accordance GAAP, or as a measure of
    profitability or liquidity, management understands that EBITDA is
    customarily used as a criteria in evaluating records management companies.
    Moreover, substantially all of the Company's financing agreements,
    including the Notes, contain covenants in which EBITDA is used as a
    measure of financial performance. See "Management's Discussion and
    Analysis of Financial Condition and Results of Operations" for a
    discussion of other measures of performance determined in accordance with
    GAAP and the Company's sources and applications of cash flows.
 
(i) EBITDA, as adjusted is defined as EBITDA plus $10,821 and $2,011 of
    operating expenses in 1996 and the three months ended March 31, 1997,
    respectively, specifically identified by management that would not have
    been incurred had the 1996 and 1997 Acquisitions occurred as of January 1,
    1996 and such cost savings been fully implemented as of such date. See
    Note (b) of Notes to Pro Forma Condensed Consolidated Statements of
    Operations. Management expects to realize additional cost savings beyond
    the $10,821 and $2,011 specifically identified.
 
(j) Capital expenditures for 1996 are comprised of $11.0 million for new
    shelving, $4.0 million for leasehold and building improvements, $3.8
    million for new facility purchases and related improvements, $2.9 million
    for data processing and $1.8 million for the purchase of transportation,
    warehouse and office equipment. Of the total 1996 capital expenditures,
    management estimates that approximately $2.5 million was for upgrading and
    restructuring of existing facilities to accommodate growth or for
    maintenance capital expenditures. The 1996 capital expenditures do not
    include $11.0
 
                                      27
<PAGE>
 
   million paid for real estate and other assets acquired from related parties
   (see Note 10 of Notes to the Consolidated Financial Statements).
   
(k) The pro forma cubic feet of storage as of March 31, 1997 includes cubic
    feet of storage from the 1997 Acquisitions completed since such date
    (excluding AFSS).     
 
(l) Gives effect to the (i) acquisition of RMS, (ii) termination of the
    Company's Subchapter S corporation status upon completion of the Equity
    Offerings and (iii) impact of the Offerings, as if each of these items had
    occurred on March 31, 1997. See "Pro Forma Financial Data," "Use of
    Proceeds" and Note 2 to Notes to Consolidated Financial Statements.
 
                                      28
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
GENERAL
   
  The Company is the largest archive records management company in North
America, as measured by its 50 million cubic feet of records currently under
management. The Company's operations date to 1957 when its predecessor
company, L.W. Pierce Co., Inc., was founded to provide filing systems and
related equipment to companies in the Philadelphia area. The Company expanded
primarily through internal growth until 1990, when it acquired Leahy Business
Archives which effectively doubled its size. Since 1992, the Company has
pursued an expansion strategy combining growth from new and existing customers
with the completion and successful integration of 26 acquisitions through 1996
and the completion of eight acquisitions since January 1, 1997. The Company's
ability to pursue this acquisition strategy was substantially enhanced by the
implementation of the PLUS(R) system which began at the end of 1993 and was
completed in the beginning of 1995, and the expansion of the Company's credit
facilities beginning in 1994.     
 
  The Company has experienced significant growth in its revenues and operating
income as a result of its successful expansion and acquisition strategy.
During the five-year period ended December 31, 1996, revenues increased from
$62.8 million to $129.7 million, representing a compound annual growth rate of
19.9%. The Company has also made substantial investments in its facilities and
management information systems, the benefits of which are now being realized
through economies of scale and increased operating efficiencies. The Company's
operating income as a percentage of total revenues improved from 13.3% in 1992
to 15.2% in 1996 (17.7% excluding the non-recurring charges in 1996), while
operating income increased from $8.4 million in 1992 to $19.7 million in 1996
($23.0 million excluding the non-recurring charges in 1996). This increase
represents a compound annual growth rate of 23.9% as reported and 28.7%
excluding the non-recurring charges incurred in 1996. As the Company's volume
of business grows, the Company believes its substantial investment in
infrastructure will be amortized over a larger base of business, creating
further economies of scale.
 
  The Company's net income (loss) was $2.0 million, $(6.2) million, $(4.8)
million, $2.1 million and $.5 million in 1992, 1993, 1994, 1995 and 1996,
respectively. Although the Company's operating income has increased over the
five-year period, net income (loss) has fluctuated as a result of increases in
interest expense and extraordinary charges related to the early extinguishment
of debt due to refinancings in 1993, 1994, 1995 and 1996.
 
  Another tool for measuring the performance of records management companies
is EBITDA. Substantially all of the Company's financing agreements, including
the Notes, contain covenants in which EBITDA is used as a measure of financial
performance. However, EBITDA should not be considered an alternative to
operating or net income (as determined in accordance with generally accepted
accounting principles ("GAAP")) as an indicator of the Company's performance
or to cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity. The Company's EBITDA as a percentage of total revenues
improved from 22.5% in 1992 to 27.6% in 1996, while EBITDA increased from
$14.1 million in 1992 to $35.9 million in 1996, representing a compound annual
growth rate of 26.2%.
 
                                      29
<PAGE>
 
  The following table illustrates the growth in stored cubic feet from
existing customers, new customers and acquisitions from 1992 through 1996:
 
              NET ADDITIONS OF CUBIC FEET OF STORAGE BY CATEGORY
                           (CUBIC FEET IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                          THREE MONTHS
                               YEAR ENDED DECEMBER 31,                       ENDED
                          ------------------------------------------       MARCH 31,
                           1992    1993    1994    1995        1996           1997
                          ------  ------  ------  ------      ------      ------------
<S>                       <C>     <C>     <C>     <C>         <C>         <C>
Additions of Cubic Feet:
  New Customer
   Accounts(a)..........     995   1,494   1,038   2,018       2,994            746
  Existing Customer
   Accounts(b)..........   1,101   1,166   1,657     722  (c)    962  (c)       586
  Acquisitions..........     294     117     440   4,623       6,931          1,612
                          ------  ------  ------  ------      ------         ------
    Total...............   2,390   2,777   3,135   7,363      10,887          2,944
% Increase From:
  New Customer
   Accounts(a)..........       7%      9%      5%      9%         10%          *
  Existing Customer
   Accounts(b)..........       8%      7%      9%      3%(c)       3%(c)       *
  Acquisitions..........       2%      1%      2%     21%         24%          *
                          ------  ------  ------  ------      ------         ------
    Total...............      17%     17%     16%     33%         37%          *
Cubic Feet Under
 Management:
  Beginning of Period...  13,858  16,248  19,025  22,160      29,523         40,410
  End of Period.........  16,248  19,025  22,160  29,523      40,410         43,354
</TABLE>
- --------
 *  Not applicable.
(a) For the first twelve months after the establishment of a customer account,
    records added to such account are classified as additions to new customer
    accounts in the period in which they are received.
(b) Net of permanent removals.
(c) Includes effect of a records destruction program of 372 and 475 cubic feet
    of records in 1995 and 1996, respectively, for a major customer, as
    recommended by the Company pursuant to a consulting agreement with the
    Company.
 
 Revenues
 
  The Company's revenues consist of storage revenues (58.5% of total revenues
in 1996), and related service and storage material sales revenues (41.5% of
total revenues in 1996). The Company provides records storage and related
services under annual or multi-year contracts that typically provide for
recurring monthly storage fees which continue until such records are
permanently removed (for which the Company charges a service fee) and service
charges based on activity with respect to such records. The Company's current
average monthly storage rate is approximately $0.186 per cubic foot (or $2.23
per year). Permanent removal fees typically range from $2.00 to $5.75 per
cubic foot. Since there are relatively little direct ongoing marketing, labor
or capital expenditures associated with storing a box of records, recurring
storage fees contribute significantly to the Company's operating results.
 
  While the Company's total revenues have increased at a compound annual
growth rate of 19.9% from 1992 to 1996, total revenue per annual average cubic
foot during such period has declined 8.4% from $4.17 to $3.82.* The decline is
principally attributable to (i) increases in sales to large volume accounts
under long-term contracts with discounted rates, which generate lower revenue
per cubic foot, but typically generate increased operating income, (ii)
renegotiation of contracts with existing customers to provide for longer term
contracts at lower rates, and (iii) competition. Declines in revenues per
cubic foot have been more than offset by improvements in operating
efficiencies and greater productivity as demonstrated by the increase in
EBITDA and EBITDA as a percentage of total revenues over the same period.
 
- --------
*  For periods through 1994, average cubic feet is the average of cubic feet
   at the beginning and the end of the period; for periods beginning on or
   after January 1, 1995, average cubic feet is the average of the cubic feet
   at the end of each month in such period.
 
                                      30
<PAGE>
 
 Operating Expenses and Productivity
 
  Operating expenses consist primarily of cost of sales, selling, general and
administrative expenses, and depreciation and amortization. Cost of sales are
comprised mainly of wages and benefits, facility occupancy costs, equipment
costs and supplies. The major components of selling, general and
administrative expenses are management, administrative, marketing and data
processing wages and benefits and also include travel, communication and data
processing expenses, professional fees and office expenses.
 
  In recent years, the Company has undertaken several steps to reduce
operating expenses, particularly labor and facility occupancy costs, which are
its two highest cost components. From 1992 to 1996, annual operating expenses
(before depreciation, amortization and consulting payments) per average annual
cubic foot declined 14.8% from $3.24 to $2.76.*
 
  The installation of the PLUS(R) system (which took approximately five years
and over $8 million to develop and implement and an additional $2.1 million to
upgrade and expand capacity) has significantly reduced the Company's labor
requirements by streamlining administrative and warehouse work processes,
thereby reducing the labor required to process customer orders. The PLUS(R)
system also has increased the speed at which the Company can obtain labor
efficiencies when acquiring new records management companies, which in
conjunction with the Company's centralized corporate administrative functions,
has generally enabled the company to integrate several acquisition sites
concurrently and to reduce the workforce of acquired businesses by at least
20%.
 
  The following table illustrates the Company's improvement in labor
productivity from 1992 to 1996:
 
                        ANALYSIS OF LABOR PRODUCTIVITY
 
<TABLE>
<CAPTION>
                                         1992    1993    1994    1995    1996
                                        ------- ------- ------- ------- -------
<S>                                     <C>     <C>     <C>     <C>     <C>
Cubic Feet Under Management Per
 Employee(a)..........................   19,961  23,033  24,405  24,521  26,021
EBITDA Per Employee(b)................  $18,162 $19,537 $20,014 $22,379 $26,022
Number of Employees at End of Period..      814     826     908   1,204   1,553
</TABLE>
- --------
(a) Based on end of period cubic footage under management and end of period
    number of employees.
(b) Based on the average of the number of employees at the beginning and end
    of period.
 
  The Company has begun to operate in larger, more efficient regional
facilities in some areas which generate economies of scale in both labor and
facility occupancy costs. For example, in 1995 the Company secured two new
facilities, one in New Jersey and one in Massachusetts, which expanded the
Company's storage capacity by 17 million cubic feet. The Company is in the
process of consolidating certain individual warehouses into these facilities
and anticipates realizing further economics of scale as it consolidates other
warehouses over the next two or three years as existing leases expire. This
added capacity is expected to satisfy the Company's growth requirements in its
Northeast region for several years. The Company intends to pursue this
consolidation strategy, when feasible, in other locations. Primarily as a
result of the new facilities in New Jersey and Massachusetts, warehouse
utilization has declined to approximately 64% at the end of 1996 from
historical levels of 70% to 80%. Increases in utilization rates at existing
facilities generally result in increased operating income because of the
relatively minimal incremental operating costs associated with such increased
utilization.
 
- --------
*  For periods through 1994, average cubic feet is the average of cubic feet
   at the beginning and the end of the period; for periods beginning on or
   after January 1, 1995, average cubic feet is the average of the cubic feet
   at the end of each month in such period.
 
                                      31
<PAGE>
 
  The Company's depreciation and amortization charges result primarily from
the capital-intensive nature of its business and the acquisitions the Company
has completed. The principal components of depreciation relate to shelving,
facilities and leasehold improvements, equipment for new facilities and
computer systems. Amortization primarily relates to the amortization of
intangible assets associated with acquisitions, including goodwill, and to the
amortization of client acquisition costs. The Company has accounted for all of
its acquisitions under the purchase method. Since the purchase price for
records management companies is usually substantially in excess of the fair
market value of their assets, these purchases have given rise to significant
goodwill and, accordingly, significant levels of amortization. Although
amortization is a non-cash charge, it does decrease reported net income.
 
 Capital Expenditures and Client Acquisition Costs
 
  The majority of the Company's capital expenditures are related to expansion.
The largest single component is the purchase of shelving which is directly
related to the addition of new records. The marginal cost of adding a cubic
foot of storage capacity in an existing facility is approximately $2.60, of
which approximately $2.00 is attributable to shelving costs. Shelving has a
relatively long life and rarely needs to be replaced. The remaining $.60 is
attributed to the installation of lighting and security systems and other
storage related modifications. Most of the Company's storage facilities (both
in number and square feet) are leased, but the Company will purchase
facilities on an opportunistic basis. The Company's data processing capital
expenditures are also largely related to growth.
 
  In 1996, capital expenditures of $23.5 million consisted of $11.0 million
for new shelving, $4.0 million for leasehold and building improvements, $3.8
million for new facility purchases and related improvements, $2.9 million for
data processing, and $1.8 million for the purchase of transportation,
warehouse and office equipment. Of the total 1996 capital expenditures,
management estimates that approximately $2.5 million was for maintenance
capital expenditures.
 
  In addition, in August 1996 in connection with the offering of the 1996
Notes, the Company purchased certain real estate interests and other assets
from affiliates for $14.9 million, of which $11.0 million was for the purchase
of facilities.
 
  In connection with the acquisition of new large volume accounts, the Company
often incurs client acquisition costs, primarily sales commissions and move-in
costs. Client acquisition costs are capitalized and amortized over six years.
In 1996, the Company incurred $6.5 million of client acquisition costs.
Amortization of client acquisition costs amounted to $1.7 million in 1996.
 
 Extraordinary Charge
 
  To provide capital to fund its growth oriented business strategy, the
Company has incurred substantial indebtedness. The Company has completed
several expansions of its credit facilities, primarily utilizing bank debt,
which have resulted in one-time charges, including the repurchase of warrants
and the write- off of deferred financing costs of $6.0 million, $3.3 million
and $2.0 million in 1994, 1995 and 1996, respectively.
 
  In connection with the use of the proceeds from the Equity Offerings, the
Company will incur a prepayment penalty of $7.0 million (pretax) to redeem a
portion of the 1996 Notes. In addition, approximately $3.0 million (pretax) of
unamortized deferred financing costs will be written off. This extraordinary
charge of approximately $10.0 million (pretax) will be recorded in the quarter
in which the redemption occurs. Upon the completion of the Equity Offerings,
the Company's status as a Subchapter S corporation will terminate and a
deferred income tax provision of approximately $6.6 million will be recorded.
In addition, due to the acceleration of the vesting of certain options which
will occur upon the completion of the Equity Offerings, the Company will also
record an unusual charge of approximately $1.8 million (pretax) the estimated
unamortized compensation expense associated with stock options granted on
January 1, 1997 in the quarter in which the Offerings are consummated. See
Note 8 of Notes to Consolidated Financial Statements.
 
                                      32
<PAGE>
 
RESULTS OF OPERATIONS
 
  The following table sets forth, for the periods indicated, information
derived from the Company's consolidated statements of operations, expressed as
a percentage of revenue. There can be no assurance that the trends in revenue
growth or operating results shown below will continue in the future.
 
<TABLE>   
<CAPTION>
                                                               THREE MONTHS
                                YEARS ENDED DECEMBER 31,      ENDED MARCH 31,
                               -----------------------------  ----------------
                                 1994       1995      1996     1996     1997
                               --------   --------  --------  -------  -------
   <S>                         <C>        <C>       <C>       <C>      <C>
   REVENUES:
     Storage..................     57.0%      58.2%     58.5%    57.1%    58.0%
     Service and storage
      material sales..........     43.0       41.8      41.5     42.9     42.0
                               --------   --------  --------  -------  -------
       Total revenues.........    100.0      100.0     100.0    100.0    100.0
   Cost of sales, excluding
    depreciation and
    amortization..............     59.8       58.3      57.0     58.6     55.4
   Selling, general and
    administrative............     19.2       16.9      15.4     16.3     16.8
   Depreciation and
    amortization..............     10.2        8.6       9.9      8.7     10.5
   Consulting payments to
    related parties...........      0.6        0.5         0      0.4        0
   Foreign currency
    translation...............        0          0         0        0      0.4
   Non-recurring charges......        0          0       2.5        0        0
                               --------   --------  --------  -------  -------
     Operating income.........     10.2       15.7      15.2     16.0     16.9
   Interest expense...........      8.7       10.1      13.3      9.6     16.7
                               --------   --------  --------  -------  -------
     Income before
      extraordinary charge....      1.5        5.6       1.9      6.4      0.2
   Extraordinary charge.......      7.3        3.4       1.5        0        0
                               --------   --------  --------  -------  -------
     Net income (loss)........     (5.8)%      2.2%      0.4%     6.4%     0.2%
                               ========   ========  ========  =======  =======
   OTHER DATA:
     EBITDA...................     21.0%      24.8%     27.6%    25.0%    27.8%
     Operating income before
      non-recurring charges
      and foreign currency
      translation.............     10.2%      15.7%     17.7%    16.0%    17.3%
</TABLE>    
 
 Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,
1997
 
  Total revenues increased from $29.7 million for the first quarter of 1996 to
$40.2 million for the first quarter of 1997, an increase of $10.5 million, or
35.5%. Sixteen acquisitions completed from March 1996 to January 1997
accounted for $7.2 million, or 68.6%, of such increase in total revenues. The
balance of the revenue growth resulted from sales to new customers and from
net increases in cubic feet stored from existing customers.
 
  Storage revenues increased from $17.0 million for the first quarter of 1996
to $23.3 million for the first quarter of 1997, an increase of $6.3 million,
or 37.4%. Service and storage material sales revenues increased from $12.7
million for the first quarter of 1996 to $16.9 million for the first quarter
of 1997, an increase of $4.2 million, or 32.8%.
 
  Cost of sales (excluding depreciation and amortization) increased from $17.4
million in the three months ended March 31, 1996 to $22.3 million in the three
months ended March 31, 1997, an increase of $4.9 million, or 28.1%, but
decreased as a percentage of total revenues from 58.6% in 1996 to 55.4% in
1997. The $4.9 million increase in cost of sales resulted primarily from an
increase in cubic feet stored from internal growth and acquisitions. The
decrease in cost of sales as a percentage of total revenues was due primarily
to the realization of operating efficiencies.
 
  Selling, general and administrative expenses increased from $4.9 million for
the first quarter of 1996 to $6.8 million for the first quarter of 1997, an
increase of $1.9 million, or 39.3%, and increased as a percentage of revenues
from 16.3% for the first quarter of 1996 to 16.8% for the first quarter of
1997. The dollar increase was primarily attributable to increases in
administrative staffing, including increases due to acquisitions. The increase
as a percentage of total revenues was due primarily to increased marketing
expenses related to the recent expansion of the sales and marketing force and
employee training.
 
  Depreciation and amortization expense increased from $2.6 million for the
first quarter of 1996 to $4.2 million for the first quarter of 1997, an
increase of $1.6 million, or 63.8%, and increased as a percentage of
 
                                      33
<PAGE>
 
revenues from 8.7% for the first quarter of 1996 to 10.5% for the first
quarter of 1997. The increase was primarily attributable to the additional
depreciation and amortization expense related to the sixteen acquisitions
completed from March 1996 to January 1997, plus capital expenditures for
buildings, shelving, improvements to records management facilities and
information systems, and client acquisition costs.
 
  Interest expense increased from $2.8 million for the first quarter of 1996
to $6.7 million for the first quarter of 1997, an increase of $3.9 million, or
135.8%. The increase was primarily attributable to increased indebtedness
related to financing acquisitions and capital expenditures, as well as the
higher interest rate on the Company's 11 1/8% Senior Subordinated Notes
compared to the bank debt repaid upon the issuance of such Notes.
 
  As a result of the foregoing factors, the Company had net income of $1.9
million (6.4% of revenues) for the first quarter of 1996 compared to net
income of $0.1 million (.2% of revenues) for the first quarter of 1997.
 
  EBITDA increased from $7.4 million for the first quarter of 1996 to $11.2
million for the first quarter of 1997, an increase of $3.8 million, or 50.2%.
As a percentage of revenues, EBITDA increased from 25.0% for the first quarter
of 1996 to 27.8% for the first quarter of 1997.
 
 Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
 
  Total revenues increased from $95.4 million in 1995 to $129.7 million in
1996, an increase of $34.3 million or 36.0%. Revenues from acquisitions
represented $25.7 million or 74.9% of this increase, including $16.3 million
from a full year of operations of five acquisitions made in 1995 and $9.4
million from a partial year of operations of twelve acquisitions made in 1996.
Approximately $8.6 million or 25.1% of the total revenue growth resulted from
sales to new customers and increases in cubic feet stored from existing
customers.
 
  Storage revenues increased from $55.5 million in 1995 to $75.9 million in
1996, an increase of $20.4 million or 36.8%. Service and storage material
sales revenues increased from $39.9 million in 1995 to $53.8 million in 1996,
an increase of $13.9 million or 35.0%.
 
  The annual average cubic feet stored increased from approximately 25.1
million in 1995 to approximately 34.0 million in 1996, an increase of 35.5% as
a result of acquisitions, new customer accounts and growth from existing
customer accounts.
 
  Cost of sales (excluding depreciation and amortization) increased from $55.6
million in 1995 to $73.9 million in 1996, an increase of $18.3 million or
32.8%, but decreased as a percentage of total revenues from 58.3% in 1995 to
57.0% in 1996. The $18.3 million increase was due primarily to increases in
wages and benefits resulting from an increased number of employees and to
increases in facility occupancy costs associated with the growth in business.
The decrease as a percentage of total revenue was due primarily to increased
operating and storage efficiencies.
 
  Selling, general and administrative expenses increased from $16.1 million in
1995 to $20.0 million in 1996, an increase of $3.9 million or 23.9%, and
decreased as a percentage of total revenues from 16.9% in 1995 to 15.4% in
1996. The decrease as a percentage of total revenues was due to operating
efficiencies and the implementation of programs to control and reduce certain
administrative expenses. The purchase of certain real estate interests from
affiliates in August 1996 contributed $0.9 million to the reduction in cost of
sales or 0.7% as a percentage of revenues.
 
  Depreciation and amortization expenses increased from $8.2 million in 1995
to $12.9 million in 1996, an increase of $4.7 million or 57.7%, and increased
as a percentage of total revenues from 8.6% in 1995 to 9.9% in 1996. This
increase was the result of increased capital expenditures for shelving and
improvements to record management facilities and information systems and the
amortization of goodwill from the Company's acquisitions.
 
 
                                      34
<PAGE>
 
  The Company incurred non-recurring charges of $3.3 million in 1996 in
connection with the assumption of leasehold interests in certain facilities
from affiliated parties and with the establishment of a pension for Leo W.
Pierce, Sr. See "Management--Compensation Committee Interlocks and Insider
Participation."
 
  As a result of the foregoing factors, excluding the non-recurring charges in
1996, operating income increased from $15.0 million in 1995 to $23.0 million
in 1996, an increase of 53.7%, and increased as a percentage of total revenues
from 15.7% in 1995 to 17.7% in 1996. The increase reflected the growth in the
Company's business, economies of scale and increased operating efficiencies.
 
  Interest expense increased from $9.6 million in 1995 to $17.2 million in
1996, an increase of $7.6 million or 79.0%, due primarily to higher levels of
indebtedness. The Company recorded extraordinary charges of $3.3 million in
1995 and $2.0 million in 1996 related to the early extinguishment of debt as a
result of refinancing and expanding its existing credit agreement in 1995 and
again in 1996.
 
  As a result of the foregoing factors, net income was $0.5 million in 1996
compared to net income of $2.1 million in 1995.
   
  EBITDA increased from $23.6 million in 1995 to $35.9 million in 1996, an
increase of $12.3 million or 51.8%, and increased as a percentage of total
revenues from 24.8% in 1995 to 27.6% in 1996. The increase as a percentage of
the total revenues reflected growth in the Company's business, economies of
scale and increased operating efficiencies.     
 
 Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
 
  Total revenues increased from $82.6 million in 1994 to $95.4 million in
1995, an increase of $12.8 million or 15.4%. Almost one-half of the total
revenue growth resulted from sales to new customers and increases in cubic
feet stored from existing customers, partially offset by the reduction of
records of a major customer pursuant to a records destruction program
recommended by the Company pursuant to a consulting agreement with the
Company. Five acquisitions completed from February 1995 to October 1995
accounted for $6.6 million (or 51.6%) of the increase.
 
  Storage revenues increased from $47.1 million in 1994 to $55.5 million in
1995, an increase of $8.4 million or 17.8%. Service and storage material sales
revenues increased from $35.5 million in 1994 to $39.9 million in 1995, an
increase of $4.4 million or 12.3%.
 
  The annual average cubic feet stored increased from approximately 20.6
million in 1994 to approximately 25.1 million in 1995, an increase of 21.8% as
a result of acquisitions, new customer accounts and growth from existing
customer accounts.
 
  Cost of sales (excluding depreciation and amortization) increased from $49.4
million in 1994 to $55.6 million in 1995, an increase of $6.2 million or
12.6%, but decreased as a percentage of total revenues from 59.8% in 1994 to
58.3% in 1995. The $6.2 million increase was due primarily to increases in
storage volume and the associated cost of additional storage capacity. The
decrease as a percentage of total revenues was due primarily to increased
operating and storage efficiencies, in part reflecting the full implementation
of the PLUS(R) system during the first quarter of 1995.
 
  Selling, general and administrative expenses increased from $15.9 million in
1994 to $16.1 million in 1995, an increase of $0.2 million or 1.7%, and
decreased as a percentage of total revenues from 19.2% in 1994 to 16.9% in
1995. The decrease as a percentage of total revenues was due to operating
efficiencies and the implementation of programs to control and reduce certain
administrative expenses.
 
  Depreciation and amortization expenses decreased from $8.4 million in 1994
to $8.2 million in 1995, a decrease of $0.2 million or 3.2%, and decreased as
a percentage of total revenues from 10.2% in 1994 to 8.6% in 1995. This
decrease, both in dollars and as a percentage of total revenues, was due
primarily to the Company's
 
                                      35
<PAGE>
 
revision of the estimated useful lives of certain long-term assets, effective
January 1, 1995, to more accurately reflect the estimated economic lives of
the related assets and to be more in conformity with industry practices. The
aggregate effect of adopting these revised lives was to decrease amortization
and depreciation expense by approximately $4.9 million. This change more than
offset what would have been an increase in depreciation charges resulting from
capital expenditures for shelving and improvements to records management
facilities and information systems and the amortization of goodwill from the
Company's acquisitions.
 
  As a result of the foregoing factors, operating income increased from $8.4
million in 1994 to $15.0 million in 1995, an increase of 77.9%, and increased
as a percentage of the total revenues from 10.2% in 1994 to 15.7% in 1995. The
increases reflect the growth in the Company's business, economies of scale and
increased operating efficiencies.
 
  Interest expense increased from $7.2 million in 1994 to $9.6 million in
1995, an increase of $2.4 million or 33.3%, due primarily to higher levels of
indebtedness. The Company recorded extraordinary charges of $6.0 million in
1994 and $3.3 million in 1995 related to the early extinguishment of debt as a
result of refinancing and expanding its then existing credit agreement in 1994
and again in 1995.
 
  As a result of the foregoing factors, net income was $2.1 million in 1995
compared to a net loss of $4.8 million in 1994.
 
  EBITDA increased from $17.4 million in 1994 to $23.6 million in 1995, an
increase of $6.2 million or 36.2%, and increased as a percentage of total
revenues from 21.0% in 1994 to 24.8% in 1995. The increase as a percentage of
total revenues reflected growth in the Company's business, economies of scale
and increased operating efficiencies.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  The Company's primary sources of capital have been cash flows from
operations and borrowings under various revolving credit facilities and other
senior indebtedness. Historically, the Company's primary uses of capital have
been acquisitions, capital expenditures and client acquisition costs.
   
  The net proceeds from the Equity Offerings will be primarily used to redeem
a portion of the 1996 Notes, and the net proceeds of the Notes Offering will
be primarily used to repay outstanding amounts under the Credit Facility. The
result of the use of proceeds from the Offerings will be to reduce the
Company's leverage and improve its financial flexibility. As of March 31,
1997, on a pro forma basis after giving effect to the 1997 Acquisitions
completed after such date, the Recent Acquisitions, the Offerings and the
estimated use of the net proceeds therefrom, the Company's consolidated
indebtedness would have been approximately $257.2 million. As of March 31,
1997, the Company's consolidated indebtedness was $254.8 million, and adjusted
for the 1997 Acquisitions completed after such date and the Recent
Acquisitions, the Company's consolidated indebtedness would have been $324.3
million. The Company believes that future cash flows from operations, together
with borrowings under the Credit Facility and any net proceeds of the
Offerings not used to repay indebtedness, will be sufficient to fund future
working capital needs, capital expenditure requirements and debt service
requirements of the Company for the foreseeable future.     
 
 Capital Investments
 
  For 1994, 1995 and 1996 and the three months ended March 31, 1997, capital
expenditures were $6.4 million, $16.3 million, $23.5 million and $10.8
million, respectively, and client acquisition costs were $1.9 million, $2.2
million, $6.5 million and $1.8 million, respectively. Capital expenditures for
1996 were comprised of $11.0 million for new shelving, $4.0 million for
leasehold and building improvements, $3.8 million for new facility purchases
and related improvements, $2.9 million for data processing, and $1.8 million
for the purchase of transportation, warehouse and office equipment.
 
  In addition, in August 1996 in connection with the offering of the 1996
Notes, the Company purchased certain real estate interests and other assets
from affiliates for $14.9 million, of which $11.0 million was for the purchase
of facilities.
 
                                      36
<PAGE>
 
  In 1997, the Company expects its aggregate capital expenditures will
approximate $34 million. Of this amount, approximately $10 million is expected
to be related to the purchase of facilities. Of the remaining $24 million,
over 85% is anticipated to be growth related, principally for shelving for new
records.
 
 Acquisitions
   
  In order to capitalize on industry consolidation opportunities, the Company
has actively pursued acquisitions since the beginning of 1994, which has
significantly impacted liquidity and capital resources. From 1994 to 1996, the
Company acquired 21 records management companies for an aggregate cash
purchase price of $97.6 million. Since the beginning of 1997, the Company has
made eight acquisitions for an aggregate cash purchase price of $88.5 million.
The Company has historically financed its acquisitions with borrowings under
its credit agreements and the 1996 Notes and with cash flows from existing
operating activities. In the past, the Company has relied solely upon cash as
consideration for its acquisitions; however, following the Offerings, the
Company may also use equity securities or a combination of cash and equity
securities to purchase other records management companies.     
 
  To the extent that future acquisitions are financed by additional borrowings
under its Credit Facility or other types of indebtedness, the resulting
increase in debt and interest expense could have a negative effect on such
measures of liquidity as debt to equity.
 
 Certain Effects Resulting from Acquisitions
   
  As a result of its substantial acquisition experience, the Company has
developed a standardized program by which it integrates acquired companies
into its existing infrastructure. The integration of an acquired company
entails, among other things, converting the database of stored records to the
PLUS(R) system, reorganizing archive operating activities and eliminating
certain back office activities which can be handled through the PLUS(R) system
or the Company's centralized corporate organization. Certain savings start to
be realized a short time after an acquisition. The pro forma operating
expenses reflected in the Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1996 and the three months ended
March 31, 1997 would have been reduced by an estimated $10,821 and $2,011,
respectively, for specifically identified items had the acquisitions completed
in 1996 and the 1997 Acquisitions occurred as of January 1, 1996 and had such
cost savings been fully implemented as of such date. See Note (b) to the Pro
Forma Condensed Consolidated Statement of Operations. These savings relate to
(i) the termination of certain employees due to the efficiency of the PLUS(R)
system and integration and consolidation of facilities, (ii) a reduction in
warehouse rent expense related to facilities the Company has vacated or will
vacate or has negotiated changes in lease terms and (iii) a reduction of other
operating costs due to the Company's economies of scale. Management expects to
realize additional cost savings beyond the $10,821 and $2,011 specifically
identified.     
 
 Sources of Funds
 
  Net cash flows provided by operating activities were $11.0 million, $17.5
million and $26.4 million for 1994, 1995 and 1996, respectively, and net cash
flows used in operating activities was $5.5 million for the three months ended
March 31, 1997. The $6.5 million increase from 1994 to 1995 was primarily
comprised of a $6.9 million increase in net income and a $3.4 million decrease
in working capital offset in part by a $2.7 million decline in extraordinary
charges. The $8.9 million increase from 1995 to 1996 was primarily comprised
of a $4.7 million increase in depreciation and amortization and a $6.8 million
decrease in working capital, offset by a $1.6 million decrease in net income
and a $1.3 million decline in extraordinary charges.
 
  Net cash flows used in investing activities were $13.9 million, $51.3
million, $108.8 million and $31.9 million, for 1994, 1995, 1996 and the three
months ended March 31, 1997, respectively. The uses of such cash flows were
primarily for acquisitions, capital expenditures and client acquisition
expenditures detailed above.
 
  Net cash flows provided by financing activities were $2.8 million, $34.2
million, $82.9 million and $37.3 million, for 1994, 1995, 1996 and the three
months ended March 31, 1997, respectively. In 1994, the Company's
 
                                      37
<PAGE>
 
   
previous credit facility was expanded to $120.0 million and included a
substantial acquisition facility. In 1995, the Company's previous credit
facility was expanded to $170.0 million, including a substantial acquisition
facility, and provided funds for the acquisition of PLC Command in Canada. In
July 1996, the Company issued $200.0 million of the 1996 Notes and used the
net proceeds to retire all of the debt outstanding under the Company's
previous credit facility, to purchase certain properties from affiliates of
the Company, to redeem stock from a shareholder of the Company, to fund an
acquisition and for general corporate purposes. In August 1996, the Company
entered into the Credit Facility which provides $100.0 million in U.S. dollar
borrowings and Cdn $35.0 million in Canadian dollar borrowings. The amount of
U.S. dollar borrowings provided for under the Credit Facility was subsequently
increased to $110.0 million. The Credit Facility contains a number of
financial and other covenants restricting the Company's ability to incur
additional indebtedness and make certain types of expenditures. Covenants in
the Indentures governing the Notes also restrict borrowings under the Credit
Facility. As of March 31, 1997, after giving effect to the 1997 Acquisitions
completed after such date, the Recent Acquisitions and pro forma for the
Offerings and the application of the estimated net proceeds therefrom (at an
assumed initial public offering price of $16.50 per share), the Company could
have borrowed $66.9 under the Credit Facility. The interest rate on the Credit
Facility, pro forma for the Offerings, the 1997 Acquisitions completed after
such date and the Recent Acquisitions, would have been 7.7%. Although there
can be no assurances, the Company anticipates that subsequent to the
Offerings, it will amend its Credit Facility to permit, at the Company's
option, an increase in the total availability of U.S. dollar borrowings of up
to an aggregate of $150.0 million and to change certain other provisions of
the Credit Facility. See "Description of Certain Indebtedness--Credit
Facility."     
 
 Future Capital Needs
 
  Management believes that cash flow from operations in conjunction with the
net proceeds of the Offerings and borrowings under the Credit Facility will be
sufficient for the foreseeable future to meet working capital requirements and
to make possible future acquisitions and capital expenditures. Depending on
the pace and size of future possible acquisitions, the Company may elect to
seek additional debt or equity financing. There can be no assurance that the
Company will be able to obtain any future financing, if required, or that the
terms for any such future financing would be favorable to the Company.
 
                                      38
<PAGE>
 
                                   BUSINESS
 
GENERAL
 
  The Company is the largest archive records management company in North
America, as measured by its 50 million cubic feet of records currently under
management. The Company operates a total of 161 records management facilities
of which 148 are in the United States, serving 58 markets, including the 16
largest U.S. markets. In addition, the Company operates 13 records management
facilities in five of Canada's six largest markets.
 
  The Company is a full-service provider of records management and related
services, enabling customers to outsource their data and records management
functions. The Company offers storage for all major media, including paper
(which has typically accounted for approximately 95% of the Company's storage
revenues), computer tapes, optical discs, microfilm, video tapes and X-rays.
In addition, the Company provides next day or same day records retrieval and
delivery, allowing customers prompt access to all stored material. The Company
also offers other data management services, including customer records
management programs, imaging services and records management consulting
services.
 
  The Company believes it is the most technologically advanced records
management company in the industry by virtue of its Pierce Leahy User
Solution(R) (PLUS(R)) computer system. The PLUS(R) system fully integrates the
Company's records management, data retrieval and billing functions on a
centralized basis through the use of proprietary, real time software. The
PLUS(R) system assists the Company in efficiently managing records in multiple
locations for national and local customers, rapidly integrating acquisitions
of records management companies and maintaining a low-cost operating
structure. The Company serves a diversified group of over 22,000 customer
accounts in a variety of industries such as financial services, manufacturing,
transportation, healthcare and law. The Company's storage and related services
are typically provided pursuant to contracts that include recurring monthly
storage fees, which continue until such records are permanently removed (for
which the Company charges a fee), and additional charges for services such as
retrieval on a per unit basis.
 
  The Company's revenues and operating income before non-recurring charges (on
a pro forma basis as defined herein) for the year ended December 31, 1996 were
$167.8 million and $23.4 million, respectively. From 1992 to 1996, the
Company's revenues and operating income before non-recurring charges grew at
compound annual growth rates of 19.9% and 28.7%, respectively. The Company
attributes this growth to the expansion of its business with new and existing
customers, which has been primarily driven by the trend towards outsourcing of
records management functions by companies and the ongoing consolidation of the
fragmented records management industry. The Company has successfully acquired
and integrated 26 companies from 1992 to 1996.
 
  The Company's growth strategy is to expand its business in new and existing
markets through (i) targeting new customers, (ii) growing with existing
customers and (iii) continuing its acquisition program. The Company has
adopted the following approaches to pursue its growth objectives:
 
  Targeting New Customers. The Company has a dual sales strategy focused on
both larger, typically multi-location accounts and smaller accounts, with a
dedicated sales force for each. The Company's sales and marketing force has
increased from 41 persons at the end of 1995 to 73 persons currently. For
large regional and national accounts, the Company believes its national
presence, sophisticated systems and low-cost operating structure provide a
competitive advantage. These organizations are increasingly outsourcing such
noncore activities, which enables their management to focus on their core
business and to reduce space requirements and records management costs. For
smaller accounts, the Company combines the cost benefits of its centralized
systems with quality local service. From 1992 to 1996, the average annual
growth rate of cubic feet of storage from new customers was approximately 8%.
 
  Growing with Existing Customers. The Company services its existing customers
through both a centralized customer service organization and local client
service representatives. Existing customers typically
 
                                      39
<PAGE>
 
generate additional records annually which are stored with the Company. From
1992 to 1996, the average annual growth rate of cubic feet of storage from
existing customers was approximately 6%.
   
  Continuing Acquisition Program. The Company believes that the records
management industry is highly fragmented and offers substantial opportunity
for consolidation. The Company targets potential acquisitions both in the
markets it already services and in new markets which it is not yet servicing.
From 1992 to 1996, the Company successfully completed and integrated 26
acquisitions, totalling approximately 12.4 million cubic feet of records at
the time of acquisition. Since January 1, 1997, the Company has completed
eight acquisitions, totalling approximately 7.2 million cubic feet of records
at the time of acquisition. As a result of its centralized organizational
structure and the PLUS(R) system, the Company has been able to rapidly achieve
significant economies of scale in its acquisitions. From 1992 to 1996, the
average annual growth rate of cubic feet of storage from acquisitions was
approximately 10%. See "--Acquisition and Growth Strategy."     
 
  The Company's growth strategy is supported by an operating strategy which
emphasizes providing premium standardized services while maintaining a low-
cost operating structure. As a result, the Company's operating income before
non-recurring charges as a percentage of total revenues increased from 13.3%
in 1992 to 17.7% in 1996 and 13.9% in 1996 on a pro forma basis. The Company
expects to continue its growth and enhance its position by implementing its
strategy based on the following elements:
 
  Using Sophisticated Centralized Systems to Provide High Quality Service. In
tandem with the Company's centralized customer service organization and local
field support personnel, the Company utilizes its PLUS(R) system to provide a
high and consistent level of service (24 hours a day, seven days a week) to
its customers on a national and local basis, including providing its customers
with real-time access to the database. Although PLUS(R) is centralized, the
system permits local management flexibility through a variety of pre-
programmed options to customize the system and enhance its utility to
different types of customers. For example, PLUS(R) offers (i) specialized
inventory reporting formats (e.g., by insurance policy, law case file number
or mortgage file), (ii) specialized invoicing (e.g., to local division with
information reporting to the customer's corporate office, and vice versa, and
departmental invoicing), (iii) pre-set inventory review dates based on the
assigned retention period for a particular class of document and (iv)
authorized users with security passwords.
 
  Maintaining its Position as a Low-Cost Provider through Economies of
Scale. The Company strives to remain a low-cost operator through achieving
economies of scale in labor, real estate, transportation, computer systems and
administrative expenses. The PLUS(R) system allows the Company to enhance the
efficiency of its facilities while reducing fixed and operating costs. This
system eliminates the need to designate permanent locations for an individual
customer's records within a facility, by using sophisticated bar-coding
technology which enables records to be stored wherever space is available and
to be positioned within the Company's facilities based on retrieval frequency,
thereby reducing labor costs. PLUS(R) is similarly valuable in helping to
achieve cost savings in acquisitions.
 
THE RECORDS MANAGEMENT INDUSTRY
 
  According to a 1994 study by the Association of Commercial Record Centers
(the "ACRC"), an industry trade group with over 500 members, approximately
2,800 companies offer records storage and related services in North America.
The Company believes that only 25% of the potential market outsources its
records management functions and that approximately 75% is still "unvended,"
or internally managed. The Company estimates that the North American vended
records management industry generates annual revenues in excess of $1.0
billion. Management believes that the industry is highly fragmented, with most
industry participants operating on a regional or local basis.
 
                                      40
<PAGE>
 
  Saved documents, or records, generally fall into two categories: active and
inactive. Active records refer to information that is frequently referenced and
usually stored on-site by the originator. Inactive records are not needed for
frequent access, but must be retained for future reference, legal requirements
or regulatory compliance.
 
              [DRAWING SHOWING FILING SPACE UTILIZATION OF FILE 
                    CABINET AND STORAGE BOXES APPEARS HERE]
 
Filing cabinets are an inefficient way to store inactive records. Professional
records management companies can store twice the amount of records in the same
amount of space and do so in real estate that is typically substantially less
expensive than prime office space. 
 
  Inactive records, which the Company estimates comprise approximately 80% of
all records, are the principal focus of the records management industry.
 
  The Company believes that the records management industry is characterized
by the following trends:
 
  Industry Consolidation. The records management industry is undergoing a
period of consolidation as larger, better capitalized industry participants
acquire smaller regional or local participants. Management believes that
consolidation is primarily driven by the needs of large customers for fully
integrated coverage and the ability to realize economies of scale, especially
with respect to labor, real estate, transportation and computer systems and
administrative expenses. Industry consolidation also provides private owners of
smaller records management companies the ability to obtain liquidity.
 
  Movement Towards Outsourcing. Outsourcing of internal records management
functions represents the largest single source of new business for records
management companies. The Company believes that as more organizations become
aware of the advantages of professional records management, such as net cost
reductions and enhanced levels of service, the records management industry
will continue to gain a growing portion of the unvended segment. The Company
also believes that the establishment of national providers with well-known
brand names will help to accelerate this trend.
 
  Increasing Production of Paper. Increasingly widespread technologies such as
facsimiles, copiers, personal computers, laser printers and advanced software
packages have enabled organizations to create, copy and distribute documents
more easily and broadly. In spite of new "paperless" technologies (including
the Internet and "e-mail"), information remains predominantly paper based.
Additionally, the cost of storing records on paper is currently less expensive
than the cost of converting paper records to, and storing on, other media
(e.g., computer media, imaging, microfilm, CD-Rom and optical disc).
 
  Expanded Record Keeping Needs. While technology has augmented the growth of
paper generation, several external forces and concerns have played an
important role in organizations' decisions to store and retain access to
records. For example, the continued growth of regulatory requirements and the
proliferation of litigation has resulted in increased volumes and lengthened
holding periods of documents. Retained records are also remaining in storage
for extended periods of time because the process of determining which records
to destroy is time consuming and often more costly in the short-term than
continued storage.
 
ACQUISITION HISTORY AND GROWTH STRATEGY
   
  The Company believes that the consolidation trend occurring in the North
American records management industry will continue and that acquisitions will
remain an important part of the Company's growth strategy. Acquisitions
provide the Company with the ability to expand and achieve additional
economies of scale. From 1992 to 1996, the Company successfully completed and
integrated 26 acquisitions, totaling approximately 12.4 million cubic feet of
records at the time of acquisition. Since January 1, 1997, the Company has
completed eight acquisitions, totalling approximately 7.2 million cubic feet
of records at the time of acquisition. As a result of its     
 
                                      41
<PAGE>
 
substantial acquisition experience, the Company has developed a standardized
program through which it integrates acquired companies into its existing
infrastructure. In each of these acquisitions, staffing levels were initially
reduced with further reductions typically taking place in the following months
as general and administrative functions were integrated into the Company's
centralized operating system.
 
  The following table summarizes certain information for each acquisition
completed since 1990:
 
<TABLE>   
<CAPTION>
                                                                           EXISTING/           DATE OF        
ACQUISITION                              LOCATION                         NEW LOCATION       ACQUISITION      
- -----------                              --------                         ------------      --------------    
<S>                                      <C>                              <C>               <C>               
Leahy Business Archives                  Multiple*                        Existing/New      February 1990     
Muhlenhaupt Records Management           Long Island                      Existing          April 1992        
Arcus Data                               New York                         Existing          July 1992         
File Away                                Baltimore/Washington, D.C.       Existing          July 1992         
Taylor Document                          Richmond                         New               August 1992       
Data Management of Tennessee             Nashville                        New               April 1993        
Command Records                          Chicago                          Existing          June 1994         
Fidelity Archives                        Philadelphia                     Existing          July 1994         
ProFilers                                Jacksonville                     New               October 1994      
Fileminders                              Jacksonville                     New               October 1994      
Vital Archives                           New York                         Existing          February 1995     
Bestway Archival Services                Miami                            Existing          May 1995          
Curtis Archives                          Seattle                          New               August 1995       
Command Records Service                  Canada**                         New               October 1995      
AMK Documents                            Phoenix                          New               October 1995      
Brambles (Ottawa Division)               Ottawa                           Existing          March 1996        
The File Cabinet                         Atlanta                          Existing          March 1996        
File Box                                 Austin                           New               April 1996        
Security Archives                        Dallas                           Existing          May 1996          
Archives America of San Diego            San Diego                        New               July 1996         
Security Archives of Denver              Denver                           New               August 1996       
Data Protection Services                 Birmingham                       New               September 1996    
Info-Stor                                Calgary                          Existing          October 1996      
Archives                                 Denver                           Existing          October 1996      
InTrust                                  Denver, Albuquerque,                                                 
                                         Colorado Springs, Ft. Wayne      Existing/New      October 1996      
Security Archives of Las Vegas           Las Vegas                        New               October 1996      
Records Management                       Birmingham                       Existing          December 1996     
Security Archives & Storage Company      Wilmington                       Existing          January 1997      
The Records Center                       Tampa                            Existing          January 1997      
Data Archives                            Trenton                          Existing          January 1997      
Professional Records Storage & Delivery  West Palm Beach                  Existing          January 1997      
Advanced File Storage Systems            Jacksonville                     Existing          April 1997        
Records Management Services              Multiple***                      Existing/New      April 1997        
Austin File Room                         Austin                           Existing          May 1997          
Corporate Storage                        Chicago                          Existing          June 1997          
</TABLE>    
- --------
  * Los Angeles, Houston, New York, New Jersey, Boston, Connecticut, Chicago,
    Dallas and Miami/Ft. Lauderdale.
 ** Toronto, Montreal, Vancouver, Ottawa and Calgary.
*** Chicago, Indianapolis, Cincinnati, Los Angeles, Phoenix, Houston, New York
    and St. Louis.
 
  The Company's centralized organizational structure and management
information systems are essential elements for both the successful integration
of acquired records management operations and the ability of the Company to
achieve economies of scale. The rapid conversion of an acquired company's
records into the PLUS(R) system and the integration of all corporate functions
(order processing, accounting, payroll, etc.) into the Company's corporate
organization in an efficient, standardized process allows the Company to
realize cost savings as a result of reduced labor and overhead costs and
improved facility utilization. The Company also believes that its centralized
approach permits better quality measurement and control procedures than a
decentralized approach to integrating acquisitions. See "Risk Factors--Risks
Associated with Acquisitions."
 
 
                                      42
<PAGE>
 
  The Company targets potential acquisitions both in locations it already
services (existing markets) and in new areas which it is not yet servicing.
Existing market acquisitions typically provide the highest degree of operating
leverage as a result of eliminating redundant overhead, such as overlapping
delivery runs, and when economically feasible, consolidating with an existing
Company facility in the same market. New market acquisitions allow the Company
to both expand its business generally and enhance its ability to serve multi-
location customer accounts. These acquisitions are typically either the result
of following an existing customer into a new location or are on a more
opportunistic basis when an attractive acquisition comes to the attention of
the Company. Once in the new area, the Company seeks to obtain records from
its existing multi-location customers which may have operations in that area.
Additionally, operating in the new locations assists the Company's sales force
in more effectively targeting new customers in that area.
 
  In the past, the Company has relied solely upon cash as consideration for
its acquisitions; however, following the Offerings, the Company may also use
equity securities or a combination of cash and equity securities to purchase
other records management companies.
 
THE 1997 ACQUISITIONS
   
  In January 1997, the Company successfully completed and has subsequently
integrated four acquisitions with facilities in Wilmington, Tampa, Trenton and
West Palm Beach. In April 1997, the Company completed the acquisition of
Advanced File Storage Systems with facilities in Jacksonville, Florida and the
acquisition of RMS with facilities in Chicago, Indianapolis, Cincinnati, Los
Angeles, Phoenix, Houston, New York and St. Louis. The aggregate cash
consideration paid for the 1997 Acquisitions was approximately $82.1 million.
       
RECENT ACQUISITIONS     
   
  In May 1997, the Company completed the acquisition of Austin File Room with
facilities in Austin, Texas and in June 1997, the Company completed the
acquisition of Corporate Storage with facilities in Chicago. The aggregate
cash consideration paid for the Recent Acquisitions was approximately $6.4
million.     
 
DESCRIPTION OF SERVICES
 
  The Company's records management services are focused on storage, retrieval
and data management of hard copy documents.
 
 Storage
 
  Storage revenues have averaged 58% of total revenues during the Company's
last five fiscal years. Nearly all of the Company's storage fees are derived
from hard copy storage. During 1996, the Company generated 94% of its storage
revenues from hard copy storage and 6% from vault storage for special items
such as computer tapes, X-rays, films or other valuable items. Storage charges
typically are billed monthly on a per cubic foot basis.
 
  The Company tracks all of its records stored in cartons, from initial pick-
up through permanent removal, with the use of its PLUS(R) system. Bar-coded
boxes are packed by the customer and transported by the Company's
transportation department to the appropriate facility where they are scanned
and placed into storage at the locations designated by PLUS(R). At such time,
the Company's data input personnel enter the data twice (i.e., double key
verifying) to enhance the integrity of the information entered into the
system.
 
  The Company offers secure, climate-controlled facilities for the storage of
non-paper forms of media such as computer tapes, optical discs, microfilm,
video tapes and X-rays. These types of media often require special
 
                                      43
<PAGE>
 
facilities due to the nature of the records. The Company's storage fees for
non-paper media are higher than for typical paper storage. The Company also
provides ancillary services for non-paper records in the same manner as it
provides for its hard copy storage operations.
 
 Service and Product Sales
 
  The Company's principal services include adding records to storage,
temporary removal of records from storage to support a customer's need to
review the files, replacing temporarily removed records and permanent
withdrawals from storage or destruction of records. Pick-up and delivery of
customer records can be tailored to a customer's specific needs and range from
standard service (typically requests received by 10:30 a.m. are delivered or
picked up that afternoon and requests received by 3:30 p.m. are delivered or
picked up the next day) to emergency service (typically within three hours or
less). Pick-up and delivery operations are supported by the Company's fleet of
over 400 owned or leased vehicles. The Company charges for pick-up and
delivery services on a per-unit basis depending on the immediacy of delivery
requested.
 
  A small percentage of the Company's customers manage their records on a file
by file basis, allowing the customer direct access and traceability of a
specific file (rather than on a box by box basis). The Company provides data
entry services to such customers to input the file by file listings into the
PLUS(R) system.
 
  The Company also offers a records destruction service, which provides
customers with a secure, controlled program to periodically review and remove
records which no longer need to be retained. Although boxes destroyed no
longer generate monthly storage fees, the Company charges for the destruction
of records and increases its available shelving space as a result. The Company
believes its ability to manage destruction programs for customers efficiently
through the PLUS(R) system also enhances its ability to attract large
accounts.
 
  In addition to providing traditional storage, customers may contract with
the Company to manage their on-site records or file services center. Such
management services generally include providing Company personnel to manage
the customer's active files (including records storage and tracking) at the
customer's facilities, supplemented by off-site storage at the Company's
facilities. As part of this service, the Company can use its own internally
developed file management software, or maintain the customer's existing
system. The Company also provides consulting and other services on an
individualized basis, including advisory work for customers setting up in-
house records management systems. In addition, the Company sells cardboard
boxes and other storage containers to its customers.
 
CUSTOMER SERVICE
 
  Customer calls are routed into one of the Company's two centralized customer
service departments located in the Company's U.S. and Canadian corporate
headquarters. Both customer service departments are staffed and can receive
customer calls 24 hours a day, seven days a week. The Company currently
employs approximately 70 customer service representatives. Routine pick-up and
delivery requests are dispatched directly by customer service representatives
to local facilities as directed by PLUS(R).
 
  PLUS(R), in tandem with a centralized order processing organization and
local field support personnel, enables the Company to provide a high and
consistent level of service (24 hours a day, seven days a week) to its
customers in a cost-effective manner. The centralized order entry system
allows (i) efficient workload balancing as the daily "peak" call-in periods
can be spread over three time zones, (ii) centralized quality control
monitoring to increase delivery of consistent and high-quality service, and
(iii) the employment of Spanish- speaking customer service representatives
whose language skills can serve any of the Company's U.S. customers, primarily
for its operations in Florida, Texas and California.
 
  As a complement to its centralized customer service departments, the Company
provides client service representatives to work with existing customers at the
local level. In addition to maintaining personal contacts with customers, the
local client service representatives help meet the Company's customers'
changing records management needs through advice in efficient recordkeeping
procedures, and, when appropriate, by offering the sale of additional
services.
 
 
                                      44
<PAGE>
 
MANAGEMENT INFORMATION SYSTEMS
 
  The Company believes that PLUS(R), its core management information system,
is the most sophisticated records management system in the industry, and
provides the Company with a significant customer service and cost advantage in
attracting and retaining major accounts with records storage needs in multiple
locations and acquiring other records management companies. The Company's
centralized customer service and billing functions eliminate the need for
redundant functions at individual facilities. In addition, the PLUS(R) system
enables the Company to offer its customers full life cycle records management,
from file creation to destruction, and coordinates inventory control, order
entry, billing, material sales, service activity, accounts receivable and
management reporting on a centralized basis. PLUS(R) utilizes database
technology, proprietary software and extensive bar coding in a flexible,
enterprise-wide, client/server environment.
 
  During 1993, the Company completed an extensive two and one-half year
development program and began to install the PLUS(R) system in each of its
facilities. The Company invested approximately $8 million in developing
PLUS(R), primarily in conjunction with Andersen Consulting, together with
input from Hewlett Packard, Racal, Progress and Symbol Technologies. The
system has been designed on a modular basis which provides the Company with
the ability to expand the system's capacity as its business grows. The Company
also has devised certain backups designed to protect against loss of data and
computer failures. Company-wide installation of PLUS(R) commenced at the end
of 1993 and was completed during the first quarter of 1995. Since initial
development, the Company has also invested an additional $2.1 million to
upgrade and expand the capacity of the PLUS(R) system and to further increase
its functionality.
 
  Implementation of the PLUS(R) system has improved the Company's operating
efficiency by streamlining a number of its daily work processes:
 
  . PLUS(R) allows the Company real time access to locate each unit of a
    customer's records, regardless of geographic location, through an
    enterprise-wide, shared database and to centrally receive and dispatch
    pick-up and delivery orders to the appropriate location for processing.
    Management believes that no other records management system in the
    industry offers such real time access for multiple locations.
 
  . The PLUS(R) system reduces the number of employees required to handle the
    inbound/outbound movement of boxes through the use of sophisticated
    algorithms which allow archive employees to process multiple customer
    requests in an efficient manner.
 
  . PLUS(R) facilitates the integration of acquired records management
    companies in an efficient, standardized process. By converting the
    acquired company's records into the PLUS(R) system, the Company is able
    to reduce the labor and overhead costs associated with the acquisition,
    resulting in cost savings.
 
  . The PLUS(R) system assists the Company in efficiently utilizing its
    storage space by eliminating the need for permanent locations for
    individual records. At any one time, approximately 2% of total cubic feet
    of records managed by the Company are temporarily returned to customers,
    freeing up storage space which PLUS(R) enables the Company to use
    productively. When a box is temporarily returned to a customer, a new box
    may be placed in the original box's location. Upon return of the original
    box to the Company, PLUS(R) automatically assigns the box a new location
    within a facility in the market in which the Company determines to store
    the box.
 
  PLUS(R) offers several additional features which enhance the Company's
customer support functions. The system is continuously updated when any
account activity is undertaken, providing customers with real time access to
information regarding box location and retrievals. The PLUS(R) system is
flexible and allows the Company to design and implement customized records
management solutions for various industries utilizing a set of standardized
options. The PLUS(R) system's on-line customer support network allows certain
customers to place orders for both records storage and retrieval directly from
their own in-house terminals resulting in a more efficient system of records
management. PLUS(R) can also perform sophisticated searches to locate
inventory items even when the customers do not have the specific number of the
box they are seeking. In addition, the Company has recently initiated a trial
program, PLUS(R) Link, which is designed to transfer information directly
between the Company's centralized database and a customer's local file room.
 
 
                                      45
<PAGE>
 
  In marketing its services, the Company believes it can point to the
following direct benefits to a customer of the PLUS(R) system:
 
  . Through the PLUS(R) system central data base, a customer is able to
    obtain real time access to any file listing which is stored in any
    location. In addition to the benefits of immediate access to file listing
    information, this centralized data base is likely to reduce the time
    required to locate a file that a client might have stored in one of
    several locations.
 
  . With PLUS(R), a file can be retained in any Company warehouse and
    delivered only if and when it is needed at a specific location. Customers
    with multiple locations typically do not have large enough records
    management requirements to justify their own dedicated warehouse in each
    area. In order to increase the efficiency of warehouse facilities, such
    companies sometimes require operations in disparate locations to ship
    their records to a central or a regional warehouse. This process
    increases the costs as such companies must pay to ship files a
    substantial distance to inactive storage and incur additional costs, and
    typically time delay, to subsequently return the files to the initial
    location.
 
  . Through utilization of the PLUS(R) system, customers eliminate the need
    for expensive in-house computer systems and programming support staff to
    maintain an inventory management system. Companies which store their own
    records typically cannot achieve the economies of scale available to the
    Company.
 
SALES AND MARKETING
 
  During the past five years, the Company has invested significant effort in
developing its sales and marketing department, which is comprised of 73
employees in the United States and Canada, excluding any additions that may
result from the acquisition of RMS. Sales representatives are trained to sell
a "total systems approach," in which a customer's records management
requirements are surveyed and evaluated in order to determine the file
management system which best meets the customer's needs and offer
recommendations on how to implement such a system. From 1992 to 1996, the
Company's sales representatives secured over 3,600 new customer accounts
comprising over 8.5 million cubic feet of records from new accounts.
 
 
                         NEW CUSTOMER ACCOUNT GROWTH*

           [BAR GRAPH OF NEW CUSTOMER ACCOUNT GROWTH APPEARS HERE]*
 
           Cubic feet in millions:

                                 1994 - 1,038
                                 1995 - 2,018
                                 1996 - 2,994

* For the first twelve months after the establishment of a customer account, 
records added to such account are classified as additions to new customer 
accounts in the period in which they are received.
 
  The Company's sales and marketing department is divided into five regions:
Northeast; South; Midwest; West; and Canada. The Company's Vice President,
Sales and Marketing directs five regional sales managers who
 
                                      46
<PAGE>
 
are each responsible for one of the regions. In addition, the Company's sales
force is divided between sales representatives who focus on large accounts
which are frequently multi- location and a recently expanded group of sales
representatives who focus on smaller, single-location customers. The sales
force is primarily compensated on a commission basis with incentives tied to
the Company's sales goals. The Company also uses telemarketing, direct
response and print advertising to assist in its marketing programs.
 
CUSTOMERS
 
  The Company serves a diversified group of over 22,000 customers accounts in
a variety of industries, including financial services, manufacturing,
transportation, healthcare and law. The Company tracks customer accounts,
which are based on invoices. Accordingly, depending on how invoices have been
arranged at the request of a customer, one customer may have multiple customer
accounts. None of the Company's customers accounted for more than 3% of the
Company's total revenues during any of the last three years. The Company
services all types of customers from small to medium size companies (such as
professional groups and law firms that often have one location) to Fortune 500
companies that have operations in multiple locations. The Company provides
records management services to approximately one-half of the Fortune 500
companies and has 50 customers with over 100,000 cubic feet of records under
management with the Company. Larger companies with multiple locations that
have performed their own records management services to date are a principal
focus for new customers by the Company. The Company believes that its presence
in multiple locations in conjunction with the PLUS(R) system enable it to
provide the sophisticated file management services frequently required by such
customers.
 
  The Company's contracts with larger, typically multi-location customers
usually provide for an initial term of five or more years, and contracts with
other customers typically provide for initial terms of one or two years. Both
types of contracts generally provide for annual renewals thereafter (with
either party having the right to terminate the contract). Customers are
generally charged monthly storage fees until their records are destroyed or
permanently removed, for which fees are charged. In addition, services such as
file retrieval are separately charged. During 1996, approximately 3% of cubic
feet of records under management by the Company were permanently removed
(other than as part of an organized records destruction program). The Company
believes this relatively low attrition rate is due to a number of factors,
including satisfaction with the Company's services as well as the effort and
expense of transferring records to another service provider or back in-house.
 
FACILITIES
 
  The Company operates a total of 161 records management facilities of which
148 are in the United States, serving 58 markets, including the 16 largest
U.S. markets, and 13 facilities in Canada serving five of Canada's six largest
markets. Of the 10.2 million square feet of floor space (representing over 75
million cubic feet of storage capacity) in the Company's records storage
facilities, approximately 36% and 64% (41% and 59% on a cubic footage basis)
are in owned and leased facilities, respectively. The Company's facilities are
located as follows:
 
<TABLE>
<CAPTION>
                                                          RECORDS
                                                         MANAGEMENT  CUBIC FEET
                         REGION                          FACILITIES OF CAPACITY
                         ------                          ---------- ------------
<S>                                                      <C>        <C>
United States
  Southern Region.......................................     27      7.4 million
   (includes Alabama, Florida,
   Georgia, North Carolina and
   Tennessee)
  Northern Region.......................................     48     39.4 million
   (includes Connecticut, Delaware,
   Maryland, Massachusetts, New Jersey,
   New York, Ohio, Pennsylvania and
   Virginia)
</TABLE>
 
 
                                      47
<PAGE>
 
<TABLE>
<CAPTION>
                                                          RECORDS
                                                         MANAGEMENT  CUBIC FEET
                         REGION                          FACILITIES OF CAPACITY
                         ------                          ---------- ------------
<S>                                                      <C>        <C>
  Midwest Region........................................       53   16.8 million
   (includes Colorado, Illinois,
   Indiana, Michigan, Missouri,
   New Mexico and Texas)
  Western Region........................................       20    5.4 million
   (includes Arizona, California,                          ------   ------------
   Nevada and Washington)
  Total U.S.............................................      148   69.0 million
Canada..................................................       13    6.1 million
   (includes Calgary, Montreal, Ottawa,                    ------   ------------
   Toronto and Vancouver)
  Total.................................................      161   75.1 million
                                                           ======   ============
</TABLE>
 
  In response to certain opportunities that arose, the Company has made
significant new facility investments, substantially increasing the Company's
available storage capacity in its Northeast region. During 1995, the Company
purchased a storage facility in New Jersey with 12 million cubic feet of
storage capacity and leased (with an option to purchase) a storage facility in
Massachusetts with five million cubic feet of storage capacity. The Company is
in the process of consolidating certain individual warehouses into these
facilities and will consolidate other warehouses over the next two or three
years as existing leases expire. The addition of these facilities provides the
Company with substantial excess storage capacity in such region and is
expected to satisfy the Company's facility expansion requirements in its
Northeast region for several years. The Company intends to consolidate
facilities in other locations when appropriate. Primarily as a result of the
new facilities in New Jersey and Massachusetts, warehouse utilization has
declined to approximately 66% from historical levels of 70% to 80%.
 
COMPETITION
 
  The Company competes with numerous records management companies in all
geographic areas in which it operates. The Company believes that competition
for customers is based on price, reputation for reliability, quality of
service and scope and scale of technology, and believes that it generally
competes effectively based on these factors. Management believes that, except
for Iron Mountain Incorporated, all of these competitors have records
management revenues significantly lower than those of the Company. The Company
believes that the trend towards consolidation in the industry will continue,
and the Company also faces competition in identifying attractive acquisition
candidates. In addition, the Company faces competition from the internal
document handling capability of its current and potential customers.
 
  The substantial majority of the Company's revenues are derived from the
storage of paper records and from related services. Alternative technologies
for generating, capturing, managing, transmitting and storing information have
been developed, many of which require significantly less space than paper.
Such technologies include computer media, microforms, audio/video tape, film,
CD-Rom and optical disc. Management believes that conversion of paper
documents into these smaller storage media is currently not cost-effective for
inactive records, primarily due to the high labor cost of preparing and
converting the documents for imaging.
 
EMPLOYEES
 
  As of May 10, 1997, the Company had 1,952 employees, including 242 employees
in Canada. None of the Company's employees is covered by a collective
bargaining agreement. Management considers its employee relations to be good.
 
INSURANCE
 
  The Company carries comprehensive property insurance covering replacement
costs of real and personal property. Subject to certain limitations and
deductibles, such policies also cover extraordinary expenses
 
                                      48
<PAGE>
 
associated with business interruption and damage or loss from fire, flood or
earthquakes (in certain geographic areas), and losses at the Company's
facilities up to approximately $225 million.
 
ENVIRONMENTAL MATTERS
 
  The Company's properties and operations may be subject to liability under
various environmental laws, regardless of fault, for the investigation,
removal or remediation of soil or groundwater, on or off-site, resulting from
the release or threatened release of hazardous materials, as well as damages
to natural resources. The owner or operator of contaminated property may also
be subject to claims for damages and remediation costs from third parties
based upon the migration of any hazardous materials to other properties.
 
  At certain of the properties owned or leased by the Company, petroleum
products or other hazardous materials, are or were stored in USTs. Some
formerly used USTs have been removed; others were abandoned in place. The
Company believes all of the USTs are registered, where required under
applicable law. The Company also is aware of the presence in some of its
facilities of ACMs, but believes that no action is presently required to be
taken as a result of such material.
 
  At the Company's New Jersey facility, certain contamination has been
discovered resulting from operations of the prior owner thereof. The prior
owner, which has agreed to be responsible for the cost of such remediation, is
completing remediation of the property under a consent order with the New
Jersey Department of Environmental Protection ("NJDEP"). The prior owner has
posted a $1.1 million letter of credit with the NJDEP. The Company has
purchased an environmental liability insurance policy covering the cleanup
costs to the Company, if any, resulting from any on- or off-site environmental
condition existing at the time of the Company's acquisition of this property,
with a $250,000 deductible and policy limits of $4 million per occurrence/$8
million in the aggregate, provided the claim first arises during the term of
the policy, which is August 10, 1995 through August 11, 1998.
 
  The Company has not received any written notice from any governmental
authority or third party asserting, and is not otherwise aware of, any
material noncompliance, liability or claim under environmental laws applicable
to the Company other than as described above. No assurance can be given that
there are no environmental conditions for which the Company may be liable in
the future or that future regulatory action, or compliance with future
environmental laws, will not require the Company to incur costs that could
have a material adverse effect on the Company's financial condition or results
of operations.
 
LEGAL PROCEEDINGS
 
  The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company, or any of its property, is
subject.
 
                                      49
<PAGE>
 
                                  MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
  Set forth below is certain information regarding the Company's directors,
executive officers and other significant management personnel:
 
<TABLE>
<CAPTION>
                 NAME                 AGE POSITION
                 ----                 --- --------
 <C>                                  <C> <S>
 Leo W. Pierce, Sr...................  78 Chairman of the Board
 J. Peter Pierce.....................  51 President, Chief Executive Officer and
                                           Director
 Douglas B. Huntley..................  36 Vice President, Chief Financial Officer and
                                           Director
 Joseph A. Nezi......................  50 Vice President, Sales and Marketing
 David Marsh.........................  48 Vice President, Chief Information Officer
 Ross M. Engelman....................  33 Vice President, Operations--South
 J. Michael Gold.....................  37 Vice President, Operations--Northeast
 Christopher J. Williams.............  38 Vice President, Operations--West
 Leo W. Pierce, Jr...................  52 Vice President, Contracts Administration
                                           and Director
 Michael J. Pierce...................  47 Vice President, Equipment Sales and
                                           Distribution Group and Director
 Raul A. Fernandez...................  46 Vice President, Information Services
 Joseph P. Linaugh...................  47 Vice President, Treasurer
 Thomas Grogan.......................  42 Vice President and Controller
 Ronald P. Muhlenhaupt...............  42 Vice President, Assistant to the President
 Lisa G. Goldschmidt.................  29 General Counsel
 Alan B. Campell.....................  46 Director
 Delbert S. Conner...................  67 Director
</TABLE>
 
  Leo W. Pierce, Sr. has served as Chairman of the Board of the Company since
its formation in 1957. Mr. Pierce served as the Chief Executive Officer of the
Company from formation to January 1995 and as its President from formation to
January 1984. Prior to forming the Company, Mr. Pierce was a sales
representative for Lefebure Corporation and an accountant for Price
Waterhouse. Mr. Pierce holds a B.A. degree from St. John's University.
 
  J. Peter Pierce has served as President and Chief Executive Officer of the
Company since January 1995 and has been a director since the early 1970s. Mr.
Pierce served as President and Chief Operating Officer of the Company from
January 1984 to January 1995, prior to which time he served in various other
capacities with the Company, including as Vice President of Operations,
General Manager of Connecticut, New York and New Jersey and Sales Executive.
Mr. Pierce attended the University of Pennsylvania and served in the United
States Marine Corps.
 
  Douglas B. Huntley has served as Chief Financial Officer since January 1994
and as a director of the Company since September 1994. From May 1993 until
December 1993, Mr. Huntley served as Assistant to the President of the
Company. From August 1989 to March 1993, he was an Executive Advisor and a
Project Manager of Rockwell International in connection with a multi-billion
dollar NASA contract. Prior thereto, Mr. Huntley was an accountant for
Deloitte Haskin & Sells. Mr. Huntley holds a B.S. degree from Bucknell
University and an M.B.A. from the University of Pennsylvania, Wharton School
of Business and is a Certified Public Accountant.
 
  Joseph A. Nezi has served as Vice President, Sales and Marketing of the
Company since September 1991. From July 1990 to September 1991, Mr. Nezi was
the Vice President, Sales and Marketing of Delaware Valley Wholesale Florist
where he was responsible for the sales and marketing of a firm with $30
million of sales. Prior thereto, Mr. Nezi was the President and General
Manager of Pomerantz and Company following 17 years in various sales positions
of increasing responsibility with Xerox. Mr. Nezi holds a B.A. degree from
Villanova University.
 
                                      50
<PAGE>
 
  David Marsh has served as Vice President and Chief Information Officer of
the Company since January 1995 and was Assistant to the President of the
Company from November 1994 to December 1994. From August 1986 to May 1994, Mr.
Marsh was Manager--Corporate Relations for the Massachusetts Institute of
Technology where he was responsible for the management and development of
MIT's relationships with U.S. and European information technology,
communications and service companies. Prior to August 1986, Mr. Marsh held
positions as President of MEA Management Systems, Director of Corporate
Strategic Planning with Public Service Company of New Hampshire, Senior
Consultant with Booz, Allen & Hamilton and Second Vice President with the
Chase Manhattan Bank. Mr. Marsh holds a B.S. degree from University of
Salford, U.K. and S.M. degrees in Management and Nuclear Engineering from MIT.
 
  Ross M. Engelman has served as Vice President, Operations--South since
October 1994. From June 1993 to October 1994, Mr. Engelman was Vice President,
Information Systems and from September 1991 to June 1993, he was Assistant to
the President of the Company. From August 1985 to September 1991, Mr. Engelman
was a management consultant with Andersen Consulting. Mr. Engelman holds a
B.S.E. degree from the University of Pennsylvania, Wharton School of Business.
 
  J. Michael Gold has served as Vice President, Operations--Northeast of the
Company since June 1993. Prior thereto, Mr. Gold was Vice President,
Operations from February 1992 to June 1993, Vice President, New York
Metropolitan Region from January 1990 to February 1992 and General Manager of
the New Jersey Archive from April 1985 to February 1989. Prior to joining the
Company, Mr. Gold was the Budget Administration Manager for SmithKline
Beecham. Mr. Gold holds a B.A. degree from Villanova University.
 
  Christopher J. Williams has served as Vice President, Operations--West since
June 1993. From February 1992 to June 1993, Mr. Williams was the Company's
Vice President, Information Services. Prior thereto, Mr. Williams held a
number of additional positions with the Company since he joined it in 1980,
including most recently as General Manager of the New York Archive and
Regional Vice President--New England. Mr. Williams holds a B.S. degree from
Western New England College.
 
  Leo W. Pierce, Jr. has served as Vice President, Contract Administration of
the Company since January 1990 and as a director since the early 1970s. Mr.
Pierce has been affiliated with the Company since its inception in various
capacities, including as manager of the Philadelphia Archive and Vice
President, Facilities Management. Mr. Pierce holds a B.A. degree from LaSalle
University.
 
  Michael J. Pierce has served as Vice President, Equipment Sales and
Distribution Group of the Company since February 1990 and as a director since
the early 1970s. Mr. Pierce has been affiliated with the Company since its
inception in various sales capacities. Mr. Pierce attended Temple University
and served in the United States Army.
 
  Raul A. Fernandez has served as Vice President, Information Systems of the
Company since February 1990. From March 1988 to February 1990, Mr. Fernandez
was Director of Information Systems. Prior to joining the Company, Mr.
Fernandez was employed by RCA Pictures Division and Sperry-Unisys as District
Manager. Mr. Fernandez holds a B.A. degree from Kings College.
 
  Joseph P. Linaugh has served as Vice President and Treasurer of the Company
since January 1994. From January 1990 to December 1993, Mr. Linaugh served as
Vice President, Chief Financial Officer and a director of the Company. Prior
to joining the Company, Mr. Linaugh worked in various financial positions with
private and publicly held companies and for Laventhol & Horwath in public
accounting. Mr. Linaugh holds a B.S. degree from LaSalle University and is a
Certified Public Accountant.
 
  Thomas Grogan has served as Vice President and Controller of the Company
since January 1994. From April 1985 to December 1993, Mr. Grogan was the
Company's Vice President of Finance and Administration. Prior to joining the
Company, Mr. Grogan worked for Dunn, Dunn and Associates in public accounting
from
 
                                      51
<PAGE>
 
May 1979 to March 1985 and in private industry from June 1977 to April 1979.
Mr. Grogan holds a B.S. degree from Widener College and is a Certified Public
Accountant.
 
  Ronald P. "Rip" Muhlenhaupt has served as Vice President, Assistant to the
President since October 1994, with responsibility for the Customer Response
Group and corporate communications, as well as company-wide training and
education initiatives for both customers and staff. From April 1992 to October
1994, Mr. Muhlenhaupt was Vice President, Corporate Development. Mr.
Muhlenhaupt provided service as Creative Consultant from November 1989 to
April 1992 when he joined the Company upon the acquisition, by Pierce Leahy,
of the records management division of his family-owned business, The
Muhlenhaupt Corporation, where he was President. Mr. Muhlenhaupt holds a B.S.
degree from Fairfield University.
 
  Lisa G. Goldschmidt has served as General Counsel of the Company since
October 1995. From September 1992 to October 1995, Ms. Goldschmidt was an
attorney at Reed Smith Shaw & McClay. Ms. Goldschmidt holds a B.A. and a J.D.
degree from the University of Pennsylvania.
 
  Alan B. Campell has served as a director of the Company since September
1994. Mr. Campell is one of the founders of Campell Vanderslice Furman, an
investment banking firm, and has been a Managing Director of the firm since
its formation in 1986. Prior thereto, Mr. Campell was a Vice President at
Chase Manhattan Bank, N.A. Mr. Campell holds a B.A. degree from Brown
University and an M.A. from the University of Southern California.
 
  Delbert S. Conner has served as a director of the Company since September
1990. Since May 1995, Mr. Conner has served as the Vice Chairman of USCO
Distribution Services, Inc. on a semi-retired basis. From January 1994 through
April 1995, he was the Vice Chairman of USCO on a full-time basis and its
President and Chief Executive Officer from February 1983 to December 1993. Mr.
Conner holds a B.S. degree from Bryant College.
 
  Messrs. J. Peter Pierce, Leo W. Pierce, Jr. and Michael J. Pierce are
brothers. Leo W. Pierce, Sr. is their father. For purposes of the above
biographical information, the Company includes L.W. Pierce Company, Inc., the
predecessor to the Company. See "The Company."
 
BOARD OF DIRECTORS
 
  As of the closing of the Offerings, the Company's Board of Directors will be
classified into three classes with staggered three-year terms, each class to
contain as nearly as possible one-third of the number of members of the Board.
One class of directors will be elected for a three-year term at each annual
meeting of shareholders commencing in 1998. It is currently contemplated that
within 90 days after the closing of the Offerings, Leo W. Pierce, Jr. and
Michael J. Pierce will resign and the Board of Directors will add one or two
independent directors to the Board. The terms of J. Peter Pierce, Michael J.
Pierce and Alan B. Campell will expire at the 1998 annual meeting of
shareholders; the terms of Douglas B. Huntley and Delbert S. Conner will
expire at the 1999 annual meeting of shareholders; and the terms of Leo W.
Pierce, Sr. and Leo W. Pierce, Jr. will expire at the 2000 annual meeting of
shareholders.
 
  The Company's Board of Directors has a Compensation Committee, which prior
to the Offerings has been comprised of Leo W. Pierce, Sr., J. Peter Pierce and
Alan B. Campell. The Compensation Committee recommends to the Board both
salary levels and bonuses for the officers of the Company. The Compensation
Committee also reviews and makes recommendations with respect to the Company's
existing and proposed compensation plans, and serves as the committee
responsible for administrating the Company's Nonqualified Option Plan (as
hereinafter defined).
 
  Following the Offerings, the Board of Directors intends to reconstitute the
Compensation Committee and establish an Audit Committee, each of which will be
comprised of two or more directors. It is anticipated that the Compensation
Committee and the Audit Committee will be comprised of Mr. Conner and a second
nonemployee director. The Compensation Committee is expected to determine
compensation for executive officers of the Company and administer the
Company's stock option plans. The Audit Committee is expected to
 
                                      52
<PAGE>
 
recommend the appointment of the Company's independent public accountants and
review the scope and results of audits and internal accounting controls.
 
  All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. Mr. Conner
also receives $3,500 for each meeting of the Board of Directors which he
attends. No other director receives separate compensation for services
rendered as a director. It is currently anticipated that any other outside
directors added to the Board of Directors will be compensated similarly to Mr.
Conner, although the Board may in the future consider using stock options or a
combination of cash and stock options to compensate outside directors.
 
EXECUTIVE COMPENSATION
 
  The following table sets forth the compensation received by the Company's
Chief Executive Officer and the five other highest paid executive officers
(together with the Chief Executive Officer, the "Named Executive Officers")
for services to the Company in 1995 and 1996.
 
                          SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                LONG-TERM
                                                               COMPENSATION
                                   ANNUAL COMPENSATION            AWARDS
                              -------------------------------- ------------
                                                     OTHER      SECURITIES
        NAME AND                                     ANNUAL     UNDERLYING   ALL OTHER
   PRINCIPAL POSITION    YEAR  SALARY   BONUS     COMPENSATION   OPTIONS    COMPENSATION
   ------------------    ---- -------- -------    ------------ ------------ ------------
<S>                      <C>  <C>      <C>        <C>          <C>          <C>
J. Peter Pierce......... 1996 $251,485 $93,400        --             --        $6,967(a)
 President and Chief     1995  186,800  93,400        --             --         6,681(a)
 Executive Officer
Ross M. Engelman........ 1996  130,500  65,000        --          54,014        5,216(b)
 Vice President,         1995  130,422  65,000        --          90,024        4,830(b)
 Operations--South
J. Michael Gold......... 1996  130,000  65,000        --          54,014        3,739(c)
 Vice President,         1995  129,905  65,000        --          90,024        3,417(c)
 Operations--Northeast
Douglas B. Huntley...... 1996  130,000  65,000        --          54,014        5,231(d)
 Vice President and      1995  129,520  65,000        --          90,024        4,802(d)
 Chief Financial Officer
Joseph A. Nezi.......... 1996  130,000  92,370(e)     --          32,068        6,256(f)
 Vice President, Sales   1995  133,020  97,841(e)     --          90,024        5,748(f)
 and Marketing
Christopher J.           1996  130,000  65,000        --          54,014        5,339(g)
 Williams...............
 Vice President,         1995  129,905  65,000        --          90,024        5,089(g)
 Operations--West
</TABLE>
- --------
(a) Included in such amounts for 1996 and 1995, respectively, are $2,268 and
    $2,310 representing an employer match under the 401(k) Plan (as defined
    herein), $1,699 and $1,371 in net premiums for a guaranteed term life
    insurance policy on behalf of Mr. Pierce and $3,000 and $3,000
    representing contributions made by the Company under the Profit Sharing
    Plan (as defined herein).
(b) Included in such amounts for 1996 and 1995, respectively, are $2,249 and
    $2,107 representing an employer match under the 401(k) Plan, $158 and $98
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Engelman and $2,809 and $2,608 representing contributions made by the
    Company under the Profit Sharing Plan.
(c) Included in such amounts for 1996 and 1995, respectively, are $750 and
    $700 representing an employer match under the 401(k) Plan, $191 and $119
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Gold and $2,798 and $2,598 representing contributions made by the
    Company under the Profit Sharing Plan.
(d) Included in such amounts for 1996 and 1995, respectively, are $2,250 and
    $2,093 representing an employer match under the 401(k) Plan, $191 and $119
    in net premiums for a guaranteed term life insurance policy on
 
                                      53
<PAGE>
 
    behalf of Mr. Huntley and $2,790 and $2,590 representing contributions made
    by the Company under the Profit Sharing Plan.
(e) Includes $27,370 and $32,842 paid as commissions in 1996 and 1995,
    respectively.
(f) Included in such amounts for 1996 and 1995, respectively, are $2,260 and
    $2,310 representing an employer match under the 401(k) Plan, $996 and $438
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Nezi and $3,000 and $3,000 representing contributions made by the
    Company under the Profit Sharing Plan.
(g) Included in such amounts for 1996 and 1995, respectively, are $2,250 and
    $2,066 representing an employer match under the 401(k) Plan, $191 and $125
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Williams and $2,898 and $2,898 representing contributions made by the
    Company under the Profit Sharing Plan.
 
OPTION GRANTS IN 1996
 
  The following table sets forth certain information concerning stock options
granted to the Named Executive Officers during 1996 (all of which were granted
on January 1, 1996) after giving effect to the Stock Recapitalization.
 
<TABLE>
<CAPTION>
                                      INDIVIDUAL GRANTS
                         --------------------------------------------
                                                                       POTENTIAL REALIZABLE
                         NUMBER OF                                       VALUE AT ASSUMED
                         SECURITIES  % OF TOTAL                        ANNUAL RATES OF STOCK
                         UNDERLYING   OPTIONS                         PRICE APPRECIATION FOR
                          OPTIONS    GRANTED TO  EXERCISE                 OPTION TERM(B)
                          GRANTED   EMPLOYEES IN   PRICE   EXPIRATION -----------------------
      NAME                 (#)(A)       1996     ($/SHARE)    DATE        5%          10%
      ----               ---------- ------------ --------- ---------- ----------- -----------
<S>                      <C>        <C>          <C>       <C>        <C>         <C>
J. Peter Pierce.........      --         --          --       --              --          --
Ross M. Engelman........   54,014       15.0%      $5.86        *     $   199,145 $   504,673
J. Michael Gold.........   54,014       15.0        5.86        *         199,145     504,673
Douglas B. Huntley......   54,014       15.0        5.86        *         199,145     504,673
Joseph A. Nezi..........   37,068       10.3        5.86        *         136,668     346,344
Christopher J. Williams.   54,014       15.0        5.86        *         199,145     504,673
</TABLE>
- --------
 * The options have no specified expiration date.
(a) All options were granted under the Nonqualified Option Plan. The options
    vest in five equal annual installments commencing on the first anniversary
    of the date of grant, and vested options become exercisable on the earlier
    of ten years from the date of grant or the date the Company is no longer a
    Subchapter S corporation. The Company may make loans with respect to
    vested options. See "--Stock Incentive Plan."
(b) Illustrates the value that might be received upon exercise of options
    immediately prior to the assumed expiration of their term at the specified
    compounded rates of appreciation based on the market price for the Common
    Stock when the options were granted. At the time of grant, there was no
    established trading market for the Common Stock and, accordingly, the
    market price is based upon the formula set forth in the Nonqualified
    Option Plan which is based upon a multiple of EBITDA, as well as the
    amount of cash, cash equivalents, outstanding indebtedness and other
    obligations of the Company. Since the options granted to the Named
    Executive Officers do not have a specified expiration date, for purposes
    of calculating the assumed appreciation, the options have been deemed to
    expire ten years from the date of grant.
 
                                      54
<PAGE>
 
STOCK OPTION EXERCISES AND HOLDINGS
 
  The following table sets forth the value of options held by each of the
Named Executive Officers at December 31, 1996 after giving effect to the Stock
Recapitalization. None of the Named Executives exercised any options during
1996.
 
                    AGGREGATED OPTION EXERCISES IN 1996 AND
                      OPTION VALUES AT DECEMBER 31, 1996
 
<TABLE>
<CAPTION>
                                                  NUMBER OF SECURITIES
                                                 UNDERLYING UNEXERCISED      VALUE OF UNEXERCISED
                                                       OPTIONS AT           IN-THE-MONEY OPTIONS AT
                                                   DECEMBER 31, 1996         DECEMBER 31, 1996(A)
                                              ---------------------------- -------------------------
                           SHARES
                         ACQUIRED ON  VALUE
NAME                     EXERCISE(#) REALIZED EXERCISABLE/UNEXERCISABLE(B) EXERCISABLE/UNEXERCISABLE
- ----                     ----------- -------- ---------------------------- -------------------------
<S>                      <C>         <C>      <C>                          <C>
J. Peter Pierce.........     --        --              --/--                         --/--
Ross M. Engelman........     --        --              --/144,038                    --/$0
J. Michael Gold.........     --        --              --/144,038                    --/ 0
Douglas B. Huntley......     --        --              --/144,038                    --/ 0
Joseph A. Nezi..........     --        --              --/127,092                    --/ 0
Christopher J.
 Williams...............     --        --              --/144,038                    --/ 0
</TABLE>
- --------
(a) There was no established market for the Common Stock as of December 31,
    1996, and, accordingly, the values are based on the exercise price of
    options granted on January 1, 1997 in accordance with the formula set
    forth in the Nonqualified Option Plan.
(b) As of December 31, 1996, none of the options were exercisable although of
    such totals, options to purchase 46,812 shares of Common Stock were vested
    for each of Messrs. Engelman, Gold, Huntley and Williams and options to
    purchase 43,423 shares of Common Stock were vested for Mr. Nezi. Pursuant
    to the terms of the Nonqualified Option Plan, vested options become
    exercisable on the earlier of ten years from the date of grant or the date
    the Company is no longer a Subchapter S corporation. Accordingly, upon the
    consummation of the Offerings and the termination of the Company's status
    as a Subchapter S corporation, the vested options set forth above will
    become exercisable.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  Prior to the Offerings, the Compensation Committee of the Board of Directors
has been comprised of Leo W. Pierce, Sr., J. Peter Pierce and Alan B. Campell.
Leo W. Pierce, Sr. is the former Chief Executive Officer and President of the
Company and J. Peter Pierce is the Company's Chief Executive Officer and
President.
 
  In August 1996, the Company purchased for $14.9 million all of the interests
of the two partnerships owned by members of the Pierce family in six
facilities previously leased to the Company and 16 facilities previously
subleased, as well as minority interests in five other properties currently
leased by the Company. The purchase price was based on third party appraisals
or the recent acquisition price for the six facilities and management's
estimates of the value of the leasehold and minority ownership interests based
on the net present value of the cash flows generated by such interests. The
leases and subleases were entered into during the period from March 1980 to
April 1995. The aggregate rental payments for the leases and subleases were
$7,658,000, $8,201,000 and $4,624,000 in 1994, 1995 and the portion of 1996
prior to the purchase, respectively.
 
  The Company also leases from four separate limited partnerships its
corporate headquarters in King of Prussia, Pennsylvania and its facilities in
Suffield, Connecticut, Orlando, Florida and Charlotte, North Carolina. J.
Peter Pierce, the Company's President and Chief Executive Officer, is the
general partner of three of the limited partnerships and members of the Pierce
family and certain other officers and directors of the Company and their
affiliates own substantial limited partnership interests in each of the four
limited partnerships. The lease
 
                                      55
<PAGE>
 
on the Company's corporate headquarters expires on April 30, 2003, without any
renewal options. The leases for the Suffield, Orlando and Charlotte facilities
terminate on December 31, 2005, October 31, 2004 and August 31, 2001,
respectively. Each of such leases contains two five-year renewal options. The
aggregate rental payments by the Company for such properties during 1994, 1995
and 1996 were $531,000, $773,000 and $894,000, respectively.
 
  The Company believes that the terms of its leases with the related parties
are as favorable to the Company as those generally available from unaffiliated
third parties. There are no plans by the Company to lease additional
facilities from officers, directors or other affiliated parties.
 
  In December 1993, the Company's Chairman, Leo W. Pierce, Sr., advanced
$80,000 to the Company. The Company repaid the loan, together with interest at
7%, in three equal installments in December 1994, December 1995 and May 1996.
In July, 1996, the Company redeemed 100 shares of voting Class A Common Stock
(equivalent to 105,910 shares of Common Stock after the Stock
Recapitalization) from Mr. Pierce for an aggregate price of $1.45 million,
which price was based on the Company's EBITDA. The Company had previously
undertaken to pay $60,000 per year for a five-year period to Mr. Pierce's
spouse upon his death. The Company replaced this arrangement by providing an
annual pension in the amount of $96,000 to Mr. Pierce and then to his spouse,
if she survives him.
 
  The Company has entered into a tax indemnification agreement with the
current shareholders of the Company which provides for: (i) the distribution
to such shareholders of cash equal to the product of the Company's taxable
income for the period from January 1, 1997 until the date the Offerings are
completed and the sum of the highest effective federal and state income tax
rate applicable to any current shareholder (or in the case of shareholders
that are trusts, any beneficiaries), less any prior distributions to such
shareholders to pay taxes for such period, and (ii) an indemnification of such
shareholders for any losses or liabilities with respect to any additional
taxes (including interest, penalties and legal fees) resulting from the
Company's operations during the period in which it was a Subchapter S
corporation.
 
  Alan B. Campell is a managing director of Campell Vanderslice Furman
("CVF"), an investment banking firm that has provided investment banking
services to the Company since 1992. Mr. Campell became a director of the
Company in 1994. During 1994, 1995 and 1996, the Company paid CVF $0.8
million, $0.7 million and $0.8 million, respectively, with respect to
investment banking services. CVF will receive a fee estimated to be
approximately $    in connection with the Offerings.
 
STOCK INCENTIVE PLAN
 
  The Company established a Nonqualified Stock Option Plan (the "Nonqualified
Option Plan") in September 1994 to provide incentives to Key Employees
(defined below) who contribute significantly to the strategic and long-term
performance objectives and growth of the Company. The Nonqualified Option Plan
is administered by the Compensation Committee of the Board of Directors.
   
  The Nonqualified Option Plan provides for the issuance of stock options not
intended to qualify as incentive stock options under Section 422 of the Code
("NQSOs") to "Key Employees," defined as employees of the Company who are
members of a select group of management or highly compensated employees. As of
December 31, 1996, there were nine Key Employees. Under the Nonqualified
Option Plan, options exercisable for an aggregate of 380,217 shares of Common
Stock are available for grant. The exercise price per share of Common Stock of
options granted under the Nonqualified Option Plan shall be equal to or
greater than the fair market value of the Common Stock as of the last day of
the calendar quarter coinciding with or immediately preceding the date of the
grant. Options granted under the Nonqualified Option Plan become exercisable,
to the extent they are vested, at the earlier of the tenth anniversary of the
date of grant or the date the Company is no longer a Subchapter S Corporation.
    
                                      56
<PAGE>
 
  The Board, in its sole discretion, may direct the Company to make a loan to
a Key Employee whose Vested Percentage (defined below) with respect to one or
more stock options is at least 60%. The maximum amount of any such loan shall
be 25% of the amount which would be payable to the Key Employee had he
terminated employment other than on account of death or total and permanent
disability as of the date of the loan as set forth in the following paragraph.
Vested Percentage is based upon the options vesting in five equal annual
installments commencing on the first anniversary of the date of grant;
provided, however, that 100% shall be deemed to be vested in the case of a Key
Employee who terminates employment on account of death or total and permanent
disability.
 
  If a Key Employee's employment is terminated for any reason, each stock
option which has not been exercised shall terminate; provided, however, that
if a Key Employee terminates employment after the Class B Common Stock has
become readily tradeable in an established securities market, other than
pursuant to a termination for cause, his option shall not expire until the end
of the 90-day period following the date of termination. Upon termination of
employment (other than for cause or when the Class B Common Stock is tradeable
in an established securities market), the Company is required to pay the Key
Employee the Vested Percentage of the value of any options held by the Key
Employee. The value of the options for this purpose is equal to the aggregate
fair market value of the underlying shares (determined by a formula set forth
in the Nonqualified Option Plan), less (i) the principal amount of any
outstanding loans pursuant to the Nonqualified Option Plan and (ii) the
aggregate exercise price of the underlying shares.
 
1997 STOCK OPTION PLAN
 
  In April 1997, the Company adopted its 1997 Stock Option Plan (the "1997
Plan") which provides for grants of stock options ("Options") to selected
employees, officers, directors, consultants and advisers of the Company. By
encouraging stock ownership, the Company seeks to attract, retain and motivate
such persons and to encourage them to devote their best efforts to the
business and financial success of the Company.
 
  The 1997 Plan authorizes up to 1,500,000 shares of Common Stock (subject to
adjustment in certain circumstances) for issuance pursuant to the terms of the
1997 Plan. If Options expire or are terminated for any reason without being
exercised, the shares of Common Stock subject to such Options again will be
available for grant.
 
  The 1997 Plan may be administered by the Board of Directors (the "Board") or
by a committee of the Board (references to the "Committee" refers to the
committee, if one is appointed, and otherwise to the Board). Grants under the
1997 Plan may consist of (i) options intended to qualify as incentive stock
options ("ISOs") within the meaning of Section 422 of the Code or (ii) NQSOs.
Options may be granted to any employee (including officers and directors) of
the Company, members of the Board who are not employees and consultants and
advisers who perform services to the Company or any of its subsidiaries ("Key
Advisers"). During any calendar year, no grantee may receive Options for more
than 500,000 shares of Common Stock.
 
  The option price of any ISO granted under the 1997 Plan will not be less
than the fair market value of the underlying shares of Common Stock on the
date of grant. The option price of a NQSO will be determined by the Committee,
in its sole discretion, and may be greater than, equal to or less than the
fair market value of the underlying shares of Common Stock on the date of
grant. The Committee will determine the term of each Option, provided that the
exercise period may not exceed ten years from the date of grant. The option
price of an ISO granted to a person who owns more than 10% of the total
combined voting power of all classes of stock of the Company must be at least
equal to 110% of the fair market value of Common Stock on the date of grant,
and the ISO's term may not exceed five years. A grantee may pay the option
price (i) in cash, (ii) by delivering shares of Common Stock owned by the
grantee for more than six months and having a fair market value on the date of
exercise equal to the option price, or (iii) by such other method as the
Committee may approve. The Committee may impose on Options such vesting and
other conditions as the Committee deems appropriate. Options may be exercised
while the grantee is an employee, Key Adviser or member of the Board or within
a specified period after termination of the grantee's employment or services.
 
                                      57
<PAGE>
 
  In the event of a change of control (as defined in the 1997 Plan), all
outstanding Options will become fully exercisable.
 
  All Options will be granted subject to any applicable federal, state and
local withholding requirements; the Company can deduct from wages paid to the
grantee any such taxes required to be withheld with respect to the Options. If
the Company so permits, a grantee may choose to satisfy the Company's income
tax withholding obligation with respect to an Option by having shares withheld
up to an amount that does not exceed the grantee's maximum marginal tax rate
for federal, local and state taxes.
 
  The Board may amend or terminate the 1997 Plan at anytime; provided that,
the Board may not (a) change the class of individuals eligible to receive an
ISO, (b) increase the maximum number of shares as to which Options may be
granted or (c) make any other change or amendment to which shareholder
approval is required in order to satisfy the conditions set forth in Rule 16b-
3 promulgated under the Exchange Act or Section 162(m) of the Code, in each
case without obtaining shareholder approval. To date, no Options have been
granted under the 1997 Plan. The 1997 Plan will terminate in April 2007,
unless terminated earlier by the Board or extended by the Board with approval
of the shareholders.
 
401(K) PLAN; PROFIT SHARING PLAN
 
  The Company has a savings and investment plan under Section 401(k) of the
Code (the "401(k) Plan") and a profit sharing plan also under Section 401(k)
(the "Profit Sharing Plan"). The 401(k) Plan covers substantially all full-
time employees over the age of 20 1/2 and with more than 1,000 hours of
service. Participants in the 401(k) Plan may elect to defer a specified
percentage of their compensation into the 401(k) Plan on a pre-tax basis. The
Company is required to make matching contributions under the 401(k) Plan equal
to 25% of the employee's contributions up to a maximum of 2% of the employee's
annual compensation. The contributions to the 401(k) Plan by a participant
vest immediately. Participants earn a vested right to their matching
contributions in increasing amounts over a period of five years, commencing
after three full years of employment. After seven years of service, the
participant's right to his or her matching contribution is fully vested.
Thereafter, the participant may receive a distribution of the entire value of
his or her account upon termination of employment or upon retirement,
disability or death.
 
  The Profit Sharing Plan covers substantially all full-time employees over
the age of 21 with more than 1,000 hours of service. The Company may make
discretionary profit sharing contributions in amounts as the Board of
Directors of the Company may determine. The Company's contributions under the
Profit Sharing Plan have historically ranged from 2-3% of a participant's
annual eligible income. Participants are not permitted to contribute to the
Profit Sharing Plan directly. Participants earn a vested right to their profit
sharing contribution in increasing amounts over a period of five years,
commencing after three full years of employment. After seven years of service,
the participant's right to his or her profit sharing contribution is fully
vested. Thereafter, the participant may receive a distribution of the entire
value of his or her account upon termination of employment or upon retirement,
disability or death.
 
                             CERTAIN TRANSACTIONS
 
  The Company has entered into a consulting agreement with Maurice Cox, Jr., a
shareholder of the Company, to provide consulting services to the Company
through 2004 for an annual payment of $40,000.
   
  In December 1994, the Company loaned $60,000 to J. Michael Gold, its Vice
President, Operations--Northeast. During 1996, an additional $38,516 was
loaned to Mr. Gold. As of May 31, 1997, $77,000 of the principal amount,
together with interest accruing at a rate of 8.875%, was outstanding.     
 
  See also "Management--Compensation Committee Interlocks and Insider
Participation."
 
                                      58
<PAGE>
 
                      PRINCIPAL AND SELLING SHAREHOLDERS
   
  The following table sets forth, as of June 15, 1997, after giving effect to
the Stock Recapitalization, certain information regarding the ownership of
Common Stock by (i) each person known by the Company to beneficially own 5% or
more of the outstanding shares of Common Stock, (ii) each Selling Shareholder,
(iii) each director and Named Executive Officer and (iv) all directors and
executive officers of the Company as a group.     
 
<TABLE>   
<CAPTION>
                          SHARES OF COMMON STOCK                   SHARES OF COMMON STOCK
                            BENEFICIALLY OWNED                       BENEFICIALLY OWNED
                          PRIOR TO THE OFFERINGS                   AFTER THE OFFERINGS(1)
                          ------------------------------  SHARES   --------------------------------
NAME                        NUMBER         PERCENTAGE   TO BE SOLD   NUMBER           PERCENTAGE
- ----                      -------------    ----------------------- --------------     -------------
<S>                       <C>              <C>          <C>        <C>                <C>
Leo W. Pierce, Sr.(2)...     10,485,090(3)      100.0%       --        10,272,476(3)         65.9%
J. Peter Pierce(2)......     10,485,090(3)      100.0        --        10,272,476(3)         65.9
Leo W. Pierce, Jr.(4)...      1,476,386          14.1     58,250        1,418,136             9.1
Michael J. Pierce(5)....      1,418,135          13.5        --         1,418,135             9.1
Mary E. Pierce..........      1,396,953          13.3        --         1,396,953             9.0
Barbara P. Quinn(6).....      1,396,954          13.3     40,564        1,356,390             8.7
Constance P. Buck-
 ley(7).................      1,386,362          13.2     56,715        1,329,647             8.5
Kathryn Cox(8)..........      1,334,461          12.7     17,475        1,277,376             8.2
Maurice Cox, Jr.(9).....      1,334,461          12.7     39,610        1,277,376             8.2
Alan B. Campell.........            --            --         --               --              --
Delbert S. Conner.......            --            --         --               --              --
Ross M. Engelman........            --            --         --            46,812(10)           *
J. Michael Gold.........            --            --         --            46,812(10)           *
Douglas B. Huntley......            --            --         --            46,812(10)           *
Joseph A. Nezi..........            --            --         --            43,423(10)           *
Christopher J. Wil-
 liams..................            --            --         --            46,812(10)           *
All directors and
 executive officers as a
 group (13 persons).....     10,485,090         100.0%       --        10,555,255(11)        66.5%
</TABLE>    
- --------
*  Less than 1%
(1)  In the event the U.S. Underwriters' over-allotment option is exercised in
     full, Leo W. Pierce, Jr., Barbara P. Quinn and Maurice Cox, Jr. will
     beneficially own 1,324,871 shares (8.2%), 1,256,390 shares (7.8%) and
     1,237,766 shares (7.7%), respectively, of the shares outstanding after the
     Equity Offerings, and all directors and executive officers as a group will
     beneficially own 10,322,380 (62.8%).
(2)  The business address for Leo W. Pierce, Sr., J. Peter Pierce, Leo W.
     Pierce, Jr., Michael J. Pierce, Mary E. Pierce, Barbara P. Quinn,
     Constance P. Buckley and Kathryn Cox is c/o Pierce Leahy Corp., 631 Park
     Avenue, King of Prussia, Pennsylvania 19406. The address for Maurice Cox,
     Jr. is 731 E. Manoa Road, Havertown, Pennsylvania 19083.
(3)  Messrs. Leo W. Pierce, Sr. and J. Peter Pierce are the Voting Trustees of
     the Voting Trust Agreement described below. Substantially all of the
     members of the Pierce family are expected to enter into the Voting Trust
     Agreement, and, accordingly, the beneficial ownership of the Voting
     Trustees includes 10,485,090 and 10,272,476 shares of stock to be held by
     members of the Pierce family before and after the Offerings, respectively,
     of which 408,813 shares are owned directly by Leo W. Pierce, Sr. and
     746,668 shares are owned directly by J. Peter Pierce.
(4)  Includes 311,376 shares of Common Stock held for the benefit of Mr.
     Pierce's children.
(5)  Includes 151,981 shares of Common Stock held for the benefit of Mr.
     Pierce's child.
(6)  Includes 585,683 shares of Common Stock held for the benefit of Ms.
     Quinn's children.
(7)  Includes 252,066 shares of Common Stock held for the benefit of Ms.
     Buckley's children.
(8)  Includes 792,207 shares of Common Stock held by Ms. Cox's husband and
     192,751 shares held by or for the benefit of Ms. Cox's children.
(9)  Includes 349,503 shares of Common Stock held by Mr. Cox's wife and 192,751
     shares held by or for the benefit of Mr. Cox's children.
(10) Consists of options to purchase shares of Common Stock which will become
     exercisable upon termination of the Company's Subchapter S corporation
     status in connection with the Offerings.
(11) Includes 10,272,476 shares of Common Stock beneficially owned by Messrs.
     Leo W. Pierce, Sr. and J. Peter Pierce pursuant to the Voting Trust
     Agreement and options to purchase an aggregate of 282,779 shares of
     Common Stock that will become exercisable upon termination of the
     Company's Subchapter S corporation status in connection with the
     Offerings.
 
                                      59
<PAGE>
 
VOTING TRUST AGREEMENT
 
  Prior to the Offerings, all of the outstanding capital stock of the Company
was owned by members of the Pierce family. Substantially all of the members of
the Pierce family, who are expected to own approximately 66% of the shares of
Common Stock to be outstanding after the Offerings, have indicated their
intention to enter into a ten-year voting trust agreement (the "Voting Trust
Agreement") which appoints Leo W. Pierce, Sr. and J. Peter Pierce as the
Voting Trustees (the "Voting Trustees"). All shares subject to the Voting
Trust Agreement shall be voted at the direction of the Voting Trustees. In the
event the Voting Trustees cannot agree on how to vote with respect to a
certain matter, one-half of the shares subject to the Voting Trust Agreement
will be voted according to the direction of each Voting Trustee. In the event
that a Voting Trustee becomes unable or unwilling to continue serving as a
Voting Trustee, the remaining Voting Trustee will act as sole Voting Trustee.
The Voting Trust Agreement will terminate in the event both Trustees become
unable or unwilling to continue serving as Voting Trustees. The Voting Trust
Agreement does not place any restriction on the transfer of shares held
subject to the Voting Trust Agreement; such shares will be released from the
Voting Trust Agreement upon their transfer to a person not subject to the
Voting Trust Agreement.
 
                                      60
<PAGE>
 
                         DESCRIPTION OF CAPITAL STOCK
 
  The authorized capital stock of the Company consists of 80,000,000 shares of
Common Stock, par value $.01 per share, and 10,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). Immediately prior to
the Offerings, there were 10,485,090 shares of Common Stock outstanding. No
shares of Preferred Stock are currently outstanding.
 
  Prior to the Stock Recapitalization, the Company had outstanding two classes
of Common Stock: Class A Common Stock, which was voting, and Class B Common
Stock, which was nonvoting. In connection with the Stock Recapitalization, all
of the shares of Class A and Class B Common Stock were converted into an
aggregate of 10,485,090 shares of Common Stock.
 
COMMON STOCK
 
  The holders of Common Stock are entitled to one vote per share on each
matter to be decided by the shareholders and do not have cumulative voting
rights. Accordingly, the holders of a majority of Common Stock entitled to
vote in any election of directors may elect all of the directors standing for
election. The holders of Common Stock have no preemptive, redemption or
conversion rights. The holders of Common Stock will be entitled to receive
ratably such dividends, if any, as the Board of Directors may declare from
time to time out of funds legally available for such purpose. In the event of
liquidation, dissolution or winding up of the affairs of the Company, after
payment or provision for payment of all of the Company's debts and obligations
and any preferential distributions to holders of Preferred Stock, if any, the
holders of the Common Stock will be entitled to share ratably in the Company's
remaining assets. All outstanding shares of Common Stock are, and the Common
Stock offered hereby will be, validly issued, fully paid and nonassessable.
 
PREFERRED STOCK
 
  The Board of Directors is authorized, without further action by the
shareholders, to provide for the issuance of shares of Preferred Stock as a
class without series or in one or more series, to establish the number of
shares in each class or series and to fix the designations, powers,
preferences and rights of each such class or series and the qualifications,
limitations or restrictions thereof. Because the Board of Directors has the
power to establish the preferences and rights of each class or series of
Preferred Stock, the Board of Directors may afford the holders of any class or
series of Preferred Stock preferences, powers and rights, voting or otherwise,
senior to the rights of holders of Common Stock. The issuance of Preferred
Stock could have the effect of delaying or preventing a change in control of
the Company. As of the date of this Prospectus, the Company has not authorized
the issuance of any Preferred Stock and there are no plans, agreements or
understandings for the issuance of any shares of Preferred Stock.
 
CERTAIN PROVISIONS OF PENNSYLVANIA LAW AND THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS
 
  The Company is subject to the provisions of Section 2538 and Sections 2551-
2556 of the Pennsylvania Business Corporation Law of 1988, as amended (the
"PBCL"), which in certain cases provide for supermajority shareholder approval
of business combinations involving the Company and any "interested
shareholder" (as defined in such statute and includes generally, in the case
of Section 2538, shareholders who are a party to the business combination or
who are treated differently from other shareholders, and, in the case of
Sections 2551-2556, shareholders beneficially owning 20% or more of the voting
power of a "registered" corporation, such as the Company). In addition,
Sections 2551-2556 also impose certain restrictions on business combinations
involving the Company and any "interested shareholder." The term "business
combination" includes a merger, asset sale or other transaction involving an
interested shareholder.
 
  The PBCL also provides that the directors of a corporation, making decisions
concerning takeovers or any other matters, may consider, to the extent that
they deem appropriate, among other things, (i) the effects of any proposed
transaction upon any or all groups affected by such action, including, among
others, shareholders,
 
                                      61
<PAGE>
 
employees, suppliers, customers and creditors, (ii) the short-term and long-
term interests of the corporation and (iii) the resources, intent and conduct
of the person seeking control.
 
  The Company's Bylaws provide that the Company's Board of Directors is to be
composed of three classes, with staggered three-year terms, each class to
contain as nearly as possible one-third of the number of members of the Board.
Accordingly, at each annual meeting of shareholders, only approximately one-
third of the Company's directors will be elected.
 
  Certain other provisions of the Company's Articles of Incorporation and
Bylaws could also have the effect of preventing or delaying any change in
control of the Company, including (i) the advance notification procedures
governing certain shareholder nominations of candidates for the Board of
Directors and for certain other shareholder business to be conducted at an
annual meeting, (ii) the absence of authority for shareholders to call special
shareholder meetings of the Company, except in certain limited circumstances
mandated by the PBCL, and (iii) the absence of authority for shareholder
action by written consent by less than all of the Company's shareholders.
These provisions, the classified board and "supermajority" voting rights,
could have the effect of making it more difficult for a third party to
acquire, or discouraging a third party from seeking to acquire, control of the
Company.
 
  As permitted by the PBCL, the Bylaws provide that a director shall not be
personally liable in such capacity for monetary damages for any action taken,
or any failure to take any action, unless the director breaches or fails to
perform the duties of his office under the PBCL, and the breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness. These
provisions of the Bylaws, however, do not apply to the responsibility or
liability of a director pursuant to any criminal statute, or to the liability
of a director for the payment of the Company's taxes pursuant to local,
Pennsylvania or federal law. These provisions offer persons who serve on the
Board of Directors of the Company protection against awards of monetary
damages for negligence in the performance of their duties.
 
  The Bylaws also provide that every person who is or was a director or
officer of the Company, or a director, officer, employee, agent, partner or
fiduciary of, or in any other capacity for any corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which he served as
such at the request or for the benefit of the Company, shall be indemnified by
the Company to the fullest extent permitted by law against all expenses and
liabilities reasonably incurred by or imposed upon him, in connection with any
proceeding to which he may be made, or threatened to be made, a party, or in
which he may become involved by reason of his being or having been a director
or officer of the Company, or a director, officer, employee, agent, partner or
fiduciary of, or in any other capacity for such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
whether or not he is a director or officer of the Company or a director,
officer, employee, agent, partner or fiduciary of, or in any other capacity
for such other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise at the time the expenses or liabilities are
incurred.
 
TRANSFER AGENT
 
  The transfer agent and registrar for the Common Stock will be State Street
Bank and Trust Company.
 
 
                                      62
<PAGE>
 
                      DESCRIPTION OF CERTAIN INDEBTEDNESS
 
THE 1996 NOTES
 
  General. In July 1996, the Company issued $200,000,000 principal amount of
11 1/8% Senior Subordinated Notes due 2006 (the "Original Notes"). In November
1996, the Company exchanged the Original Notes for $200,000,000 principal
amount of 11 1/8% Senior Subordinated Notes due 2006 (the "1996 Notes"), which
are substantially identical to the Original Notes except that the 1996 Notes
are registered under the Securities Act. The 1996 Notes mature on July 15,
2006, and bear interest at 11 1/8% per annum, payable semi-annually in arrears
on January 15 and July 15.
 
  The following is a summary of the material terms of the Company's 1996 Notes
and is qualified in its entirety by reference to the indenture governing the
1996 Notes (the "1996 Indenture"). The 1996 Notes are general unsecured
obligations of the Company, subordinated in right of payment to Senior
Indebtedness of the Company (as defined in the 1996 Indenture).
 
  Redemption. Except as set forth in the following sentence, the Company may
not redeem the 1996 Notes prior to July 15, 2001. The Company may redeem up to
an aggregate of $70,000,000 principal amount of the 1996 Notes at any time
prior to July 15, 1999 with the net proceeds of the one or more Public Equity
Offerings (as defined in the 1996 Indenture) at a redemption price equal to
110% of the aggregate principal amount so redeemed plus accrued interest to
the Redemption Date. After July 15, 2001, the Company may redeem the 1996
Notes in whole or in part at specified redemption prices (expressed as a
percentage of principal amount), together, in each case, with accrued and
unpaid interest to the Redemption Date. The Company expects to use a
substantial portion of the net proceeds of the Equity Offerings to redeem
$70,000,000 principal amount of the 1996 Notes. See "Use of Proceeds."
 
  Covenants; Events of Default. The 1996 Indenture contains provisions which,
among other things, limit (i) the incurrence of additional debt, (ii) the
payment of dividends on and issuance of any Capital Stock of a Restricted
Subsidiary (as defined in the 1996 Indenture), (iii) the payment of cash
dividends by the Company, (iv) the use of proceeds from the sale of assets,
(v) transactions with affiliates, (vi) the creation of liens, (vii) the
creation of investments, (viii) the creation of subsidiaries and (ix) sale and
lease-back transactions.
 
  The 1996 Indenture provides that an Event of Default will occur upon, among
other occurrences, (i) a default by the Company for 30 days in the payment of
any interest installment due and payable on the 1996 Notes, (ii) a default in
payment of the principal when due on the 1996 Notes or upon the failure to
redeem or purchase the 1996 Notes when required, (iii) a default by the
Company or by any of its domestic subsidiaries that may become a guarantor of
the 1996 Notes in performance of any covenant or agreement in the 1996
Indenture after written notice to the Company by the trustee under the 1996
Indenture or the holders of not less than 25% in aggregate principal amount of
the 1996 Notes, and (iv) the occurrence of a default of $3.0 million or more
with respect to any Indebtedness of the Company or any Restricted Subsidiary.
 
  Guarantee. The 1996 Notes are secured on a second priority basis, by a
pledge of 65% of the capital stock of the Company's Canadian subsidiary
subordinate to a pledge of such shares in favor of the lenders and the
administrative agent under the Credit Facility and senior to a pledge of such
shares in favor of the holders of the 1997 Notes. The 1996 Notes will be
guaranteed, pari passu with the 1997 Notes, on an unsecured senior
subordinated basis, by any future domestic subsidiaries of the Company.
 
THE 1997 NOTES
   
  General. Concurrent with the Equity Offerings, the Company will issue
$100,000,000 principal amount of    % Senior Subordinated Notes due 2007 (the
"1997 Notes") pursuant to the Notes Offering. The 1997 Notes will be
substantially similar to the 1996 Notes. The 1997 Notes mature on    , 2007
and bear interest at    %, payable semi-annual in arrears on     and    .     
 
                                      63
<PAGE>
 
  The following is a summary of the material terms of the 1997 Notes and is
qualified in its entirety by reference to the indenture governing the 1997
Notes (the "1997 Indenture"). The 1997 Notes will be general unsecured
obligations of the Company, subordinated in right of payment to senior
indebtedness of the Company (as defined in the 1997 Indenture).
 
  Redemption. Except as set forth in the following sentence, the Company may
not redeem the 1997 Notes prior to    , 2002. The Company may redeem up to an
aggregate of $35 million principal amount of the 1997 Notes at any time prior
to    , 2000 with the net proceeds of the one or more Public Equity Offerings
(as defined in the 1997 Indenture) at a redemption price equal to    % of the
aggregate principal amount so redeemed plus accrued interest to the Redemption
Date. After    , 2002, the Company may redeem the 1997 Notes in whole or in
part at specified redemption prices (expressed as a percentage of principal
amount), together, in each case, with accrued and unpaid interest to the
Redemption Date.
 
  Covenants; Events of Default. The 1997 Indenture will contain provisions
which, among other things, limit (i) the incurrence of additional debt, (ii)
the payment of dividends on and issuance of any Capital Stock of a Restricted
Subsidiary (as defined in the 1997 Indenture), (iii) the payment of cash
dividends by the Company, (iv) the use of proceeds from the sale of assets,
(v) transactions with affiliates, (vi) the creation of liens, (vii) the
creation of investments, (viii) the creation of subsidiaries and (ix) sale and
lease-back transactions.
 
  The 1997 Indenture will provide that an Event of Default will occur upon,
among other occurrences, (i) a default by the Company for 30 days in the
payment of any interest installment due and payable on the 1997 Notes, (ii) a
default in payment of the principal when due on the 1997 Notes or upon the
failure to redeem or purchase the 1997 Notes when required, (iii) a default by
the Company or by any of its domestic subsidiaries that may become a guarantor
of the 1997 Notes in performance of any covenant or agreement in the 1997
Indenture after written notice to the Company by the trustee under the 1997
Indenture or the holders of not less than 25% in aggregate principal amount of
the 1997 Notes, and (iv) the occurrence of a default of $3.0 million or more
with respect to any Indebtedness of the Company or any Restricted Subsidiary.
 
  Guarantee. The 1997 Notes will be secured on a third priority basis, by a
pledge of 65% of the capital stock of the Company's Canadian subsidiary
subordinate to pledges of such stock in favor of the lenders and the
administrative agent under the Credit Facility and in favor of the holders of
the 1996 Notes. The 1997 Notes will be guaranteed, pari passu with the 1996
Notes, on an unsecured senior subordinated basis, by any future domestic
subsidiaries of the Company.
 
CREDIT FACILITY
 
  In August 1996, the Company and its Canadian subsidiary entered into the
Credit Facility with Canadian Imperial Bank of Commerce ("CIBC" or "Agent") as
the Agent, and the syndicate banks, providing for a senior secured revolving
line of credit in an aggregate principal amount of $100 million in U.S. dollar
borrowings and Cdn $35 million in Canadian dollar borrowings by the Company's
Canadian subsidiary. The amount of U.S. dollar borrowings provided for under
the Credit Facility was subsequently increased to $110 million. The following
is a summary of the material terms of the Credit Facility and does not purport
to be complete and is subject to and qualified by reference to the Credit
Facility which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
 
  The Credit Facility matures on June 30, 2002, unless previously terminated,
and the aggregate available commitment under the Credit Facility will be
reduced incrementally on a quarterly basis, beginning September 30, 1999.
 
  Borrowings under the U.S. dollar portion of the Credit Facility bear
interest at a rate equal to, at the option of the Company, either (i) the base
rate (which is based on as the Federal Funds rate or the prime rate most
recently announced by the Agent) or (ii) LIBOR, in each case plus an
applicable margin determined by reference to the ratio of Total Net Debt to
EBITDA of the Company (as defined in the Credit Facility). Borrowings under
 
                                      64
<PAGE>
 
the Canadian Dollar portion of the Credit Facility also bear interest based on
various methods plus an applicable margin.
 
  The obligations of the Company under the Credit Facility are unconditionally
guaranteed, jointly and severally, by all subsidiaries of the Company. The
obligations of the Company and such guarantors under the Credit Facility are
secured primarily by a first priority pledge of the stock of all material
subsidiaries of the Company and a first priority lien on all of the assets of
the Company and such guarantors. Obligations under the Canadian facility are
guaranteed by the Company.
 
  The Credit Facility contains, among other things, covenants restricting the
ability of the Company and its subsidiaries to dispose of assets, pay
dividends, repurchase or redeem capital stock and indebtedness, create liens,
make capital expenditures, make certain investments or acquisitions, enter
into transactions with affiliates and otherwise restrict corporate activities.
The Credit Facility also contains a number of financial covenants. Although
there can be no assurances, the Company anticipates that subsequent to the
Offerings, it will amend its Credit Facility to permit, at the Company's
option, an increase in the total availability of U.S. dollar borrowings of up
to an aggregate of $150 million and to change certain other provisions of the
Credit Facility.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
  Prior to the Equity Offerings, there has not been any public market for the
Common Stock. Upon completion of the Equity Offerings, the Company will have
15,585,090 shares of Common Stock outstanding, assuming no exercise of
1,114,174 outstanding options under the Plan. Of these shares, the 5,312,614
shares registered in the Equity Offerings will be freely tradable without
restriction under the Securities Act, except any shares purchased by persons
deemed to be "affiliates" of the Company which will be subject to certain
resale limitations of Rule 144 under the Securities Act. The remaining shares
of Common Stock outstanding upon completion of the Equity Offerings, including
those shares issued pursuant to the exercise of outstanding options, will be
"restricted securities" within the meaning of Rule 144. Such securities, as
well as any Common Stock held by any person deemed to be an affiliate of the
Company, may be sold only if registered under the Securities Act or sold in
accordance with an available exemption from registration. For purposes of Rule
144, an "affiliate" of an issuer is a person that, directly or indirectly,
through the use of one or more intermediaries, controls, or is controlled by
or is under common control with such issuer.
 
  In general, under Rule 144 as it shall be in effect after the Equity
Offerings, a person who has beneficially owned shares for at least one year,
including an "affiliate," as that term is defined in the Act, is entitled to
sell within any three-month period a number of shares that does not exceed the
greater of one percent of the then outstanding shares of Common Stock
(approximately 156,000 shares after giving effect to the Equity Offerings), or
the average weekly trading volume during the four calendar weeks preceding
filing of notice of such sale. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about the Company. A person who is not an affiliate
at any time during the three months preceding a sale, and who has beneficially
owned shares for at least two years, is entitled to sell such shares under
Rule 144(k) without regard to the volume limitations, manner of sale
provisions or public information requirements.
 
  In addition to the 5,312,614 shares offered hereby, all of the shares of
Common Stock owned by current shareholders of the Company will be eligible for
sale under Rule 144 of the Securities Act, subject, in the case of affiliates,
to applicable volume and other restrictions contained therein and subject to
the 180-day lock-up period for certain shareholders as described under
"Underwriting." In addition, the Company expects to file a registration
statement covering shares issuable under the stock option plans.
 
  Sales of substantial amounts of Common Stock in the public market after the
restrictions lapse, or the perception that such sales could occur, could
adversely affect the prevailing market price and the ability of the Company to
raise equity capital in the future. The Company can make no prediction as to
the effect, if any, that
 
                                      65
<PAGE>
 
sales of shares of its Common Stock, or the availability of shares for future
sale, will have on the market price of the Common Stock prevailing from time
to time. Such sales may also make it more difficult for the Company to sell
equity securities or equity-related securities in the future at a time and
price which it deems appropriate.
 
            CERTAIN U.S. TAX CONSEQUENCES TO NON-U.S. SHAREHOLDERS
 
  The following is a general discussion of certain U.S. federal tax
consequences of the acquisition, ownership and disposition of Common Stock by
a holder that, for U.S. federal income tax purposes, is not a "United States
person" (a "Non-U.S. Holder"). This discussion is based upon the U.S. federal
tax law now in effect, which is subject to change, possibly retroactively. For
purposes of this discussion, a "U.S. person" means a citizen or resident of
the United States; a corporation, partnership, or other entity created or
organized in the United States or under the laws of the United States or of
any political subdivision thereof; an estate whose income is includable in
gross income for U.S. federal income tax purposes regardless of its source; or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. trustees
have the authority to control all substantial decisions of the trust. This
discussion does not consider any specific facts or circumstances that may
apply to a particular Non-U.S. Holder. Prospective investors are urged to
consult their tax advisors regarding the U.S. federal tax consequences of
acquiring, holding and disposing of Common Stock, as well as any tax
consequences that may arise under the laws of any foreign, state, local or
other taxing jurisdiction.
 
DIVIDENDS
 
  Dividends paid to a Non-U.S. Holder will generally be subject to withholding
of U.S. federal income tax at the rate of 30% unless the dividend is
effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Holder, in which case the dividend will be
subject to the U.S. federal income tax or net income that applies to U.S.
persons generally (and, with respect to corporate holders and under certain
circumstances, the branch profits tax). Non-U.S. Holders should consult any
applicable income tax treaties that may provide for a lower rate of
withholding or other rules different from those described above. A Non-U.S.
Holder may be required to satisfy certain certification requirements in order
to claim treaty benefits or otherwise claim a reduction of or exemption from
withholding under the foregoing rules.
 
GAIN ON DISPOSITION
 
  A Non-U.S. Holder will generally not be subject to U.S. federal income tax
on gain recognized on a sale or other disposition of Common Stock unless (i)
the gain is effectively connected with the conduct of a trade or business
within the United States by the Non-U.S. Holder, (ii) in the case of a Non-
U.S. Holder who is a nonresident alien individual and holds the Common Stock
as a capital asset, such holder is present in the United States for 183 or
more days in the taxable year and certain other requirements are met or (iii)
the Company is or becomes a "United States real property holding corporation"
for U.S. federal income tax purposes (in which case the gain realized by a
more than 5% holder will generally be treated as effectively connected with a
trade or business in the United States and subject to withholding). The
Company believes that it is not currently a United States real property
holding corporation, but no assurances can be given in this regard. Gain that
is effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Holder will be subject to the U.S. federal
income tax on net income that applies to U.S. persons generally (and, with
respect to corporate holders and under certain circumstances, the branch
profits tax) but will not be subject to withholding. Non-U.S. Holders should
consult any applicable treaties that may provide for different rules.
 
FEDERAL ESTATE TAXES
 
  Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for U.S. federal estate tax purposes) of the
United States at the date of death will be included in such individual's
estate for U.S. federal estate tax purposes unless an applicable estate tax
treaty provides otherwise.
 
 
                                      66
<PAGE>
 
INFORMATION REPORTING AND BACKUP WITHHOLDING
 
  The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld.
This information may also be made available to the tax authorities of a
country in which the Non-U.S. Holder resides.
 
  Certain U.S. information reporting requirements and backup withholding tax
will generally not apply to dividends paid on the Common Stock to a Non-U.S.
Holder at an address outside the United States. Payments by a U.S. office of a
broker of the proceeds of a sale of the Common Stock is subject to both backup
withholding at a rate of 31% and information reporting unless the holder
certifies its Non-U.S. Holder status under penalties of perjury or otherwise
establishes an exemption. Information reporting requirements (but not backup
withholding) will also apply to payments of the proceeds of sales of the
Common Stock by non-U.S. offices of U.S. brokers, or foreign brokers with
certain types of relationships to the U.S. unless the broker has documentary
evidence in its records that the holder is a Non-U.S. Holder and certain other
conditions are met, or the holder otherwise establishes an exemption.
 
  Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-U.S.
Holder's U.S. federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
 
                                 UNDERWRITING
 
  Under the terms and subject to the conditions stated in the U.S.
Underwriting Agreement dated the date hereof, each of the underwriters of the
United States and Canadian offering (the "U.S. Offering") of Common Stock
named below (the "U.S. Underwriters"), for whom Smith Barney Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated are
acting as the Representatives (the "Representatives"), has severally agreed to
purchase, and the Company and the Selling Shareholders have agreed to sell to
each U.S. Underwriter, the aggregate number of shares of Common Stock set
forth opposite the name of such U.S. Underwriter.
 
<TABLE>
<CAPTION>
                                  NUMBER
U.S. UNDERWRITER                 OF SHARES
- ----------------                 ---------
<S>                              <C>
Smith Barney Inc. .............
Merrill Lynch, Pierce, Fenner &
   Smith Incorporated..........
PaineWebber Incorporated.......
 
</TABLE>
<TABLE>
<CAPTION>
                            NUMBER
U.S. UNDERWRITER           OF SHARES
- ----------------           ---------
<S>                        <C>
   .......................
   .......................
                           ---------
  Total................... 4,250,091
                           =========
</TABLE>
 
  Under the terms and subject to the conditions contained in the International
Underwriting Agreement dated the date hereof, each of the managers of the
concurrent international offering of Common Stock named below (the
"Managers"), for whom Smith Barney Inc., Merrill Lynch International Limited
and PaineWebber International (U.K.) Ltd. are acting as lead managers (the
"Lead Managers"), has severally agreed to purchase, and the Company and the
Selling Shareholders have agreed to sell to each Manager, the aggregate number
of shares of Common Stock set forth opposite the name of such Manager below:
 
<TABLE>
<CAPTION>
                               NUMBER
MANAGER                       OF SHARES
- -------                       ---------
<S>                           <C>
Smith Barney Inc. ...........
Merrill Lynch International
 Limited.....................
PaineWebber International
 (U.K.) Ltd. ................
 
</TABLE>
<TABLE>
<CAPTION>
                            NUMBER
MANAGER                    OF SHARES
- -------                    ---------
<S>                        <C>
   .......................
   .......................
                           ---------
  Total................... 1,062,523
                           =========
</TABLE>
 
                                      67
<PAGE>
 
  The U.S. Underwriters and the Managers (collectively, the "Underwriters")
initially propose to offer part of the shares of Common Stock directly to the
public at the public offering price set forth on the cover page of this
Prospectus and part to certain dealers at a price that represents a concession
not in excess of $   .    per share below the public offering price. The U.S.
Underwriters and the Managers may allow, and such dealers may reallow, a
concession not in excess of $   .   per share to the other U.S. Underwriters
or Managers, respectively, or to certain other dealers. After the initial
offering of the shares to the public, the public offering price and such
concessions may be changed by the U.S. Underwriters and the Managers. The
Representatives and the Lead Managers have advised the Company that the U.S.
Underwriters and the Managers do not intend to confirm any shares to any
accounts over which they exercise discretionary authority.
 
  The Company and certain Selling Shareholders have granted to the U.S.
Underwriters an option, exercisable for thirty days from the date of this
Prospectus, to purchase up to an aggregate of 564,017 and 232,875 additional
shares of Common Stock, respectively, at the public offering price set forth
on the cover page of this Prospectus less the underwriting discounts and
commissions. The U.S. Underwriters may exercise such option solely for the
purpose of covering over-allotments, if any, in connection with the sale of
the shares offered hereby. To the extent such option is exercised, each U.S.
Underwriter will be obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number of
shares set forth opposite each U.S. Underwriter's name in the preceding table
bears to the total number of shares listed in such table.
 
  The Company, its executive officers and directors, the Selling Shareholders
and certain other shareholders of the Company have agreed that, for a period
of 180 days from the date of this Prospectus, they will not without the prior
written consent of Smith Barney Inc., offer, sell, contract to sell, or
otherwise dispose of, any shares of Common Stock of the Company or any
securities convertible into, or exercisable or exchangeable for, Common Stock
of the Company, subject to certain limited exceptions, including the issuance
of shares by the Company for possible acquisitions.
 
  The U.S. Underwriters and the Managers have entered into an Agreement
Between U.S. Underwriters and Managers pursuant to which each U.S. Underwriter
has agreed that, as part of the distribution of the 4,250,091 shares offered
in the U.S Offering (together with the 796,892 shares which may be offered to
cover over-allotments) (i) it is not purchasing any such shares for the
account of anyone other than a U.S. or Canadian Person (as defined below) and
(ii) it has not offered or sold and will not offer, sell, resell or deliver,
directly or indirectly, any of such shares or distribute any prospectus
relating to the United States and Canadian offering outside the United States
or Canada to anyone other than a U.S. or Canadian Person. In addition, each
Manager has agreed that as part of the distribution of the 1,062,523 shares
offered in the International Offering (i) it is not purchasing any such shares
for the account of any U.S. or Canadian Person and (ii) it has not offered or
sold, and will not offer, sell, resell or deliver, directly or indirectly, any
of such shares or distribute any prospectus relating to the International
Offering in the United States or Canada or to any U.S. or Canadian Person.
Each Manager has agreed that it will offer to sell shares only in compliance
with all relevant requirements of any applicable law.
 
  The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the U.S. Underwriting Agreement, the
International Underwriting Agreement and the Agreement Between U.S.
Underwriters and Managers, including (i) certain purchases and sales between
the U.S. Underwriters and the Managers, (ii) certain offers, sales, resales,
deliveries or distributions to or through investment advisors or other persons
exercising investment discretion, (iii) purchases, offers or sales by a U.S.
Underwriter who is acting as Manager or by a Manager who is also acting as a
U.S. Underwriter and (iv) other transactions specifically approved by the
Representatives and the Lead Managers. As used herein, "U.S. or Canadian
Person" means any resident or national of the United States or Canada, any
corporation, partnership or other entity created or organized in or under the
laws of the United States or Canada or any estate or trust, the income of
which is subject to United States or Canadian income taxation regardless of
the source of its income (other than the foreign branch of any U.S. or
Canadian Person), and includes any United States or Canadian branch of a
person other than a U.S. or Canadian Person.
 
                                      68
<PAGE>
 
  In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the Equity Offerings, creating a short position in the Common
Stock for their own account. In addition, to cover over-allotments or to
stabilize the price of the Common Stock, the Underwriters may bid for, and
purchase, shares of Common Stock, in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an
underwriter of a dealer for distributing the Common Stock in the Equity
Offerings, if the syndicate repurchases previously distributed Common Stock in
transactions to cover syndicate short positions, in stabilization transactions
or otherwise. Any of these activities may stabilize or maintain the market
price of the Common Stock above independent market levels. The Underwriters
are not required to engage in these activities, and may end any of these
activities at any time.
 
  Any offer of shares in Canada will only be made pursuant to an exemption
from the requirement to file a prospectus in the relevant province of Canada
in which such offer is made.
 
  Each Manager has represented and agreed during the period of six months from
the date hereof (i) that it has not offered or sold and will not offer or sell
in the United Kingdom any shares except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(whether as principal or agent) for the purposes of their businesses or in
other circumstances which do not constitute an offer to the public in the
United Kingdom for the purpose of the Public Offers of Securities Regulation
1995 (the "Regulations"), (ii) that it has complied and will comply with all
applicable provisions of the Regulations and of the Financial Services Act
1986 with respect to anything done by it in relation to the shares in, from,
or otherwise involving the United Kingdom and (iii) that it has only issued or
passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of these shares if
that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom such documents may otherwise lawfully be issued or passed on.
 
  No action has been or will be taken in any jurisdiction by the Company, the
Selling Shareholders or the Managers that would permit an offering to the
general public of the shares offered hereby in any jurisdiction other than the
United States.
 
  Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
 
  Pursuant to the Agreement Between U.S. Underwriters and Managers, sales may
be made between the U.S. Underwriters and the Managers of such number of
shares as may be mutually agreed. The price of any shares so sold shall be the
public offering price as then in effect for shares being sold by the U.S.
Underwriters and the Managers, less all or any part of the selling concession
unless otherwise determined by mutual agreement. To the extent that there are
sales between the U.S. Underwriters and the Managers pursuant to the Agreement
Between U.S. Underwriters and Managers, the number of shares initially
available for sale by the U.S. Underwriters and by the Managers may be more or
less than the number of shares appearing on the front cover of this
Prospectus.
 
  The Underwriting Agreements provide that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option
described above) if any such shares are taken.
 
  Prior to the Equity Offerings, there has not been any public market for the
Common Stock of the Company. Consequently, the initial public offering price
for the shares of Common Stock included in the Equity Offerings has been
determined by negotiations between the Company and the Representatives. Among
the factors
 
                                      69
<PAGE>
 
considered in determining such price were the history of and prospects for the
Company's business and the industry in which it competes, an assessment of the
Company's management and the present state of the Company's development, the
past and present revenues and earnings of the Company, the prospects for
growth of the Company's revenues and earnings, the current state of the
economy in the United States and the current level of economic activity in the
industry in which the Company competes and in related or comparable
industries, and currently prevailing conditions in the securities markets,
including current market valuations of publicly traded companies which are
comparable to the Company.
 
  The Company, the Selling Shareholders, the U.S. Underwriters and the
Managers have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act.
 
  CVF will receive a fee estimated to be approximately $     in connection
with the Offerings.
 
                                 LEGAL MATTERS
 
  The validity of the Common Stock offered hereby will be passed upon for the
Company by Cozen and O'Connor, Philadelphia, Pennsylvania. Two members of
Cozen and O'Connor are limited partners in certain limited partnerships that
lease facilities to the Company. Certain legal matters will be passed upon for
the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York.
 
                                    EXPERTS
 
  The consolidated financial statements and schedules of Pierce Leahy Corp. as
of December 31, 1995 and 1996, and for each of the three years in the period
ended December 31, 1996, included in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
 
  The financial statements of Security Archives, Inc. as of June 30, 1994 and
1995, and for the years then ended, included in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
 
  The financial statements of Records Management Services, Inc. as of
September 30, 1996 and for the year then ended, included in this Prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein and are included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
 
                                      70
<PAGE>
 
                             AVAILABLE INFORMATION
 
  The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act
with respect to the Common Stock offered hereby (including all amendments and
supplements thereto, the "Registration Statement"). As permitted by the rules
and regulations of the Commission, this Prospectus, which constitutes part of
the Registration Statement, omits certain information, exhibits and
undertakings contained in the Registration Statement. For further information
with respect to the Company and the Common Stock offered hereby, reference is
made to the Registration Statement. Statements contained in this Prospectus as
to the contents of any contract or other document are not necessarily complete
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
 
  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. The
Registration Statement (and the exhibits and schedules thereto), as well as
such reports and other information filed by the Company with the Commission,
may be inspected and copied at the Public Reference Section of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at Room 1400, 75 Park
Place, New York, New York 10007 and Suite 1400, Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60661. Copies of such materials may
be obtained from the Public Reference Section of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Copies of such material will be available for inspection at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
Such information can also be reviewed through the Commission's Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR") which is publicly available
through the Commission's Web Site on the Internet (http:\\www.sec.gov).
 
                                      71
<PAGE>
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Consolidated Financial Statements of Pierce Leahy Corp.:
  Report of Independent Public Accountants.................................  F-2
  Consolidated Balance Sheets..............................................  F-3
  Consolidated Statements of Operations....................................  F-4
  Consolidated Statements of Shareholders' Deficit.........................  F-5
  Consolidated Statements of Cash Flows....................................  F-6
  Notes to Consolidated Financial Statements...............................  F-7
Financial Statements of Security Archives, Inc............................. F-17
Financial Statements of Records Management Services, Inc. ................. F-23
</TABLE>


 
                                      F-1
<PAGE>
 
  After the recapitalization discussed in Note 2 to the Company's consolidated
financial statements is effected, we expect to be in a position to render the
following audit report.
 
                                          /s/ Arthur Andersen LLP
 
                                          February 28, 1997, except for the
                                           recapitalization discussed in Note
                                           2, as to which the date is
                                             .
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Pierce Leahy Corp.:
 
  We have audited the accompanying consolidated balance sheets of Pierce Leahy
Corp. (a New York corporation) and Subsidiary as of December 31, 1995 and
1996, and the related consolidated statements of operations, shareholders'
deficit and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
  We conducted our audits 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 audits provide 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 Pierce Leahy Corp. and
Subsidiary as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
 
Philadelphia, Pa.
 
                                      F-2
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                   DECEMBER 31
                                                ------------------   MARCH 31
                                                  1995      1996       1997
                                                --------  --------  -----------
                                                                    (UNAUDITED)
                    ASSETS
<S>                                             <C>       <C>       <C>
CURRENT ASSETS:
  Cash......................................... $    722  $  1,254   $  1,064
  Accounts receivable, net of allowance for
   doubtful accounts of $487,  $795 and $982...   14,182    17,828     21,473
  Inventories..................................      762       611        687
  Prepaid expenses and other...................    1,025       688      1,171
                                                --------  --------   --------
    Total current assets.......................   16,691    20,381     24,395
                                                --------  --------   --------
PROPERTY AND EQUIPMENT.........................  109,755   158,154    171,234
  Less--Accumulated depreciation and
   amortization................................  (35,328)  (45,020)   (46,814)
                                                --------  --------   --------
    Net property and equipment.................   74,427   113,134    124,420
                                                --------  --------   --------
OTHER ASSETS:
  Intangible assets, net.......................   38,621    97,544    113,873
  Other........................................    1,589     3,761      3,774
                                                --------  --------   --------
    Total other assets.........................   40,210   101,305    117,647
                                                --------  --------   --------
                                                $131,328  $234,820   $266,462
                                                ========  ========   ========
     LIABILITIES AND SHAREHOLDERS' DEFICIT
<S>                                             <C>       <C>       <C>
CURRENT LIABILITIES:
  Current portion of long-term debt............ $  1,478  $  7,310   $    205
  Current portion of noncompete obligations....      200       466        387
  Accounts payable.............................    4,641     6,757      3,558
  Accrued expenses.............................    9,533    20,563     16,586
  Deferred revenues............................    8,978     9,218     10,437
                                                --------  --------   --------
    Total current liabilities..................   24,830    44,314     31,173
LONG-TERM DEBT.................................  116,812   209,330    253,868
NONCOMPETE OBLIGATIONS.........................      517       317        302
DEFERRED RENT..................................    2,814     2,841      3,070
DEFERRED INCOME TAXES..........................    3,492     3,456      3,443
COMMITMENTS AND CONTINGENCIES (Note 9)
REDEEMABLE WARRANTS............................    1,064       --         --
SHAREHOLDERS' DEFICIT..........................  (18,201)  (25,438)   (25,394)
                                                --------  --------   --------
                                                $131,328  $234,820   $266,462
                                                ========  ========   ========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-3
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                 FOR THE YEAR ENDED       FOR THE THREE MONTHS
                                    DECEMBER 31              ENDED MARCH 31
                             ---------------------------  ---------------------
                              1994     1995      1996       1996       1997
                             -------  ------- ----------  ---------------------
                                                               (UNAUDITED)
<S>                          <C>      <C>     <C>         <C>       <C>
REVENUES:
  Storage..................  $47,123  $55,501 $   75,900   $ 16,969 $    23,322
  Service and storage
   material sales..........   35,513   39,895     53,848     12,730      16,910
                             -------  ------- ----------  --------- -----------
    Total revenues.........   82,636   95,396    129,748     29,699      40,232
                             -------  ------- ----------  --------- -----------
OPERATING EXPENSES:
  Cost of sales, excluding
   depreciation and
   amortization............   49,402   55,616     73,870     17,406      22,298
  Selling, general and
   administrative..........   15,882   16,148     20,007      4,856       6,762
  Depreciation and
   amortization............    8,436    8,163     12,869      2,572       4,214
  Consulting payments to
   related parties.........      500      500        --         125         --
  Non-recurring charges....      --       --       3,254        --          --
  Foreign currency
   translation.............      --       --         --         --          182
                             -------  ------- ----------  --------- -----------
    Total operating
     expenses..............   74,220   80,427    110,000     24,959      33,456
                             -------  ------- ----------  --------- -----------
    Operating income.......    8,416   14,969     19,748      4,740       6,776
INTEREST EXPENSE...........    7,216    9,622     17,225      2,846       6,712
                             -------  ------- ----------  --------- -----------
    Income before
     extraordinary item....    1,200    5,347      2,523      1,894          64
EXTRAORDINARY CHARGE--Loss
 on early extinguishment of
 debt......................    5,991    3,279      2,015        --          --
                             -------  ------- ----------  --------- -----------
NET INCOME (LOSS)..........   (4,791)   2,068        508      1,894          64
ACCRETION OF REDEEMABLE
 WARRANTS..................       16      889      1,561      1,561         --
                             -------  ------- ----------  --------- -----------
NET INCOME (LOSS)
 APPLICABLE TO COMMON
 SHAREHOLDERS..............  $(4,807) $ 1,179 $   (1,053) $     333 $        64
                             =======  ======= ==========  ========= ===========
PRO FORMA DATA (UNAUDITED)
 (Note 2):
  Historical net income
   (loss) applicable to
   Common shareholders.....                   $   (1,053)           $        64
  Pro forma provision for
   income taxes............                          905                    291
                                              ==========            ===========
  Pro forma net loss.......                   $   (1,958)           $      (227)
                                              ==========            ===========
  Pro forma net loss per
   share...................                   $     (.18)           $      (.02)
                                              ==========            ===========
  Shares used in computing
   pro forma net loss per
   share...................                   10,611,650             10,549,870
                                              ==========            ===========
  Supplemental pro forma
   net income per share....                   $      .19            $       .06
                                              ==========            ===========
  Shares used in computing
   supplemental pro forma
   net income per share....                   15,711,449             15,611,270
                                              ==========            ===========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-4
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                         COMMON STOCK
                         --------------  ADDITIONAL             CUMULATIVE
                         CLASS   CLASS    PAID-IN   ACCUMULATED TRANSLATION
                           A       B      CAPITAL     DEFICIT   ADJUSTMENT   TOTAL
                         ------  ------  ---------- ----------- ----------- --------
<S>                      <C>     <C>     <C>        <C>         <C>         <C>
BALANCE, JANUARY 1,
 1994................... $  --   $  --      $ 24     $(14,532)     $--      $(14,508)
  Accretion of
   redeemable warrants..    --      --       --           (16)      --           (16)
  Net loss..............    --      --       --        (4,791)      --        (4,791)
  Distributions to
   shareholders.........    --      --       --           (26)      --           (26)
                         ------  ------     ----     --------      ----     --------
BALANCE, DECEMBER 31,
 1994...................    --      --        24      (19,365)      --       (19,341)
  Accretion of
   redeemable warrants..    --      --       --          (889)      --          (889)
  Net income............    --      --       --         2,068       --         2,068
  Distributions to
   shareholders.........    --      --       --           (39)      --           (39)
                         ------  ------     ----     --------      ----     --------
BALANCE, DECEMBER 31,
 1995...................    --      --        24      (18,225)      --       (18,201)
  Accretion of
   redeemable warrants..    --      --       --        (1,561)      --        (1,561)
  Repurchase of Class A
   common stock (Note
   7)...................    --      --       --        (1,450)      --        (1,450)
  Deemed distribution
   due to purchase of
   real estate and other
   assets from related
   parties (Note 10)....    --      --       --        (4,132)      --        (4,132)
  Net income............    --      --       --           508       --           508
  Distributions to
   shareholders.........    --      --       --          (602)      --          (602)
                         ------  ------     ----     --------      ----     --------
BALANCE, DECEMBER 31,
 1996...................    --      --        24      (25,462)      --       (25,438)
  Change in cumulative
   translation
   adjustment
   (unaudited)..........    --      --       --           --        (20)         (20)
  Net income
   (unaudited)..........    --      --       --            64       --            64
                         ------  ------     ----     --------      ----     --------
BALANCE, MARCH 31, 1997
   (unaudited).......... $  --   $  --      $ 24     $(25,398)     $(20)    $(25,394)
                         ======  ======     ====     ========      ====     ========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-5
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                               FOR THE THREE
                                   FOR THE YEAR ENDED           MONTHS ENDED
                                       DECEMBER 31                MARCH 31
                               -----------------------------  -----------------
                                 1994      1995      1996      1996      1997
                               --------  --------  ---------  -------  --------
                                                                (UNAUDITED)
<S>                            <C>       <C>       <C>        <C>      <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES:
 Net income (loss)...........  $ (4,791) $  2,068  $     508  $ 1,894  $     64
 Adjustments to reconcile net
  income (loss) to net cash
  provided by (used in)
  operating activities--
  Extraordinary charge.......     5,991     3,279      2,015      --        --
  Depreciation and
   amortization..............     8,436     8,163     12,869    2,421     4,214
  Loss (gain) on sale of
   property and equipment....       --        --         (32)     --          3
  Amortization of deferred
   financing costs...........     1,068       533        516      111       233
  Imputed interest on long-
   term debt and noncompete
   obligation................       229       --         --       --        --
  Increase in deferred rent..        50        29        302       43       229
  Foreign currency adjustment
   of long-term debt.........       --        --          31       79      (110)
  Change in assets and
   liabilities, net of the
   effects from the purchase
   of businesses--
   (Increase) decrease in--
    Accounts receivable......    (2,061)     (360)    (2,408)  (1,402)   (2,968)
    Inventories..............       (46)     (347)       150      107       (75)
    Prepaid expenses and
     other...................       (91)       57        747     (580)     (450)
    Other assets.............       255      (536)      (486)     162        (9)
   Increase (decrease) in--
    Accounts payable.........     1,763      (978)     1,630       39    (3,754)
    Accrued expenses.........      (170)    4,693     10,732     (628)   (4,038)
    Deferred revenues........       367       921         (8)     244     1,125
    Deferred income taxes....       --        --        (128)     --        (13)
                               --------  --------  ---------  -------  --------
   Net cash provided by (used
    in) operating
    activities...............    11,000    17,522     26,438    2,490    (5,549)
                               --------  --------  ---------  -------  --------
CASH FLOWS FROM INVESTING
 ACTIVITIES:
 Payments for businesses
  acquired, net of cash
  acquired...................    (4,663)  (28,355)   (61,176)  (2,865)  (18,463)
 Capital expenditures........    (6,352)  (16,288)   (23,493)  (3,553)  (10,794)
 Purchase of real estate and
  other assets from related
  parties....................       --        --     (11,018)     --        --
 Client acquisition costs....    (1,905)   (2,245)    (6,477)  (1,108)   (1,788)
 Deposits on pending
  acquisitions...............       --        --        (850)     --        --
 Increase in intangible
  assets.....................      (943)   (4,274)    (5,618)    (763)     (706)
 Payments on noncompete
  agreements.................       (70)     (153)      (333)     (50)     (155)
 Proceeds from sale of
  property and equipment.....       --        --         123      --        --
                               --------  --------  ---------  -------  --------
   Net cash used in investing
    activities...............   (13,933)  (51,315)  (108,842)  (8,339)  (31,906)
                               --------  --------  ---------  -------  --------
CASH FLOWS FROM FINANCING
 ACTIVITIES:
 Net borrowings (payments) on
  revolving line of credit...    (7,700)     (900)     5,237    4,236    44,628
 Proceeds from issuance of
  long-term debt.............    76,850   128,420    210,229    1,700       --
 Payments on long-term debt
  and capital lease
  obligations................   (61,195)  (90,958)  (118,570)    (335)   (7,213)
 Prepayment penalties and
  cancellation of warrants...    (1,781)      --      (2,625)     --        --
 Payment of debt financing
  costs......................    (3,385)   (2,366)    (9,283)     --       (150)
 Repurchase of Common stock..       --        --      (1,450)     --        --
 Distributions to
  shareholders...............       (26)      (39)      (602)     --        --
                               --------  --------  ---------  -------  --------
   Net cash provided by
    financing activities.....     2,763    34,157     82,936    5,601    37,265
                               --------  --------  ---------  -------  --------
NET INCREASE (DECREASE) IN
 CASH........................      (170)      364        532     (248)     (190)
CASH, BEGINNING OF PERIOD....       528       358        722      722     1,254
                               --------  --------  ---------  -------  --------
CASH, END OF PERIOD..........  $    358  $    722  $   1,254  $   474  $  1,064
                               ========  ========  =========  =======  ========
SUPPLEMENTAL DISCLOSURE--CASH
 PAID FOR INTEREST...........  $  6,738  $  8,356  $   7,443  $ 3,594  $ 11,768
                               ========  ========  =========  =======  ========
</TABLE>
        The accompanying notes are an integral part of these statements.
 
                                      F-6
<PAGE>
 
                              PIERCE LEAHY CORP.
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1996
                (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
       (INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED 
                     MARCH 31, 1996 AND 1997 IS UNAUDITED)
 
1. BACKGROUND:
 
  Pierce Leahy Corp. and its majority-owned subsidiary, Pierce Leahy Command
Company (together, the "Company"), stores and services business records for
clients throughout the United States and Canada. The Company also sells
storage containers and provides records management consulting services and
imaging services.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
 Interim Consolidated Financial Statements
 
  The consolidated balance sheet as of March 31, 1997 and the consolidated
statements of operations for the three months ended March 31, 1996 and 1997
are unaudited and, in the opinion of management of the Company, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for those interim periods. The results of
operations for the three months ended March 31, 1996 and 1997 are not
necessarily indicative of the results to be expected for the full year.
 
 Principles of Consolidation
 
  The consolidated financial statements include the accounts of Pierce Leahy
Corp. and its 99%-owned subsidiary, Pierce Leahy Command Company. All
intercompany accounts and transactions have been eliminated in consolidation.
The minority interest in Pierce Leahy Command Company is not material to the
consolidated financial statements.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Inventories
 
  Inventories, which consist of storage containers, are stated at the lower of
cost (first-in, first-out) or market.
 
 Property and Equipment
 
  Property and equipment are stated at cost. Depreciation is provided using
straight-line and accelerated methods over the estimated useful lives of the
assets.
 
 Goodwill
 
  Goodwill reflects the cost in excess of fair value of the net assets of
companies acquired in purchase transactions. Goodwill is amortized using the
straight-line method from the date of acquisition over the expected period to
be benefited, estimated at 30 years. The Company assesses the recoverability
of goodwill, as well as other long-lived assets, based upon expectations of
future undiscounted cash flows in accordance with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of."
 
 Client Acquisition Costs
   
  The unreimbursed costs of moving the records of new clients into the
Company's facilities and sales commissions related to new client contracts
have been capitalized and are included in intangible assets in the
accompanying balance sheets (see Note 4). All such costs are being amortized
on a straight-line basis over six years, which represent the average initial
contract term. The Company assesses whether amortization using a six year
average initial contract term significantly varies by means of applying a
specific contract basis. Such difference has not been material.     
 
                                      F-7
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
 Deferred Rent
 
  Certain of the Company's leases for warehouse space provide for scheduled
rent increases over the lease terms. The Company recognizes rent expense on a
straight-line basis over the lease terms, with the excess of the rent charged
to expense over the amount paid recorded as deferred rent in the accompanying
balance sheets.
 
 Health Insurance Reserve
 
  The Company self-insures for benefit claims under a health insurance plan
provided to employees. The self-insurance was limited to $75 and $100 in
claims per insured individual per year in 1995 and 1996, respectively, and a
liability for claims incurred but not reported is reflected in the
accompanying balance sheets. Specific stop loss insurance coverage is
maintained to cover claims in excess of the coverage per insured individual
per year.
 
 Income Taxes
 
  The Company is a Subchapter S corporation and, therefore, any taxable income
or loss for federal income tax purposes is passed through to the shareholders.
While not subject to federal income taxes, the Company is subject to income
taxes in certain states. The Company reports certain expenses in different
periods for financial reporting and income tax purposes.
 
  The Tax Reform Act of 1986 provides for a tax at the corporate level on
gains realized on asset sales for a specified period following the election of
Subchapter S status. Deferred taxes have been provided for taxes which may be
triggered if the Company disposes of certain assets acquired in connection
with an acquisition.
 
 Recapitalization
 
  In June 1997, the Company is expected to effect a stock split, reclassify
its Class A and Class B common stock as common stock, authorize 10,000,000
shares of undesignated preferred stock and increase its authorized common
stock to 80,000,000 shares. All references in the accompanying financial
statements to the number of common shares and per-share amounts have been
retroactively restated to reflect the stock split.
 
 Revenue Recognition
 
  Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to the
customer. Deferred revenues represent amounts invoiced for storage services in
advance of the rendering of the services. The costs of storage and service
revenues are not separately distinguishable, as the revenue producing
activities are interdependent and costs are not directly attributable or
allocable in a meaningful way to those activities.
 
 Change in Accounting Estimates
 
  Effective January 1, 1995, the Company revised its estimates of the useful
lives of certain long-term assets, as management re-evaluated in 1995 the
appropriate useful lives of these types of assets given the significant
increase in the level of capital expenditures and payments for businesses
acquired (see Note 13) over prior years. The revised useful lives were
determined based on an analysis of the Company's actual experiences in the use
of such assets, along with other information gained during the acquisition
process and the availability of other industry data. The revised useful lives
are as follows:
 
<TABLE>
<CAPTION>
                                                            USEFUL LIFE (YEARS)
                                                            --------------------
      LONG-TERM ASSET                                        OLD            NEW
      ---------------                                       -----          -----
     <S>                                                    <C>            <C>
     Buildings.............................................    25             40
     Warehouse equipment...................................    12          12-20
     Client acquisition costs..............................     3              6
     Other intangibles.....................................     3             10
     Goodwill..............................................  5-20             30
</TABLE>
 
  The change in accounting estimates was effective January 1, 1995, and the
aggregate effect of adopting these revised lives was to decrease amortization
and depreciation expense and increase net income for the year ended December
31, 1995 by approximately $4,868.
 
 
                                      F-8
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Foreign Currency Translation
 
  The balance sheets and statements of operations of the Canadian operations
are translated into U.S. dollars using the rates of exchange at period end.
All foreign currency transaction gains and losses are included in operations
in the period in which they occur. The cumulative translation adjustment at
December 31, 1995 and 1996 was not material to the consolidated financial
statements.
 
 New Accounting Pronouncements
 
  The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation." The
Company has adopted the disclosure requirement of this pronouncement for the
year ended December 31, 1996 (see Note 8). The adoption of this pronouncement
had no impact on the Company's consolidated statements of operations.
 
 Fair Value of Financial Instruments
 
  For certain of the Company's financial instruments, including accounts
receivable, accounts payable and accrued expenses, management believes that
the carrying amounts approximate fair value due to their short maturities. The
carrying amount and estimated fair value of the Company's Senior Subordinated
Notes at December 31, 1996 were $200,000 and $182,648. The estimated fair
value of the Senior Subordinated Notes at March 31, 1997 was $183,486. The
fair value of the Senior Subordinated Notes was estimated based on the quoted
market prices offered for the Company's publicly traded debt securities.
 
 Pro Forma Statement of Operations
 
  Upon completion of the equity offerings referred to in this prospectus, the
Company will terminate its status as a Subchapter S Corporation and will be
subject to federal and state income taxes thereafter. Accordingly, for
informational purposes, the accompanying statements of operations for the year
ended December 31, 1996 and three months ended March 31, 1997 include an
unaudited pro forma provision of $905 and $291, respectively, for the income
taxes which would have been recorded if the Company had not been a Subchapter
S Corporation, based on the tax laws in effect during the period. The pro
forma income tax provisions reflect the add back of all non-deductible
expenses, which primarily relate to goodwill amortization on stock
acquisitions.
 
  Based on the tax effect of the cumulative difference between the financial
reporting and income tax bases of assets and liabilities at December 31, 1996,
a deferred income tax provision of approximately $6,600 would have been
recorded had the Subchapter S Corporation status been terminated at that time.
The actual deferred income tax provision to be recorded will reflect the
effect of operations of the Company for the period from January 1, 1997
through the termination of its Subchapter S Corporation status.
 
 Pro Forma Net Loss Per Share
 
  Pro forma net loss per share was calculated by dividing pro forma net loss
by the weighted average number of shares of common stock outstanding. Pursuant
to the requirements of the Securities and Exchange Commission, common stock
equivalents issued by the Company during the 12 months immediately preceding
the equity offerings contemplated by this prospectus have been included in the
calculation of the shares used in computing pro forma net loss per share as if
they were outstanding for the period presented (using the treasury stock
method and an assumed equity offerings price of $16.50 per share). All other
common stock equivalents have been excluded from the calculation as the impact
is anti-dilutive.
 
 Supplemental Pro Forma Net Income Per Share
 
  Supplemental pro forma net income per share is based on the weighted average
number of shares of common stock and common stock equivalents used in the
calculation of pro forma net loss per share and the other common stock
equivalents previously excluded, plus the number of shares that would need to
be issued in the equity offerings contemplated by this prospectus to repay
$70,000 of Senior Subordinated Notes and the related prepayment penalties of
$7,000, at an assumed equity offerings price of $16.50 per share. Pro forma
net
 
                                      F-9
<PAGE>
 
                               PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
loss is reduced by $4,947 and $1,237 for the year ended December 31, 1996 and
the three months ended March 31, 1997, respectively, for the elimination of
interest expense, net of tax, on the Senior Subordinated Notes including the
amortization of a portion of deferred financing costs. The redemption will
result in an extraordinary charge of approximately $6,085, net of tax, in the
quarter in which the redemption occurs.
 
3. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
                                                    DECEMBER 31
                                                 ------------------  MARCH 31
                                        LIFE       1995      1996      1997
                                     ----------- --------  --------  --------
   <S>                               <C>         <C>       <C>       <C>
   Land.............................         --  $  4,780  $  7,353  $  8,138
   Buildings and improvements....... 10-40 years   35,758    57,296    64,042
   Warehouse equipment (primarily
    shelving)....................... 12-20 years   53,943    71,773    75,827
   Data processing equipment and
    software........................     7 years   10,684    14,363    15,186
   Furniture and fixtures...........     7 years    2,970     3,823     3,908
   Transportation equipment.........     5 years    1,620     3,546     4,133
                                                 --------  --------  --------
                                                  109,755   158,154   171,234
   Less--Accumulated depreciation
    and amortization................              (35,328)  (45,020)  (46,814)
                                                 --------  --------  --------
     Net property and equipment.....             $ 74,427  $113,134  $124,420
                                                 ========  ========  ========
</TABLE>
 
  Depreciation expense was $5,066, $4,325, $6,652, $1,305 and $1,794 for the
years ended December 31, 1994, 1995, and 1996 and for the three months ended
March 31, 1996 and 1997, respectively.
 
4. INTANGIBLE ASSETS:
<TABLE>
<CAPTION>
                                                      DECEMBER 31
                                                   ------------------  MARCH 31
                                                     1995      1996      1997
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Goodwill....................................... $ 25,857  $ 69,417  $ 85,307
   Client acquisition costs.......................    8,680    15,157    16,945
   Noncompete agreements..........................    6,980    11,287    11,706
   Deferred financing costs.......................    2,248     9,267     9,416
   Other intangible assets........................    9,399    13,377    14,113
                                                   --------  --------  --------
                                                     53,164   118,505   137,487
   Less--Accumulated amortization.................  (14,543)  (20,961)  (23,614)
                                                   --------  --------  --------
     Net intangible assets........................ $ 38,621  $ 97,544  $113,873
                                                   ========  ========  ========
</TABLE>
 
<TABLE>
<CAPTION>
                                                         MARCH 31, 1997
                                                 ------------------------------
                                                          ACCUMULATED  NET BOOK
                                         LIFE      COST   AMORTIZATION  VALUE
                                      ---------- -------- ------------ --------
   <S>                                <C>        <C>      <C>          <C>
   Goodwill..........................   30 years $ 85,307   $ (4,574)  $ 80,733
   Client acquisition costs..........    6 years   16,945     (5,645)    11,300
   Noncompete agreements.............  1-7 years   11,706     (7,242)     4,464
   Deferred financing costs..........   10 years    9,416       (618)     8,798
   Other intangible assets........... 3-15 years   14,113     (5,535)     8,578
                                                 --------   --------   --------
                                                 $137,487   $(23,614)  $113,873
                                                 ========   ========   ========
</TABLE>
 
 
                                      F-10
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Amortization of all intangible assets, other than deferred financing costs
which are charged to interest expense, was $3,370, $3,838, $6,217, $1,116 and
$2,420 for the years ended December 31, 1994, 1995, and 1996 and for the three
months ended March 31, 1996 and 1997, respectively. Amortization of deferred
financing costs was $1,068, $533, $516, $111 and $233 for the years ended
December 31, 1994, 1995, and 1996 and for the three months ended March 31,
1996 and 1997, respectively. Capitalized client acquisition costs were $1,905,
$2,245, $6,477, $1,108 and $1,788 and related amortization expense was $1,536,
$909, $1,688, $297 and $593 for the years ended December 31, 1994, 1995, 1996
and for the three months ended March 31, 1996 and 1997, respectively.
 
  The Company continually evaluates whether events or circumstances have
occurred that indicate that the remaining useful lives of the intangible
assets should be revised or that the remaining balance of such assets may not
be recoverable. As of December 31, 1996, the Company believes that no
revisions to the remaining useful lives or write-downs of intangible assets
are required.
 
5. ACCRUED EXPENSES:
<TABLE>
<CAPTION>
                                                          DECEMBER 31
                                                         -------------- MARCH 31
                                                          1995   1996     1997
                                                         ------ ------- --------
   <S>                                                   <C>    <C>     <C>
   Accrued salaries and commissions..................... $2,190 $ 2,613 $ 3,582
   Accrued vacation.....................................  2,140   2,866   3,005
   Accrued interest.....................................    583   9,840   4,784
   Other................................................  4,620   5,244   5,215
                                                         ------ ------- -------
                                                         $9,533 $20,563 $16,586
                                                         ====== ======= =======
</TABLE>
 
6. LONG-TERM DEBT:
<TABLE>
<CAPTION>
                                                     DECEMBER 31
                                                  ------------------  MARCH 31
                                                    1995      1996      1997
                                                  --------  --------  --------
   <S>                                            <C>       <C>       <C>
   11 1/8% Senior Subordinated Notes, due 2006..  $    --   $200,000  $200,000
   U.S. Revolver, interest at prime (9.75% at
    March 31, 1997).............................       --        --     49,900
   Canadian Revolver, interest at prime (5.4% at
    December 31, 1996)..........................       --      5,327       --
   Seller Notes.................................       --      7,600       500
   Mortgage Notes...............................       --      3,679     3,607
   Borrowings under previous credit agreement
    (repaid in July 1996).......................   118,208       --        --
   Other........................................        82        34        66
                                                  --------  --------  --------
                                                   118,290   216,640   254,073
   Less--Current portion........................    (1,478)   (7,310)     (205)
                                                  --------  --------  --------
                                                  $116,812  $209,330  $253,868
                                                  ========  ========  ========
</TABLE>
 
  In July 1996, the Company issued $200,000 of Senior Subordinated Notes (the
"Notes") in a private offering. The Notes are general unsecured obligations of
the Company, subordinated in right of payment to the senior indebtedness of
the Company and senior in right of payment to any current or future
subordinated indebtedness. The Notes mature on July 15, 2006, and bear
interest at 11 1/8% per year, payable semiannually in arrears on January 15
and July 15, commencing January 15, 1997. The proceeds from the sale of the
Notes were used to retire certain existing indebtedness of the Company under
its previous credit facilities, to purchase certain properties from related
party partnerships (see Note 10), to redeem stock from a shareholder (see Note
7), to fund an acquisition and for general purposes. The Company must comply
with all financial and operating covenants under the indenture for the Notes
while the Notes are outstanding.
 
  In August 1996, the Company entered into a new credit facility (the "Credit
Facility") providing a revolving line of credit of U.S. $100 million in
borrowings and CDN $35 million in borrowings by the Company's Canadian
subsidiary. The Credit Facility is senior to all other indebtedness the
Company may have
 
                                     F-11
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
and is secured by the stock of the Company's shareholders. Borrowings under
the facility bear interest at prime plus an applicable margin, or at LIBOR
plus an applicable margin, at the option of the Company. In addition to
interest and other customary fees, the Company is obligated to remit a fee of
0.375% per year on unused commitments, payable quarterly. The aggregate
available commitment under the Credit Facility will be reduced on a quarterly
basis, beginning September 30, 1999. The Credit Facility matures on June 30,
2002, unless previously terminated. The Company must comply with all financial
and operating covenants under the Credit Facility during the term of the
agreement. The Company's available borrowing capacity under the Credit
Facility is contingent upon the Company meeting certain financial ratios and
other criteria.
 
  The highest amount outstanding under the current Canadian revolver during
the year ended December 31, 1996, was $5,691. The average amount outstanding
on the Canadian revolver during the year was $5,037, while the weighted
average interest rate was 5.8%. There were no borrowings under the current
U.S. revolver in 1996. The highest amount outstanding under the previous
credit facility for the year ended December 31, 1996 was $6,582, the average
amount outstanding was $3,251, and the weighted average interest rate was
9.62%.
 
  In connection with certain acquisitions completed in 1996, notes for $7,600
were issued to the sellers. The notes bear interest at 5% per year and $7,100
was repaid in 1997. The remaining note is due in 1998.
 
  In connection with the purchase of real estate from related parties (see
Note 10) and an acquisition completed in 1996, the Company assumed $1,114 and
$2,630 of mortgage notes, respectively. The notes bear interest at 10.5% and
8%, respectively, and require monthly principal and interest payments of $20
and $22, with balloon payments due in 2002 and 2001, respectively.
 
  Future scheduled principal payments on the Company's long-term debt at
December 31, 1996 are as follows:
 
<TABLE>
     <S>                                                                <C>
     1997.............................................................. $  7,310
     1998..............................................................      705
     1999..............................................................      207
     2000..............................................................      218
     2001..............................................................      231
     2002 and thereafter...............................................  207,969
                                                                        --------
                                                                        $216,640
                                                                        ========
</TABLE>
 
  Upon entering into the previous credit facilities in 1993 and 1994, the
Company issued warrants to certain lenders to purchase common stock. Warrants
to purchase 229,825 shares at $.01 per share were issued in 1993 and 55,073
shares at $2.68 per share were issued in 1994.
 
  Management assigned an initial value of $338 to the 1993 warrants and $87 to
the 1994 warrants for financial reporting purposes. The Company called the
warrants in February 1996 at an amount which was determined by a formula
defined in the credit agreement. The change in value of the redeemable
warrants from the initial value has been accreted through a charge to
shareholders' deficit in the accompanying financial statements. The warrants
were redeemed for $2,625 in 1996 and there are no outstanding warrants at
December 31, 1996.
 
  Debt refinancings occurred in 1994, 1995 and 1996, resulting in the write-
off of previously deferred financing costs of $3,980, $2,779 and $2,015,
respectively, and prepayment and other charges (including the write-off of
unamortized debt discount) of $2,011 in 1994 and $500 in 1995. Such write-offs
and charges have been recorded as extraordinary items in the accompanying
consolidated statements of operations.
 
                                     F-12
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
7. CAPITAL STOCK:
 
  At December 31, 1995 and 1996, and March 31, 1997 the Company's capital
stock was comprised of the following:
 
<TABLE>
<CAPTION>
                                                          PREFERRED    COMMON
                                                          ---------- ----------
     <S>                                                  <C>        <C>
     Par value........................................... $      .01 $      .01
     Shares authorized................................... 10,000,000 80,000,000
     Shares issued and outstanding December 31, 1995.....        --  10,591,000
     Shares issued and outstanding December 31, 1996.....        --  10,485,090
     Shares issued and outstanding March 31, 1997........        --  10,485,090
</TABLE>
 
  In 1996, the Company redeemed 105,910 shares of common stock for $1,450 and
canceled these shares.
 
8. STOCK OPTIONS:
 
  In September 1994, the Company established a nonqualified stock option plan
which provides for the granting to key employees of options to purchase an
aggregate of 1,208,453 shares of common stock. The shares available for grant
were increased by 284,898 in December 1996. Options to purchase 600,510 shares
at $5.10 per share were granted on January 1, 1995 and options to purchase
360,094 shares at $5.86 per share were granted on January 1, 1996. Option
grants, when vested, are exercisable at the earlier of the tenth anniversary
of the date of grant or the first date on which the Company ceases to be an S
Corporation, and have an exercise price equal to the fair market value of the
common stock on the date of grant. Fair market value is determined based on a
formula, as defined in the option plan. The options vest in five equal annual
installments beginning on the first anniversary of the date of grant. At
December 31, 1996, options for 119,678 shares were vested. As of December 31,
1995 and 1996, no options were exercisable.
 
  At December 31, 1996, the total options outstanding are 960,604 with
exercise prices between $5.10 to $5.86 and a weighted average exercise price
of $5.38. The options contain no expiration dates, however, no options are
exercisable. The fair value of each option grant is estimated on the date of
the grant using the Black-Scholes option pricing model with the following
assumptions used for the grants in 1995 and 1996.
 
<TABLE>
<CAPTION>
                                                                  1995    1996
                                                                 ------- -------
     <S>                                                         <C>     <C>
     Risk free interest rates...................................    8.0%    5.6%
     Expected lives of options.................................. 7 years 7 years
     Expected dividend yields...................................     N/A     N/A
     Expected volatility........................................     15%     15%
</TABLE>
 
  The fair value of each option granted in 1995 and 1996 is $2, as determined
under the provisions of Statement of Financial Accounting Standards No. 123.
The Company's net income would have been reduced and the following pro forma
results would have been reported had compensation cost been recorded for the
fair value of the options granted:
 
<TABLE>
<CAPTION>
                                                                     1995  1996
                                                                    ------ ----
     <S>                                                            <C>    <C>
     Net income, as reported....................................... $2,068 $508
     Pro forma net income.......................................... $1,799 $ 91
</TABLE>
 
  The Statement of Financial Accounting Standards No. 123 method of accounting
is applied only to options granted after January 1, 1995. The resulting pro
forma compensation cost may not be representative of the amount to be expected
in future years due to the vesting schedule of the options.
 
  On January 1, 1997, the Company granted options to acquire 153,570 shares of
common stock at $5.09 per share. The deferred compensation related to these
options will be amortized over the vesting period. Due to the
 
                                     F-13
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
acceleration of the vesting of these options which will occur upon the
completion of the equity offerings contemplated by this prospectus, the
Company will record a charge of approximately $1,752 for the estimated
unamortized compensation on these options, using an assumed equity offerings
price of $16.50 per share.
 
9. COMMITMENTS AND CONTINGENCIES:
 
 Operating Leases
 
  At December 31, 1996, the Company was obligated under noncancelable
operating leases, including the related-party leases discussed below, for
warehouse space, office equipment and transportation equipment. These leases
expire at various times through 2015 and require minimum rentals, subject to
escalation, as follows:
 
<TABLE>
     <S>                                                         <C>
     1997....................................................... $ 22,632
     1998.......................................................   21,136
     1999.......................................................   18,870
     2000.......................................................   16,761
     2001.......................................................   15,566
     2002 and thereafter........................................   39,487
                                                                 --------
                                                                 $134,452
                                                                 ========
</TABLE>
 
  Rent expense was approximately $12,262, $14,098, and $17,008 for the years
ended December 31, 1994, 1995 and 1996, respectively. Some of the leases for
warehouse space provide for purchase options on the facilities at certain
dates.
 
  The Company leases office and warehouse space at prices which, in the
opinion of management, approximate market rates from entities which are owned
by certain shareholders, officers and employees of the Company. Rent expense
on these leases was approximately $7,658, $8,201, and $9,019 for the years
ended December 31, 1994, 1995, and 1996, respectively. A significant portion
of the related party rent expense was reduced through the purchase of certain
real estate and the buy-out of certain lease interests in July 1996 (see Note
10).
 
 Other Matters
 
  The Company has entered into a consulting agreement with a shareholder of
the Company and consulting agreements with several of the former owners of
acquired businesses (see Note 12). These agreements require the following
minimum payments:
 
<TABLE>
     <S>                                                             <C>
     1997........................................................... $480
     1998...........................................................   98
     1999...........................................................   40
     2000...........................................................   40
     2001...........................................................   40
     2002 and thereafter............................................  130
                                                                     ----
                                                                     $828
                                                                     ====
</TABLE>
 
  The Company is party to various claims arising in the ordinary course of
business. Although the ultimate outcome of these matters is presently not
determinable, management, after consultation with legal counsel, does not
believe that the resolution of these matters will have a material adverse
effect on the Company's financial position or results of operations.
 
                                     F-14
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
10. RELATED PARTY TRANSACTIONS:
 
  In July 1996, the Company purchased certain real estate previously leased
and other assets from two partnerships, whose partners are shareholders of the
Company. The payment for the purchased real estate and other assets was
$11,018 plus the assumption of a $1,114 mortgage. Since the transaction was
with related parties, the real estate was recorded at its depreciated cost and
the deferred rent liability on the leases was eliminated as a credit to
shareholders' deficit. The $4,132 difference between the purchase price and
the depreciated cost was charged to shareholders' deficit as a deemed
distribution. In addition, the Company bought out certain lease commitments
from a related party partnership for $2,764. This lease buy-out cost was
recorded as a non-recurring charge in the 1996 consolidated statement of
operations.
 
  The Company had an agreement with a shareholder of the Company that required
payments of $60 per year for five years upon the death of the shareholder. The
present value of this benefit was recorded as a liability by the Company. In
July 1996, the Company decided to make monthly pension payments to the
shareholder and terminated the previous agreement. The pension payments are $8
per month until the death of the shareholder or his spouse. The $490
difference between the present value of this benefit and the liability
previously reported was recorded as a non-recurring charge in the 1996
consolidated statement of operations.
 
  The Company paid financial advisory fees to an investment banking firm of
which a director of the Company is the managing director. The fees were
approximately $800, $700 and $800 in 1996, 1995 and 1994 respectively.
 
  In December 1993, the Company borrowed $80 from a shareholder which bears
interest at 7%. The note was repaid in 1996.
 
11. EMPLOYEE BENEFIT PLANS:
 
  The Company maintains a discretionary profit sharing and a 401(k) plan for
substantially all full-time employees over the age of 20 1/2 and with more
than 1,000 hours of service. Participants in the 401(k) plan may elect to
defer a specified percentage of their compensation on a pretax basis. The
Company is required to make matching contributions equal to 25% of the
employee's contribution up to a maximum of 2% of the employee's annual
compensation. Participants become vested in the Company's matching
contribution over three to seven years. The expense relating to these plans
was $506, $591, and $1,122 for the years ended December 31, 1994, 1995 and
1996, respectively.
 
12. STOCK PURCHASE AGREEMENTS:
 
  The Company and certain shareholders are parties to an agreement which
provides that, in the event of a shareholder's desire to transfer his
ownership interest, the other shareholders party to the agreement and/or the
Company have the right of first refusal to purchase the stock under the terms
specified in the agreement. The agreement also provides that, in the event of
a shareholder's death, the Company will purchase the stock from the estate of
the deceased under the terms and at the amount per share, subject to periodic
adjustment, specified in the agreement. The purchase would be funded, in part,
from the proceeds of insurance policies currently in place ($37,700 face
value). The stock purchase agreement will be terminated upon completion of the
equity offerings.
 
                                     F-15
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
13. ACQUISITIONS:
 
  In 1995, the Company completed five acquisitions of records management
businesses for an aggregate cash purchase price of $28,994. The most
significant of these acquisitions was for $16,022 in October 1995; all others
were individually less than $5,000. In 1996, the Company completed 12
acquisitions for an aggregate cash purchase price of $62,165 (of which $14,000
was for one transaction in May 1996 and $13,500 was for another transaction in
October 1996). In addition to these cash payments, an acquisition in 1995
provided for a $800 noncompete obligation payable over three years and an
acquisition during 1996 provided for a $400 noncompete obligation payable over
one year. The noncompete liability at December 31, 1996 was $783. Each of
these acquisitions was 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 the respective
acquisition dates. The excess of the purchase price over the underlying fair
value of the assets and liabilities acquired has been allocated to goodwill
($17,549 and $43,062 in 1995 and 1996, respectively) and is being amortized
over the estimated benefit period of 30 years. In connection with certain of
the acquisitions, the Company entered into consulting agreements with several
of the former owners of the acquired businesses which require aggregate
commitments of $498 at December 31, 1996 (see Note 9).
 
  Through March 31, 1997, the Company completed four acquisitions of record
management businesses for an aggregate purchase price of $18,512. The most
significant of these acquisitions was for $9,084 in January 1997; all others
were individually less than $5,000. Each of these acquisitions has been
accounted for using the purchase method of accounting. The $15,934 excess
purchase price over the underlying fair value of the assets and liabilities
acquired has been allocated to goodwill.
 
  A summary of the cash paid for the purchase price as of the acquisitions is
as follows:
 
<TABLE>
<CAPTION>
                                                                   THREE MONTHS
                                                                      ENDED
                                                 1995     1996    MARCH 31, 1997
                                                -------  -------  --------------
     <S>                                        <C>      <C>      <C>
     Fair value of assets acquired............. $36,171  $63,598     $19,322
     Liabilities assumed.......................  (7,177)  (1,432)       (810)
     Cash acquired.............................    (639)    (990)        (49)
                                                -------  -------     -------
       Net cash paid........................... $28,355  $61,176     $18,463
                                                =======  =======     =======
</TABLE>
 
  The following unaudited pro forma information shows the results of the
Company's operations for the years ended December 31, 1995 and 1996 and for
the three months ended March 31, 1997 as though each of the completed
acquisitions had occurred as of January 1, 1995:
 
<TABLE>
<CAPTION>
                                                                    THREE MONTHS
                                            YEAR ENDED DECEMBER 31     ENDED
                                            ----------------------   MARCH 31,
                                              1995          1996        1997
                                            --------      --------  ------------
     <S>                                    <C>           <C>       <C>
     Total revenues......................   $154,438      $167,838    $44,631
     Net income (loss)...................   $ (9,239)     $ (7,232)   $(1,544)
</TABLE>
 
  The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1995, 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 acquired companies.
 
  Subsequent to December 31, 1996, the Company signed a definitive agreement
to purchase a regional records management company for approximately $62,000,
which it intends to finance through borrowings under its Credit Facility. The
acquisition is subject to due diligence and customary conditions.
 
 
                                     F-16
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders of Security Archives, Inc.:
 
  We have audited the accompanying balance sheets of Security Archives, Inc.
as of June 30, 1995 and 1994, and the related statements of income and
retained earnings and of cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits 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 our audits provide a reasonable basis for
our opinion.
 
  In our opinion, such financial statements present fairly, in all material
respects, the financial position of Security Archives, Inc. as of June 30,
1995 and 1994, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
 
  As discussed in Notes 1, 2 and 4 to the financial statements, during 1994,
the Company changed its methods of accounting for investments in equity
securities and income taxes to conform with Statements of Financial Accounting
Standards No. 115 and No. 109, respectively.
 
Deloitte & Touche LLP
 
Dallas, Texas
August 14, 1995
 
 
                                     F-17
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                JUNE 30,
                                         ------------------------   MARCH 31,
                                            1994         1995         1996
                                         -----------  -----------  -----------
                                                                   (UNAUDITED)
<S>                                      <C>          <C>          <C>
                 ASSETS
                 ------
CURRENT ASSETS:
  Cash and cash equivalents............. $   465,058  $   387,354  $   703,129
  Accounts receivable...................     205,599      245,839      253,966
  Prepaid expenses......................     169,191      243,886      325,272
                                         -----------  -----------  -----------
    Total current assets................     839,848      877,079    1,282,367
PROPERTY, PLANT AND EQUIPMENT:
  Land..................................   1,128,822    1,128,822    1,128,822
  Buildings and improvements............   2,533,200    2,646,548    3,260,627
  Equipment.............................   4,106,862    4,430,263    4,449,706
                                         -----------  -----------  -----------
                                           7,768,884    8,205,633    8,839,155
  Less accumulated depreciation.........  (3,892,935)  (3,849,502)  (3,845,308)
                                         -----------  -----------  -----------
                                           3,875,949    4,356,131    4,993,847
INVESTMENTS--Available for sale (Note
 2).....................................     989,795      341,264          --
DEFERRED INCOME TAXES (Note 4)..........      13,495          --           --
OTHER ASSETS............................     112,835      136,447      123,191
                                         -----------  -----------  -----------
    TOTAL ASSETS........................ $ 5,831,922  $ 5,710,921  $ 6,399,405
                                         ===========  ===========  ===========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
CURRENT LIABILITIES:
  Current maturities of long-term debt
   (Note 3)............................. $   157,564  $       --   $       --
  Accounts payable......................      76,239      243,682       92,917
  Accrued expenses......................     123,201      153,768      107,788
  Deferred income taxes (Note 4)........      51,877       52,659       55,234
  Other.................................      23,000       23,000       23,000
                                         -----------  -----------  -----------
    Total current liabilities...........     431,881      473,109      278,939
LONG-TERM DEBT, NET OF CURRENT
 MATURITIES (Note 3)....................   1,477,994          --           --
DEFERRED INCOME TAXES (Note 4)..........         --         3,485        6,699
COMMITMENTS (Note 5)....................
STOCKHOLDERS' EQUITY (Notes 3 and 5):
  Common stock--par value $50 per share;
   100 shares authorized and issued.....       5,000        5,000        5,000
  Treasury stock--56 shares, at cost....  (2,475,958)  (2,475,958)  (2,475,958)
  Unrealized losses on investments (Note
   2)...................................     (46,877)     (10,384)         --
  Retained earnings.....................   6,439,882    7,715,669    8,584,725
                                         -----------  -----------  -----------
    Total stockholders' equity..........   3,922,047    5,234,327    6,113,767
                                         -----------  -----------  -----------
    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY............................. $ 5,831,922  $ 5,710,921  $ 6,399,405
                                         ===========  ===========  ===========
</TABLE>
 
                       See notes to financial statements.
 
                                      F-18
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                   STATEMENTS OF INCOME AND RETAINED EARNINGS
 
<TABLE>
<CAPTION>
                                                           FOR THE NINE MONTHS
                          FOR THE YEARS ENDED JUNE 30,       ENDED MARCH 31,
                          ------------------------------  ----------------------
                               1994            1995          1995        1996
                          --------------  --------------  ----------  ----------
                                                               (UNAUDITED)
<S>                       <C>             <C>             <C>         <C>
REVENUE:
  Storage charges.......  $    2,470,703  $    2,812,673  $2,095,542  $2,295,615
  Pickup and delivery...         840,040         857,638     652,376     593,938
  Retrieval, refile and
   catalog..............         497,428         510,573     377,658     385,756
  Document
   disintegration.......         293,869         363,311     272,621     225,732
  Cart service..........          78,630          81,397      62,640      58,010
  Deposit on boxes......          71,326          70,151      55,112      59,601
  Miscellaneous.........         105,141         287,997     162,965     322,105
                          --------------  --------------  ----------  ----------
                               4,357,137       4,983,740   3,678,914   3,940,757
EXPENSES:
  Storage...............         553,977         651,482     483,724     393,011
  Handling..............       1,115,739       1,082,665     712,810     793,837
  General and
   administrative.......       1,085,490       1,192,996   1,000,197   1,462,215
                          --------------  --------------  ----------  ----------
                               2,755,206       2,927,143   2,196,731   2,649,063
                          --------------  --------------  ----------  ----------
OPERATING PROFIT........       1,601,931       2,056,597   1,482,183   1,291,694
OTHER INCOME (EXPENSE):
  Interest income.......          69,285          87,400      20,458       9,172
  Interest expense......        (154,326)       (112,938)   (106,068)        --
  Other.................          60,684         (52,624)    (16,082)      8,190
                          --------------  --------------  ----------  ----------
INCOME BEFORE INCOME
 TAXES AND CUMULATIVE
 EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE...       1,577,574       1,978,435   1,380,491   1,309,056
PROVISION FOR INCOME
 TAXES (Note 4).........        (616,491)       (702,648)   (485,000)   (440,000)
                          --------------  --------------  ----------  ----------
INCOME BEFORE CUMULATIVE
 EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE...         961,083       1,275,787     895,491     869,056
CUMULATIVE EFFECT OF
 CHANGE IN ACCOUNTING
 PRINCIPLE (Note 4).....          53,283             --          --          --
                          --------------  --------------  ----------  ----------
NET INCOME..............       1,014,366       1,275,787     895,491     869,056
RETAINED EARNINGS,
 BEGINNING OF YEAR......       5,425,516       6,439,882   6,439,882   7,715,669
                          --------------  --------------  ----------  ----------
RETAINED EARNINGS, END
 OF YEAR................  $    6,439,882  $    7,715,669  $7,335,373  $8,584,725
                          ==============  ==============  ==========  ==========
</TABLE>
 
                       See notes to financial statements.
 
                                      F-19
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                           FOR THE NINE MONTHS
                          FOR THE YEARS ENDED JUNE 30,       ENDED MARCH 31,
                          ------------------------------  -----------------------
                               1994            1995          1995        1996
                          --------------  --------------  ----------  -----------
                                                               (UNAUDITED)
<S>                       <C>             <C>             <C>         <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net Income.............  $    1,014,366  $    1,275,787  $  895,491  $   869,056
 Adjustments to
  reconcile net income
  to net cash provided
  by operating
  activities............
 Depreciation...........         463,797         509,516     371,980      437,161
 Loss (gain) on disposal
  of assets.............         (44,441)         28,454         --        61,556
 Loss on sale of
  investments...........          19,435          24,813      20,615       10,384
 Deferred income tax
  expense...............          26,400          (3,747)     17,763        5,789
 Changes in operating
  assets and
  liabilities:
  (Increase) decrease in
   accounts receivable..           9,563         (40,240)    (96,301)      (8,127)
  Decrease in income
   taxes receivable.....          31,066             --          --           --
  (Increase) decrease in
   prepaid expenses.....        (140,247)        (74,695)      1,380      (81,386)
  (Increase) decrease in
   other assets.........        (100,758)        (23,612)     19,171       13,256
  Increase (decrease) in
   accounts payable.....          17,107         167,443     (33,472)    (150,765)
  Increase (decrease) in
   accrued expenses.....         (73,916)         30,567     108,681      (45,980)
  Increase in other
   liabilities..........          23,000             --          --           --
                          --------------  --------------  ----------  -----------
    Net cash provided by
     operating
     activities.........       1,245,372       1,894,286   1,305,308    1,110,944
                          --------------  --------------  ----------  -----------
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Purchase of property,
  plant and equipment...      (1,193,989)     (1,018,150)   (660,593)  (1,136,433)
 Proceeds from sale of
  property..............          79,771             --          --           --
 Purchases of
  investments...........      (1,070,373)        (58,250)    (52,145)         --
 Proceeds from sale of
  investments...........       1,012,178         739,968      20,316      341,264
                          --------------  --------------  ----------  -----------
    Net cash used in
     investing
     activities.........      (1,172,413)       (336,432)   (692,422)    (795,169)
                          --------------  --------------  ----------  -----------
CASH FLOWS FROM
 FINANCING ACTIVITIES--
 Principal payments of
 long-term debt.........        (144,051)     (1,635,558)   (116,844)         --
                          --------------  --------------  ----------  -----------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS............         (71,092)        (77,704)    496,042      315,775
CASH AND CASH
 EQUIVALENTS, BEGINNING
 OF PERIOD..............         536,150         465,058     465,058      387,354
                          --------------  --------------  ----------  -----------
CASH AND CASH
 EQUIVALENTS, END OF
 PERIOD.................  $      465,058  $      387,354  $  961,100  $   703,129
                          --------------  --------------  ----------  -----------
SUPPLEMENTAL DISCLOSURE:
 Cash payments for:
  Interest..............  $      154,326  $      112,938  $  106,068  $       --
                          --------------  --------------  ----------  -----------
  Income taxes..........  $      413,255  $      485,000  $  400,000  $   400,000
                          --------------  --------------  ----------  -----------
 Noncash Investing
  activities:
  Unrealized loss on
   investments..........  $       46,877  $       10,384  $   12,576  $       --
                          ==============  ==============  ==========  ===========
</TABLE>
 
                       See notes to financial statements.
 
                                      F-20
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
       NOTES TO FINANCIAL STATEMENTS, YEARS ENDED JUNE 30, 1995 AND 1994
 
          (INFORMATION AS OF MARCH 31, 1996 AND FOR THE NINE MONTHS 
                  ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  General--Security Archives, Inc. (the "Company"), a Texas corporation, is
engaged in the storage, delivery, retrieval and destruction of documents for
companies in the north Texas area.
 
  Interim Consolidated Financial Statements--The consolidated balance sheets
as of March 31, 1996 and the consolidated statements of operations for the
three months ended March 31, 1995 and 1996 are unaudited and, in the opinion
of management of the Company, include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the results
for those interim periods. The results of operations for the three months
ended March 31, 1995 and 1996 are not necessarily indicative of the results to
be expected for the full year.
 
  Investments--The Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("SFAS 115"), effective June 30, 1994. Under SFAS 115, investments are
classified as held-to-maturity, available-for-sale, or trading, depending on
the Company's ability and intent with respect to the use of individual
securities. The Company's investments at June 30, 1995 and 1994, are
classified as available-for-sale and are carried at fair value.
 
  Property, Plant and Equipment--Property, plant and equipment are carried at
cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets, ranging from 3 to 18 years. When
assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period. The cost of maintenance and repairs is
charged to expense as incurred; significant renewals and betterments are
capitalized. Deductions are made for retirements resulting from the renewals
or betterments.
 
  Income Taxes--Effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which changed the method of accounting for income taxes from the
deferred method to the liability method. Under the liability method, deferred
income taxes are recognized for the tax consequences of temporary differences
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities.
 
  Cash Equivalents--The Company considers all highly liquid investments with
an original maturity of three months or less to be cash equivalents.
 
2. INVESTMENTS
 
  The Company adopted SFAS 115 effective June 30, 1994. Investments at June 30,
1995 and 1994, consisting of shares of the Phoenix Tax-Exempt Bond Portfolio,
are classified as available-for-sale and have a cost of $357,438 and $1,063,968
and a fair value, as determined by quoted market prices, of $341,264 and
$989,795, at June 30, 1995 and 1994, respectively. The net unrealized losses
included in stockholders' equity at June 30, 1995 and 1994, was $10,384 and
$46,877, net of income taxes of $5,790 and $27,296, respectively.
 
  In fiscal year 1995, the Company sold shares with a cost of $764,781 for
$739,968, resulting in a realized loss of $24,813. The losses were calculated
using the average cost method.
 
                                     F-21
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
 
3. LONG-TERM DEBT
 
  Long-term debt at June 30, 1994, consisted of a 9% note payable to the
former majority stockholder for the purchase of 56 shares of common stock in
the amount of $1,635,558, of which $157,564 represented amounts due in 1995.
During June 1995, the Company paid off the note in full.
 
4. INCOME TAXES
 
  Effective July 1, 1993, the Company adopted SFAS 109. The cumulative effect
of this accounting change has been credited to 1994 income as a separate item.
 
  The provision for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                                                1995      1994
                                                              --------  --------
     <S>                                                      <C>       <C>
     Current federal......................................... $641,704  $471,383
     Current state...........................................   78,706    58,260
     Deferred................................................  (17,762)   86,848
                                                              --------  --------
       Total................................................. $702,648  $616,491
                                                              ========  ========
</TABLE>
 
  Deferred income taxes at June 30, 1995 and 1994, principally related to the
use of accelerated depreciation methods for tax purposes on property, plant
and equipment and prepaid insurance.
 
  The Company's effective income tax rate differs from the federal statutory
rate primarily from state income taxes (net of federal tax benefit).
 
5. COMMITMENTS
 
  During 1989, the Company entered into a stock repurchase agreement with a
stockholder. Under the terms of the agreement, the Company will purchase the
stockholder's shares upon the stockholder's death at the greater of the book
value of the shares or the amount of the life insurance proceeds received by
the Company from a policy on the stockholder's life. Payment of the purchase
price would be made in quarterly payments over four years, bearing interest at
8% per annum. At June 30, 1995, the stockholder held 12 shares of stock at a
book value of $118,962 per share. The Company owns a $500,000 face value life
insurance policy on the stockholder.
 
                                     F-22
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors of
Records Management Services, Inc. and Subsidiaries:
 
  We have audited the accompanying consolidated balance sheet of Records
Management Services, Inc. and subsidiaries (the "Company") as of September 30,
1996, and the related consolidated statements of operations, shareholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company'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, such consolidated financial statements present fairly, in
all material respects, the financial position of Records Management Services,
Inc. and subsidiaries as of September 30, 1996, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
 
  As described in Note 1, the Company changed its method of accounting for
customer acquisition costs effective October 1, 1995.
 
DELOITTE & TOUCHE LLP
 
Chicago, Illinois
November 22, 1996
(January 10, 1997 as to Note 11)
 
                                     F-23
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,  MARCH 31,
                                                          1996         1997
                                                      ------------- -----------
                                                                    (UNAUDITED)
                       ASSETS
<S>                                                   <C>           <C>
CURRENT ASSETS:
  Cash...............................................  $   453,842  $    91,741
  Accounts receivable (net of allowance for doubtful
   accounts of $51,433
   and $28,670)......................................    2,117,947    2,751,542
  Carton inventory...................................      120,940       41,220
  Deposits...........................................      179,909      135,654
  Deferred income tax benefit (Note 9)...............       20,500       20,500
  Other current assets...............................       45,077      170,128
                                                       -----------  -----------
    Total current assets.............................    2,938,215    3,210,785
PROPERTY AND EQUIPMENT--Net..........................    6,075,578    6,185,181
OTHER ASSETS:
  Investment in partnership (Note 3).................      148,738          --
  Deferred customer acquisition costs (Note 1).......      444,905      433,632
  Deferred income tax benefit (net of valuation
   allowance of $76,600)
   (Note 9)..........................................      359,300      359,300
  Goodwill...........................................      199,295      185,681
                                                       -----------  -----------
    Total other assets...............................    1,152,238      978,613
                                                       -----------  -----------
TOTAL................................................  $10,166,031  $10,374,579
                                                       ===========  ===========
</TABLE>

<TABLE>
<CAPTION> 

        LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                   <C>          <C>
CURRENT LIABILITIES:
  Accounts payable................................... $ 1,264,004  $ 1,177,661
  Accrued liabilities................................   1,319,690    2,206,407
  Notes payable to shareholders (Note 6).............     225,000      250,000
  Current portion of notes payable (Note 6)..........      48,395      140,491
  Current portion of capital lease obligations (Note
   7)................................................     288,579    1,000,902
                                                      -----------  -----------
    Total current liabilities........................   3,145,668    4,775,461
BANK REVOLVING CREDIT AND TERM LOANS (Note 6)........   3,000,001    3,306,683
NOTES PAYABLE (Note 6)...............................     136,399          --
CAPITAL LEASE OBLIGATIONS (Note 7)...................     632,913          --
SHAREHOLDERS' EQUITY:
  Common stock and additional paid-in capital, no
   par; 1,000,000 shares authorized; 384,493 shares
   outstanding (Note 10).............................     151,738      235,620
  Loan to shareholder for purchase of common stock...     (71,899)     (71,899)
  Retained earnings..................................   3,171,211    2,128,714
                                                      -----------  -----------
    Total shareholders' equity.......................   3,251,050    2,292,435
                                                      -----------  -----------
TOTAL................................................ $10,166,031  $10,374,579
                                                      ===========  ===========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                      F-24
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                          SIX MONTHS ENDED
                                          YEAR ENDED          MARCH 31
                                         SEPTEMBER 30, -----------------------
                                             1996         1996        1997
                                         ------------- ----------  -----------
                                                            (UNAUDITED)
<S>                                      <C>           <C>         <C>
REVENUE:
  Storage...............................  $10,533,695  $5,062,839  $ 5,668,388
  Service...............................    6,515,598   3,113,313    3,799,227
                                          -----------  ----------  -----------
                                           17,049,293   8,176,152    9,467,615
OPERATING EXPENSES:
  Cost of storage and service, excluding
   depreciation and amortization........   10,885,766   4,827,790    6,080,516
  Selling, general and administrative...    5,176,789   2,477,528    2,763,525
  Special compensation charge...........          --          --     1,026,643
  Depreciation and amortization.........      820,274     485,868      435,728
                                          -----------  ----------  -----------
                                           16,882,829   7,791,186   10,306,412
                                          -----------  ----------  -----------
    Operating income (loss).............      166,464     384,966     (838,797)
OTHER INCOME (EXPENSE):
  Interest income.......................        4,113       4,020        4,105
  Interest expense......................     (374,594)   (152,350)    (207,805)
  Loss on disposal of division..........     (225,000)        --           --
  Equity in income of partnership.......        4,834         --           --
                                          -----------  ----------  -----------
                                             (590,647)   (148,330)    (203,700)
                                          -----------  ----------  -----------
INCOME (LOSS) BEFORE INCOME TAXES.......     (424,183)    236,636   (1,042,497)
PROVISION (CREDIT) FOR INCOME TAXES
 (Note 9)...............................     (125,400)     85,913          --
                                          -----------  ----------  -----------
NET INCOME (LOSS).......................  $  (298,783) $  150,723  $(1,042,497)
                                          ===========  ==========  ===========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                      F-25
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                   COMMON
                                 STOCK AND
                                 ADDITIONAL    LOAN
                                  PAID-IN       TO       RETAINED
                                  CAPITAL   SHAREHOLDER  EARNINGS     TOTAL
                                 ---------- ----------- ----------  ----------
<S>                              <C>        <C>         <C>         <C>
BALANCE, OCTOBER 1, 1995........  $ 61,864   $    --    $3,469,994  $3,531,858
  Issuance of common stock upon
   exercise of options..........    89,874    (71,899)         --       17,975
  Net loss......................       --         --      (298,783)   (298,783)
                                  --------   --------   ----------  ----------
BALANCE, SEPTEMBER 30, 1996.....   151,738    (71,899)   3,171,211   3,251,050
  Exercise of stock options
   (unaudited)..................    83,882        --           --       83,882
  Net loss (unaudited)..........       --         --    (1,042,497) (1,042,497)
                                  --------   --------   ----------  ----------
BALANCE, MARCH 31, 1997
 (unaudited)....................  $235,620   $(71,899)  $2,128,714  $2,292,435
                                  ========   ========   ==========  ==========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                      F-26
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                          SIX MONTHS ENDED
                                          YEAR ENDED          MARCH 31
                                         SEPTEMBER 30, -----------------------
                                             1996         1996        1997
                                         ------------- ----------  -----------
                                                            (UNAUDITED)
<S>                                      <C>           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).....................  $ (298,783)  $  150,723  $(1,042,497)
  Adjustments to reconcile net income
   (loss) to net cash flows from
   operating activities:
   Deferred income tax provision........    (167,400)         --           --
   Depreciation and amortization........     820,274      376,019      468,439
   Equity in income of partnership......      (4,834)         --           --
   Provision for loss on disposal of
    division............................     225,000          --           --
   Special compensation charge..........         --           --       600,000
   Changes in:
    Accounts receivable.................       1,187     (116,993)    (633,595)
    Carton inventory....................       3,081     (100,280)      79,720
    Deposits and other current assets...      18,173     (184,047)     (80,796)
    Accounts payable....................     192,400      318,682      (86,343)
    Accrued liabilities.................     357,868      161,247      286,717
                                          ----------   ----------  -----------
     Net cash flows from operating
      activities........................   1,146,966      605,351     (408,355)
                                          ----------   ----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment....  (1,262,224)  (1,074,819)    (407,284)
  Customer acquisition costs............    (522,950)    (383,779)     (47,245)
  Proceeds from sale of investment in
   partnership..........................         --           --       148,738
  Repayment of loans to unconsolidated
   partnership..........................      91,500          --           --
                                          ----------   ----------  -----------
     Net cash flows from investing
      activities........................  (1,693,674)  (1,458,598)    (305,791)
                                          ----------   ----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (repayments) under term
   loan and revolving line of credit....     925,001      916,667      306,682
  Proceeds from notes payable to
   shareholders.........................     225,000          --        25,000
  Proceeds from exercise of stock
   options..............................      17,975          --        83,882
  Payments under capital leases.........    (217,007)     (25,763)     (63,519)
                                          ----------   ----------  -----------
     Net cash flows from financing
      activities........................     950,969      890,904      352,045
                                          ----------   ----------  -----------
NET CHANGE IN CASH......................     404,261       37,657     (362,101)
CASH--Beginning of year.................      49,581       49,581      453,842
                                          ----------   ----------  -----------
CASH--End of year.......................  $  453,842   $   87,238  $    91,741
                                          ==========   ==========  ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
  Cash paid for:
   Interest.............................  $  334,089   $  151,754  $   210,315
   Income taxes.........................      47,628       38,921       81,315
SUPPLEMENTAL DISCLOSURES OF NONCASH
 INVESTING AND FINANCING ACTIVITIES--
 Year ended September 30, 1996:
  The Company incurred equipment capital
   lease obligations of $630,668.
  The purchase price of a 1995
   acquisition was adjusted, reducing
   notes payable and goodwill by
   $30,206.
  The Company purchased all the tangible
   assets of McClatchy Business Archives
   for cash of $150,000 and notes
   payable of $150,000.
  The Company issued common stock valued
   at $89,874 for cash of $17,975 and a
   note receivable of $71,899.
</TABLE>
 
                See notes to consolidated financial statements.
 
                                      F-27
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         YEAR ENDED SEPTEMBER 30, 1996
 
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                                  UNAUDITED.)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  NATURE OF OPERATIONS--Records Management Services, Inc. (Illinois) (the
"Company") is a provider of business records management services including
storage, consulting, micro-imaging and contract management services.
 
  PRINCIPLES OF CONSOLIDATION--The accompanying financial statements include
the accounts of the Company and its wholly owned subsidiaries. All significant
intercompany accounts, transactions and profits have been eliminated.
 
  The Company's 50% interest in an unconsolidated partnership is accounted for
by the equity method.
 
  INTERIM FINANCIAL STATEMENTS--The consolidated balance sheet as of December
31, 1996 and the consolidated statements of operations and cash flows for the
three months ended December 31, 1996 and 1995 are unaudited and, in the
opinion of management of the Company, include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of the
results for those interim periods. The results of operations for the three
months ended December 31, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
 
  USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  PROPERTY AND EQUIPMENT--Depreciation is computed using accelerated and
straight-line methods over the following estimated useful lives: buildings and
improvements, 31.5 years; equipment, 3-12 years.
 
  GOODWILL--Goodwill represents the excess of purchase price of certain
subsidiaries over the fair value of net assets acquired and is amortized on a
straight-line basis over ten years. Accumulated amortization was $141,608 at
September 30, 1996.
 
  CHANGE IN ACCOUNTING PRINCIPLE--Effective October 1, 1995, the Company began
capitalizing customer acquisition costs. Costs, net of revenues received for
the initial transfer of the records, related to the acquisition of large
volume accounts (accounts consisting of 5,000 or more cartons) are capitalized
and amortized over the life of the related contract (currently ranging from
three to five years). Management believes such treatment to be preferable
because it conforms with prevalent industry practice. As of September 30,
1996, acquisition costs of $522,950 have been capitalized, including $105,600
capitalized in the three months ended December 31, 1995; accumulated
amortization totaled $78,045 at September 30, 1996.
 
2. ACQUISITION
 
  Effective November 30, 1995, the Company acquired all of the records storage
business of McClatchy Business Archives ("McClatchy") of Houston, Texas, for
$300,000 in a transaction accounted for as a purchase. The purchase price
included $150,000 in cash and a $150,000 note payable to the seller (see Note
6).
 
                                     F-28
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
 
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                                  UNAUDITED.)
 
3. UNCONSOLIDATED PARTNERSHIP
 
  The Company owns a 50% partnership interest in Certified Document
Destruction of Illinois ("CDDI"). CDDI provided document destruction services
to the Company and others until it sold its business to Crown Recycling &
Waste Services, Inc. ("Crown") effective September 30, 1996 for approximately
$500,000. The Company's 50% share of the gain recognized on the sale was
$53,581 and its 50% share of CDDI's operating loss for fiscal year 1996 was
$48,747. In connection with the sale agreement, the Company agreed to provide
at least 15 million pounds of material for destruction or disposal by Crown
during the five-year period ending September 30, 2001 for a total cost, based
on current market prices, of approximately $600,000.
 
4. DISPOSAL OF GEORGIA DIVISION
 
  The Company closed the Georgia division effective September 30, 1996.
Existing assets will be transferred to other divisions. Property rental
agreements were terminated and approximately $225,000 was accrued at September
30, 1996 for these and other costs.
 
5. BALANCE SHEET INFORMATION
 
  Property and equipment as of December 31, 1996 comprises the following:
 
<TABLE>
   <S>                                                              <C>
   Land............................................................ $   164,804
   Buildings and improvements......................................   2,645,666
   Equipment.......................................................   9,415,568
                                                                    -----------
                                                                     12,226,038
   Accumulated depreciation........................................  (6,150,460)
                                                                    -----------
   Property and equipment--net..................................... $ 6,075,578
                                                                    ===========
 
Accrued liabilities as of September 30, 1996 comprise the following:
 
   Payroll......................................................... $   246,327
   Real estate taxes...............................................     272,791
   401(k) plan contributions.......................................     335,094
   Disposal of Georgia division....................................     225,000
   Other...........................................................     240,478
                                                                    -----------
   Total........................................................... $ 1,319,690
                                                                    ===========
</TABLE>
 
6. DEBT
 
  Effective December 1, 1995, the Company entered into a $2,000,000 secured
term loan (the "Term Loan") agreement and a $1,200,000 secured revolving line
of credit agreement (the "Line") with a bank. The Term Loan and the Line
(collectively, the "Loans") bear interest due monthly at the prime rate plus
1%. The Term Loan also requires monthly principal payments of $11,111. All
unpaid principal is due February 1, 1997. At September 30, 1996, total
outstanding borrowings were $3,000,001.
 
  The Term Loan is secured by first mortgages on certain real estate owned by
the Company. The Line is secured by a first priority lien on all of the
Company's assets. The Loans are cross-collateralized and cross-defaulted.
 
                                     F-29
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
 
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                                  UNAUDITED.)
 
  See Note 11 regarding refinancing of the Loans.
 
  The $150,000 note payable issued in connection with the purchase of
McClatchy bears interest at 9% per annum and is payable in eight annual
installments of principal and interest of $27,101 (see Note 2). The $34,794
balance of a note payable issued in connection with a fiscal year 1995
acquisition is payable upon demand. Annual maturities of notes payable amount
to $48,395 for the year ending September 30, 1997 and range from $15,000 to
$19,200 for the succeeding four years.
 
  In 1996, certain shareholders agreed to loan $300,000 to the Company, of
which $225,000 was advanced prior to September 30, 1996. The notes bear
interest at 11% per annum and are due on September 30, 1997.
 
7. LEASING ARRANGEMENTS
 
  The Company has operating lease agreements for warehouse space expiring at
various dates through 2004. Leases covering a portion of the total leased
space are with entities controlled by directors and shareholders of the
Company. The leases contain renewal options for additional periods and
generally provide for rent adjustments based on changes in the Consumer Price
Index and actual real estate taxes and interest.
 
  The Company has guaranteed payment of all principal and interest due on a
loan payable by Morris West Limited Partnership ("Morris West"), which is
owned by certain directors and shareholders of the Company, to LaSalle
National Bank in the amount of $640,000. Morris West is one of the related
entities from which the Company leases warehouse space.
 
  The estimated future minimum rental payments required under the operating
leases as of September 30, 1996 are as follows:
 
<TABLE>
<CAPTION>
                                                 RELATED   UNRELATED
   FISCAL YEAR                                   ENTITIES   ENTITIES    TOTAL
   -----------                                  ---------- ---------- ----------
   <S>                                          <C>        <C>        <C>
   1997........................................ $  504,833 $  913,224 $1,418,057
   1998........................................    314,833    866,368  1,181,201
   1999........................................    241,558    736,601    978,159
   2000........................................     69,833    656,319    726,152
   2001........................................     69,833    656,319    726,152
   Thereafter..................................    151,305  1,460,228  1,611,533
                                                ---------- ---------- ----------
       Total................................... $1,352,195 $5,289,059 $6,641,254
                                                ========== ========== ==========
</TABLE>
 
  During fiscal year 1996, the Company recorded rent expense totaling
$1,638,953, including $732,900 of rent to related entities.
 
                                     F-30
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
 
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                                  UNAUDITED.)
 
  The Company has entered into capitalized long-term leasing agreements for
shelving and various other equipment with an aggregate cost of $1,181,902 and
accumulated amortization of $137,297 at September 30, 1996. The future minimum
lease payments under the capitalized leases as of September 30, 1996 are as
follows:
 
<TABLE>
<CAPTION>
   FISCAL YEAR
   -----------
   <S>                                                                <C>
   1997.............................................................. $ 389,591
   1998..............................................................   373,042
   1999..............................................................   268,283
   2000..............................................................    54,730
   2001..............................................................    29,983
                                                                      ---------
                                                                      1,115,629
   Less amount representing interest.................................   194,137
                                                                      ---------
   Present value of future minimum lease payments....................   921,492
   Less principal due in one year....................................   288,579
                                                                      ---------
       Total......................................................... $ 632,913
                                                                      =========
</TABLE>
 
8. EMPLOYEE BENEFIT PLAN
 
  Eligible employees participate in the Records Management Services, Inc.
401(k) Profit Sharing Plan. Company contributions, consisting of a
discretionary profit-sharing contribution and a partial matching of employee
contributions, totaled approximately $161,000 for the year ended September 30,
1996.
 
9. INCOME TAXES
 
  The components of the income tax benefit for the year ended September 30,
1996 are as follows:
 
<TABLE>
   <S>                                                              <C>
   Current......................................................... $  42,000
   Deferred........................................................  (186,700)
                                                                    ---------
                                                                     (144,700)
   Change in valuation allowance...................................    19,300
                                                                    ---------
       Total....................................................... $(125,400)
                                                                    =========
 
  A reconciliation of the U.S. federal statutory rate of 35% to the effective
rate of tax benefit for the year ended September 30, 1996 is as follows:
 
   Statutory rate..................................................      35.0%
   Nondeductible expenses..........................................      (2.8)
   Adjustment of valuation allowance...............................      (4.5)
   Other, net......................................................       1.9
                                                                    ---------
   Effective rate..................................................      29.6%
                                                                    =========
 
</TABLE>
 
                                     F-31
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
 
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                                  UNAUDITED.)
<TABLE>
  The components of deferred tax assets as of September 30, 1996 are as
follows:
 
   <S>                                                                <C>
   Current:
     Allowance for doubtful accounts................................. $ 20,500
                                                                      ========
   Long-term:
     AMT credit carry-forwards....................................... $100,500
     Net operating loss carry-forwards...............................  522,100
     Accrued expenses................................................  222,800
     Accumulated depreciation........................................ (372,600)
     Other...........................................................  (36,900)
     Valuation allowance.............................................  (76,600)
                                                                      --------
       Total......................................................... $359,300
                                                                      ========
</TABLE>
 
  The valuation allowance relates to state operating loss carry-forwards of
subsidiaries that have not achieved profitable operations.
 
10. STOCK OPTIONS
 
  In March 1996, the president of the Company exercised an option to purchase
4,993 shares of the Company's common stock at $18.00 per share in exchange for
cash of $17,975 (20%) and a note payable in the amount of $71,899 (80%). The
note bears interest at 6% per annum and requires monthly payments of principal
and interest of $607 from October 1996 until September 2002 when the remaining
principal ($51,143) is due.
 
  The president of the Company holds two other options, each to purchase 4,993
shares at $12.00 per share. One option expires July 31, 1997, while the other
expires September 30, 1998.
 
11. SUBSEQUENT EVENTS
 
  On January 10, 1997, the Company entered into a $2,500,000 secured term loan
agreement and a $1,500,000 secured revolving line of credit agreement bearing
interest at the prime rate. Proceeds were used to repay the existing Term Loan
and Line. The Term Loan requires monthly principal payments of $33,334. All
unpaid principal of both loans is due June 30, 1998. The Term Loan is secured
by certain equipment of the Company. The Line is secured by the Company's
accounts receivable. The loans are cross-collateralized and cross-defaulted.
 
  In December 1996, the Company issued another option to the president of the
Company to purchase 4,993 shares at $12.00 per share. This option expires
November 30, 1999.
 
12. SALE AGREEMENT (UNAUDITED)
 
  In 1997 the Company signed a definitive sale agreement with Pierce Leahy
Corp. In connection with this agreement, in March 1997 the Company's board of
directors granted certain employees stock appreciation rights relating to
prior services provided. The statement of operations for the six months ended
March 31, 1997 reflects a charge of approximately $600,000 relating to such
grants. In addition, a shareholder of the Company agreed to provide additional
severance payments to certain employees for prior services which totaled
approximately $427,000. The statement of operations also reflects this special
compensation charge.
 
                                     F-32
<PAGE>
 


[Inside Back Cover Artwork]

              [Three four-color photographs]





<PAGE>
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN
THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THOSE TO WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT
LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT
ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
 
                                 ------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3
Risk Factors.............................................................  10
The Company..............................................................  15
Concurrent Offering......................................................  15
Use of Proceeds..........................................................  16
Dividend Policy..........................................................  16
Dilution.................................................................  17
Capitalization...........................................................  18
Pro Forma Financial Data.................................................  19
Selected Historical and Pro Forma Consolidated Statements of Operations,
 Other Data and Balance Sheets...........................................  25
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  29
Business.................................................................  39
Management...............................................................  50
Certain Transactions.....................................................  58
Principal and Selling Shareholders.......................................  59
Description of Capital Stock.............................................  61
Description of Certain Indebtedness......................................  63
Shares Eligible for Future Sale..........................................  65
Certain U.S. Tax Consequences to Non-U.S. Shareholders...................  66
Underwriting.............................................................  67
Legal Matters............................................................  70
Experts..................................................................  70
Available Information....................................................  71
Index to Consolidated Financial Statements............................... F-1
</TABLE>
 
                                 ------------
 
 UNTIL      , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE EQUITY OFFERINGS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                               5,312,614 SHARES
 
                              PIERCE LEAHY CORP.
 
                                 COMMON STOCK
 
                      [LOGO OF PIERCE LEAHY APPEARS HERE]
 
                                   --------
 
                                  PROSPECTUS
 
                                       , 1997
 
                                   --------
 
                               SMITH BARNEY INC.
 
                              MERRILL LYNCH & CO.
 
                           PAINEWEBBER INCORPORATED
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                   
                SUBJECT TO COMPLETION, DATED JUNE 24, 1997     

PROSPECTUS
                               5,312,614 SHARES

[LOGO OF PIERCE LEAHY         PIERCE LEAHY CORP.
APPEARS HERE]
                                 COMMON STOCK
                                   --------
 
  Of the 5,312,614 shares of Common Stock of Pierce Leahy Corp. (the "Company")
offered hereby, 5,100,000 shares are being sold by the Company and 212,614
shares are being sold by certain shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling
Shareholders.
 
  Of the 5,312,614 shares of Common Stock offered hereby, 1,062,523 shares are
being offered for sale in an international offering outside of the United
States and Canada (the "International Equity Offering") by the Managers (as
defined herein) and 4,250,091 shares are being offered in a concurrent offering
in the United States and Canada (the "U.S. Equity Offering" and together with
the International Equity Offering, the "Equity Offerings") by the U.S.
Underwriters (as defined herein).
 
  Prior to the Equity Offerings, there has not been a public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $15 and $18 per share. See "Underwriting" for
information relating to the factors considered in determining the initial
public offering price.
   
  Concurrently with the Equity Offerings, the Company is offering $100,000,000
aggregate principal amount of  % Senior Subordinated Notes due 2007 by a
separate prospectus (the "Notes Offering" and together with the Equity
Offerings, the "Offerings"). The consummation of the Equity Offerings is not
conditioned upon the consummation of the Notes Offering.     
 
  This document may not be passed on in the United Kingdom to any person unless
that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom this document may otherwise lawfully be issued or passed on.
 
  The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "PLH," subject to official notice of issuance.
 
   SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
                                    HEREBY.
 
                                   --------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
 
================================================================================
<TABLE>
<CAPTION>
                                          UNDERWRITING              PROCEEDS TO
                                PRICE TO DISCOUNTS AND  PROCEEDS TO   SELLING
                                 PUBLIC  COMMISSIONS(1) COMPANY(2)  SHAREHOLDERS
- --------------------------------------------------------------------------------
<S>                             <C>      <C>            <C>         <C>
Per Share.....................     $           $            $            $
- --------------------------------------------------------------------------------
Total(3)......................   $           $             $           $
================================================================================

</TABLE>
(1) For information regarding indemnification of the Managers and the U.S.
    Underwriters, see "Underwriting."
(2) Before deducting expenses estimated at $725,000, all of which are payable
    by the Company.
(3) The Company and certain of the Selling Shareholders have granted the U.S.
    Underwriters a 30-day option to purchase up to an aggregate of 796,892
    additional shares of Common Stock solely to cover over-allotments, if any.
    See "Underwriting." If such option is exercised in full, the total Price to
    Public, Underwriting Discounts and Commissions, Proceeds to Company and
    Proceeds to Selling Shareholders will be $   , $   , $    and $   ,
    respectively.
 
                                   --------
 
    The shares of Common Stock are being offered by the several Managers named
herein, subject to prior sale, when, as and if accepted by them and subject to
certain conditions. It is expected that certificates for the shares of Common
Stock offered hereby will be available for delivery on or about   , 1997 at the
office of Smith Barney Inc., 333 West 34th Street, New York, New York 10001.
 
                                   --------
 
SMITH BARNEY INC.
                      MERRILL LYNCH INTERNATIONAL
                                                       PAINEWEBBER INTERNATIONAL
 
     , 1997
<PAGE>
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE
TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
THOSE TO WHICH IT RELATES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT
LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY
TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
 
                                  -----------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3
Risk Factors.............................................................  10
The Company..............................................................  15
Concurrent Offering......................................................  15
Use of Proceeds..........................................................  16
Dividend Policy..........................................................  16
Dilution.................................................................  17
Capitalization...........................................................  18
Pro Forma Financial Data.................................................  19
Selected Historical and Pro Forma Consolidated Statements of Operations,
 Other Data and Balance Sheets...........................................  25
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  29
Business.................................................................  39
Management...............................................................  50
Certain Transactions.....................................................  58
Principal and Selling Shareholders.......................................  59
Description of Capital Stock.............................................  61
Description of Certain Indebtedness......................................  63
Shares Eligible for Future Sale..........................................  65
Certain U.S. Tax Consequences to Non-U.S. Shareholders...................  66
Underwriting.............................................................  67
Legal Matters............................................................  70
Experts..................................................................  70
Available Information....................................................  71
Index to Consolidated Financial Statements............................... F-1
</TABLE>
 
                                  -----------
 
 UNTIL      , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE EQUITY OFFERINGS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                                5,312,614 SHARES
 
                               PIERCE LEAHY CORP.
 
                                  COMMON STOCK
 
                     [LOGO OF PIERCE LEAHY APPEARS HERE]
 
                                    -------
 
                                   PROSPECTUS
 
                                       , 1997
 
                                    -------
 
                               SMITH BARNEY INC.
 
                          MERRILL LYNCH INTERNATIONAL
 
                           PAINEWEBBER INTERNATIONAL
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
 
                                    PART II
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
  The following table sets forth fees payable to the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. and the New
York Stock Exchange and other expenses expected to be incurred in connection
with the issuance and distribution of the securities being registered. All of
the fees and expenses will be paid by the Company.
 
<TABLE>
<S>                                                                   <C>
Securities and Exchange Commission Registration Fee.................. $ 33,334
National Association of Securities Dealers, Inc. Filing Fee..........   11,500
New York Stock Exchange Listing Fee..................................  130,000
Legal Fees and Expenses..............................................  150,000*
Accounting Fees and Expenses.........................................  200,000*
Blue Sky Fees and Expenses...........................................    5,000*
Transfer Agent Fees and Expenses.....................................   10,000*
Printing and Engraving Expenses......................................  175,000*
Miscellaneous........................................................   10,166*
                                                                      --------
  Total.............................................................. $725,000*
                                                                      ========
</TABLE>
- --------
* Estimated
 
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
  Subchapter D (Sections 1741 through 1750) of Chapter 17 the Pennsylvania
Business Corporation Law of 1988, as amended (the "PBCL"), contains provisions
for mandatory and discretionary indemnification of a corporation's directors,
officers, employees and agents (collectively "Representatives") and related
matters.
 
  Under Section 1741, subject to certain limitations, a corporation has the
power to indemnify directors, officers and other Representatives under certain
prescribed circumstances against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with a threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party or threatened to be made a party by reason of his being
a Representative of the corporation or serving at the request of the
corporation as a Representative of another corporation, partnership, joint
venture, trust or other enterprise, if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.
 
  Section 1742 provides for indemnification with respect to derivative and
corporate actions similar to that provided by Section 1741. However,
indemnification is not provided under Section 1742 in respect of any claim,
issue or matter as to which a Representative has been adjudged to be liable to
the corporation unless and only to the extent that the proper court determines
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, a Representative is fairly and reasonably
entitled to indemnity for the expenses that the court deems proper.
 
  Section 1743 provides that indemnification against expenses is mandatory to
the extent that a Representative has been successful on the merits or
otherwise in defense of any such action or proceeding referred to in Section
1741 or 1742.
 
  Section 1744 provides that unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation as authorized in
the specific case upon a determination that indemnification of a
 
                                     II-1
<PAGE>
 
Representative is proper because the Representative met the applicable
standard of conduct, and such determination will be made by the board of
directors by a majority vote of a quorum of directors not parties to the
action or proceeding; if a quorum is not obtainable or if obtainable and a
majority of disinterested directors so directs, by independent legal counsel;
or by the shareholders.
 
  Section 1745 provides that expenses incurred by a Representative in
defending any action or proceeding referred to in Subchapter D of Chapter 17
of the PBCL may be paid by the corporation in advance of the final disposition
of such action or proceeding upon receipt of an undertaking by or on behalf of
the Representative to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation.
 
  Section 1746 provides generally that except in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by Subchapter D of
Chapter 17 of the PBCL shall not be deemed exclusive of any other rights to
which a Representative seeking indemnification or advancement of expenses may
be entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding that office.
 
  Section 1747 grants a corporation the power to purchase and maintain
insurance on behalf of any Representative against any liability incurred by
him in his capacity as a Representative, whether or not the corporation would
have the power to indemnify him against that liability under Subchapter D of
Chapter 17 of the PBCL.
 
  Sections 1748 and 1749 apply the indemnification and advancement of expenses
provisions contained in Subchapter D of Chapter 17 of the PBCL to successor
corporations resulting from consolidation, merger or division and to service
as a representative of a corporation or an employee benefit plan.
 
  Section 7.2 of the Company's Bylaws provides indemnification to directors
and officers for all actions taken by them and for all failures to take action
to the fullest extent permitted by Pennsylvania law against all expense,
liability and loss reasonably incurred or suffered by them in connection with
any threatened, pending or completed action, suit or proceeding (including,
without limitation, an action, suit or proceeding by or in the right of the
Company), whether civil, criminal, administrative, investigative or through
arbitration. Section 7.2 also permits the Company, by action of its Board of
Directors, to indemnify officers, employees and other persons to the same
extent as directors. Amendments, repeals or modifications of Section 7.2 can
only be prospective and such changes require the affirmative vote of not less
than all of the directors then serving or holders of a majority of the
outstanding shares of stock of the Company entitled to vote in elections of
directors. Section 7.2 further permits the Company to maintain insurance, at
its expense, for the benefit of any person on behalf of whom insurance is
permitted to be purchased by Pennsylvania law against any such expenses,
liability or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under
Pennsylvania or other law.
 
  See Section 9 of the U.S. Underwriting Agreement and Section 9 of the
International Underwriting Agreement, filed as Exhibits 1.1 and 1.2 hereto,
respectively, pursuant to which the Underwriters agree to indemnify the
Company, its directors, officers and controlling persons against certain
liabilities, including liabilities under the Securities Act.
 
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
 
  In April 1997, the Company undertook a recapitalization in which shares of
voting and nonvoting Common Stock were reclassified into one class of shares
of Common Stock. The Company was then redomesticated into Pennsylvania
pursuant to a merger (all such transactions, the "Stock Recapitalization").
The Stock Recapitalization was exempt from registration under Section 3(a)(9)
of the Securities Act of 1933 (the "Securities Act").
 
                                     II-2
<PAGE>
 
  In July 1996, the Company sold $200,000,000 aggregate principal amount of
11-1/8% Senior Subordinated Notes due 2006 (the "1996 Notes") to "qualified
institutional buyers," as defined in Rule 144A under the Securities Act. The
sale of the 1996 Notes was exempt from the registration provisions of the
Securities Act pursuant to Section 4(2) thereof.
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 (a) Exhibits
 
<TABLE>   
<CAPTION>
 EXHIBIT
   NO.                                   EXHIBIT
 -------                                 -------
 <C>     <S>
  1.1**  Form of U.S. Underwriting Agreement
  1.2**  Form of International Underwriting Agreement
  3.1**  Articles of Incorporation of the Company
  3.2**  Bylaws of the Company
  5*     Opinion of Cozen and O'Connor
  9**    Form of Voting Trust Agreement by and among certain shareholders of
         the Company
 10.1    Pierce Leahy Corp. Non-Qualified Stock Option Plan (incorporated by
         reference to Exhibit 10.3 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.2**  Pierce Leahy Corp. 1997 Stock Option Plan
 10.3    Credit Agreement, dated as of August 13, 1996, among the Company,
         Pierce Leahy Command Company, the several lenders from time to time
         parties thereto, Canadian Imperial Bank of Commerce, as Canadian Ad-
         ministrative Agent, and Canadian Imperial Bank of Commerce, New York
         Agency, as U.S. administrative agent, together with certain collateral
         documents attached thereto, including the form of US$ Note, the form
         of Canadian$ Note, the form of the U.S. Global Guarantee and Security
         Agreement made by the Company, certain of its affiliates and subsidi-
         aries and its shareholders in favor of the U.S. Administrative Agent,
         the form of Canadian Security Agreement between Pierce Leahy Command
         Company and the Canadian Administrative Agent and the form of Pledge
         and Intercreditor Agreement among certain of the Company's affiliates,
         the US Administrative Agent and the Canadian Administrative Agent (in-
         corporated by reference to Exhibit 10.4 to the Company's Registration
         Statement on Form S-4, File No. 333-9963)
 10.4    Indenture, dated as of July 15, 1996, among the Company, as issuer,
         and United States Trust Company of New York, as trustee (incorporated
         by reference to Exhibit 4.4 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.5**  Form of Indenture among the Company, as issuer, and The Bank of New
         York, as trustee
 10.6    Share Purchase Agreement dated September 30, 1995 between the Company
         and Moore Corporation Limited (incorporated by reference to Exhibit
         10.5 to the Company's Registration Statement on Form S-4, File No.
         333-9963)
 10.7    Stock Purchase Agreement dated April 17, 1996 among the Company and
         Security Archives, Inc. and Patrick G. Clayton, Carol A. Clayton and
         Byron Wood Clayton (incorporated by reference to Exhibit 10.6 to the
         Company's Registration Statement on Form S-4, File No. 333-9963)
 10.8    Stock Purchase Agreement dated as of February 27, 1997 between the
         Company, Records Management Services, Inc. and certain shareholders of
         Records Management Services, Inc. (incorporated by reference to Ex-
         hibit 10.7 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1996)
 10.9**  Form of Tax Indemnification Agreement among the Company and certain of
         its shareholders
 10.10** First Amendment, dated as of October 23, 1996, to the Credit Agreement
 10.11** Second Amendment and Consent, dated as of March 27, 1997, to the
         Credit Agreement
 10.12*  Third Amendment, Consent and Waiver, dated as of May 22, 1997, to the
         Credit Agreement
 11**    Statement re: computation of per share earnings
 21**    Subsidiaries of the Registrant
 23.1    Consent of Cozen and O'Connor (included in Exhibit 5)
 23.2*   Consent of Arthur Andersen LLP
 23.3*   Consent of Deloitte & Touche LLP
 23.4*   Consent of Deloitte & Touche LLP
 24**    Power of Attorney
</TABLE>    
- --------
* Filed herewith.
** Previously filed.
 
                                     II-3
<PAGE>
 
 (b) Financial Statement Schedules
 
  Schedule II--Valuation and Qualifying Accounts
 
ITEM 17. UNDERTAKINGS
 
  Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
  The undersigned Registrant hereby undertakes that:
 
    (1) For determining any liability under the Securities Act, the
  information omitted from the form of prospectus filed as part of this
  registration statement in reliance upon Rule 430(A) and contained in a form
  of prospectus filed by the Registrant pursuant to Rule 424(b)(1), or (4),
  or 497(h) under the Securities Act shall be deemed to be part of this
  registration statement as of the time it was declared effective.
 
    (2) For determining any liability under the Securities Act, each post-
  effective amendment that contains a form of prospectus shall be deemed to
  be a new registration statement relating to the securities offered in the
  registration statement, and the offering of such securities at that time
  shall be deemed to be the initial bona fide offering thereof.
 
                                     II-4
<PAGE>
 
                                   SIGNATURES
   
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN KING OF PRUSSIA, PENNSYLVANIA, ON
JUNE 23, 1997.     
 
                                         Pierce Leahy Corp.
                                                     
                                            
                                         By:     /s/ J. Peter Pierce     
                                              ----------------------------
                                                     J. PETER PIERCE,
                                              PRESIDENT AND CHIEF EXECUTIVE
                                                         OFFICER
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
 
             SIGNATURE                       TITLE                 DATE
             ---------                       -----                 ----
     
                 *                    Chairman of the         June 23, 1997
- ------------------------------------   Board of Directors                   
         LEO W. PIERCE, SR.                                                 

                                
      /s/ J. Peter Pierce             President, Chief        June 23, 1997
- ------------------------------------   Executive Officer                    
          J. PETER PIERCE              and Director           
                                       (Principal
                                       Executive Officer)
                                  
    /s/ Douglas B. Huntley            Vice President,         June 23, 1997
- ------------------------------------   Chief Financial                      
         DOUGLAS B. HUNTLEY            Officer and            
                                       Director
                                       (Principal
                                       Financial and
                                       Accounting
                                       Officer)
    
                 *                    Director                June 23, 1997
- ------------------------------------                                        
         LEO W. PIERCE, JR.                                        
    
                 *                    Director                June 23, 1997
- ------------------------------------                                        
         MICHAEL J. PIERCE                                         
    
                 *                    Director                June 23, 1997
- ------------------------------------                                        
          ALAN B. CAMPELL                                          
 
    
                 *                    Director                June 23, 1997
- ------------------------------------                                        
         DELBERT S. CONNER                                         
   
    
By:    /s/ J. Peter Pierce     
    --------------------------------
           J. PETER PIERCE

        
By:   /s/ Douglas B. Huntley     
    --------------------------------
          DOUGLAS B. HUNTLEY
Attorneys-in-fact pursuant to the powers
 of attorney previously provided as part
     of this Registration Statement.
 
                                      II-5
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Pierce Leahy Corp.:
 
  We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements for Pierce Leahy Corp. and have issued
our report thereon dated February 28, 1997. Our audit was made for the purpose
of forming an opinion on the basic financial statements taken as a whole. The
schedule of valuation and qualifying accounts is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
 
                                          Arthur Andersen LLP
 
Philadelphia, Pa.,
February 28, 1997
 
                                      S-1
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                        BALANCE,   CHARGES              BALANCE,
                                      BEGINNING OF   TO     DEDUCTIONS   END OF
                                         PERIOD    EXPENSE FROM RESERVE  PERIOD
                                      ------------ ------- ------------ --------
<S>                                   <C>          <C>     <C>          <C>
March 31, 1997 (unaudited):
  Reserve for doubtful accounts......     $795      $234       $ 47       $982
December 31, 1996:
  Reserve for doubtful accounts......     $487      $467       $159       $795
December 31, 1995:
  Reserve for doubtful accounts......     $554      $418       $485       $487
December 31, 1994:
  Reserve for doubtful accounts......     $513      $180       $139       $554
</TABLE>
 
                                      S-2
<PAGE>
 
                                 EXHIBIT INDEX
 
 
<TABLE>   
<CAPTION>
 EXHIBIT
   NO.                                   EXHIBIT
 -------                                 -------
 <C>     <S>
  1.1**  Form of U.S. Underwriting Agreement
  1.2**  Form of International Underwriting Agreement
  3.1**  Articles of Incorporation of the Company
  3.2**  Bylaws of the Company
  5*     Opinion of Cozen and O'Connor
  9**    Form of Voting Trust Agreement by and among certain shareholders of
         the Company
 10.1    Pierce Leahy Corp. Non-Qualified Stock Option Plan (incorporated by
         reference to Exhibit 10.3 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.2**  Pierce Leahy Corp. 1997 Stock Option Plan
 10.3    Credit Agreement, dated as of August 13, 1996, among the Company,
         Pierce Leahy Command Company, the several lenders from time to time
         parties thereto, Canadian Imperial Bank of Commerce, as Canadian Ad-
         ministrative Agent, and Canadian Imperial Bank of Commerce, New York
         Agency, as U.S. administrative agent, together with certain collateral
         documents attached thereto, including the form of US$ Note, the form
         of Canadian$ Note, the form of the U.S. Global Guarantee and Security
         Agreement made by the Company, certain of its affiliates and subsidi-
         aries and its shareholders in favor of the U.S. Administrative Agent,
         the form of Canadian Security Agreement between Pierce Leahy Command
         Company and the Canadian Administrative Agent and the form of Pledge
         and Intercreditor Agreement among certain of the Company's affiliates,
         the US Administrative Agent and the Canadian Administrative Agent (in-
         corporated by reference to Exhibit 10.4 to the Company's Registration
         Statement on Form S-4, File No. 333-9963)
 10.4    Indenture, dated as of July 15, 1996, among the Company, as issuer,
         and United States Trust Company of New York, as trustee (incorporated
         by reference to Exhibit 4.4 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.5**  Form of Indenture among the Company, as issuer, and The Bank of New
         York, as trustee
 10.6    Share Purchase Agreement dated September 30, 1995 between the Company
         and Moore Corporation Limited (incorporated by reference to Exhibit
         10.5 to the Company's Registration Statement on Form S-4, File No.
         333-9963)
 10.7    Stock Purchase Agreement dated April 17, 1996 among the Company and
         Security Archives, Inc. and Patrick G. Clayton, Carol A. Clayton and
         Byron Wood Clayton (incorporated by reference to Exhibit 10.6 to the
         Company's Registration Statement on Form S-4, File No. 333-9963)
 10.8    Stock Purchase Agreement dated as of February 27, 1997 between the
         Company, Records Management Services, Inc. and certain shareholders of
         Records Management Services, Inc. (incorporated by reference to Ex-
         hibit 10.7 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1996)
 10.9**  Form of Tax Indemnification Agreement among the Company and certain of
         its shareholders
 10.10** First Amendment, dated as of October 23, 1996, to the Credit Agreement
 10.11** Second Amendment and Consent, dated as of March 27, 1997, to the
         Credit Agreement
 10.12*  Third Amendment, Consent and Waiver, dated as of May 22, 1997, to the
         Credit Agreement
 11**    Statement re: computation of per share earnings
 21**    Subsidiaries of the Registrant
 23.1    Consent of Cozen and O'Connor (included in Exhibit 5)
 23.2*   Consent of Arthur Andersen LLP
 23.3*   Consent of Deloitte & Touche LLP
 23.4*   Consent of Deloitte & Touche LLP
 24**    Power of Attorney
</TABLE>    
- --------
 * Filed herewith.
** Previously filed.

<PAGE>
 
                                                                       Exhibit 5

                       [LETTERHEAD OF COZEN AND O'CONNOR]



                                 June 24, 1997



Pierce Leahy Corp.
631 Park Avenue
King of Prussia, PA  19406

          Re:  Registration Statement on Form S-1
               File No. 333-23121
               ----------------------------------
    
Ladies and Gentlemen:

          As counsel to Pierce Leahy Corp. (the "Company"), we have assisted in
the preparation of the Company's Registration Statement on Form S-1, File No.
333-23121 (the "Registration Statement"), filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended.  The Registration
Statement covers 6,109,506 shares (the "Shares") of the Company's Common Stock,
$.01 par value (the "Common Stock") to be sold by the Company and certain
selling shareholders named therein (the "Selling Shareholders"), including up to
796,892 additional shares of Common Stock which the Underwriters will have an
option to purchase from the Company and certain of the Selling Shareholders,
solely for the purpose of covering over-allotments.

          In connection therewith, we have examined the originals or copies,
certified or otherwise identified to our satisfaction, of the Company's Articles
of Incorporation, as amended, its Bylaws, minutes and resolutions of its Board
of Directors and shareholders, and such other documents and corporate records
relating to the Company and the issuance of the Common Stock covered by the
Registration Statement as we have deemed necessary or appropriate for purposes
of rendering this opinion.

          In our examinations of documents, instruments and other papers, we
have assumed the genuineness of all signatures on original and certified
documents and the conformity to original and certified documents of all copies
submitted to us as conformed, photostatic and other copies.  As to matters of
fact which have not been independently established, we have relied upon
representations of officers of the Company.

          Based upon the foregoing examination, information and assumptions, it
is our opinion that when sold in accordance with the plan of distribution set
forth in the Registration Statement, the Shares will be legally issued, fully
paid and non-assessable.


          We hereby consent to the reference to our firm in the Registration
Statement under the Prospectus caption "Legal Matters" and to the inclusion of
this opinion as Exhibit 5 to the Registration Statement.

                                       Very truly yours,



                                       COZEN AND O'CONNOR

<PAGE>
 
     THIRD AMENDMENT, CONSENT AND WAIVER, dated as of May 22, 1997 (this
"Amendment, Consent and Waiver"), to the Credit Agreement, dated as of August
 ------------------------------                                               
13, 1996 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among PIERCE LEAHY CORP., a New York
                   ----------------                                        
corporation (the "Company"), PIERCE LEAHY COMMAND COMPANY, a company organized
                  -------                                                     
and existing under the laws of the Province of Nova Scotia (the "Canadian
                                                                 --------
Borrower" and, together with the Company, the "Borrowers"), the several banks
- --------                                       ---------                     
and other financial institutions from time to time parties thereto (the
                                                                       
"Lenders"), Canadian Imperial Bank of Commerce, New York Agency, as US
 -------                                                              
Administrative Agent for the US$ Lenders thereunder, and Canadian Imperial Bank
of Commerce, as Canadian Administrative Agent for the C$ Lenders thereunder.


                             W I T N E S S E T H :
                             - - - - - - - - - -  


     WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
certain loans and other extensions of credit to the Borrowers; and

     WHEREAS, the Borrowers have requested, and, upon this Amendment, Consent
and Waiver becoming effective, the Required Lenders have agreed, that certain
provisions of the Credit Agreement be amended, and that certain non-compliances
with the provisions of the Credit Agreement be consented to and waived, all in
the manner provided for in this Amendment, Consent and Waiver;

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     I.   Defined Terms.  Terms defined in the Credit Agreement and used herein
          -------------                                                        
shall have the meanings given to them in the Credit Agreement.

     II.  Amendment to Subsection 8.10(a) of the Credit Agreement.  Subsection
          -------------------------------------------------------             
8.10(a) of the Credit Agreement is hereby amended by deleting the table
appearing at the end of said paragraph and substituting in lieu thereof the
following table:
<TABLE>
<CAPTION>
 
- --------------------------------------------------------------------------- 
"Period                                                           Ratio
 ------                                                           -----
- ------------------------------------------------------------  -------------
<S>                                                           <C>
 
From and including the Closing Date through March 30, 1998    6.25 to 1.00
 
From and including March 31, 1998 through June 29, 1998       6.00 to 1.00
 
From and including June 30, 1998 through June 30, 1999        5.75 to 1.00
From and including July 1, 1999 and thereafter                5.50 to 1.00"
- ---------------------------------------------------------------------------
</TABLE>
<PAGE>
 
                                                                            2
 
     III.     Consent.  The Required Lenders hereby consent, in accordance with
              -------                                                          
paragraph (e)(i) of the proviso contained in the definition of "Permitted
Acquisition" in Section 1.1 of the Credit Agreement, to the acquisitions of (i)
Austin File Room, Inc., (ii) Nuway Storage and (iii) the remaining 60%
partnership interest in Knott Pierce Limited Partnership, respectively, on the
terms and conditions set forth in Schedule I to this Amendment, Consent and
Waiver, notwithstanding that the aggregate amount of the proceeds of Acquisition
Loans made in the 1997 fiscal year of the Company that are used to fund
Permitted Acquisitions shall exceed US$65,000,000.

     IV.      Waiver.  The Required Lenders hereby waive any Default or Event of
              ------                                                            
Default under the Credit Agreement resulting from the Company's incurrence of
mortgage Indebtedness in the principal amount of approximately US$4.3 million on
the Travelers Corporation Building Archives in Windsor, Connecticut.

     V.       Conditions to Effectiveness. This Amendment, Consent and Waiver
              ---------------------------
shall become effective on the date (the "Amendment, Consent and Waiver Effective
                                         ---------------------------------------
Date") upon which the Borrowers, each of the Guarantors, the US Administrative
- ----
Agent and each of the Required Lenders shall have executed and delivered to the
US Administrative Agent this Amendment, Consent and Waiver.

     VI.      General.
              -------   

     1.       Representations and Warranties.  To induce the US Administrative
              ------------------------------
Agent and the Lenders parties hereto to enter into this Amendment, Consent and
Waiver, the Company hereby represents and warrants to the US Administrative
Agent and each of the Lenders as of the Amendment, Consent and Waiver Effective
Date that the representations and warranties made by the Company in the Loan
Documents are true and correct in all material respects on and as of the
Amendment, Consent and Waiver Effective Date, before and after giving effect to
the effectiveness of this Amendment, Consent and Waiver, as if made on and as of
the Amendment, Consent and Waiver Effective Date.

     2.       Payment of Expenses.  The Company agrees to pay or reimburse the
              -------------------
US Administrative Agent for all of its reasonable out-of-pocket costs and
expenses incurred in connection with this Amendment, Consent and Waiver, any
other documents prepared in connection herewith and the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel to the US Administrative Agent.

     3.       No Other Amendments, Consents and Waivers; Confirmation.  Except
              -------------------------------------------------------
as expressly amended, modified and supplemented hereby, the provisions of the
Credit Agreement and the other Loan Documents are and shall remain in full force
and effect.
<PAGE>
 
                                                                            3
 
     4.      Governing Law; Counterparts.
             --------------------------- 

     (a)     This Amendment, Consent and Waiver and the rights and obligations
     of the parties hereto shall be governed by, and construed and interpreted
     in accordance with, the laws of the State of New York.

     (b)     This Amendment, Consent and Waiver may be executed by one or more
     of the parties to this Agreement on any number of separate counterparts,
     and all of said counterparts taken together shall be deemed to constitute
     one and the same instrument. A set of the copies of this Amendment, Consent
     and Waiver signed by all the parties shall be lodged with each of the
     Company and the US Administrative Agent. This Amendment, Consent and Waiver
     may be delivered by facsimile transmission of the relevant signature pages
     hereof.
<PAGE>
 
                                                                             4

 
               IN WITNESS WHEREOF, the parties hereto have caused this
     Amendment, Consent and Waiver to be duly executed and delivered by their
     respective proper and duly authorized officers as of the day and year first
     above written.


                              PIERCE LEAHY CORP.

                              By:
                                 -------------------------------------
                                Title:


                              PIERCE LEAHY COMMAND COMPANY

                              By:
                                 -------------------------------------
                                Title:


                              CANADIAN IMPERIAL BANK OF COMMERCE, 
                              NEW YORK AGENCY,
                              as US Administrative Agent and as a Lender

                              By:
                                 -------------------------------------
                                Title:  Director, CIBC Wood Gundy Securities
                                         Corp., AS AGENT

                              BANK OF IRELAND GRAND CAYMAN
                              as a Lender

                              By:
                                 -------------------------------------  
                                Title:


                              CREDIT LYONNAIS NEW YORK BRANCH
                              as a Lender

                              By:
                                
                                 -------------------------------------
                                Title:


                              FLEET NATIONAL BANK
                              as a Lender

                              By:
                                
                                 -------------------------------------
                                 Title:
<PAGE>
 
                                                                             5
 
                              THE FIRST NATIONAL BANK OF MARYLAND
                              as a Lender

                              By:
                                 ------------------------------------- 
                                 Title:


                              HELLER FINANCIAL
                              as a Lender

                              By:
                                 ------------------------------------- 
                                 Title:


                              STATE STREET BANK AND TRUST COMPANY
                              as a Lender

                              By:
                                 ------------------------------------- 
                                 Title:


                              THE BANK OF NEW YORK
                              as a Lender

                              By:
                                 ------------------------------------- 
                                 Title:
<PAGE>
 
                          ACKNOWLEDGEMENT AND CONSENT

          Each of the undersigned, as a Guarantor under that certain US Global
Guarantee and Security Agreement, dated as of August 13, 1996, made by each of
such Guarantors in favor of the US Administrative Agent, hereby acknowledges and
consents to the execution and delivery of this Third Amendment, Consent and
Waiver to which this Acknowledgment and Consent is attached and hereby reaffirms
its obligations as a Guarantor under said US Global Guarantee and Security
Agreement.


                              PIERCE LEAHY CORP.


                              By:
                                 ------------------------------------- 
                                 Title:


                              PLC COMMAND I, INC.


                              By:
                                 ------------------------------------- 
                                 Title:


                              PLC COMMAND II, INC.


                              By:
                                 ------------------------------------- 
                                 Title:


                              PLC COMMAND I, L.P.
                              By PLC Command I, Inc., as its general partner

                              By:
                                 ------------------------------------- 
                                 Title:

                              PLC COMMAND II, L.P.
                              By PLC Command II, Inc., as its general partner

                              By:
                                 ------------------------------------- 
                                 Title:

<PAGE>
 
                                                                    EXHIBIT 23.2
 
                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
  As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
Registration Statement.
 
                                          Arthur Andersen LLP
 
Philadelphia, PA
   
June 23, 1997     

<PAGE>
 
                                                                 
                                                              EXHIBIT 23.3     
                         
                      INDEPENDENT AUDITORS' CONSENT     
   
  We consent to the use in this Amendment No. 3 to Registration Statement No.
333-23121 of Pierce Leahy Corp. of our report dated August 14, 1995, on the
financial statements of Securities Archives, Inc. appearing in the Prospectus,
which is a part of this Registration Statement, and to the reference to us
under the heading "Experts" in such Prospectus.     
   
Deloitte & Touche LLP     
   
Dallas, Texas     
   
June 23, 1997     

<PAGE>
 
                                                                 
                                                              EXHIBIT 23.4     
                         
                      INDEPENDENT AUDITORS' CONSENT     
   
  We consent to the use in this Amendment No. 3 to Registration Statement No.
333-23121 of Pierce Leahy Corp. of our report dated November 22, 1996 (January
10, 1997 as to Note 11) on the consolidated financial statements of Records
Management Services, Inc. and subsidiaries appearing in the Prospectus, which
is a part of this Registration Statement, and to the reference to us under the
heading "Experts" in such Prospectus.     
   
Deloitte & Touche LLP     
   
Chicago, Illinois     
   
June 23, 1997     


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