<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
- --------------------------------------------------------------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2000
-----------
IRON MOUNTAIN INCORPORATED
--------------------------
(Exact Name of Registrant as Specified in its Charter)
PENNSYLVANIA
------------
(State or Other Jurisdiction of Incorporation or Organization)
1-13045 23-2588479
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(Commission file number) (I.R.S. Employer Identification No.)
745 ATLANTIC AVENUE, BOSTON, MASSACHUSETTS 02111
------------------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
(617) 535-4766
---------------
(Registrant's Telephone Number, Including Area Code)
<PAGE>
Item 5. Other Events
On May 1, 2000, Iron Mountain Incorporated ("Iron Mountain" or the "Company")
announced certain financial information for the fiscal quarter ended March 31,
2000. For more information, see the Company's press release, dated May 1, 2000,
which is attached herewith as Exhibit 99.
Item 7. Pro Forma Financial Information and Exhibits
During 1999 and 2000, Iron Mountain acquired several businesses. The following
represents unaudited Pro Forma Condensed Consolidated Financial Statements for
certain such businesses acquired in 1999 and 2000, and certain other
transactions. Pursuant to Article 11 of Regulation S-X, pro forma effect has
only been given to acquired businesses for which the Company has previously
filed audited financial statements in accordance with Rule 3-05 of Regulation
S-X.
The accompanying presents Iron Mountain's unaudited pro forma condensed
consolidated balance sheet as of December 31, 1999 and unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
1999 and notes thereto.
The term pro forma transactions, as used in the accompanying pro forma condensed
consolidated financial statements and notes thereto, is defined as certain of
our 1999 acquisitions, the Pierce Leahy Corp. ("Pierce Leahy") acquisition and
certain financing transactions and includes the following: the acquisitions of
Iron Mountain Europe Limited ("Iron Mountain Europe") (50.1% interest), First
American Records Management, Inc., Data Base, Inc., MAP, S.A. (Memogarde) by
Iron Mountain Europe, Central File, Inc., Sistemas de Archivo Corporativo, S. de
R.L. de C.V. (50.1% interest), Stortext (Holdings) Ltd. by Iron Mountain Europe,
Midtown Professional Records Center, Inc., and Pierce Leahy Corp.; the issuance
of $150 million of senior subordinated notes in April 1999 and our public
offering of common stock in May 1999. The pro forma condensed consolidated
financial statements separately present the pro forma effects of the Pierce
Leahy merger. You should read the pro forma financial statements in conjunction
with our Form 8-K filed on February 1, 2000 and our 1999 Annual Report on Form
10-K filed on March 30, 2000.
On February 1, 2000, Pierce Leahy and Iron Mountain consummated the transactions
contemplated by a certain Agreement and Plan of Merger among Pierce Leahy and
Iron Mountain, dated as of October 20, 1999. The acquisition was structured as a
reverse merger. Pierce Leahy is the surviving legal entity and has changed its
name to Iron Mountain Incorporated. The total consideration for this transaction
is valued at approximately $1.1 billion.
The merger consideration resulted in the equivalent of a fixed exchange ratio of
1.1 shares of Iron Mountain common stock for each share of Pierce Leahy common
stock. The exchange ratio was effected by Pierce Leahy paying, prior to the
merger, a stock dividend of one share of its common stock for each 10 shares
then outstanding. The purchase price of Pierce Leahy was based upon the fair
value of its common stock and options to acquire its common stock, the fair
value of the assumed debt and transaction costs.
The total consideration for this transaction was composed of: (i) approximately
18.8 million shares of the Company's common stock with a fair value of $444
million; (ii) approximately 1.6 million options to acquire the Company's common
stock with a fair value of $25 million; (iii) assumed debt with a fair value of
$585 million; and (iv) approximately $4 million of capitalized transaction
costs.
<PAGE>
(b) Pro forma Financial Information
Page
----
Unaudited Pro forma Condensed Consolidated Balance Sheet
as of December 31, 1999 2
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1999 3
Schedule A- Schedule of 1999 Pro Forma Acquisitions for
the year ended December 31, 1999 4
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements 5
(c) Exhibits
Exhibit No. 99 Press Release, dated as of May 1, 2000
<PAGE>
IRON MOUNTAIN INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet
of Iron Mountain (the "Iron Mountain Pro Forma Balance Sheet") has been prepared
based on the historical balance sheets of Iron Mountain and Pierce Leahy as of
December 31, 1999. The Iron Mountain Pro Forma Balance Sheet gives effect to the
acquisition of Pierce Leahy by Iron Mountain as if the acquisition had been
completed as of December 31, 1999.
The following Unaudited Pro Forma Condensed Consolidated Statement of
Operations of Iron Mountain (the "Iron Mountain Pro Forma Statement of
Operations" and together with the Iron Mountain Pro Forma Balance Sheet, the
"Iron Mountain Pro Forma Financial Statements") for the year ended December 31,
1999 gives effect to: (a) certain 1999 acquisitions and the Pierce Leahy
acquisition; (b) the issuance of $150 million 8 1/4% Senior Subordinated Notes,
in April 1999; (c) the sale of 5.8 million shares of common stock in May 1999;
(d) Iron Mountain's repurchase of shares issued in connection with the Data Base
acquisition for $39.5 million on May 18, 1999 and (e) the Company's amendment to
its revolving credit facility effective February 1, 2000, as if each had
occurred as of January 1, 1999. Pursuant to certain SEC Rules and Regulations,
the Iron Mountain Pro Forma Financial Statements do not include results of
operations, or pro forma adjustments, for 9 acquisitions completed in 1999 and 3
acquisitions completed in 2000 that are not defined herein as the 1999 Pro Forma
Acquisitions or shown as a 2000 acquisition. In addition, the Iron Mountain Pro
Forma Statement of Operations does not include the results of operations for
acquisitions completed by Pierce Leahy in 1999. Pro forma adjustments are
described in the accompanying notes.
The acquisition of Pierce Leahy by Iron Mountain was effected by
merging Iron Mountain with and into Pierce Leahy, with Pierce Leahy being the
surviving legal entity. Immediately after the merger, Pierce Leahy changed its
name to Iron Mountain Incorporated. As the Iron Mountain stockholders owned
approximately 65% of the combined company as of the acquisition date, the merger
was accounted for as a reverse acquisition, and Iron Mountain is the acquiring
company for accounting purposes.
Iron Mountain's pro forma financial statements do not give effect to
estimated annual net cost savings of $15 million associated with the Pierce
Leahy acquisition. Management expects to achieve this annual level of savings
within three years after the merger. Further, the pro forma financial statements
do not reflect any costs that were associated with integrating the two companies
as it is not practicable to quantify these costs at this time. These costs may
be material to Iron Mountain's results of operations. Depending upon
management's plans and the nature and timing of the costs, the costs may be
accounted for as part of the acquisition accounting, as a post-combination
restructuring charge, as operating expenses in the period incurred or as capital
expenditures. The Company expects to record a restructuring charge in the second
quarter of 2000. The Company will record this charge once the restructuring plan
has been formalized. Furthermore, the pro forma results also do not give effect
to all cost savings or incremental costs that may occur as a result of the
integration and consolidation of the 1999 Pro Forma Acquisitions included in
these pro forma financial statements.
In June 1999, Iron Mountain decided to sell its information technology
staffing business, Arcus Staffing Resources, Inc., which was acquired in January
1998 as part of its acquisition of Arcus Group, Inc. Effective November 1, 1999
Iron Mountain completed the sale of substantially all of the assets of Arcus
Staffing. Iron Mountain has accounted for the sale of Arcus Staffing as a
discontinued operation.
Iron Mountain has accounted for its acquisitions and the related real
estate transactions using the purchase method of accounting.
Iron Mountain's pro forma statement of operations does not necessarily
indicate the actual results of operations that Iron Mountain would have reported
if the events described above had occurred as of January 1, 1999, nor does it
necessarily indicate the results of future operations. In the opinion of Iron
Mountain's management, all adjustments and disclosures necessary to fairly
present these pro forma financial statements have been made.
The Iron Mountain Pro Forma Financial Statements should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and with Iron Mountain's and Pierce Leahy's
financial statements contained in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 30, 2000.
<PAGE>
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PIERCE LEAHY PRO FORMA
IRON PIERCE PRO FORMA IRON
MOUNTAIN LEAHY ADJUSTMENTS MOUNTAIN
---------- ------ ------------ ----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets $ 143,664 $ 64,193 $ (21) (A) $ 207,836
Property, Plant and Equipment, net 403,739 276,034 -- 679,773
Goodwill, net 729,213 351,138 430,057 (A) 1,510,408
Other Long-term Assets 40,596 69,101 (59,165) (A) 50,532
---------- --------- -------- ----------
Total Assets $1,317,212 $ 760,466 $ 370,871 $2,448,549
========== ========= ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 150,348 $ 98,389 $ 4,275 (B) $ 253,012
Long-term Debt, net of Current Portion 603,057 563,997 (12,390) (B) 1,154,664
Other Long-term Liabilities 5,749 -- -- 5,749
Deferred Rent 10,819 7,192 (7,192) (B) 10,819
Deferred Income Taxes 16,207 21,080 (11,534) (B) 25,753
Minority Interest 42,278 -- -- 42,278
Stockholders' Equity 488,754 69,808 397,712 (B) 956,274
---------- --------- -------- ----------
Total Liabilities and Stockholders'
Equity $1,317,212 $ 760,466 $370,871 $2,448,549
========== ========= ======== ==========
</TABLE>
The accompanying notes are an integral part of these pro forma
financial statements.
2
<PAGE>
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL 1999 PIERCE LEAHY PRO FORMA
IRON PRO FORMA PRO FORMA PIERCE PRO FORMA IRON
MOUNTAIN ACQUISITIONS(1) ADJUSTMENTS SUBTOTAL LEAHY ADJUSTMENTS MOUNTAIN
------------ --------------- ----------- -------- ------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Storage $ 317,387 $18,962 $ -- $336,349 $190,095 $ -- $526,444
Service and Storage
Material Sales 202,162 7,154 -- 209,316 152,167 -- 361,483
---------- ---------- ----------- -------- --------- --------- --------
Total Revenues 519,549 26,116 -- 545,665 342,262 -- 887,927
Operating Expenses:
Cost of Sales (Excluding 260,930 12,618 -- 273,548 191,510 (20,393)(I) 444,665
Depreciation)
Selling, General and
Administrative 128,948 15,882 (9,396) (C) 135,434 45,856 28,716 (J) 210,006
Depreciation and
Amortization 65,422 2,477 1,748 (D) 69,647 43,655 4,216 (K) 117,518
Foreign Currency Exchange -- -- -- -- (7,473) 7,473 (L) --
Merger-related Expenses -- -- -- -- 2,361 -- 2,361
---------- ---------- ----------- -------- --------- --------- --------
Total Operating Expenses 455,300 30,977 (7,648) 478,629 275,909 20,012 774,550
---------- ---------- ----------- -------- --------- --------- --------
Operating Income (Loss) 64,249 (4,861) 7,648 67,036 66,353 (20,012) 113,377
Interest Expense, net 54,425 1,210 855 (E) 56,490 52,363 (765) (M) 108,088
Other Income 17 -- -- 17 -- 7,473 (N) 7,490
---------- ---------- ----------- -------- --------- --------- --------
Income (Loss) Before
Provision for Income
Taxes and Minority Interest 9,841 (6,071) 6,793 10,563 13,990 (11,774) 12,779
Provision for Income Taxes 10,579 805 (223)(F) 11,161 6,290 1,242 (O) 18,693
Minority Interest 322 -- 339 (G) 661 -- -- 661
---------- ---------- ----------- -------- --------- --------- --------
Income (Loss) from Continuing $ (1,060) $ (6,876) $ 6,677 $(1,259) $7,700 $(13,016) $(6,575)
Operations ========== ========== =========== ======== ========= ========= ========
Loss from Continuing
Operations per Common
Share - Basic and Diluted $ (0.03) $ (0.12)
========== ========
Weighted Average Common
Shares Outstanding -
Basic and Diluted 33,345 2,063 (H) 35,408 18,784 (P) 54,192
========== =========== ========= ========== ========= =========
EBITDA (2) $ 129,671 $ (2,384) $ 9,396 $ 136,683 $ 104,896 $ (8,323) $ 233,256
========== ========== =========== ========= ========== ========= =========
</TABLE>
- -----------------
(1) See Schedule A for detail of the 1999 Pro Forma Acquisitions.
(2) EBITDA is defined as earnings before interest, taxes, depreciation,
amortization, extraordinary items, other income and merger-related expenses
The accompanying notes are an integral part of these pro forma
financial statements.
3
<PAGE>
IRON MOUNTAIN INCORPORATED
SCHEDULE OF 1999 PRO FORMA ACQUISITIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST
IRON AMERICAN 1999
MOUNTAIN RECORDS DATA PRO FORMA
EUROPE MANAGEMENT BASE MEMOGARDE OTHER ACQUISITIONS
-------- ---------- ------ --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Storage $ 3,178 $ 1,687 $ 6,781 $1,847 $5,469 $18,962
Service and Storage Material Sales 2,032 1,165 415 902 2,640 7,154
------- -------- ------- ------- ------- --------
Total Revenues 5,210 2,852 7,196 2,749 8,109 26,116
Operating Expenses:
Cost of Sales (Excluding Depreciation) 2,624 1,816 3,254 826 4,098 12,618
Selling, General and Administrative 1,313 3,258 8,695 719 1,897 15,882
Depreciation and Amortization 608 153 873 271 572 2,477
------- -------- ------- ------- ------- --------
Total Operating Expenses 4,545 5,227 12,822 1,816 6,567 30,977
------- -------- ------- ------- ------- --------
Operating Income (Loss) 665 (2,375) (5,626) 933 1,542 (4,861)
Interest Expense, net 200 161 491 151 207 1,210
------- -------- ------- ------- ------- --------
Income (Loss) Before Provision for Income
Taxes and Minority Interest 465 (2,536) (6,117) 782 1,335 (6,071)
Provision for Income Taxes 215 -- -- 408 182 805
------- -------- ------- ------- ------- --------
Income (Loss) from Continuing Operations $ 250 $ (2,536) $ (6,117) $ 374 $ 1,153 $ (6,876)
======= ======== ======= ======= ======= ========
EBITDA $ 1,273 $ (2,222) $ (4,753) $1,204 $2,114 $ (2,384)
======= ======== ======= ======= ======= ========
</TABLE>
- --------------------------------------------
(1) Represents historical results of operations for each 1999 Pro Forma
Acquisition for the period in 1999 prior to the time it was acquired,
unless otherwise noted. See "Overview" in the accompanying notes.
The accompanying notes are an integral part of these pro forma
financial statements.
4
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
OVERVIEW
1999 PRO FORMA ACQUISITIONS
In January of 1999, Iron Mountain acquired a controlling 50.1% interest in
Iron Mountain Europe (f.k.a. Britannia Data Management Limited) for total
consideration of $49.3 million, consisting of cash and the capital stock of
Arcus Data Security Limited, the Company's existing data security services
business in London. In April of 1999, Iron Mountain acquired Data Base, Inc. and
related real estate for total consideration of $115.0 million, consisting of
cash, assumed debt, and common stock. In April of 1999, Iron Mountain also
acquired First American Records Management, Inc. ("FARM") for total
consideration of $41.5 million in cash. In June of 1999, Iron Mountain, through
Iron Mountain Europe, acquired a controlling 50.1% interest in MAP, S.A.
("Memogarde") for total consideration of $16.9 million, consisting of cash and
assumed debt. The aggregate purchase price for the four remaining 1999 Pro Forma
Acquisitions, comprising Midtown Professional Records Centre, Inc., Central
File, Inc., Iron Mountain Europe's acquisition of Stortext (Holdings) Ltd. and a
50.1% interest in Sistemas de Archivo Corporativo, S. de R.L. de C.V, was $30.3
million in cash and assumed debt.
PIERCE LEAHY ACQUISITION
On February 1, 2000, Iron Mountain completed its merger with Pierce Leahy
for total consideration of approximately $1.1 billion, which consisted of common
stock, options to acquire common stock and the assumption of debt. Pierce Leahy
is the surviving legal entity and immediately changed its name to Iron Mountain
Incorporated. Although Pierce Leahy is the surviving legal entity, Iron Mountain
is considered the acquirer for accounting purposes.
The merger consideration resulted in the equivalent of a fixed exchange
ratio of 1.1 shares of Iron Mountain common stock for each share of Pierce Leahy
common stock. The exchange ratio was effected by Pierce Leahy paying, prior to
the merger, a stock dividend of one share of Pierce Leahy common stock for each
10 shares then outstanding. The Pierce Leahy common stock was exchanged for
shares of Iron Mountain common stock. Each outstanding share of Iron Mountain
common stock was converted into one share of common stock of the combined
entity.
The transaction has been accounted for as a reverse acquisition. The
purchase price of Pierce Leahy is based upon the fair value of Pierce Leahy
common stock and options to acquire Pierce Leahy common stock, the fair value of
the assumed debt on the date that the merger was completed and transaction
costs. The pro forma balance sheet reflects the fair value of Pierce Leahy's
debt as of December 31, 1999, while interest expense on the pro forma income
statement is based on the fair value of Pierce Leahy's debt as of February 1,
2000. As the common stock exchange ratio is fixed, the fair value of Pierce
Leahy common stock is based upon the stock price on the date the merger was
announced.
5
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
The calculation of the purchase price as of December 31, 1999 and February 1,
2000 are as follows (in millions):
<TABLE>
<CAPTION>
December 31, February 1,
1999 2000
------------------- -------------------
<S> <C> <C>
Fair Value of Common Stock Issued(1) $ 444.0 $ 444.0
Fair Value of Stock Options(2) 25.0 25.0
Fair Value of Debt Assumed(3) 568.6 584.9
Transaction Costs 4.1 4.1
--------- ---------
Total Purchase Price $ 1,041.7 $ 1,058.0
========= =========
</TABLE>
(1) Based on 18,783,813 outstanding shares of Pierce Leahy common stock at
February 1, 2000 at a fair value of $23.64 per share. Both the numbers of shares
and share price reflect an adjustment for Pierce Leahy's January 2000 10% stock
dividend.
(2) Based on options to acquire 1,563,566 shares of Pierce Leahy common stock at
February 1, 2000 after giving effect to the January 2000 10% stock dividend.
(3) The December 31, 1999 fair value of Pierce Leahy's debt assumed is
calculated using the outstanding balances as of December 31, 1999 and quoted
market prices of its publicly traded debt as of February 1, 2000. For purposes
of determining the final purchase price, the actual fair value used was based on
the outstanding balances and the quoted market prices when the merger was
completed, February 1, 2000.
A number of Pierce Leahy shareholders are parties to the Pierce Leahy
shareholders' agreement. This agreement restricts the ability of these
shareholders to sell 5.7 million shares of Iron Mountain common stock (after
giving effect to the stock dividend) for up to five years after the merger. Iron
Mountain may obtain an appraisal to determine the fair value of these restricted
shares. Iron Mountain believes that, due to these restrictions, the actual fair
value of these restricted shares could be less than the $23.64 per share value
used for purposes of calculating the purchase price. Accordingly, Iron Mountain
would record a corresponding decrease in equity, goodwill and goodwill
amortization from the amounts used in the accompanying pro forma financial
statements. If the resale restrictions result in a 10% discount to the fair
value of the shares, there would be a reduction of approximately $13 million of
equity and goodwill and $0.5 million of goodwill amortization annually.
The pro forma statement of operations does not reflect additional
estimated transaction costs of approximately $1.1 million that Pierce Leahy
charged to expense in January 2000. Additionally, the pro forma statements do
not reflect a compensation charge of approximately $2.0 million recorded by
Pierce Leahy in January 2000 associated with accelerating the vesting of certain
stock options.
6
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
IRON MOUNTAIN EUROPE
In January 1999, Iron Mountain purchased a controlling 50.1% interest
in Iron Mountain Europe for total consideration of $49.3 million, consisting of
cash and the capital stock of Arcus Data Security Limited, our existing data
security services business in London.
Iron Mountain Europe has an April 30 fiscal year end. Iron Mountain
consolidates Iron Mountain Europe using an October 31 fiscal year end.
Accordingly, the Iron Mountain Pro Forma Statements of Operations for the year
ended December 31, 1999 include Iron Mountain Europe's results for the year
ended October 31, 1999.
The financial statements of Iron Mountain Europe, Memogarde and
Stortext have been prepared in accordance with U.S. generally accepted
accounting principles and have been translated into U.S. dollars in accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation." The functional currencies of Iron Mountain Europe, Memogarde, and
Stortext are Pounds Sterling, French Francs and Pounds Sterling, respectively.
The assets and liabilities have been translated into U.S. dollars at the
exchange rate in effect at the end of the period translated. Revenues and
expenses have been translated into U.S. dollars at the average exchange rate in
effect during the period translated. Gains and losses that result from
translating assets and liabilities into U.S. dollars are included in
stockholders' equity as a cumulative translation adjustment. The amount of the
cumulative translation loss as of December 31, 1999 included in stockholders'
equity in the accompanying Iron Mountain Pro Forma Balance Sheet is $1.2
million.
DATA BASE ACQUISITION
On April 8, 1999, Iron Mountain acquired Data Base and related real
estate for $115.0 million including transaction costs. As part of the total
consideration, Iron Mountain issued 1,476,577 shares of common stock with a fair
value of $46.0 million. On May 18, 1999, Iron Mountain repurchased all of the
shares issued in connection with the Data Base acquisition from the former
shareholders of Data Base for $39.5 million, with a portion of the net proceeds
from the 1999 equity offering.
BALANCE SHEET
The aggregate consideration paid for the 1999 Pro Forma and Pierce
Leahy acquisitions was $1.3 billion. The excess of the purchase price over
the book value of the net assets acquired for each of the acquisitions was
allocated to tangible and intangible assets, based on our estimate of the
fair value of the net assets acquired. The following allocation of the
aggregate purchase price of the Pierce Leahy acquisition is based on the fair
value of net assets acquired as of December 31, 1999 and is subject to
adjustment, based on the final determination of the fair value as of February
1, 2000. Management believes that the final allocation of the purchase price
of the 1999 Pro Forma Acquisitions will not differ materially from the
preliminary estimated amounts.
7
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
1999 PRO FORMA ACQUISITIONS:
(in millions)
<S> <C> <C>
Current Assets $ 32.2
Property, Plant and Equipment 69.3
Goodwill 235.9
Other Long-term Assets 2.2
Current Liabilities (25.9)
Deferred Income Taxes (2.1)
Long-term Debt (15.2)
Other Long-term Liabilities (0.1)
Minority Interest (43.1)
---------
Purchase Price of 1999 Pro Forma Acquisitions $ 253.2
PIERCE LEAHY (1):
Current Assets $ 65.9
Property, Plant and Equipment 276.0
Goodwill 781.2
Other Long-term Assets 8.0
Current Liabilities (79.9)
Deferred Income Taxes (9.5)
---------
Purchase Price of Pierce Leahy 1,041.7
----------
Total Purchase Price of the 1999 Pro Forma
Acquisitions and Pierce Leahy $ 1,294.9
==========
</TABLE>
(1) The purchase price allocation is preliminary and is subject to
finalization of the fair value of fixed assets, operating leases,
restricted common stock and deferred income taxes.
The 1999 Pro Forma Acquisitions are assumed to be financed as follows (in
millions):
<TABLE>
<S> <C> <C>
Fair value of common stock issued $46.0
Net proceeds from the 1999 debt offering 145.0
Net proceeds from the 1999 equity offering 41.3
Borrowing's under Iron Mountain Europe's line of credit 13.6
Assumption of long-term debt 4.8
Capital Stock of Arcus Data Security Limited 2.5
--------
Purchase Price of 1999 Pro Forma Acquisitions $ 253.2
=======
</TABLE>
8
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
The accompanying Iron Mountain Pro Forma Balance Sheet as of December 31, 1999
has been prepared as if the Pierce Leahy acquisition had been fully consolidated
as of December 31, 1999 and reflects the following pro forma adjustments:
(A) Pro forma adjustments to assets consist of the following (in millions):
<TABLE>
<CAPTION>
OTHER
CURRENT LONG-TERM
ASSETS GOODWILL ASSETS
------ -------- ------
<S> <C> <C> <C>
Tax effect of fair value adjustments $ 1.7 $ -- $ --
Reverse Pierce Leahy's historical goodwill -- (351.1) --
Record goodwill related to the merger -- 779.5 --
Adjust the fair value of other long-term assets
consisting primarily of deferred financing costs and -- -- (61.2)
customer acquisition costs
Reclassify deferred transaction costs to goodwill (1.7) 1.7 --
Record deferred financing costs incurred in
connection with the credit agreement amendment -- -- 2.0
---------- --------- --------
Total Adjustments $ (0.0) $ 430.1 $ (59.2)
========== ========= ========
</TABLE>
9
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
(B) Pro forma adjustments to liabilities and stockholders' equity consist of the
following (in millions):
<TABLE>
<CAPTION>
DEFERRED
CURRENT LONG-TERM DEFERRED INCOME STOCKHOLDERS'
LIABILITIES DEBT RENT TAXES EQUITY
----------- --------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Reverse equity not assumed $ -- $ -- $ -- $ -- $ (69.8)
Issuance of common stock and options -- -- -- -- 469.0
Estimated costs to register common stock -- -- -- -- (1.5)
Tax effect of fair value adjustments -- -- -- (11.5) --
Fair value of debt assumed -- (18.2) -- -- --
Reverse Pierce Leahy's historical
deferred rent -- -- (7.2) -- --
Record debt incurred as a result of
transaction and filing costs, and
financing costs associated with the -- 5.8 -- -- --
credit agreement amendment
Record restructuring reserves related to
transaction (1) 5.1 -- -- -- --
Record fair value of liabilities (0.8) -- -- -- --
------ -------- ------- -------- -------
Total Adjustments $ 4.3 $ (12.4) $ (7.2) $ (11.5) $ 397.7
====== ======== ======= ======== =======
</TABLE>
(1) Includes costs to exit certain Pierce Leahy facilities as well as severance
and relocation payments for Pierce Leahy employees.
10
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
STATEMENTS OF OPERATIONS
PRO FORMA ADJUSTMENTS - 1999 PRO FORMA ACQUISITIONS AND FINANCING TRANSACTIONS
The accompanying Iron Mountain Pro Forma Statement of Operations for
the year ended December 31, 1999 has been prepared as if the 1999 Pro Forma
Acquisitions, the 1999 equity offering, and the 1999 debt offering had occurred
on January 1, 1999 and reflect the following pro forma adjustments:
(C) To reverse one-time bonus payments, other non-recurring compensation
expenses and broker's fees directly attributable to the Data Base and
FARM acquisitions.
(D) To reflect additional depreciation expense based on the fair value of the
assets acquired and the remaining useful lives and the amortization of
goodwill. Property, plant and equipment are depreciated over three to 50
years, goodwill is amortized over 25 to 30 years, software is amortized
over three years and covenants not-to-compete are amortized over two to
five years on a straight-line basis.
(E) Pro forma adjustments to interest expense consist of the following (in
millions):
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
-----------------
ACQUISITION ADJUSTMENTS:
<S> <C>
Reverse interest expense on debt of the acquired companies
retired or not assumed $ (0.8)
Record interest expense on the additional debt used to finance
the 1999 acquisitions assumed to be financed under our 2.4
revolving credit facility
FINANCING ADJUSTMENTS:
Reverse interest expense on our revolving credit facility debt
assumed to be retired with the net proceeds from the 1999
debt offering and a portion of the net proceeds from the (4.5)
1999 equity offering
Record interest expense related to our 1999 debt offering,
including amortization of deferred financing fees 3.8
------
Total Acquisition and Financing Adjustments $ 0.9
======
</TABLE>
(F) To adjust the provision for income taxes to a 40% rate on domestic pro
forma income before nondeductible goodwill amortization and other
nondeductible expenses, and adjust to foreign statutory rates on foreign
pro forma income before nondeductible goodwill.
(G) To record the 49.9% minority interest in the net income of Memogarde,
Stortext, Sistemas de Archivo Corporativo and Iron Mountain Europe.
11
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
(H) To adjust the pro forma weighted average common shares outstanding as if
the 1999 Pro Forma Acquisitions, the 1999 equity offering, and the 1999
debt offering had occurred on January 1, 1999. The number of shares of
common stock issued and repurchased, and the adjustments, are as follows
(in thousands):
<TABLE>
<CAPTION>
Total
Number of
Shares Issued Year Ended
Transactions or Repurchased December 31, 1999
------------ -------------- -----------------
<S> <C> <C>
1999 equity offering 5,750 2,063
Data Base 1,477 393
Repurchase of Data Base shares (1,477) (393)
------- ------
Net shares issued 5,750 2,063
======= ======
</TABLE>
12
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
PRO FORMA ADJUSTMENTS - PIERCE LEAHY
The accompanying Iron Mountain Pro Forma Statement of Operations for
the year ended December 31, 1999 has been prepared as if the Pierce Leahy
acquisition had occurred on January 1, 1999 and reflects the following pro forma
adjustments (in millions).
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
(I) Costs of Sales (excluding depreciation)
To reflect the normalization of rent expense $ 0.2
To conform Pierce Leahy's classification of cost of sales
and selling, general and administrative expenses to Iron
Mountain's classification (20.6)
-------
$ (20.4)
=======
(J) Selling, General and Administrative
To conform Pierce Leahy's classification of cost of sales
and selling, general and administrative expenses to Iron
Mountain's classification 20.6
To conform Pierce Leahy's accounting for customer
acquisition costs to Iron Mountain's accounting 8.1
-------
$ 28.7
=======
(K) Depreciation and Amortization
Amortization of goodwill created in the merger based on a
30-year life $ 14.9
To adjust depreciation and amortization for Iron
Mountain's estimation of useful lives of Pierce Leahy's
fixed assets and intangible assets (10.7)
-------
$ 4.2
=======
(L) Foreign Currency Exchange
To conform Pierce Leahy's classification of foreign
currency exchange gain to Iron Mountain's classification $ 7.5
=======
</TABLE>
13
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<S> <C>
(M) Interest Expense
Reverse amortization of Pierce Leahy's deferred financing
costs in connection with the adjustment to fair value of
debt assumed $ (1.6)
Record the amortization related to fair value adjustment
of debt assumed 0.2
Record amortization of deferred financing costs in
connection with the new credit facility 0.4
Record interest on borrowings associated with the
transaction costs of the merger, registration of shares of
common stock and deferred financing costs associated with
the credit agreement amendment 0.7
Reverse interest on Pierce Leahy's revolving credit (12.3)
facility
Record interest on Iron Mountain's revolving credit
facility at 6.95% 10.7
Record interest on additional debt incurred by Pierce
Leahy through February 1, 2000
1.1
--------
$ (0.8)
========
</TABLE>
The impact of a 1/8% change in the interest rate on pro forma
borrowings under Iron Mountain's revolving credit facility for the year ended
December 31, 1999 is $0.2 million.
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
-----------------
<S> <C>
(N) Other Income, net
To conform Pierce Leahy's classification of foreign
currency exchange gain to Iron Mountain's classification $ 7.5
======
(O) Provision for Income Taxes
To adjust the provision for income taxes to a 40% rate on
pro forma income before nondeductible goodwill and other $ 1.2
nondeductible expenses =======
(P) To adjust the pro forma weighted average common shares
outstanding as if the merger with Pierce Leahy had occurred on
January 1, 1999, including the effect of the 10% stock dividend
</TABLE>
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
--------------------------
(Registrant)
May 3, 2000 By: /s/ Jean A. Bua
- ----------- ----------------------------
(Date) Jean A. Bua
Vice President and Corporate Controller
(Principal Accounting Officer)
15
<PAGE>
EXHIBIT 99
FOR IMMEDIATE RELEASE
Contact: John F. Kenny, Jr.
Executive Vice President and
Chief Financial Officer
(617) 535-4799
IRON MOUNTAIN REPORTS FIRST-QUARTER 2000 FINANCIAL RESULTS
REVENUES INCREASE 94 PERCENT;
EBITDA DOUBLES TO $54 MILLION
BOSTON, MA - MAY 1, 2000 -- Iron Mountain Incorporated (NYSE: IRM), the global
leader in records and information management services, today reported
substantially higher revenues and EBITDA for the quarter ended March 31, 2000
compared with the same period in 1999.
Iron Mountain's total consolidated revenues for the first quarter of 2000 grew
to $212 million, an increase of 94 percent compared with the same period in
1999, reflecting both internal growth and acquisitions. Internal revenue growth
for the first quarter of 2000 was 14 percent.
Iron Mountain's earnings before interest, taxes, depreciation, amortization,
extraordinary items, other income and merger-related expenses ("EBITDA")
increased 100 percent to $54 million for the first quarter of 2000 compared with
the same period in 1999. Merger-related expenses are certain expenses directly
related to the Company's merger with Pierce Leahy Corp. that cannot be
capitalized and include costs of exiting certain facilities, severance and
pay-to-stay payments, system conversion costs and other transaction-related
costs.
Storage revenues increased to $125 million for the first quarter of 2000 from
$68 million for the same period in 1999. This marks the 45th consecutive quarter
for which Iron Mountain has reported increased storage revenues. Storage
revenues, which are considered a key performance indicator for the records and
information management services industry, are largely recurring since customers
typically retain their records for many years.
-- more --
<PAGE>
IRON MOUNTAIN REVENUES INCREASE FOR FIRST QUARTER / PAGE 2
Richard Reese, the Company's Chairman and Chief Executive Officer, stated: "Iron
Mountain continues to execute a successful strategy of investing for internal
growth while supplementing that growth through domestic and international
acquisitions. In the quarter, we posted strong internal growth and continued to
advance our strategic acquisition program in Latin America and Europe. Most
importantly, we are excited at having the Pierce Leahy organization join with us
as we pursue our global strategy, become more cost efficient and share those
efficiencies with our shareholders."
On February 1, 2000, Iron Mountain completed its acquisition of Pierce Leahy
Corp., the Company's largest and best competitor, in a stock-for-stock merger
valued at approximately $1.1 billion, including the assumption of debt and
related transaction costs. Had the acquisition occurred on January 1, 2000, the
Company's combined revenue for the quarter would have been $242 million. "As we
proceed with integrating the Iron Mountain and Pierce Leahy organizations, we
are highlighting and preserving the best attributes and business practices of
each company and seeing a stronger combined company emerge," said Reese.
ACQUISITION SUCCESS ON ALL FRONTS
Iron Mountain completed five acquisitions, in addition to the Pierce Leahy
transaction, since the end of 1999 for total consideration of approximately $19
million. The Company acquired Records Disposal, Inc., a secure information
destruction services business serving Dallas and The File Vault, a business
records management provider in Denver. Additionally, the Company announced a
definitive agreement to acquire substantially all of the assets of Data Storage
Centers, Inc. ("DSC") of Jacksonville, Florida for $54 million in cash. DSC
operates in 14 markets located primarily in the southeastern United States. This
acquisition, which is subject to customary closing conditions, is expected to
close today.
Iron Mountain Europe continued its expansion program during the quarter with two
acquisitions in Spain that broaden the lines of business offered there.
Documentalia, S.A. and Boston Data, S.A. are leading businesses in healthcare
information services and data security services, respectively, in the Madrid
market. Iron Mountain South America Ltd. has consummated its first transaction
with the acquisition of C.A.D.A. Storage S.A. located in Buenos Aires,
Argentina.
As an international, full service provider of records and information management
services, Iron Mountain currently provides services to over 100,000 customer
accounts in 77 markets in the United States, including more than half of the
Fortune 500, and over 15,000 customer accounts in 31 markets outside the United
States. The Company currently operates nearly 500 records management facilities
in the United States and approximately 90 outside the United States. For more
information, visit our website at www.ironmountain.com.
-- more --
<PAGE>
IRON MOUNTAIN REVENUES INCREASE FOR FIRST QUARTER / PAGE 3
This press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, and is subject
to the safe-harbor created by such Act. These statements involve known and
unknown risks, uncertainties and other factors that may cause the actual results
to be materially different from those contemplated in the forward-looking
statements. Such factors include, but are not limited to: (i) failure to fully
realize the anticipated cost savings related to the Pierce Leahy merger in a
timely manner because of difficulty in integrating the operations of the two
companies and unanticipated costs as a result of the merger; (ii) the Company's
ability or inability to complete acquisitions on satisfactory terms and to
integrate acquired companies efficiently; (iii) the cost and availability of
financing for contemplated growth; and (iv) other trends in competitive or
economic conditions affecting Iron Mountain's financial condition or results of
operations not presently contemplated. Iron Mountain undertakes no obligation to
release publicly the result of any revision to these forward-looking statements
that may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
NOTE: Condensed Consolidated Statements of Operations and Condensed Consolidated
Balance Sheets of Iron Mountain Incorporated follow.
<PAGE>
IRON MOUNTAIN REVENUES INCREASE FOR FIRST QUARTER / PAGE 4
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
---------------- --------------
<S> <C> <C>
REVENUES:
Storage $124,939 $ 67,722
Service and Storage Material Sales 87,198 41,649
-------- ---------
Total Revenues 212,137 109,371
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation) 104,458 54,435
Selling, General and Administrative 53,457 27,875
Depreciation and Amortization 26,303 13,595
Merger-Related Expenses 516 --
-------- ---------
Total Operating Expenses 184,734 95,905
-------- ---------
OPERATING INCOME 27,403 13,466
INTEREST EXPENSE 23,783 11,944
OTHER INCOME (EXPENSE) (781) --
-------- ---------
Income from Continuing Operations Before Provision
for Income Taxes and Minority Interest Expense 2,839 1,522
PROVISION FOR INCOME TAXES 8,529 1,623
MINORITY INTEREST (INCOME) EXPENSE (307) 147
-------- ---------
Loss from Continuing Operations (5,383) (248)
INCOME FROM DISCONTINUED OPERATIONS (NET OF APPLICABLE TAXES) -- 99
-------- ---------
Net Loss $ (5,383) $ (149)
======== =========
LOSS FROM CONTINUING OPERATIONS PER COMMON SHARE - BASIC AND DILUTED $ (0.11) $ (0.01)
======== =========
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.11) $ (0.01)
======== =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED 47,943 29,500
======== =========
EBITDA FROM CONTINUING OPERATIONS (1) $ 54,222 $ 27,061
======== =========
</TABLE>
- --------------
(1) Earnings before interest, taxes, depreciation, amortization, extraordinary
items, other income and merger-related expenses.
-- more --
<PAGE>
IRON MOUNTAIN REVENUES INCREASE FOR FIRST QUARTER / PAGE 5
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------------- -------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 10,104 $ 3,830
Accounts Receivable (less allowances of $10,801
and $5,740, respectively) 160,860 104,074
Other Current Assets 43,868 35,760
---------- ----------
Total Current Assets 214,832 143,664
---------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment at Cost 804,849 497,369
Less: Accumulated Depreciation (107,076) (93,630)
---------- ----------
Property, Plant and Equipment, net 697,773 403,739
---------- ----------
OTHER ASSETS:
Goodwill, net 1,505,066 729,213
Other Non-current Assets, net 51,948 40,596
---------- ----------
Total Other Assets 1,557,014 769,809
---------- ----------
Total Assets $2,469,619 $1,317,212
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-term Debt $ 34,657 $ 9,890
Other Current Liabilities 210,069 140,458
---------- ----------
Total Current Liabilities 244,726 150,348
LONG-TERM DEBT, NET OF CURRENT PORTION 1,183,536 603,057
OTHER LONG-TERM LIABILITIES 44,830 32,775
MINORITY INTEREST 42,367 42,278
SHAREHOLDERS' EQUITY 954,160 488,754
---------- ----------
Total Liabilities and Shareholders' Equity $2,469,619 $1,317,212
========== ==========
</TABLE>
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