<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): NOVEMBER 14, 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
(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 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro forma Financial Information
During 1999 and 2000, the Company acquired several businesses. The following
represents the unaudited pro forma condensed consolidated financial
statements for certain businesses acquired by the Company 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 primary purpose of this Form 8-K is to update previously filed pro forma
information with the Company's results of operations for the nine months
ended September 30, 2000. Other than the amendment to the Company's credit
facility, all other acquisitions and financing transactions included in the
accompanying pro forma financial statements have been previously reported.
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the nine months ended September 30, 2000 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 5-12
</TABLE>
<PAGE>
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
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 and 2000 acquisitions and certain financing transactions
and includes the following: (a) the acquisitions of Iron Mountain Europe
Limited ("Iron Mountain Europe") (50.1% interest), First American Records
Management Inc. ("FARM"), Data Base, Inc. ("Data Base"), MAP, S.A.
(Memogarde) ("Memogarde") by Iron Mountain Europe, Central File, Inc.
("Central File"), Sistemas de Archivo Corporativo, S. de R.L. de C.V. (50.1%
interest) ("Sistemas de Archivo Corporativo"), Stortext (Holdings) Ltd.
("Stortext") by Iron Mountain Europe, Midtown Professional Records Center,
Inc. ("Midtown"), Pierce Leahy Corp. ("Pierce Leahy"), and Data Storage
Center, Inc. ("DSC"); (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
August 14, 2000 to include 2 tranches of term debt totalling $350 million as
well as a revolving credit facility of $400 million, as if each had occurred
as of January 1, 1999. You should read the pro forma financial statements in
conjunction with our Current Reports on Form 8-K, Quarterly Reports on Form
10-Q and Annual Report on Form 10-K previously filed with the Securities and
Exchange Commission ("SEC").
The following Unaudited Pro Forma Condensed Consolidated Statements of
Operations (the "Pro Forma Statements of Operations") for the year ended
December 31, 1999 and the nine months ended September 30, 2000 give effect to
the pro forma transactions described above, as if each had occurred as of
January 1, 1999. Pursuant to certain SEC Rules and Regulations, the Pro Forma
Financial Statements do not include results of operations, or pro forma
adjustments, for nine acquisitions completed in 1999 and eight acquisitions
completed in 2000 that are not defined herein as the 1999 Pro Forma
Acquisitions or shown as a 2000 acquisition. In addition, the Pro Forma
Statements of Operations do not include the results of operations for
acquisitions completed by Pierce Leahy in 1999. Pro forma adjustments are
described in the accompanying notes.
The Pro Forma Financial Statements do not give effect to estimated
annual net cost savings of $15.0 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 further costs 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. Furthermore, the Pro Forma Statements of
Operations 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 and DSC included in these pro forma financial statements.
In June 1999, Iron Mountain decided to sell its information technology
staffing business, Arcus Staffing Resources, Inc. ("Arcus Staffing"), 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 using the purchase
method of accounting.
The Pro Forma Statements of Operations do not necessarily indicate the
actual results of operations that Iron Mountain would have reported if the
pro forma transactions described above had occurred as of January 1, 1999,
nor do they 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.
1
<PAGE>
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------- ---------------------
IRON PIERCE DATA STORAGE IRON
MOUNTAIN LEAHY (1) CENTER(2) ADJUSTMENTS MOUNTAIN
-------- --------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Revenues:
Storage .............................. $ 426,343 $ 17,476 $ 4,265 $ -- $ 448,084
Service and Storage Material Sales .... 294,492 12,701 2,226 -- 309,419
--------- --------- --------- --------- ---------
Total Revenues ..................... 720,835 30,177 6,491 -- 757,503
Operating Expenses:
Cost of Sales (Excluding Depreciation) 351,510 18,189 2,554 (2,285)(A) 369,968
Selling, General and Administrative ... 181,964 3,962 2,029 2,363 (B) 190,318
Depreciation and Amortization ......... 92,776 3,708 475 1,555 (C) 98,514
Foreign Currency Exchange ............. -- 147 -- (147)(D) --
Stock Option Compensation Expense ..... 15,110 -- -- -- 15,110
Merger-related Expenses(3) ............ 5,653 4,438 -- (3,232)(E) 6,859
--------- --------- --------- --------- ---------
Total Operating Expenses ........... 647,013 30,444 5,058 (1,746) 680,769
Operating Income (Loss) .................. 73,822 (267) 1,433 1,746 76,734
Interest Expense, net .................... 85,066 4,724 112 4,485 (F) 94,387
Other Expense, net ....................... 7,505 -- -- 147 (G) 7,652
--------- --------- --------- --------- ---------
Income (Loss) Before Provision
(Credit) for Income Taxes and
Minority Interest ..................... (18,749) (4,991) 1,321 (2,886) (25,305)
Provision (Credit) for Income Taxes ...... 11,353 (472) 471 (1,249)(H) 10,103
Minority Interests in Losses of
Subsidiaries ............................ (1,073) -- -- -- (1,073)
--------- --------- --------- --------- ---------
Income (Loss) Before Extraordinary Item .. $ (29,029) $ (4,519) $ 850 $ (1,637) $ (34,335)
========= ========= ========= ========= =========
Loss Before Extraordinary Item per
Common Share-Basic and Diluted .......... $ (.55) $ (.63)
========= =========
Weighted Average Common Shares
Outstanding-Basic and Diluted ......... 52,480 2,125 (I) 54,605
========= ========= ========= ========= =========
EBITDA(4) ................................ $ 187,361 $ 8,026 $ 1,908 $ (78) $ 197,217
========= ========= ========= ========= =========
</TABLE>
---------
(1) Represents the historical results of operations of Pierce Leahy prior to the
acquisition date, February 1, 2000.
(2) Represents the historical results of operations of DSC prior to the
acquisition date, May 1, 2000.
(3) Merger-related expenses are certain expenses directly related to the
Company's merger with Pierce Leahy 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.
(4) Represents earnings before interest, taxes, depreciation,
amortization, extraordinary items, other income, foreign currency
exchange, merger-related expenses and stock option compensation expense.
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 PRO FORMA
------------------------------------------ ------------------
1999 DATA
IRON ACQUISI- PIERCE STORAGE ADJUST- IRON
MOUNTAIN TIONS (1) LEAHY CENTER MENTS (2) MOUNTAIN
--------- --------- ------- ----------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Storage .................... $317,387 $18,962 $190,095 $11,536 $ -- $537,980
Service and Storage
Material Sales ........... 202,162 7,154 152,167 5,736 -- 367,219
--------- -------- -------- -------- ------- ---------
Total Revenues ......... 519,549 26,116 342,262 17,272 -- 905,199
Operating Expenses:
Cost of Sales (Excluding
Depreciation) ............ 260,930 12,618 191,510 7,313 (20,065)(A) 452,306
Selling, General and
Administrative ........... 128,948 15,882 45,856 5,649 19,320 (B) 215,655
Depreciation and
Amortization ............. 65,422 2,477 43,655 1,556 9,125 (C) 122,235
Foreign Currency Exchange... -- -- (7,473) -- 7,473 (D) --
Merger-related Expenses..... -- -- 2,361 -- (1,136)(E) 1,225
--------- -------- -------- -------- ------- ---------
Total Operating
Expenses ............... 455,300 30,977 275,909 14,518 14,717 791,421
Operating Income (Loss) ...... 64,249 (4,861) 66,353 2,754 (14,717) 113,778
Interest Expense, net ........ 54,425 1,210 52,363 365 11,924 (F) 120,287
Other Income, net............. 17 -- -- -- 7,473 (G) 7,490
--------- -------- -------- -------- ------- ---------
Income (Loss) Before
Provision for Income Taxes
and Minority Interest ...... 9,841 (6,071) 13,990 2,389 (19,168) 981
Provision for Income Taxes ... 10,579 805 6,290 896 (5,471)(H) 13,099
Minority Interests in
Earnings of Subsidiaries.. 322 -- -- -- 339 (J) 661
--------- -------- -------- -------- -------- ---------
Income (Loss) from
Continuing Operations ...... $ (1,060) $(6,876) $ 7,700 $ 1,493 $(14,036) $ (12,779)
========= ======== ======== ======== ======== =========
Loss from Continuing
Operations per Common
Share - Basic and Diluted.. $ (0.03) $ (0.24)
========= =========
Weighted Average Common
Shares Outstanding - Basic
and Diluted ............... 33,345 20,847 (I) 54,192
========= ======= =========
EBITDA ....................... $ 129,671 $(2,384) $104,896 $ 4,310 $ 745 $ 237,238
========= ======== ======== ======== ======= =========
</TABLE>
(1) See Schedule A for detail of the 1999 Pro Forma Acquisitions.
(2) Includes adjustments for the 1999 debt and equity offerings.
The accompanying notes are an integral part of these pro forma financial
statements.
3
<PAGE>
SCHEDULE A
IRON MOUNTAIN INCORPORATED
SCHEDULE OF 1999 PRO FORMA ACQUISITIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
(UNAUDITED)
<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
OVERVIEW
DSC ACQUISITION
On May 1, 2000, Iron Mountain acquired certain assets and assumed
certain liabilities of DSC pursuant to an agreement dated February 18, 2000.
The Company acquired substantially all of the operating assets and
liabilities of DSC excluding cash, real estate and long-term debt. Iron
Mountain did not acquire or assume any assets or liabilities associated with
DSC's Pensacola, Florida records management business. The acquisition has
been accounted for as a purchase and DSC is included in Iron Mountain's
consolidated financial results from the date of acquisition. The accompanying
pro forma financial statements do not include adjustments to remove the
assets and liabilities or the results of operations related to DSC's
Pensacola, Florida records management business as the impact is immaterial.
Total consideration was $54.3 million in cash. The Company funded the
purchase with borrowings under its former revolving credit facility.
The assets acquired by Iron Mountain included tangible personal property
(consisting primarily of office equipment, furniture and fixtures, motor
vehicles and racking) and intangible personal property regularly used in
DSC's records management business. Iron Mountain intends to use the acquired
property and equipment in the operation of its records management business in
the United States.
PIERCE LEAHY ACQUISITION
On February 1, 2000, Iron Mountain completed its merger with Pierce Leahy
for total consideration of approximately $1.0 billion, which consisted of common
stock, options to acquire common stock and the assumption of debt. Pierce Leahy
was 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. 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
(CONTINUED)
The calculation of the purchase price as of February 1, 2000 is as follows (in
millions):
<TABLE>
<S> <C>
Fair Value of Common Stock Issued (1) $ 421.2
Fair Value of Stock Options (2) 25.0
Fair Value of Debt Assumed (3) 584.9
Transaction Costs 4.2
--------
Total Purchase Price $1,035.3
========
</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, less a discount on
5.7 million shares held by former Pierce Leahy shareholders, which are
subject to certain restrictions, pursuant to a shareholders' agreement.
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) Calculated based on the outstanding balances and the quoted market prices
when the merger was completed on February 1, 2000.
1999 PRO FORMA ACQUISITIONS
In January 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 1999, Iron Mountain acquired Data Base and
related real estate for total consideration of $115.0 million, consisting of
cash, assumed debt and common stock. In April 1999, Iron Mountain also
acquired FARM for total consideration of $41.5 million in cash. In June 1999,
Iron Mountain Europe acquired a controlling 50.1% interest in 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, Central File, Iron Mountain Europe's
acquisition of Stortext and a 50.1% interest in Sistemas de Archivo
Corporativo, was $30.3 million in cash and assumed debt. All of these
acquisitions are referred to collectively as the "1999 Pro Forma
Acquisitions".
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.
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.
6
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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. Revenues and expenses have been translated into U.S. dollars at
the average exchange rate in effect during the period translated.
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.
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 ........ 13.4
Assumption of long-term debt ................................... 4.8
Capital Stock of Arcus Data Security Limited ................... 2.5
------
Purchase Price of 1999 Pro Forma Acquisitions ................ $ 253.0
=======
</TABLE>
7
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
PURCHASE PRICE ALLOCATION
The aggregate consideration paid for the 1999 Pro Forma Acquisitions and
the Pierce Leahy and DSC 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 DSC and Pierce Leahy is based
on the fair value of net assets acquired as of the respective acquisition
dates and is subject to adjustment, based on the final determination of the
fair value. 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.
<TABLE>
<CAPTION>
(in millions)
<S> <C> <C>
DSC (1):
Current Assets ............................................... $ 2.7
Property, Plant and Equipment ................................ 4.1
Goodwill ..................................................... 53.3
Other Long-term Assets ....................................... 3.0
Current Liabilities .......................................... (8.8)
--------
Purchase Price of DSC ....................................... 54.3
PIERCE LEAHY (1):
Current Assets ............................................... $ 68.1
Property, Plant and Equipment ................................ 276.4
Goodwill ..................................................... 761.1
Other Long-term Assets ....................................... 12.1
Current Liabilities .......................................... (76.1)
Deferred Income Taxes ........................................ (6.3)
--------
Purchase Price of Pierce Leahy .............................. 1,035.3
1999 PRO FORMA ACQUISITIONS:
Current Assets ............................................... $ 32.0
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 .............. $ 253.0
--------
Total Purchase Price of DSC, Pierce Leahy and the 1999
Pro Forma Acquisitions ................................... $1,342.6
========
</TABLE>
(1) The purchase price allocations are preliminary and are subject to
finalization of the assessment of the fair value of fixed assets,
operating leases, and deferred income taxes.
8
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
AMENDED CREDIT AGREEMENT
On August 14, 2000, Iron Mountain entered into an amended and restated
credit agreement (the "Amended Credit Agreement"). The Amended Credit
Agreement replaces the Company's prior revolving credit facility, increases
the aggregate principal amount available to $750 million and includes a $400
million revolving credit facility (the "Revolving Credit Facility") and two
tranches of term debt (the "Tranche A Term Loan" and the "Tranche B Term
Loan"). Tranche A Term Loan and Tranche B Term Loan represent term loans to
the Company in principal amounts of $150 million and $200 million,
respectively. The Tranche A Term Loan and the Revolving Credit Facility
mature on January 31, 2005, while the Tranche B Term Loan matures on February
28, 2006. The interest rate on borrowings under the Amended Credit Agreement
varies depending on the Company's choice of base rates, plus an applicable
margin. Restrictive covenants under this agreement are similar to those under
the Company's prior credit facility.
The impact of the Amended Credit Agreement to the Company's interest
expense, net of interest income on excess cash, commitment fees, and
amortization of deferred financing costs, has been reflected in the pro forma
financial statements as if the Amended Credit Agreement was entered into on
January 1, 1999.
In conjunction with the refinancing of the Company's revolving credit
facility, the Company had an early extinguishment of debt, which resulted in
an extraordinary loss of $2.9 million (net of tax benefit of $1.9 million) in
the third quarter of 2000. The Pro Forma Financial Statements do not reflect
such an extraordinary charge.
9
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
STATEMENTS OF OPERATIONS
PRO FORMA ADJUSTMENTS
<TABLE>
<CAPTION>
The accompanying Pro Forma Statements of Operations for the nine months
ended September 30, 2000 and the year ended December 31, 1999 have been
prepared as if the 1999 Pro Forma Acquisitions, the Pierce Leahy acquisition and the
DSC acquisition had occurred on January 1, 1999, as if the 1999 equity
offering and the 1999 debt offering had occurred on January 1, 1999, and as
if the Company signed the Amended Credit Agreement as of January 1, 1999. The
following pro forma adjustments (in millions except share data) reflect
these transactions:
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
<S> <C> <C>
(A) Cost of Sales
To adjust rent expense to new lease rates negotiated in connection with
the DSC acquisition...................................................... $ .1 $ .3
To reflect normalization of rent expense related to the Pierce Leahy
acquisition.............................................................. -- .2
To conform Pierce Leahy's classification of cost of sales and
selling, general and administrative expenses to Iron
Mountain's classification ............................................... (2.4) (20.6)
------- --------
$(2.3) $(20.1)
======= ========
(B) 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 .............................................. $ 2.4 $ 20.6
To conform Pierce Leahy's accounting for customer acquisition
costs to Iron Mountain's accounting .................................... -- 8.1
To reverse one-time bonus payments, other non-recurring compensation
expenses and broker's fees directly attributable to the Data Base and FARM
acquisitions............................................................ -- (9.4)
-------- --------
$ 2.4 $ 19.3
======== ========
</TABLE>
10
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(C) Depreciation and Amortization
To reflect additional depreciation and amortization expense based on the
fair value of the assets acquired and the remaining Iron Mountain useful
lives. 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.
(D) Foreign Currency Exchange
To conform Pierce Leahy's classification of foreign currency
exchange gains and losses to Iron Mountain's classification.
(E) Merger-related Expenses
To reverse expenses directly attributable to the acquisition and
expensed by Pierce Leahy. These expenses consist of compensation expense
related to the acceleration of certain stock options, financial advisor,
legal, accounting and SEC fees.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
<S> <C> <C>
(F) Interest Expense, net
Record interest expense on debt incurred under Tranche A Term Loan and
Tranche B Term Loan of the Amended Credit Agreement (including
commitment fees and amortization of deferred financing costs) at a
weighted average interest rate of 7.9% and 9.0%, respectively ......... $ 25.2 $ 29.9
Reverse interest expense on our Revolving Credit Facility
assumed to be repaid with the amounts borrowed under the Tranche A Term
Loan and Tranche B Term Loan of the Amended Credit Agreement
(including commitment fees and amortization of deferred financing
costs)................................................................. (17.0) (4.3)
Reverse historical interest expense on debt of acquired
companies retired or not assumed ...................................... (1.5) (13.3)
Record the amortization related to fair value adjustment of
Pierce Leahy debt assumed net of adjustment to amortization of
deferred financing costs .............................................. (.1) (1.4)
Record interest expense related to our 1999 debt offering,
including amortization of deferred financing fees ..................... -- 3.7
Record interest income on the $56 million excess cash resulting from
the amounts drawn under the Amended Credit Agreement, at an assumed
reinvestment interest rate of 5.9% and 4.78%, respectively ............ (2.1) (2.7)
-------- ---------
Total .............................................................. $ 4.5 $11.9
======== =========
</TABLE>
The impact of a 1/8% change in the interest rate on pro forma borrowings
under Iron Mountain's Amended Credit Agreement for the nine months ended
September 30, 2000 and the year ended December 31, 1999 are $0.3 million and
$0.4 million, respectively.
11
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(G) Other (Income) Expense, net
To conform Pierce Leahy's classification of foreign
currency exchange gains and losses to Iron Mountain's classification.
(H) Provision for Income Taxes
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.
(I) Weighted Average Common Stock Outstanding-Basic and Diluted
To adjust the pro forma weighted average common shares outstanding as if
the merger with Pierce Leahy (including the effect of the 10% stock
dividend), the 1999 Pro Forma Acquisitions and the 1999 equity 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 Nine Months Ended Year Ended
TRANSACTIONS: or Repurchased September 30, 2000 December 31, 1999
-------------- ------------------ -----------------
<S> <C> <C> <C>
Merger with Pierce Leahy........ 18,784 2,125 18,784
1999 equity offering ........... 5,750 -- 2,063
Acquisition of Data Base ....... 1,477 -- 393
Repurchase of Data Base shares.. (1,477) -- (393)
--------- ------- ---------
Net shares issued .......... 24,534 2,125 20,847
========= ======= =========
</TABLE>
(J) Minority Interests in Earnings of Subsidiaries
To record the 49.9% minority interest in the net income of Memogarde,
Stortext, Sistemas de Archivo Corporativo and Iron Mountain Europe.
12
<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)
NOVEMBER 14, 2000 By: /s/ JEAN A. BUA
(date) ----------------------------------
Jean A. Bua
Vice President and Corporate Controller
(Principal Accounting Officer)
